Telecom Italia sees return to core profit growth as home business improves

Telecom Italia sees return to core profit growth as home business improves
Telecom Italia’s logo is seen at the headquarters in Rozzano neighbourhood of Milan, Italy, on May 25, 2016. (Photo: REUTERS/Stefano Rellandini)

MILAN : Telecom Italia (TIM) said on Tuesday it sees core profit returning to grow this year by a “mid single-digit” percentage thanks to signs of improvement in its battered home business which cushioned a decline of income in 2022.

In setting new financial targets, TIM confirmed its turnaround strategy, centred on a reorganisation into several units in order to sell assets and cut its debt pile.

“Thanks to the better-than-expected results recorded in 2022, the plan envisages further acceleration at group level,” it said in a statement, forecasting “low single digit” growth in 2023 in group revenues from services.

Its domestic business is back to growth in 2023 after six years, TIM said.

Italy’s biggest phone group reported a 10.6 per cent drop in earnings before interest, tax, depreciation and amortisation (EBITDA) including lease costs to 5 billion euros for 2022.

That compares with a “low-teens” decrease targeted by TIM and was in line with an average forecast in a company-provided consensus.

Group service revenue rose 1.3 per cent to 14.6 billion euros, exceeding analyst expectations for a rise of 0.6 per cent and the company’s target for a “low single digit decrease”.

Net financial debt stood at 25.4 billion euros as of Dec. 31, up by 3.2 billion euros from the year before.

Hit by a steady erosion of earnings and sales over the past decade amid stiff price competition on its home turf, TIM said its domestic service revenues, which contribute the bulk of overall group sales, fell by 3.4 per cent to 10.8 billion euros in 2022.

TIM, led by CEO Pietro Labriola, is facing an uncertain future as leading shareholders and the government try to reshape the company.

U.S. investment firm KKR, already a minority investor in TIM’s landline grid, this month offered to buy a controlling stake in a unit comprising TIM’s fixed network and submarine cable unit Sparkle.

TIM’s board meets on Feb. 24 to assess KKR’s non-binding bid.

“TIM remains open to assessing any alternatives that may arise in the meantime and will continue talking to its stakeholders,” it said.

TIM’s second biggest investor, state lender CDP, is also studying an offer together with Australian infrastructure fund Macquarie for an asset over which the government has special powers to block unwanted interest.


Source: Reuters