Telecom Italia Earnings: Progress on Net Debt, but Short- and Medium-Term Guidance Remains Ambitious

No-moat Telecom Italia reported third-quarter results broadly in line with company-compiled consensus and there were no major surprises. Negative trends continued in the hypercompetitive Italian market, where organic mobile service revenue fell 0.3% year on year to EUR 1.42 billion. In Italy, competitor Illiad continues to take market share as it added 162,000 mobile customers while Telecom Italia lost 69,000 clients in the period. Management reiterated guidance for the year, implying fourth-quarter domestic EBITDA-after-leases growth of over 11% to reach the guided range of 9%-10%. We believe this is ambitious given growth for the first nine months was 8.3%. We maintain our EUR 0.25 fair value estimate and Very High Morningstar Uncertainty Rating.