The quarterly season is also in full swing at Piazza Affari e from tomorrow we will begin to get serious with the board of directors for the approval of the 3rd quarter accounts of blue chips such as Mediobanca, Telecom Italia and Unicredit.
For Telecom Italia, which will release the accounts after the close of the markets, this is a highly anticipated appointment with the largest Italian telecommunications company called to give positive signals to investors after the marked weakness highlighted by the stock in recent weeks. Among analysts there is a cautious optimism dictated by the tow of Brazil and by a domestic market that should have held up better than in previous quarters.
Tim hopes for assist accounts to get back on the stock market
Since the beginning of the year, the Telecom Italia stock has recorded about -11%, the second worst performer of the Ftse Mib (the worst is Enel with -13.6%) and with a net underperformance compared to Stoxx Europe 600 Telecommunications (+ 9.8% Ytd). In recent weeks Luigi Gubitosi, CEO of TIM, stated that Telecom shares are in his opinion undervalued taking into account the company’s valuation as the sum of the parts. The top manager reiterated the strategic initiatives underway, in particular the transfer of control of OF to CDP, facilitating pragmatic interactions on the single network front.
Preview of 3rd quarter accounts
Q3 accounts should have found support from the good trend in Brazil and a further recovery in domestic services revenues thanks to football content, new state subsidies and the easing of non-recurring drag. Bloomberg Intelligence Ebitda is expected to show a medium to low single-digit decline in the third quarter. This would be an improvement on the 7.4% decline in the second quarter, driven by a 9.5% decline in Italy, of which 500 bps reflect non-recurring items and 250 bps in start-up costs, including football content.
According to the consensus drawn up by 15 investment banks and published on the TIM website, the third quarter should have seen the tlc group report revenues of € 3.85 billion, or 1.7% less than the € 3.918 billion. euro on a comparable basis in the third quarter of 2020. Organic Ebitda is estimated at 1.669 billion euro, down 5.9% from the 1.77 billion euro (again on a comparable basis) in the third quarter of 2020. Expected in Italy an ebitda down 8% to 1.325 billion euros.
Organic Capex is seen by analysts at € 979 million, up from € 755 million in the same period of 2020. Adjusted net financial debt is estimated at the end of the third quarter at € 21.96 billion from € 23.33 billion end of 2020.
Looking at estimates for the whole of 2021, analysts indicate revenues of € 15.6 billion (-0.8%), organic ebitda of € 6.67 billion (-4.5%) and organic Capex of € 3.75 billion, an increase compared to to 3.4 billion in the previous year.
Iliad bogeyman is also coming to broadband
Organic revenues, after growing 1% in the second quarter, are expected to decline slightly. “Any upside is limited as the competition in Italy on both mobile and broadband remains intense compared to other European markets, with further risks deriving from Iliad’s entry into broadband ”, explains Erthan Gurses, Bloomberg Intelligence analyst for the telecommunications sector.
TIM’s customer base, as noted by Gubitosi, is stable / slightly positive, with a churn that has fallen to a 5-year low but the Price environment remains the lowest in Europe.
Equita SIM analysts are also predicting improving dynamics in terms of fixed and mobile domestic customers thanks to a reduction in the churn rate. Mobile customers are seen down by 150 thousand units (-248 thousand in 2Q) and stable fixed customers (-9 thousand in 2Q). “We do not yet expect strong signals on BB customers in 3Q from the launch of football (+ 45 thousand, similar to 2Q), probably more visible in 4Q”, adds the Milanese sim. Domestic AL Ebitda is expected to continue to decline heavily -9.2% yoy due to football start-up costs, the decline in revenues and the recovery of operating costs with the positive trend from Brazil no longer penalized by exchange rates (EUR-BRL + 2% y / y). Group results should show -1.3% of revenues to 3.849 billion and -6.2% of AL ebitda at 1.477 billion. By virtue of this, Equita reduces its estimates for the whole of 2021 by 1% as revenues to 15.677 billion (reduction of -1% domestic to 12.844) and by -1.4% as EBITDA AL to 5.844 billion (reduction of 1 , 5% domestic at 4,758 ld, seen down by -6% y / y), with an impact of 8% on adjusted net profit.
Among analysts there are those who see upside potential of over + 100%
In general, optimism prevails among analysts about the possibility of a rise in the stock. Among those tracked by Bloomberg, as many as 55.6% have a buy opinion on Telecom Italia, 40.7% say hold and only 3.7% are sell. The average target price is € 0.53, which is 56% above current levels.
Deutsche Bank has a target price of € 0.68, ie more than double the current value. Even more ambitious are the target prices indicated by Alpha Value and Bevinster Securities which in recent weeks has reiterated buy with tp at 0.75 and 0.80 euros respectively.