see attached chart
Event Driven Telecom: Telecom Italia
BUY
TIT IM: Eur 0.8215
August 20, 2013
TIT seems to be heading into a bidding war with TEF over GVT as the latest press reports suggest that TIT is preparing a bid valuing GVT at €7bn. Under this rumored bid, VIV would get a 20% stake in TIT and a stake in the merged Brazilian entity (comprised of Tim Participacoes and GVT). This is part of a broader alliance, which TIT would plan to create with VIV. Previously, Telefonica offered €6.7bn comprised of BRL11.96BN cash and a 12% stake in the merged Brazilian subsidiary of TEF, Telefonica Brasil. Separately, TEF also offered to sell 8.3% stake it owns in TIT to VIV, for which VIV could settle by cash. The latest development is that Telefonica is planning to offer a content alliance to VIV. Any one of these deals is likely to require the approval of Brazilian regulators such as Anatel and CADE before it could become effective. From VIV’s point of view, both deal offer the optionality to participate in the Brazilian consolidation story while benefiting from potential side deals that allow VIV to leverage its content assets. The drawback in the TIT’s offer is obviously the lack of cash in the deal terms. However, both offers have common drawbacks. By retaining a stake in the merged Brazilian entity (under both offers), VIV may also have to participate (e.g. capital raise) in any future capex investments by these entities. Particularly, TIM plans to invest $1.82bn annually over the next three years and participate in the upcoming 4G spectrum auction. In addition, these offers will add additional listed companies to VIV’s holding structure, potentially increasing the discount to the VIV’s NAV. Hence, despite the bidding war, we are uninterested (as mentioned in our Aug 5 report) by the VIV’s discount. We estimate that VIV’s discount is below 10% under both TIT and TEF offers.
On the other hand, TIT’s restructuring story seems to be improving. The asset sales plans are progressing at a steady pace with expectations that TIT could sell a majority of its towers. The Argentine business sale is still subject to regulatory approvals but on its track for near term completion. The corporate governance issues seem to be subsiding with the recent dissolution of the Telco holding and the appointment of an independent board. Furthermore, Telefonica is under pressure from the Brazilian regulator to either sell its TIT stake or exit from VIVO. On a SOTP basis (assuming no GVT deal), we value TIT around €23bn (equity value), implying a 51% upside. On a relative basis, TIT looks undervalued both on EV/Sales vs OP Margin screen and EV/Asset vs ROA screen. Although the current high debt situation, operational uncertainties in Brazil and Italy are underpinning this wide discount to our estimates, we expect this discount to narrow going forward. Hence, we would buy TIT.
FULL REPORT ATTACHED
* Nuclear reactors' restart to be delayed or may never happen, says Belgian TV
Yesterday night, the Belgian TV channel VRT reported that several “reliable sources”
indicated that tests performed on the Doel 3 and Tihange 2 nuclear reactors (15TWh
output pa, c2GW capacity) revealed thousands of “micro-fractures” in the vessels.
According to the TV report, the reactors may not restart before spring 2015, at the
earliest, and may never restart at all.
* Discovery of hydrogen flakes not a novelty; that is why the plants were offline
The discovery of hydrogen flakes has been the reason to take these reactors offline;
ever since, about one hundred tests have been carried out. Only one test gave results
that were not in line with the initial expectations – a piece of steel with hydrogen flakes
undergoes 40y of irradiations concentrated in one month, and is then heated up /
cooled down, to simulate a critical situation. Given the timing of the results, and that
the government and the nuclear agency will have to analyse them, we currently assume
a re-start in Jan-2015. Although we wouldn't entirely dismiss it at this stage, the TV
report appears to be quite speculative.
* Still, risk-perception around reactors-restart is on the rise: 6-7% EPS risk
Doel 3 and Tihange 2 generate some €345m net income pa, after the payment of the
nuclear levy. Considering the closure of the reactors has triggered a surge in domestic
power prices, the ultimate net impact would be <€200m, or c6-7% of adjusted
earnings. Assuming the permanent closure of Doel 3 and Tihange 2, our 2015E
adjusted EPS of €1.30 would drop to €1.22 (implied 15.6x PE).
* Valuation: at premium but defendable due to better growth / business mix
Thanks to its global positioning, diversified business mix and re-leveraging potential, we
expect GDF Suez to deliver c4% bottom line annual growth through to 2020. This,
coupled with a >5% DY should keep supporting the stock. We set our PT based on a
target DY of 4.75% (sector average), which implies a PT of €21ps.
France President Hollande: Confirms planning new measures to support housing construction; reiterates euro is still overvalued - French Press - Announces tax reform, welfare benefits to help lower-income households
German govt to maintain its 17% stake until at least 2016 - German press
**Note: In Aug of 2013, Germany's government said that it would not sell its 17% stake on the market and that it would look for investors.
- In July of 2013, the German Finance Ministry was said to have spoken with UBS regarding the government's stake in Commerzbank. There had also been speculation that Santander could be interested in the stake.
- In 2009, the German government purchased a 25% stake in the firm.
Russia's largest oil company Rosneft has applied for government assistance for the repayment of debt recently. Two Swiss commodity giant appears to provide a billion hole, assumed an analyst - and supports his thesis with amazing observations.
Hamburg - There was a fairly comprehensive emergency, the Russia's largest oil company Rosneft last Thursday sent to the Russian government. Under the pressure of Western sanctions Rosneft sought Show chartgovernment help, such as the Russian newspaper "Vedomosti" reported. The company had requested inter alia to support the eradication of the equivalent of 31 billion euros of debt, it said in the report - the Deputy Prime Minister Arkady Dvorkovich confirmed indirectly. "The ministries will decide in the next two weeks, otherwise - no comment".
According to Russian media sees Russian Prime Minister Dmitry Medvedev such assistance rather skeptical. Although Rosneft drilling despite the sanctions blad together with ExxonMobil in the Arctic for oil. But the economic situation of the largest publicly traded oil producer in the world has deteriorated dramatically in recent weeks, the oil analyst Philip publisher stated now the business news site Quartz .
According to publisher Rosneft missing up to 10 billion dollars for the repayment of loans in the coming year. According to his analysis put two Swiss commodities trader Rosneft currently under severe pressure. The story behind it is slightly convoluted - but publisher theses are valid as Quartz reported .
Aftermath of a 55-billion-dollar deal
In autumn 2012, Rosneft bought for $ 55 billion TNK-BP, a joint venture between the British oil company BP and four Russian oligarchs. The deal, which was finalized in March 2013, Rosneft was the world's largest publicly traded oil producer. But for that the Russians had on the capital market to borrow $ 40 billion. Among the biggest donors were the two Swiss commodities trading giant Vitol and Glencore, which the Russians $ 10 billion cash loan - as an advance payment for the delivery of approximately 280,000 barrels of oil per day over the next five years.
Too bad that the USA and Europe on July 14 this year imposed economic sanctions that Rosneft also met among others. Since that time, loans are forbidden to run longer than 90 days. Rosneft CEO Viktor Sechin said at the time that the sanctions his company would not make as Rosneft have $ 20 billion on the high edge. Nevertheless Sechin requested only one month later, the Kremlin for help in repayment of debt.
Publisher has a well-founded explanation for why the situation in just four weeks could change so strongly. He watched the short selling of oil futures on the Intercontinental Exchange (ICE) a little over a year ago when the deal between Rosneft and TNK-BP has been completed. This subject then within a few weeks to forty percent, as Vitol and Glencore apparently about absicherten their loan to Rosneft, according to publisher. Since the economic sanctions the number of available short sale contracts, however, fell by nearly 30 percent - and are now almost back to that level that was common before the Rosneft's acquisition by BP-TNK.
Part 2: Sharp decline in oil futures contracts as further evidence
Publishers believed, therefore, that Vitol and Glencore to exercise their rights in order to unwind the credit - and reclaim their money by the end of next year.
This also fits that the number of available on the ICE oil futures for April and December 2015 has declined sharply, according to publisher. Vitol and Glencore appears to solve their short positions, as they have no more need for a secure its lending business. Such orders of magnitude in loss on interest in oil futures were in any case "very unusual," says publisher.
Although the loans between Vitol, Glencore and Rosneft are not directly affected by the sanctions, since the 90-day rule applies only to future loans. But publishers said that Vitol and Glencore closely monitor the current situation - and retire with good reason from the store with Rosneft. For further sanctions against Russia could cause they would not get their contract level compatible oil.
Chinese likely to play emergency funder
This would also explain the sudden decline in available oil futures contracts. Because the worst thing that could happen to the two Swiss commodity giant, had a high number of short sales for oil futures contracts on the books when the Rosneft oil can not be delivered. Then Vitol and Glencore might have to buy expensive oil in the world market in order to meet their futures can.
Vitol would not comment Quartz opposite to shops, Glencore did not answer an e-mail request. Also, investors do not trust the current complex situation in Rosneft. Since mid-July, the price of Rosneft's share is Show chart5.2 euro dropped to 4.7 euros.
In order to solve his money problem with the Swiss, Rosneft is likely now probably turn to the Chinese. This year, Rosneft has with the China National Petroleum Corporation signed a deal , which includes around 63 billion dollars in money-advance payments against oil supplies by 2018. It is not yet clear how much of this sum to arrive by the end of next year with Rosneft. But it is likely that Sechin speaks with the Chinese soon large and rapidly paid the first cash installments.
{HEIA NA Equity CARLB DC Equity GRT D<GO>}
Google Translation :{http://bit.ly/1kTPmsd} Le Figaro in French :{http://bit.ly/YxWRez}
The new boss is trying to keep one foot in the telecom media to distribute its content.
After selling a majority stake in SFR Numericable, Vivendi could he decide to remain a major player in telecoms? Before the summer, the question would not even arise. But in early August, proposing to Vivendi to buy back its Brazilian subsidiary, the telecom operator GVT, Telefonica has opened Pandora's box.Spanish then offers € 6.7 billion to Vivendi GVT , 12% of the capital Telefonica Brasil and offers him the opportunity to take 8.3% stake in Telecom Italia (Telefonica owns nearly 15%). For its part, the Italian, who is also present in Brazil via Tim Brasil, have also made contact with Vivendi. Telecom Italiacould put € 7 billion on the table for GVT and offer up to 20% of its capital French group. The supervisory board of the Italian operator should meet early next week to refine its proposal. Time is running out to him, the board of Vivendi headquarters on the 28th On this occasion, Telefonica's offer will be considered. And, if applicable, of Telecom Italia.
With these maneuvers, it is the doctrine of the separation of media and telecoms at Vivendi is shaken. The desired strategy by Jean-Rene Fourtou, who gave up his seat as chairman of the supervisory board to Vincent Bolloré June 24, seems questionable. The outgoing president held out telecom deleverage the group and focus on the media. Under the leadership of his successor, a new approach might draw. "Vincent Bolloré was not in favor of the split between the telecoms and media activities, "says a connoisseur of the file. SFR for repurchase by Numericable is not yet completed, it is even said that the Breton businessman could "not be satisfied with a 20% stake in the new entity, SFR-Numericable." "Everything will depend on the ability of Numericable to finance the acquisition of SFR. With a load of debt that will amount to EUR 100 million per month in 2015, the group may need a second strong shareholder, "says an expert.
Multiple challenges
Why such a shift? The underlying idea is to have access to companies able to distribute media content. So it would be for Vivendi to build a network with significant stakes in telecom operators. A stake in Telecom Italia would fit into this logic. This is what seems to have integrated Telefonica: Spanish operator is preparing to propose to Vivendi agreement for sharing content for television, which would be a way to improve its offer without spending more cash. "Telefonica could distribute more premium content groupCanal + (a subsidiary of Vivendi, Ed). This type of partnership allows both parties to increase their income, "a connoisseur decrypts the file. This analysis does not, however, convinces everyone. "A group of media does not have a stake in an operator to see its distributed content, if they are quality," slice a competitor telecoms operator.
For now, if the game is open between Telefonica and Telecom Italia, the Italian "tropism" of Vincent Bolloré helping to fuel rumors of a possible interest of Vivendi Telecom Italia. The French business leader can claim to know the transalpine market.From 2010 to 2013 he was vice-president of the first insurance group in the country, Generali, and he still holds 8% of Mediobanca. Italian bank has long had interests in Telefonica and Telecom Italia ...
Uber May Face Third German Setback as Munich Weighs Joining Ban
2014-08-20 06:28:51.467 GMT
By Karin Matussek
Aug. 20 (Bloomberg) -- Uber Technologies Inc., maker of the
ride-hailing application that’s fighting bans by two German
cities, may face a third setback in the country.
The Munich administration agrees with Berlin and Hamburg
that those offering rides via Uber’s smartphone app need a cab
driver’s license because they are doing so to earn a profit,
according to Daniela Schlegel, a Munich spokeswoman.
“We’re currently focusing on the drivers whom we’ll
control and fine if they transport people without a license,”
Schlegel said in an interview. “But we’re also considering
whether to issue a ban later in the process.”
Governments and regulators in cities around the world are
restricting Uber’s business on the grounds it poses safety risks
and unfairly competes with licensed taxi services. Cabbies with
licenses that can cost 200,000 euros ($266,000) apiece have
staged protests in European cities including London, Madrid,
Paris and Berlin.
“Munich is a progressive, modern city and we want to play
our part in bringing innovative transport solutions to the city
and beyond that can help improve social mobility, support the
environment and provide a safe, cost effective alternative to
traditional travel,” Fabien Nestmann, a company representative,
said in a statement to Bloomberg News.
Investors including Goldman Sachs Group Inc. and Google
Ventures are pouring cash into the burgeoning market for apps
that let users order taxis and cars or share rides using their
smartphones. San Francisco-based Uber, which is active in more
than 40 countries, raised $1.2 billion in June, giving it a
value of $17 billion.
Enforcement Suspended
Hamburg traffic authorities told Uber last month to stop
operating in the port city, saying that transporting people
without a license is against the law. Berlin followed last week.
Both cities are waiting to enforce their decisions until courts
rule on the matter following lawsuits by Uber to block the
measures.
In Germany, Uber also operates in Frankfurt and Dusseldorf
and plans to extend its services to Cologne and Stuttgart.
Frankfurt’s city government is reviewing the legal issues the
app raises “from all sides,” a spokesman said.
For Related News and Information:
Uber Taxi Service App Banned by City of Berlin
NSN NA9ATB6JTSEJ<GO>
Uber ’Dishonest’ in Innovation Claim, Hamburg Senator Tells WiWo
NSN N9ZOWU6K50Y0<GO>
Uber Demonstrations Snarl Traffic From London to Berlin: Cars
NSN N70Q326K50XU<GO>
--With assistance from Stefan Nicola in Berlin.
To contact the reporter on this story:
Karin Matussek in Berlin at +49-30-70010-6218 or
kmatussek@bloomberg.net
To contact the editors responsible for this story:
Anthony Aarons at +44-20-7673-2227 or
aaarons@bloomberg.net
Chad Thomas, Kenneth Wong
2014-08-20 06:28:51.467 GMT
By Karin Matussek
Aug. 20 (Bloomberg) -- Uber Technologies Inc., maker of the
ride-hailing application that’s fighting bans by two German
cities, may face a third setback in the country.
The Munich administration agrees with Berlin and Hamburg
that those offering rides via Uber’s smartphone app need a cab
driver’s license because they are doing so to earn a profit,
according to Daniela Schlegel, a Munich spokeswoman.
“We’re currently focusing on the drivers whom we’ll
control and fine if they transport people without a license,”
Schlegel said in an interview. “But we’re also considering
whether to issue a ban later in the process.”
Governments and regulators in cities around the world are
restricting Uber’s business on the grounds it poses safety risks
and unfairly competes with licensed taxi services. Cabbies with
licenses that can cost 200,000 euros ($266,000) apiece have
staged protests in European cities including London, Madrid,
Paris and Berlin.
“Munich is a progressive, modern city and we want to play
our part in bringing innovative transport solutions to the city
and beyond that can help improve social mobility, support the
environment and provide a safe, cost effective alternative to
traditional travel,” Fabien Nestmann, a company representative,
said in a statement to Bloomberg News.
Investors including Goldman Sachs Group Inc. and Google
Ventures are pouring cash into the burgeoning market for apps
that let users order taxis and cars or share rides using their
smartphones. San Francisco-based Uber, which is active in more
than 40 countries, raised $1.2 billion in June, giving it a
value of $17 billion.
Enforcement Suspended
Hamburg traffic authorities told Uber last month to stop
operating in the port city, saying that transporting people
without a license is against the law. Berlin followed last week.
Both cities are waiting to enforce their decisions until courts
rule on the matter following lawsuits by Uber to block the
measures.
In Germany, Uber also operates in Frankfurt and Dusseldorf
and plans to extend its services to Cologne and Stuttgart.
Frankfurt’s city government is reviewing the legal issues the
app raises “from all sides,” a spokesman said.
For Related News and Information:
Uber Taxi Service App Banned by City of Berlin
NSN NA9ATB6JTSEJ<GO>
Uber ’Dishonest’ in Innovation Claim, Hamburg Senator Tells WiWo
NSN N9ZOWU6K50Y0<GO>
Uber Demonstrations Snarl Traffic From London to Berlin: Cars
NSN N70Q326K50XU<GO>
--With assistance from Stefan Nicola in Berlin.
To contact the reporter on this story:
Karin Matussek in Berlin at +49-30-70010-6218 or
kmatussek@bloomberg.net
To contact the editors responsible for this story:
Anthony Aarons at +44-20-7673-2227 or
aaarons@bloomberg.net
Chad Thomas, Kenneth Wong