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Research Tree provides access to ongoing research coverage, media content and regulatory news on TELECOM ITALIA SPA. We currently have 6 research reports from 1 professional analysts.
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TELECOM ITALIA SPA
TELECOM ITALIA SPA
A solid Q3 confirming a good trend
07 Nov 16
A good Q3 release for the Italian incumbent: revenues were down organically by only 1.2% yoy (vs -5.2% in Q1 and -4.2% in Q2) while the EBITDA (excluding the negative impact of non-recurring items) has increased sharply by 7% yoy (vs a decline of 1.7% in H1!), with an EBITDA margin of 44.4%, 3.3ppts higher than in Q3 15. The EBITDA has clearly benefited from the actions implementing the “cost recovery plan” that started in Q2 in the Domestic Business and in Q3 in the Brazil Business. In Italy, revenues were up by 1% yoy (vs -1.7% in the H1). The solid, structural recovery of Mobile revenues was confirmed, thanks both to the maintenance of market share and the stabilisation of ARPU levels. But the key point is the EBITDA which has grown by 7.9%. Excluding non-recurring restructuring charges (corresponding to 3% of EBITDA), EBITDA would have grown by +3.3% for the first 9m, with an EBITDA margin of 46.5%, up 1.8ppts on 2015, confirming the positive change in trend that started in Q2 (Q3: +7.8%, Q2: +6.9%, Q1: -5.2%). In Brazil, Q3 revenues were down organically and at constant change by 5.2% yoy (vs -14% in H1)! Service revenues were down by 2.4% yoy, while revenues from product sales dropped by c.40%, reflecting a sales policy less focused on the sale of handsets, as well as the impact of the Brazilian macro-economic crisis on family spending decisions. The main issue is that the total number of subscribers (c.63.2m) was still down by 4.5% vs end 2015 (with a market share of 25.2%, vs 25.7% at end 2015). Note, however, that like its competitors the group has seen its prepaid customer base contract sharply in 2016, due to the adoption of a restrictive policy for the disconnection of inactive customers according to Anatel’s new criteria (the Brazilian National Telecommunications Agency). The Q3 EBITDA margin was good at 32.6%, up 1.4ppt on Q3 15. Excluding non-recurring costs, EBITDA has indeed grown by 0.5% with the start of cost-cutting operations which offset the reduction in revenues.
An integrated European media powerhouse dies before being born
24 Oct 16
Once upon a time (say about 6 months ago), Mediaset and Vivendi concluded a splendid strategic alliance: the French group was to acquire 100% of Mediaset Premium, while each entity would be taking a 3.5% stake in the other on the occasion. The ambition was to build a pan-European OTT platform and to create a southern European content and VOD powerhouse… The announced wedding has since moved to the divorce legal battlefield, maybe paving the way for a ménage à trois.
Best quarter in Italy since 2009
27 Jul 16
Q2 revenues were down organically by 4.2% yoy (vs -5.2% in Q1) while the EBITDA (excluding the negative impact of non-recurring items) has decreased by only 1.7% yoy, with an EBITDA margin of 42.0%, 1.4ppts higher than in H1 15. But in Italy, revenues were down by only 1.1% yoy (vs -2.5% in the three previous quarters). The solid, structural recovery of Mobile revenues was confirmed, thanks both to the maintenance of market share and the stabilisation of ARPU levels. Note the revenues of the Consumer segment in H1 (55% of Domestic revenues) have increased by 1.5% yoy. But the key point is the EBITDA: excluding non-recurring restructuring charges (corresponding to 2% of EBITDA), EBITDA would have grown by +0.9%, with an EBITDA margin of 45.1%, up 1.2ppts on H1 15 and a positive inversion of trend compared to Q1 (+6.9% yoy in Q2 vs -5.2% yoy in Q1). In Brazil, Q2 revenues were down organically and at constant change by 13% yoy (vs -15% in Q1)! Service revenues were down by 5.7% yoy, while revenues from product sales dropped by c.60%, reflecting a sales policy less focused on the sale of handsets, as well as the impact of the Brazilian macro-economic crisis on family spending decisions. The main issue is that the total number of subscribers (c.64m) was still down by 3.4% vs end 2015 (with a market share of 25.6%, vs 25.7% at end 2015 and 26.7% a year ago). The H1 EBITDA margin was, however, at 29.9%, up 1.5ppt on H1 15. Another key point of the H1 release: TIM and Fastweb have entered into a strategic partnership aimed at speeding up the creation of the ultrabroadband infrastructure with FTTH technology in 29 Italian cities. The partnership envisages the establishment of a joint venture with 80% of the capital held by TIM and 20% by Fastweb. The new company’s business plan therefore envisages connecting around 3m homes with FTTH technology within 2020 which will allow connection speeds of 1Gps. Total investment is €1.2bn, which the joint venture will finance in part with equity and in part with debt. TIM’s share is already included in the capex of the 2016-18 Business Plan. Moreover, as part of the partnership, TIM will buy from Fastweb over the next 18 months the infrastructure with FTTH technology that will allow around 650 thousand homes in 6 cities to connect to TIM’s network a year earlier than envisaged in the Business Plan. The strategic partnership will allow the two companies to create the latest generation, extremely high speed, infrastructure more rapidly, at the same time permitting synergies in the investments.
The new CEO's aim to reach 2019 with €1.6bn of efficiencies
16 May 16
Q1 revenues were down organically by 5.6% yoy: In Italy, revenues were down by 2.3% yoy (as in the two previous quarters). This is a little bit disappointing: the recovery trend is slowing slightly compared to the previous quarters, after, in particular, a worsening of the performance in the Fixed segment, while the solid, structural recovery of Mobile revenues was confirmed, thanks both to maintenance of market share and stabilisation of ARPU levels. Note the revenues of the Consumer segment in the Q1 (55% of Domestic revenues) have increased by 2% yoy. In Brazil, Q1 revenues were down by 15% yoy! Service revenues were down by 8.3% yoy while revenues from product sales dropped by 61%, reflecting a sales policy less focused on the sale of handsets, as well as the impact of the Brazilian macro-economic crisis on family spending decisions. The main issue is that the total number of subscribers was 67.273m, a fall of 11.2% yoy, but this corresponds to a slight increase compared to end 2015 (with a market share of 26.1%, vs 25.7% at end 2015 and 26.7% a year ago). EBITDA was down by 7.5% yoy excluding non-recurring charges, with a quite correct margin of 43.34% in Italy while the Brazilian one was 28.7%, down 0.8 ppts on the previous year due to the contraction in revenues.
Don’t miss the opportunity to buy TI at a good price
17 Feb 16
The stock declined sharply by 4% yesterday following the release of mixed results in Q4. The stock has now declined just over 30% from its highs of last autumn (when Bolloré and Niel invited themselves to the capital of the Italian telco). 2015 revenues were down by 4.6% yoy, while the EBITDA declined by 17.9%, but this includes non-recurring charges of €1bn. Without these, the organic decline would have been of 4.5% with a margin of 41% (1.8ppt higher than in 2014!).
A good recovery trend in Italy but tough market conditions in Brazil
06 Nov 15
Q3 revenues were down by 4.6% yoy at constant currency. While the domestic decline of 1.4% yoy was slightly better than expected we note, however, that market conditions were once again tougher than expected in Brazil which recorded a sharp drop of 15% in its revenues (at constant currency) due largely to a 58% reduction in handset sales (sold with no margin a year ago). Q3 EBITDA was down by only 3.7% yoy organically and at constant change. Note in particular the Brazilian margin was up by 3.8ppt from 27.4% to 31.2%, while the domestic margin was back to a more reasonable number (44.7%) after an exceptional Q3 14 (at 47.2%!). Note in parallel to this release that the board proposed to convert TI’s saving shares (representing 30% of the capital but carrying no voting rights) into ordinary shares. This will have a dilutive effect on Vivendi’s stake in TI which could be only 13% given the 20% currently held by the French group.
Panmure Morning Note 05-12-16
05 Dec 16
Filtronic, the designer and manufacturer of microwave electronics for the wireless telco market, has provided a solid 1H17 trading update. As seen during 1Q17, demand for its new ultra-wide band integrated antennas has been driven by its key customer. Crucially the roll-out provides a reference client and adoption from other clients should be coming in due course. Having said that, programme roll-outs tend to be lumpy in nature and management expect activity to be slowing in the early part of 2H17 until customer concentration is remedied, meaning Filtronic will be exposed to short-term fluctuations in demand.
08 Dec 16
Amino has this morning published a positive trading update, with figures for the year to November 2016 slightly ahead of our forecasts. We upgrade our 2016 estimates modestly, to reflect confirmation of this expected strength and upbeat comments on order backlog. Having recently upgraded our 2017 estimates, we choose to leave these unchanged for now, but will revisit them in February 2017 alongside full FY16 results.
Joy of Techs
21 Nov 16
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
N+1 Singer - Morning Song 06-12-2016
06 Dec 16
With FY16 volume and revenue already disclosed in the pre-close, the focus in today’s prelims is on PBT (£100.3m versus our £101m) and EPS (96.8p versus our 95.4p). No special dividend triggered this year (none forecast) and DPS is held at 46.8p (N1SE: 48.0p). On end markets, recent commentary is reiterated – the core business is growing, whilst consumer electronics will be subdued in the current year (competitive capacity from Solvay). On currency, there will be a material benefit in the current year (a little more than the £14m to £15m previously indicated), and a further tailwind next year if current rates are maintained (quantum TBC). There is also an investment of £10m today in a minority interest in Magma Global, Victrex’ oil and gas mega programme partner. Although the share price is now close to our TP of 1730p, we feel that there is enough in today’s announcement to retain a positive stance on medium term opportunities with strong cashflow and a special dividend potentially to look forward to in the current year.
Prospects electrify; return of cash
07 Dec 16
The sale of the Opus Energy stake to Drax Group is expected to complete during calendar 1Q17, injecting £71m into the balance sheet. With manageable net debt/EBITDA close to 1x, the board expects to return all proceeds to shareholders through a tender offer around the time of prelims, expected June 2017. Telecom Plus’ interims had reported performance in line with mildly tweaked forecasts. While 3 of the "big 6" utility providers committed to price freezes through winter, the implication is for price rises subsequently, from the beginning of TEP’s FY18 (y/e March). The collapse of GB Energy shows that the cheapest utility providers’ business models are unsustainable, which compounds interest from willing and concerned consumers, and re-incentivises the self-employed sales force, as the competitive landscape rebalances. With positive catalysts lining up to lift the share price, we lift our twelve-month target price to 1360p.