Telecom Italia S.p.A. (BIT:TIT): When Will It Breakeven?

We feel now is a pretty good time to analyse Telecom Italia S.p.A.'s (BIT:TIT) business as it appears the company may be on the cusp of a considerable accomplishment. Telecom Italia S.p.A., together with its subsidiaries, engages in the provision of fixed and mobile telecommunications services in Italy and internationally. The €5.1b market-cap company posted a loss in its most recent financial year of €1.4b and a latest trailing-twelve-month loss of €1.1b shrinking the gap between loss and breakeven. The most pressing concern for investors is Telecom Italia's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Telecom Italia

Consensus from 6 of the Italian Telecom analysts is that Telecom Italia is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of €232m in 2026. The company is therefore projected to breakeven around 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 98% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Telecom Italia given that this is a high-level summary, but, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Telecom Italia currently has a debt-to-equity ratio of 143%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Telecom Italia which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Telecom Italia, take a look at Telecom Italia's company page on Simply Wall St. We've also put together a list of key aspects you should further research:

1. Valuation: What is Telecom Italia worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Telecom Italia is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Telecom Italia’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.