TIM Group (1K) | Hold (vs Buy) | A downgrade on valuation grounds

研报英文原文证据摘录

TIM Group (1K) | Hold (vs Buy) | A downgrade on valuation grounds

rsion, the capital

reduction, the creation of EUR5.2bn of distributable reserves and the reverse stock split.

Liquidity and marketability have improved; TIT can maybe still gain from joining some new

equity indexes.

The strategy execution remains solid, as S&P has recently highlighted with the credit rating

upgrade. The domestic market is getting more rational, and Brazil is delivering solid results. But

Q1 came in line with guidance and expectation.

We think that by the time of the business update, the RAN sharing with Fastweb may not be

approved, so it is unlikely that TIM could provide more granularity on expected synergies and

financial benefits. In any case, we have already factored EUR700m of NPV creation from the RAN

sharing in our SOP.

Regarding the tower dispute, we also do not expect any news in the business update. While TIM

argues the migration path ensures a more economic and sustainable mobile network model, we

think there are still uncertainties derived from the capex requirement to build new towers, plus

potential service disruption or loss of quality.

We also do not expect any update or higher chances of cashing in the two pending earn-outs

(we also add some chances in our SOP).

Consolidation requires much market repair to justify upside.

There is still upside for TIM (and for the combined Poste-TIM) from in-market consolidation. In

our view, the sale by CK Hutchison of its 49% stake in the UK may be a signal that the Chinese

group is ready to exit Europe and may now seek a deal in Italy. Both Iliad and Wind Tre may

team up to avoid being marginalised by TIM-Poste and TIM-VOD/Fastweb RAN sharing.

The final spectrum auction setup (to be decided at the end of this year) may have a decisive