UPDATE: Credit Suisse Reinstates Telecom Italia on Mobile Pricing

In a report published Tuesday, Credit Suisse analyst Justin Funnell reinstated coverage on Telecom Italia TI with a Neutral rating.

According to the report, “Mobile pricing in Italy has moved up from the very low levels of summer, raising expectations of an inflection in the performance of the domestic operations after several years of deteriorating trends. However, pressure on the wireline business is still growing in our view, with cord cutting slowly increasing as consumers gradually react to the mobile price
cuts of the last 18 months. Mobile pricing of eu10-15/m for a 200-550 minute voice bundle (with SMS and 1-2GB of data) remains around half the estimated ARPU of TI's 6.5m voice-only lines.”

Some key points of the report included:

- "TI recognises the challenge and is adjusting its commercial offer, cutting 2play prices for new 2play customers.”
- "The logic for mobile consolidation in Brazil is strong, in our view, but the complexity of a potential deal suggests a lengthy timetable and uncertain outcome.”
- "15.2% equity FCF valuation for 2014E, a discount to the sector's range of 6% to 11%.”

Telecom Italia closed Monday at $9.53.