Telecom Italia SpA
MIL:TIT
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Intrinsic Value
The intrinsic value of one TIT stock under the Base Case scenario is 1.3083 EUR. Compared to the current market price of 0.2193 EUR, Telecom Italia SpA is Undervalued by 83%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Telecom Italia SpA
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Fundamental Analysis
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Telecom Italia SpA, established in 1994 and headquartered in Rome, is one of the leading telecommunications companies in Italy and a key player in the global telecom industry. With a rich history rooted in a government monopoly, it has evolved into a competitive provider of various services, including fixed and mobile telecommunications, internet services, and digital solutions. The company operates under two primary brands: TIM (Telecom Italia Mobile) for mobile services and TIM Fixed for landline communication. Over the years, Telecom Italia has made significant strides in advancing its network infrastructure, investing heavily in fiber optics and 5G technology, positioning itself to not o...
Telecom Italia SpA, established in 1994 and headquartered in Rome, is one of the leading telecommunications companies in Italy and a key player in the global telecom industry. With a rich history rooted in a government monopoly, it has evolved into a competitive provider of various services, including fixed and mobile telecommunications, internet services, and digital solutions. The company operates under two primary brands: TIM (Telecom Italia Mobile) for mobile services and TIM Fixed for landline communication. Over the years, Telecom Italia has made significant strides in advancing its network infrastructure, investing heavily in fiber optics and 5G technology, positioning itself to not only meet the growing demand for high-speed connectivity but also to cater to the increasing digital needs of businesses and consumers.
For investors, Telecom Italia represents an intriguing opportunity in the rapidly evolving telecom landscape. Despite facing challenges such as regulatory pressures, intense competition, and a complex financial structure, the company has crafted a strategic focus on digital transformation and service diversification. Telecom Italia aims to enhance its operational efficiency while improving customer experience through innovative solutions. With partnerships and collaborations with tech giants like Google and Amazon, the company is leveraging its technological capabilities to explore new revenue streams, making it a potentially attractive investment for those looking to capitalize on the digital revolution in communications.
Telecom Italia SpA, a leading telecommunications company in Italy, operates through several core business segments. Although the specifics may evolve, the main segments generally include:
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Fixed-Line Telephony: This segment encompasses traditional landline services for both residential and business customers, including voice services, broadband Internet access, and data transmission.
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Mobile Telephony: Telecom Italia provides mobile communication services, including voice, SMS, and mobile data services to individual consumers and enterprises. This segment includes postpaid and prepaid plans and a variety of mobile devices.
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Digital Services: This includes a range of digital products and services such as cloud computing, cybersecurity, IoT (Internet of Things) solutions, and other value-added services for both consumers and businesses.
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Wholesale Services: Telecom Italia offers wholesale telecom services to other telecom operators and service providers, which may include access to their network infrastructure, interconnection services, and other facilities.
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Media and Broadcasting: This segment may include partnerships and services related to media content delivery, including television and streaming services, which leverage Telecom Italia's distribution and broadcasting capabilities.
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International Operations: While primarily focused on the Italian market, Telecom Italia may also engage in international business, providing services and solutions in other regions through subsidiaries or partnerships.
Telecom Italia continuously seeks to innovate and develop its service offerings, adapting to changes in technology and consumer preferences in the rapidly evolving telecommunications landscape.
Telecom Italia SpA (TIM) has several potential competitive advantages that can help it maintain a strong position in the telecommunications market. Here are some notable aspects:
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Established Brand and Market Presence: As one of the oldest telecommunications companies in Italy, TIM has a strong brand recognition and a large customer base, which can be advantageous in customer loyalty and retention.
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Extensive Network Infrastructure: TIM has invested heavily in its network infrastructure, providing widespread coverage and high-quality services. This extensive infrastructure can be a significant barrier to entry for newer competitors.
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Broad Range of Services: TIM offers a comprehensive suite of services, including mobile and fixed-line telephony, broadband internet, and digital services. This diversification allows TIM to attract various customer segments and create bundled service offerings.
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Strong Financial Position: If financially stable, TIM can invest more in technology, customer service, and marketing compared to less financially secure competitors, allowing for innovation and improved customer experience.
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Strategic Partnerships: TIM has potential partnerships with technology providers and content creators, allowing it to offer exclusive content or advanced technological solutions such as IoT and smart home products, enhancing its value proposition.
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Focus on Innovation and Digital Transformation: TIM's investments in cutting-edge technologies, such as 5G and fiber optics, can enhance service quality and attract tech-savvy customers.
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Regulatory Relationships: As a major player in the market, TIM may have established relationships with regulatory authorities that can influence favorable regulatory conditions or enable the company to navigate complex regulatory environments more effectively.
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Economies of Scale: Being a large telecommunications provider, TIM can achieve economies of scale that allow it to reduce costs and offer competitive pricing, reinforcing its market position.
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Customer Service Capabilities: An established customer support network and localized service centers can enhance customer satisfaction and loyalty compared to newer entrants who may not have the same level of service.
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Focus on Sustainability: Increasingly, companies that focus on sustainability and corporate social responsibility can attract environmentally-conscious consumers, potentially providing TIM with a competitive edge.
By leveraging these advantages effectively, Telecom Italia can differentiate itself from competitors and build a more resilient business model in the dynamic telecommunications landscape.
Telecom Italia SpA faces several risks and challenges that could impact its business in the near future. Here are some of the key factors:
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Regulatory Pressures: As a major telecommunications provider, Telecom Italia is subject to stringent regulations and scrutiny from government bodies and regulatory organizations. Changes in regulations, such as those related to pricing, competition, and telecommunications infrastructure, could impact profitability and operational flexibility.
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Intense Competition: The Italian telecommunications market is highly competitive, with several players vying for market share. Increased competition can lead to price wars and reduced margins, affecting overall profitability.
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Technological Change: Rapid advancements in technology require constant investment in infrastructure and innovation. Telecom Italia must adapt to emerging technologies like 5G, fiber optic networks, and the Internet of Things (IoT). Failure to keep pace with technological change can lead to loss of market position.
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Debt Levels: Telecom Italia has historically held significant levels of debt. High debt burdens can limit financial flexibility, restrict investment opportunities, and increase vulnerability to interest rate hikes or economic downturns.
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Economic Factors: Economic instability in Italy and broader economic conditions in the Eurozone can affect consumer spending on telecommunications services. Economic downturns can lead to increased churn rates and reduced revenue growth.
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Cybersecurity Threats: As a telecom provider, Telecom Italia is a key player in the digital infrastructure, making it a target for cyberattacks. Data breaches or service interruptions can lead to significant reputational damage and financial losses.
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Market Saturation: The telecommunications sector in Italy is approaching saturation, with many households already subscribed to multiple services. This limits growth potential and could hinder efforts to attract new customers.
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Corporate Governance Issues: Telecom Italia has faced challenges related to management and corporate governance in the past. Any governance problems or leadership instability can threaten strategic direction and investor confidence.
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Global Supply Chain Issues: Disruptions in global supply chains, such as those seen during the COVID-19 pandemic, can affect the rollout of infrastructure projects and delivery of services.
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Shift to Digital Services: As more consumers shift to over-the-top (OTT) services and digital platforms for communication and entertainment, traditional telecom revenue streams may decline. Adapting business models to capitalize on these trends will be crucial.
Addressing these challenges will require strategic planning, investment in technology, and effective risk management to ensure sustainable growth and competitiveness in a dynamic telecommunications landscape.
Revenue & Expenses Breakdown
Telecom Italia SpA
Balance Sheet Decomposition
Telecom Italia SpA
Current Assets | 7.6B |
Cash & Short-Term Investments | 2.7B |
Receivables | 3.4B |
Other Current Assets | 1.6B |
Non-Current Assets | 53.4B |
Long-Term Investments | 3B |
PP&E | 7.5B |
Intangibles | 17.5B |
Other Non-Current Assets | 25.4B |
Current Liabilities | 20.5B |
Accounts Payable | 3.6B |
Accrued Liabilities | 621m |
Other Current Liabilities | 16.2B |
Non-Current Liabilities | 27.8B |
Long-Term Debt | 13B |
Other Non-Current Liabilities | 14.8B |
Earnings Waterfall
Telecom Italia SpA
Revenue
|
23.5B
EUR
|
Cost of Revenue
|
-10.4B
EUR
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Gross Profit
|
13.2B
EUR
|
Operating Expenses
|
-10.5B
EUR
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Operating Income
|
2.7B
EUR
|
Other Expenses
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-4.7B
EUR
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Net Income
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-2B
EUR
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Free Cash Flow Analysis
Telecom Italia SpA
EUR | |
Free Cash Flow | EUR |
For the first time in over a decade, the company has met or exceeded its financial guidance for two years running. Service revenues have turned positive, showing growth for three consecutive quarters, alongside an increase in EBITDA. A robust transformation plan has implemented stringent cost control, with room to further drive efficiencies. Additionally, over EUR 700 million of NRRP funds have been secured, and over EUR 4 billion was refinanced, ensuring that all debt maturities are covered up to the year 2025. The company's strategic focus remains steadfast, and they are set to continue discussions on the future direction in the coming weeks.
What is Earnings Call?
TIT Profitability Score
Profitability Due Diligence
Telecom Italia SpA's profitability score is 37/100. The higher the profitability score, the more profitable the company is.
Score
Telecom Italia SpA's profitability score is 37/100. The higher the profitability score, the more profitable the company is.
TIT Solvency Score
Solvency Due Diligence
Telecom Italia SpA's solvency score is 22/100. The higher the solvency score, the more solvent the company is.
Score
Telecom Italia SpA's solvency score is 22/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
TIT Price Targets Summary
Telecom Italia SpA
According to Wall Street analysts, the average 1-year price target for TIT is 0.3194 EUR with a low forecast of 0.202 EUR and a high forecast of 0.42 EUR.
Dividends
Current shareholder yield for TIT is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Profile
Country
Industry
Market Cap
Dividend Yield
Description
Telecom Italia SpA engages in the provision of telecommunication and Internet services, digital contents, and cloud services. The company is headquartered in Rome, Roma and currently employs 51,929 full-time employees. The firm focuses on various areas of digital services, including Enriched Communication, Trusted Digital Life, Business Life, Indoor Life, Mobile Open Life and Digital Entertainment. Its segments include Consumer, Business, National Wholesale and Other. The company is engaged in developing various projects in areas, including Smart Green, Social Reading, Solutions for good schooling, Digital tourism 2.0, Smart Home, FriendTV and Big Data. Smart Green is the assessment of projects connected with the environment and potential partnerships with the local government offices for the monitoring of air in public offices and urban areas, using networks of sensors connected to the Company's Cloud. The firm is involved, either alone or in partnership with external partners, in devising and developing healthcare services at national, regional and local level.
Officers
The intrinsic value of one TIT stock under the Base Case scenario is 1.3083 EUR.
Compared to the current market price of 0.2193 EUR, Telecom Italia SpA is Undervalued by 83%.