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This Firm Disagrees With The Consensus Bull Case On Telecom Italia

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Credit Suisse's Justin Funnell maintained a Neutral rating for Telecom Italia SpA (ADR) (NYSE: TI), with a price target of €1.20. Contrary to the consensus view, a change of control at the company would likely not transform its business, the analyst said, while adding that there were no "easy fixes on costs."

"We think the 3-Wind deal probably gets approved but wonder if things can get any better for TIM mobile anyway, after a doubling of front-book prices," analyst Justin Funnell wrote.

Driven by rising data usage and increased availability of high speed broadband, growth in the Italian fixed broadband market would have a positive effect on Telecom Italia.

A recovery in the broadband market to match the European norms of +3-4pp penetration growth per annum is likely to result in a slowing down of Telecom Italia's line loss, helping the company's EBITDA to stabilize on a sustainable basis, Funnel mentioned.

Telecom Italia's line loss is high in comparison to its peers, largely due to continued cord cutting driven by mobile substitution of voice lines and competition from OLOs. Telecom Italia's shares had rallied with Vivendi increasing its stake in the company to 23.8 percent. Funnell recommended investors to wait for a better entry point.

Latest Ratings for TI

DateFirmActionFromTo
Nov 2018DowngradesBuyNeutral
Nov 2018DowngradesOverweightEqual-Weight
Oct 2018DowngradesEqual-WeightUnderweight

View More Analyst Ratings for TI
View the Latest Analyst Ratings

Posted-In: Credit Suisse Justin FunnellAnalyst Color Reiteration Analyst Ratings

 

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