Intrinsic value of Telecom Italia ADR - TI

Previous Close

$7.58

  Intrinsic Value

$17.37

stock screener

  Rating & Target

str. buy

+129%

Previous close

$7.58

 
Intrinsic value

$17.37

 
Up/down potential

+129%

 
Rating

str. buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of TI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Telecom Italia ADR (TI) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -3.52
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  20,079
  20,481
  20,952
  21,490
  22,095
  22,764
  23,499
  24,300
  25,166
  26,099
  27,101
  28,173
  29,316
  30,533
  31,827
  33,200
  34,655
  36,195
  37,824
  39,545
  41,362
  43,279
  45,301
  47,432
  49,677
  52,042
  54,532
  57,153
  59,911
  62,813
  65,865
Variable operating expenses, $m
 
  17,346
  17,673
  18,047
  18,467
  18,932
  19,442
  19,998
  20,599
  21,247
  21,943
  19,562
  20,356
  21,201
  22,099
  23,052
  24,063
  25,132
  26,263
  27,458
  28,719
  30,051
  31,455
  32,934
  34,494
  36,136
  37,865
  39,684
  41,599
  43,614
  45,733
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  16,151
  17,346
  17,673
  18,047
  18,467
  18,932
  19,442
  19,998
  20,599
  21,247
  21,943
  19,562
  20,356
  21,201
  22,099
  23,052
  24,063
  25,132
  26,263
  27,458
  28,719
  30,051
  31,455
  32,934
  34,494
  36,136
  37,865
  39,684
  41,599
  43,614
  45,733
Operating income, $m
  3,928
  3,135
  3,279
  3,443
  3,628
  3,833
  4,057
  4,302
  4,567
  4,852
  5,158
  8,611
  8,960
  9,333
  9,728
  10,148
  10,592
  11,063
  11,561
  12,087
  12,642
  13,228
  13,846
  14,498
  15,184
  15,907
  16,668
  17,469
  18,312
  19,199
  20,132
EBITDA, $m
  8,457
  8,247
  8,437
  8,654
  8,897
  9,167
  9,463
  9,785
  10,134
  10,510
  10,913
  11,344
  11,805
  12,295
  12,816
  13,369
  13,955
  14,575
  15,231
  15,924
  16,655
  17,427
  18,241
  19,100
  20,004
  20,956
  21,959
  23,014
  24,125
  25,293
  26,522
Interest expense (income), $m
  2,434
  2,081
  2,143
  2,220
  2,309
  2,408
  2,518
  2,638
  2,769
  2,911
  3,064
  3,229
  3,404
  3,592
  3,791
  4,004
  4,229
  4,467
  4,720
  4,987
  5,269
  5,567
  5,881
  6,213
  6,562
  6,930
  7,318
  7,726
  8,156
  8,608
  9,084
Earnings before tax, $m
  2,954
  1,053
  1,135
  1,223
  1,319
  1,425
  1,540
  1,664
  1,797
  1,941
  2,094
  5,382
  5,556
  5,741
  5,937
  6,144
  6,364
  6,596
  6,841
  7,100
  7,373
  7,661
  7,965
  8,285
  8,622
  8,976
  9,350
  9,743
  10,156
  10,590
  11,048
Tax expense, $m
  929
  284
  307
  330
  356
  385
  416
  449
  485
  524
  565
  1,453
  1,500
  1,550
  1,603
  1,659
  1,718
  1,781
  1,847
  1,917
  1,991
  2,069
  2,151
  2,237
  2,328
  2,424
  2,524
  2,631
  2,742
  2,859
  2,983
Net income, $m
  1,908
  769
  829
  893
  963
  1,040
  1,124
  1,215
  1,312
  1,417
  1,528
  3,929
  4,056
  4,191
  4,334
  4,485
  4,645
  4,815
  4,994
  5,183
  5,383
  5,593
  5,814
  6,048
  6,294
  6,553
  6,825
  7,112
  7,414
  7,731
  8,065

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  6,197
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  74,350
  69,426
  71,022
  72,848
  74,897
  77,168
  79,659
  82,372
  85,309
  88,472
  91,868
  95,500
  99,376
  103,503
  107,889
  112,543
  117,475
  122,695
  128,216
  134,050
  140,209
  146,708
  153,562
  160,786
  168,398
  176,415
  184,856
  193,740
  203,089
  212,925
  223,270
Adjusted assets (=assets-cash), $m
  68,153
  69,426
  71,022
  72,848
  74,897
  77,168
  79,659
  82,372
  85,309
  88,472
  91,868
  95,500
  99,376
  103,503
  107,889
  112,543
  117,475
  122,695
  128,216
  134,050
  140,209
  146,708
  153,562
  160,786
  168,398
  176,415
  184,856
  193,740
  203,089
  212,925
  223,270
Revenue / Adjusted assets
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
Average production assets, $m
  23,567
  24,044
  24,597
  25,229
  25,939
  26,725
  27,588
  28,528
  29,545
  30,641
  31,817
  33,075
  34,417
  35,846
  37,365
  38,977
  40,685
  42,493
  44,405
  46,425
  48,559
  50,809
  53,183
  55,685
  58,321
  61,098
  64,021
  67,098
  70,336
  73,742
  77,325
Working capital, $m
  -715
  -2,765
  -2,828
  -2,901
  -2,983
  -3,073
  -3,172
  -3,280
  -3,397
  -3,523
  -3,659
  -3,803
  -3,958
  -4,122
  -4,297
  -4,482
  -4,678
  -4,886
  -5,106
  -5,339
  -5,584
  -5,843
  -6,116
  -6,403
  -6,706
  -7,026
  -7,362
  -7,716
  -8,088
  -8,480
  -8,892
Total debt, $m
  34,360
  31,059
  32,179
  33,458
  34,895
  36,487
  38,233
  40,135
  42,193
  44,411
  46,791
  49,338
  52,055
  54,947
  58,022
  61,284
  64,742
  68,401
  72,272
  76,361
  80,678
  85,234
  90,039
  95,103
  100,439
  106,059
  111,976
  118,204
  124,758
  131,652
  138,904
Total liabilities, $m
  51,968
  48,667
  49,787
  51,066
  52,503
  54,095
  55,841
  57,743
  59,801
  62,019
  64,399
  66,946
  69,663
  72,555
  75,630
  78,892
  82,350
  86,009
  89,880
  93,969
  98,286
  102,842
  107,647
  112,711
  118,047
  123,667
  129,584
  135,812
  142,366
  149,260
  156,512
Total equity, $m
  22,382
  20,758
  21,236
  21,781
  22,394
  23,073
  23,818
  24,629
  25,507
  26,453
  27,468
  28,555
  29,713
  30,947
  32,259
  33,650
  35,125
  36,686
  38,337
  40,081
  41,922
  43,866
  45,915
  48,075
  50,351
  52,748
  55,272
  57,928
  60,724
  63,665
  66,758
Total liabilities and equity, $m
  74,350
  69,425
  71,023
  72,847
  74,897
  77,168
  79,659
  82,372
  85,308
  88,472
  91,867
  95,501
  99,376
  103,502
  107,889
  112,542
  117,475
  122,695
  128,217
  134,050
  140,208
  146,708
  153,562
  160,786
  168,398
  176,415
  184,856
  193,740
  203,090
  212,925
  223,270
Debt-to-equity ratio
  1.535
  1.500
  1.520
  1.540
  1.560
  1.580
  1.610
  1.630
  1.650
  1.680
  1.700
  1.730
  1.750
  1.780
  1.800
  1.820
  1.840
  1.860
  1.890
  1.910
  1.920
  1.940
  1.960
  1.980
  1.990
  2.010
  2.030
  2.040
  2.050
  2.070
  2.080
Adjusted equity ratio
  0.237
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,908
  769
  829
  893
  963
  1,040
  1,124
  1,215
  1,312
  1,417
  1,528
  3,929
  4,056
  4,191
  4,334
  4,485
  4,645
  4,815
  4,994
  5,183
  5,383
  5,593
  5,814
  6,048
  6,294
  6,553
  6,825
  7,112
  7,414
  7,731
  8,065
Depreciation, amort., depletion, $m
  4,529
  5,112
  5,158
  5,210
  5,269
  5,334
  5,405
  5,483
  5,567
  5,658
  5,755
  2,733
  2,844
  2,962
  3,088
  3,221
  3,362
  3,512
  3,670
  3,837
  4,013
  4,199
  4,395
  4,602
  4,820
  5,049
  5,291
  5,545
  5,813
  6,094
  6,391
Funds from operations, $m
  5,526
  5,881
  5,987
  6,103
  6,232
  6,374
  6,529
  6,698
  6,879
  7,074
  7,283
  6,663
  6,900
  7,153
  7,422
  7,706
  8,008
  8,327
  8,664
  9,020
  9,396
  9,792
  10,210
  10,650
  11,114
  11,602
  12,116
  12,657
  13,227
  13,825
  14,455
Change in working capital, $m
  -449
  -54
  -64
  -73
  -82
  -90
  -99
  -108
  -117
  -126
  -135
  -145
  -154
  -164
  -175
  -185
  -196
  -208
  -220
  -232
  -245
  -259
  -273
  -288
  -303
  -319
  -336
  -354
  -372
  -392
  -412
Cash from operations, $m
  5,975
  5,936
  6,051
  6,176
  6,314
  6,465
  6,629
  6,806
  6,996
  7,200
  7,418
  6,807
  7,055
  7,318
  7,596
  7,892
  8,204
  8,535
  8,884
  9,252
  9,641
  10,051
  10,483
  10,938
  11,417
  11,922
  12,453
  13,011
  13,599
  14,217
  14,867
Maintenance CAPEX, $m
  0
  -1,948
  -1,987
  -2,033
  -2,085
  -2,144
  -2,209
  -2,280
  -2,358
  -2,442
  -2,532
  -2,629
  -2,733
  -2,844
  -2,962
  -3,088
  -3,221
  -3,362
  -3,512
  -3,670
  -3,837
  -4,013
  -4,199
  -4,395
  -4,602
  -4,820
  -5,049
  -5,291
  -5,545
  -5,813
  -6,094
New CAPEX, $m
  -5,391
  -478
  -553
  -632
  -710
  -786
  -863
  -940
  -1,017
  -1,096
  -1,176
  -1,258
  -1,342
  -1,429
  -1,519
  -1,612
  -1,708
  -1,808
  -1,912
  -2,020
  -2,133
  -2,251
  -2,374
  -2,502
  -2,636
  -2,777
  -2,923
  -3,077
  -3,238
  -3,406
  -3,583
Cash from investing activities, $m
  -4,184
  -2,426
  -2,540
  -2,665
  -2,795
  -2,930
  -3,072
  -3,220
  -3,375
  -3,538
  -3,708
  -3,887
  -4,075
  -4,273
  -4,481
  -4,700
  -4,929
  -5,170
  -5,424
  -5,690
  -5,970
  -6,264
  -6,573
  -6,897
  -7,238
  -7,597
  -7,972
  -8,368
  -8,783
  -9,219
  -9,677
Free cash flow, $m
  1,791
  3,510
  3,510
  3,511
  3,519
  3,535
  3,557
  3,586
  3,621
  3,663
  3,710
  2,920
  2,979
  3,044
  3,115
  3,192
  3,275
  3,364
  3,460
  3,562
  3,671
  3,787
  3,910
  4,040
  4,179
  4,325
  4,480
  4,643
  4,816
  4,998
  5,190
Issuance/(repayment) of debt, $m
  -1,098
  895
  1,119
  1,280
  1,436
  1,592
  1,746
  1,902
  2,059
  2,218
  2,380
  2,546
  2,717
  2,893
  3,074
  3,262
  3,457
  3,660
  3,870
  4,089
  4,318
  4,556
  4,805
  5,064
  5,336
  5,620
  5,917
  6,228
  6,554
  6,895
  7,252
Issuance/(repurchase) of shares, $m
  4
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,093
  895
  1,119
  1,280
  1,436
  1,592
  1,746
  1,902
  2,059
  2,218
  2,380
  2,546
  2,717
  2,893
  3,074
  3,262
  3,457
  3,660
  3,870
  4,089
  4,318
  4,556
  4,805
  5,064
  5,336
  5,620
  5,917
  6,228
  6,554
  6,895
  7,252
Total cash flow (excl. dividends), $m
  1,017
  4,406
  4,630
  4,790
  4,955
  5,126
  5,303
  5,488
  5,680
  5,881
  6,090
  5,466
  5,696
  5,937
  6,189
  6,454
  6,732
  7,024
  7,330
  7,651
  7,989
  8,343
  8,714
  9,105
  9,515
  9,945
  10,397
  10,871
  11,370
  11,893
  12,442
Retained Cash Flow (-), $m
  -3,855
  -377
  -477
  -546
  -613
  -679
  -745
  -811
  -878
  -946
  -1,015
  -1,086
  -1,159
  -1,234
  -1,311
  -1,392
  -1,475
  -1,561
  -1,651
  -1,744
  -1,842
  -1,943
  -2,049
  -2,160
  -2,276
  -2,397
  -2,524
  -2,656
  -2,795
  -2,941
  -3,093
Prev. year cash balance distribution, $m
 
  2,001
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  6,029
  4,152
  4,245
  4,343
  4,447
  4,559
  4,677
  4,802
  4,935
  5,075
  4,380
  4,537
  4,703
  4,878
  5,063
  5,258
  5,463
  5,679
  5,907
  6,147
  6,399
  6,665
  6,945
  7,239
  7,548
  7,873
  8,215
  8,574
  8,952
  9,349
Discount rate, %
 
  7.70
  8.09
  8.49
  8.91
  9.36
  9.83
  10.32
  10.83
  11.38
  11.95
  12.54
  13.17
  13.83
  14.52
  15.25
  16.01
  16.81
  17.65
  18.53
  19.46
  20.43
  21.45
  22.52
  23.65
  24.83
  26.07
  27.38
  28.75
  30.18
  31.69
PV of cash for distribution, $m
 
  5,598
  3,554
  3,324
  3,086
  2,843
  2,598
  2,352
  2,109
  1,871
  1,642
  1,194
  1,028
  873
  731
  603
  489
  389
  305
  234
  176
  129
  93
  65
  44
  29
  19
  12
  7
  4
  2
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Telecom Italia S.p.A. (Telecom Italia) operates fixed voice and data infrastructure in Italy, and provides mobile network platforms. The Company focuses on various areas of digital services, including Enriched Communication, Trusted Digital Life, Business Life, Indoor Life, Mobile Open Life and Digital Entertainment. Its segments include Consumer, Business, National Wholesale and Other. It is engaged in developing various projects in areas, including Smart Green, Social Reading, Solutions for good schooling, Digital tourism 2.0, Smart Home, FriendTV and Big Data. Smart Green is the assessment of projects connected with the environment and potential partnerships with the local government offices for the monitoring of air in public offices and urban areas, using networks of sensors connected to the Company's Cloud. The Company is involved, either alone or in partnership with external partners, in devising and developing healthcare services at national, regional and local level.

FINANCIAL RATIOS  of  Telecom Italia ADR (TI)

Valuation Ratios
P/E Ratio 83.7
Price to Sales 8
Price to Book 7.1
Price to Tangible Book
Price to Cash Flow 26.7
Price to Free Cash Flow 273.4
Growth Rates
Sales Growth Rate -3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24%
Cap. Spend. - 3 Yr. Gr. Rate 3%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 134.8%
Total Debt to Equity 153.5%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.8%
Ret/ On Assets - 3 Yr. Avg. 3.9%
Return On Total Capital 3.4%
Ret/ On T. Cap. - 3 Yr. Avg. 2%
Return On Equity 9.3%
Return On Equity - 3 Yr. Avg. 5.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 85.9%
Gross Margin - 3 Yr. Avg. 83%
EBITDA Margin 49.4%
EBITDA Margin - 3 Yr. Avg. 50.9%
Operating Margin 19.6%
Oper. Margin - 3 Yr. Avg. 18.5%
Pre-Tax Margin 14.7%
Pre-Tax Margin - 3 Yr. Avg. 9.3%
Net Profit Margin 9.5%
Net Profit Margin - 3 Yr. Avg. 5.1%
Effective Tax Rate 31.4%
Eff/ Tax Rate - 3 Yr. Avg. 53.5%
Payout Ratio 12.6%

TI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TI stock intrinsic value calculation we used $20079 million for the last fiscal year's total revenue generated by Telecom Italia ADR. The default revenue input number comes from 2016 income statement of Telecom Italia ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TI stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.7%, whose default value for TI is calculated based on our internal credit rating of Telecom Italia ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Telecom Italia ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TI stock the variable cost ratio is equal to 85%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.9% for Telecom Italia ADR.

Corporate tax rate of 27% is the nominal tax rate for Telecom Italia ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TI are equal to 117.4%.

Life of production assets of 12.1 years is the average useful life of capital assets used in Telecom Italia ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TI is equal to -13.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $22382 million for Telecom Italia ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 2038.24 million for Telecom Italia ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Telecom Italia ADR at the current share price and the inputted number of shares is $15.4 billion.

RELATED COMPANIES Price Int.Val. Rating
TEF Telefonica ADR 9.72 7.84  hold
VOD Vodafone Group 28.36 17.62  sell
BT BT Group ADR 16.24 27.37  str.buy

COMPANY NEWS

▶ Charles Brandes Sells Telecom Italia and Invacare Corp   [Feb-06-18 04:25PM  GuruFocus.com]
▶ Telecom Italias Plan to Win Back Investor Confidence   [Dec-05-17 12:03PM  Bloomberg]
▶ [$$] Meet the "connected cow"   [Oct-26-17 12:00AM  Financial Times]
▶ IIROC Trade Resumption - TI   [Oct-19-17 09:17AM  PR Newswire]
▶ IIROC Trading Halt - TI   [08:15AM  PR Newswire]
▶ IIROC Trading Halt - TI   [08:15AM  CNW Group]
▶ [$$] Fund managers face shortage of European junk bonds   [Oct-18-17 09:13AM  Financial Times]
▶ This is How a French Billionaire Retires   [Oct-17-17 12:42AM  Bloomberg]
▶ Italy passes decree to ward off foreign takeovers   [Oct-13-17 02:30PM  Reuters]
▶ [$$] Telecom Italia: call waiting   [Sep-18-17 11:47AM  Financial Times]
▶ PRESS DIGEST- Financial Times - July 25   [Jul-24-17 07:55PM  Reuters]
▶ [$$] Business Watch   [07:46PM  The Wall Street Journal]
▶ PRESS DIGEST- Financial Times - July 24   [Jul-23-17 08:12PM  Reuters]
Financial statements of TI
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