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The Telecom stock rebounds on the stock market, but not enough to recover from the bloodbath of the day before when prices plummeted by almost 24% to just over 21 cents and 13.5% of the ordinary share capital changed hands. Today the stock, amidst trade involving even more than 9% of the capital, closed at 22.2 cents, +4.82%, still far from the 27.8 cents on Wednesday evening, before the collapse.
TIM president, Salvatore Rossi, convened an extraordinary council meeting on Sunday, at the request of CEO Pietro Labriola, precisely to analyze the situation. The company is also considering providing the market with more clarification on the plan, particularly on the debt numbers that have fueled investor concerns.
Consob, as usual on these occasions, is carrying out its checks: however, it is too early to draw conclusions. However, Thursday’s session, while the Tim management meeting with the financial community for the presentation of the plan was underway in Rome, followed a particular trend, with heavy declines throughout the day and the fall in prices ending with the doubling of losses, from levels of -11% to the final of almost -24%.
Tim, 250 million seized for telephony fraud
When in March 2008 Franco Bernabè presented his first plan for returning to the helm of Telecom, the day of the meeting with investors was marred by a very negative reaction from the market, even if not as tragic as yesterday’s, with the title which had closed down by more than 9%. A few days later it was discovered that the banks that had pledged the remaining 3.7% still in the hands of Hopa had dumped the shares on the market because the parameters had failed. Vivendi has placed its 23.75% stake among those available for sale, still reporting its full ownership as of March 1st in the slides presented to analysts during the conference call which was held on Thursday at 6.15pm to illustrate the budget data. If there was any movement relating to the French share (or some related derivative) Consob should be able to ascertain it.
The fact remains that the deluge of sales was triggered by a “surprise” in the debt numbers which stunned analysts and their forecasts, causing uncertainty and in uncertainty, as is known, the market first of all sells, then if anything it sells sorry. What happened on this front is summarized well by an Intermonte report, which we are resuming. The Intermonte analysts write that the crux of the scandal was 1 billion more debt in the starting point at the end of 2024. Tim will remain an integrated player at least until June, managing the fixed network as in the current configuration, and will therefore continue to pay interest on all the debt and to burn cash. Tim today indicates a net debt/Ebitda ratio equal to or lower than 2 for the end of 2024, which translates into 7.6 billion in net debt at the end of the year against the 6.6 billion that resulted from the previous consensus of analysts. This, accompanied by the plan’s challenging forecasts on Ebitda growth, projects net debt of 1.6/1.7 times Ebitda at the end of 2026, i.e. 7-7.5 billion. Restructuring costs linked to personnel, high interests and the exit of working capital will ensure that the group continues to burn cash also in 2024, with an after-effect also on 2025 and only from 2026 can it say it will return to truly generating cash, provided it maintains promises on Ebitda progress. Analysts are asking for clarity on the numbers because in the confusion of the stock market storm the explanations were not exhaustive.