A week of passion for Tim. The week of the presentation of new strategic plan 2024-2026which takes into account the network spin-off (NetCo) and the end of the vertically integrated telecommunications model, has turned into a nightmare for management, which met again on Sunday to “analyse” what happened on Thursday 7 March, the day of the presentation of the Plan to the financial community, when the the stock recorded a -23% on the stock market. An emotional reaction? Or a sign of disapproval?
The new plan without Netco
Thursday 7 March, Tim’s management led by the CEO Pietro Labriolapresented to the market the 2024-2026 “Free to Run” Business Plan, which takes into account the spin-off and sale of the fixed network (NetCo) to KKR and other institutional investors and which will allow Tim to move on the market with fewer financial constraints and regulators and with greater agility and competitiveness.
THE targets of the Plan they see revenues growing by an average of 3% per year over the plan period and a EBITDA After Lease workforce increasing by an average of 8% per year, but above all a reduction in the Group’s indebtedness is expected, with a ratio Debt/EBITDA After Lease decreasing to 1.6-1.74 times compared to the pro-forma 3.85 times in 2023. But the value should already be equal to or lower than 2 times in 2024, a transition year because the closing of the sale of the Network will take place mid-year.
“The problem of this group was the debt of 20 billion, which affected not only the financial performance, but also the industrial opportunities of the group,” Labriola explained to the analysts, adding “with the sale of NetCo we will be able to be a company again able to live well on the market, restoring total financial flexibility”.
The stock market crash that surprised management
On the same day that management presented the Plan to the financial community, Tim shares recorded a vertical fall, which however was not seen on bonds, where Bonds held up better. It was CEO Pietro Labriola who noticed the discrepancy at the end of a dramatic day on the stock exchange.
Tim stock closed with a drop of 23.79% at 0.2118 euros per share, and then recovered something the following day. The exchanges on Thursday 7 March were very noteworthy, for over 512 million euros, equal to almost 12% of the capital.
The Board of Directors on Sunday and the confirmation of the guidance
The Tim’s Board of Directors has come together again SundayWith the purpose of “analyze” what happened on the stock market last Thursday, and has again confirmed the guidance on debt.
In particular, the Board of Directors indicated that the pro forma net debt net of the estimated deleverage for the NetCo operation, equal to approximately 6.1 billion euros as of 31 December 2023, is expected at the end of 2024 to be approximately 7.5 billion euros. As for the 2025-2026 cash flows, TIM specifies that in 2025 the Net cash flow is expected to be around zero and in 2026 around 0.5 billion euros. These levels of Net cash flow, if normalised, lead to a value of around 0.4 billion euros in 2025 and 0.8 billion euros in 2026.
Having confirmed the 2024-2026 guidance illustrated to the market, the Board of Directors specified that “any upside to the guidance could derive from the earn-outs connected to the Netco operation and the possible sale of Sparkle, the process of which is still underway”.
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