Telecom Italia SpA (TIM) TIT.MI
TIM's operating turnaround is real, but Vivendi-controlled governance has tripled the peer discount; independent directors plus NetCo separation could double the stock to €1.6.
Thesis
Telecom Italia reversed years of decline in 2016, with organic EBITDA back to positive growth, fibre coverage leaping from 19% to 77% of the population, and Business Plan equity free cash flow guided to €4.5bn over 2018-20. Despite this, the TIM stub has underperformed peers by 62.6% since Vivendi nominees joined the board in December 2015, with the EV/EBITDA discount widening roughly three-fold to 22%. Elliott argues Vivendi, controlled by Groupe Bolloré with only 24% of TIM voting rights, extracts disproportionate value via related-party deals (Havas €91m mandate, Canal Plus JV, rumoured €600m Mediaset content deal) while Bolloré earns six times more per dollar of profit at Vivendi than at TIM. The fix is electing six independent directors at the 24 April 2018 AGM, then separating NetCo and Sparkle, converting savings shares and reinstating a dividend — a path Elliott values at €1.6 per share, roughly 100% upside.
SCQA
TIM is Italy's incumbent telco, running a best-in-Europe copper last-mile, rapidly expanding fibre (77% coverage) and guided to €4.5bn of equity free cash flow over 2018-20 as capex peaks and EBITDA inflects back to growth.
Vivendi, itself controlled by Bolloré with only 21% of Vivendi and 24% of TIM voting rights, runs TIM as a subsidiary — three CEOs in two years, conflicted directors, Havas/Canal Plus/Mediaset related-party deals — tripling the peer EV/EBITDA discount to 22%.
Shareholders should vote at the 24 April 2018 AGM to replace six Vivendi-nominated directors with six independent candidates, then separate NetCo and Sparkle, convert savings shares into ordinaries, deleverage and reinstate a dividend.
Full execution lifts the share price from €0.8 to €1.6 (roughly 100% upside): €0.1 from conversion, €0.3 from NetCo/Sparkle separation (~€7bn or 41% of market cap), €0.4 from deleverage and dividend reintroduction.
The three reasons
- 1
Vivendi controls TIM with just 24% voting stake, running it as a subsidiary while minorities suffer
- 2
TIM stub has underperformed peers by 62.6% since Vivendi joined the board in Dec-2015
- 3
Independent board plus NetCo separation could roughly double share price from €0.8 to €1.6
Primary demands
- Replace 6 Vivendi-nominated directors with 6 independent directors at the April 24th AGM
- Legal separation / deconsolidation of NetCo (access network) to unlock hidden value
- Stake sale in Sparkle to a strategic partner
- Further monetisation of INWIT towers stake
- Convert savings shares into ordinary shares to simplify capital structure
- Reinitiate a stable dividend to ordinary shareholders
- Retain support for current CEO Amos Genish and his March 2018 Business Plan
KPIs cited
Pattern membership
Precedents cited
- European mobile tower separations (INWIT, Cellnex)
- O2 Czech network separation
- TDC acquisition in Denmark
- BT OpenReach regulatory separation and analyst valuation
- Chorus NetCo spin-off from Spark New Zealand (2008)
Composition what's on the 37 slides
Slide gallery ·
Notes
First Elliott presentation on TIM, published alongside the transformingTIM.com letter campaign ahead of the 24 April 2018 AGM proxy fight against Vivendi. Elliott does not disclose its own TIM stake anywhere in the deck (press reports around this period put it at ~8.8%, but the document itself is silent — stake_disclosed_pct left null as instructed). Rhetorical highlights: (1) waterfall peer-gap chart on p5 showing the 62.6% stub underperformance; (2) the Bolloré-Vivendi-TIM cash-flow diagram on p15 illustrating the 6x/12x profit-shifting math; (3) p21 weaponises Vincent Bolloré's own FT quote ('We don't manage Telecom Italia and we will never manage it') against Vivendi; (4) p25 Elliott-vs-Vivendi check/cross scorecard as before/after framing; (5) p28 value-creation bridge €0.8 -> €1.6; (6) p33 SOTP reveal of €7bn hidden value. Clean SCQA structure with section title pages (01/02/03) and disciplined Elliott house-style layout (navy/red accents, ample white space).