A session to forget for Tim on the very day in which the Vivendi leaders officially met the Italian government. The company of the former public monopolist closed the session down by 2.69 percent. The stock, already burdened by the uncertainty regarding the meeting between the representatives of Vivendi and those of the government on the network dossier, scheduled for the day, was also hit by the Deutsche Bank revises the rating from hold to sell, with a target price lowered to 0.23 from 0.3 euros.
Meanwhile, Vivendi remains critical of the network sale operation
Yesterday’s meeting between Vivedi and the government lasted about an hour. But nothing has been revealed about the outcome of the discussion requested by Tim’s first shareholder who was critical of various aspects of the operation: from the valuation price of infrastructure assets, to the financial sustainability of the service activities of Tim after the reorganization, to the approval process.
Vivendi was represented at the meeting by its top exponents, President Yannick Bollorè and CEO Arnaud de Puyfontaine, while, according to press reports, in addition to Giorgetti and the MEF representatives, the Presidency’s chief of staff may also have participated of the Council, Gaetano Caputi. The face-to-face meeting took place 10 days after the deadline for the Kkr fund to present the binding offer on the infrastructural network of the telecommunications group which will then be split into NetCo, the corporate vehicle in which the Mef itself will have a stake among the 15% and 20 percent. fon
Deutsche bank analysis
Analysts at the German bank believe that after the announcement of a deal with Netco, “shares may underperform as the market reflects on a residual ServeCo which remains unattractive in the industry context with Tim which will also have to wait for regulatory approval for the sale of NetCo”. Furthermore, according to experts, if the deal does not materialize, Tim would find itself exposed to a weak organic story, characterized by high financial leverage and free cash flow losses until 2027, which would leave the share capital exposed.
The main upside risks, according to the German institute, include an increase in proceeds from the sale of NetCo, a consolidation with limited remedies or a substantial restructuring of ServeCò. According to the Deutsche Bank report, Tim’s stock price “outperformed the industry by +35% over a year, albeit in a context of financial leverage (net debt 3.3 times market capitalisation) and underperformance of shares in the previous two years”.
Furthermore, DB adds, ‘Tim has not said whether shareholders will vote on the sale of NetCo and we expect clarity to be made once the board of directors has taken a position on the offer. The position of Vivendi, the main shareholder of the telecommunications company which holds 24%, will be decisive, as it would have posed various obstacles to the operation starting from the price put on the table by Kkr,