Telecom Italia SpA (FRA:TQI) ROC % : 2.75% (As of Sep. 2023)

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What is Telecom Italia SpA ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Telecom Italia SpA's annualized return on capital (ROC %) for the quarter that ended in Sep. 2023 was 2.75%.

As of today (2024-05-17), Telecom Italia SpA's WACC % is 4.91%. Telecom Italia SpA's ROC % is 3.03% (calculated using TTM income statement data). Telecom Italia SpA earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Telecom Italia SpA ROC % Historical Data

The historical data trend for Telecom Italia SpA's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Telecom Italia SpA ROC % Chart

Telecom Italia SpA Annual Data

Trend

Dec13

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

ROC %

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8.57

4.59

21.69

3.76

8.25

Telecom Italia SpA Quarterly Data
	Dec18	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23
ROC %	Get a 7-Day Free Trial															-0.59	4.22	-1.57	-26.49	2.75

Telecom Italia SpA ROC % Calculation

Telecom Italia SpA's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2022 is calculated as:

	ROC % (A: Dec. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2021 )	+	Invested Capital (A: Dec. 2022 ))	/ count )
=	1136 * ( 1 - -351.36% )	/	( (64985	+	59332)	/ 2 )
=	5127.4496	/	62158.5
=	8.25 %

where

	Invested Capital		(A: Dec. 2021 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	69187	-	6496	-	( 9153	-	max(0, 16364	-	14070	+	9153	))
=	64985

	Invested Capital		(A: Dec. 2022 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	62027	-	6605	-	( 5001	-	max(0, 14142	-	10232	+	5001	))
=	59332

Telecom Italia SpA's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2023 is calculated as:

	ROC % (Q: Sep. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Sep. 2023 ))	/ count )
=	1188 * ( 1 - -38.41% )	/	( (61430	+	58036)	/ 2 )
=	1644.3108	/	59733
=	2.75 %

where

	Invested Capital		(Q: Jun. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	61329	-	6878	-	( 3863	-	max(0, 16542	-	9563	+	3863	))
=	61430

	Invested Capital		(Q: Sep. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	61567	-	7918	-	( 5113	-	max(0, 14862	-	10475	+	5113	))
=	58036

Note: The Operating Income data used here is four times the quarterly (Sep. 2023) data.

Telecom Italia SpA (FRA:TQI) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Telecom Italia SpA's WACC % is 4.91%. Telecom Italia SpA's ROC % is 3.03% (calculated using TTM income statement data). Telecom Italia SpA earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

Telecom Italia SpA ROC % Related Terms

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Telecom Italia SpA (FRA:TQI) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Telecommunication Services » Telecom Italia SpA (FRA:TQI) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

TIAOF:USA TIAJF:USA TIAIY:USA TIIAY:USA TITR:Italy TIT:Italy TITm:UK TITRm:UK 0H6I:UK 0GA3:UK TQI:Germany TIT:Austria

Address

Corso D'Italia, 41, Roma, ITA, 00198

Website

https://www.telecomitalia.com

Telecom Italia is the incumbent telecommunications operator in Italy with more than 30% market share in the Italian mobile market and 45% market share in broadband. In the mobile market, it competes with Vodafone, Wind Tre and Iliad. In November 2023 TIM sold its fixed network to KKR for EUR 18.8 billion, and will become a pure service provider. TIM also has a 20% wireless market share in Brazil and has started building a broadband network in the country, although its reach is very small compared with its competitors Telefonica and America Movil.

Telecom Italia SpA (FRA:TQI) Headlines

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