Poste Italiane SpA: Solid operating trends and further upside potential from TIM – Reiterate Buy

Research evidence excerpt

Poste Italiane SpA: Solid operating trends and further upside potential from TIM – Reiterate Buy

expects TIM to act as a catalyst for the digitalisation of the Public Administration and

Italian businesses.

Based on our analysis and assuming unchanged terms of the tender offer, the

combination of the two companies could lead to high-single-digit to low-

double-digit EPS accretion in aworst-case scenario that no synergies are achieved

from the combination.

Figure 8: Poste Group would become a financial conglomerate with the platform providing a wide range of financials,

insurance, logistic and telecommunication services

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Source: UBS, companies information

Poste is expecting at least €700m synergies before taxes of which:

€500m gross cost synergies (3% of the combined cost base excl. D&A or 5% of

the target cost base excl. D&A) to be achieved by the second year post completion

of the offer. Cost synergies are expected to mainly come from the rationalization

and improvement of the cost structure of the group and in particular (i) via

optimization of the operating and HR costs, (ii) integration of the IT platform, call

centers and customers operations, (iii) real estate footprint rationalization, (iv)

achievement of economies of scale in advertising, procurement insourcing of

suppliers and (v) funding cost optimization leveraging on Poste Italiane investment

grade rating.

€200m gross revenues synergies by the third year (0.7% of the combined

revenues base or 1.3% of the target cost base). The revenues synergies are

primarily expected to come the cross-selling and upselling opportunities through