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Telecom Italia SpA ADR TIIAY

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Italy’s Mobile Market Still Challenging During Second-Quarter 2021; Maintaining Fair Value Estimate

Javier Correonero Equity Analyst

Analyst Note

| Javier Correonero |

Narrow-moat Telecom Italia closed the second quarter of the year with revenue of EUR 3.82 billion and EBITDA of EUR 1.64 billion, up 1% and down 5.8%, respectively, year over year. Service revenue in Italy declined 1.7%, mainly driven by weakness on the mobile business, where revenue declined 7.1% year over year compared with an 11.3% decline one quarter ago, with 103,000 mobile customer losses compared with 74,000 in the first quarter. We therefore expect Iliad, which is disrupting the lower end of the Italian market, to be the main beneficiary and to have kept winning market share as Vodafone Italia also recently reported a loss of 63,000 customers during the second quarter with revenue going down 9.3% organically. Notwithstanding, mobile average-revenue-per-user (ARPU) for Telecom Italia grew from EUR 11.4 to EUR 11.7, we believe supported by higher-end consumers. We are maintaining our EUR 0.62 fair value estimate.

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Company Profile

Business Description

Telecom Italia is the incumbent telephone operator in Italy with 9 million retail and 8 million wholesale fixed-line subscribers, 31 million wireless customers, and close to 8 million retail broadband subscribers. Telecom Italia, the largest fix network owner in Italy, has been rolling out fiber to the home in order to better compete in the broadband market. It also has 55 million wireless subscribers in Brazil (24% market share) and has started building a broadband network in the country.

Corso D'Italia, 41
Rome, 00198, Italy
T +39 636881
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 52,404


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