Telecom Italia Announces Results, Net Debt Increased

Revenue decreased by 5.3% to 2.92 billion euros, which was also in line with predictions in Italy, where the former phone monopoly generates the majority of its revenue. TIM predicted that its EBITDA-AL would decrease by a low-teens percentage rate for the year while reiterating its guidance.

Highlights

  • TIM announced that it was abandoning intentions to benefit from some tax provisions on goodwill in favour of using money to expand its company.
  • Deferred tax assets worth a net of 1.96 billion euros.
  • At the end of September, adjusted net debt was 25.5 billion euros, an increase of 15% from the previous year.

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Telecom Italia

Telecom Italia's (TIM) core profit decreased 11.2% in the third quarter compared to the same period a year earlier as declining domestic revenues exceeded cost savings and the contribution from TIM's Brazilian arm. The largest phone operator in Italy announced on Wednesday that its EBITDA-AL (earnings after interest, tax, depreciation, amortisation and lease) for the period of July to September came to 1.31 billion euros. This is lower than the 1.48 billion euros reported a year ago.

More Info on the Profit Declines

Revenue decreased by 5.3% to 2.92 billion euros, which was also in line with predictions in Italy, where the former phone monopoly generates the majority of its revenue. TIM predicted that its EBITDA-AL would decrease by a low-teens percentage rate for the year while reiterating its guidance.

TIM announced that it was abandoning intentions to benefit from some tax provisions on goodwill in favour of using money to expand its company. As a result, it deferred tax assets worth a net of 1.96 billion euros. At the end of September, adjusted net debt was 25.5 billion euros, an increase of 15% from the previous year.

Debt-ridden TIM is proposing a makeover focused on the division of its activities into various entities in an effort to reduce debt after years of being under pressure in its extremely competitive domestic market. A procedure to sell a small portion of TIM's enterprise services arm, which includes connectivity services for large corporate clients as well as cloud, Internet of Things, and cybersecurity businesses, is anticipated to be launched as part of these efforts.

Furthermore, TIM and state lender CDP have been in negotiations regarding a multi-billion dollar sale of TIM's coveted landline grid. CDP wants to control a leading national broadband network by integrating TIM's grid with that of its smaller subsidiary Open Fiber. The single network proposal, which was supported by Prime Minister Mario Draghi's former administration, is currently being reviewed by the right-wing government that was sworn in last month.

A CDP-backed takeover attempt for TIM as a whole, with participation from Vivendi and infrastructure funds, has been mentioned as a potential revision to the proposal to establish a unified network champion. TIM's stock is currently trading close to a record low, and Cabinet Undersecretary Alessio Butti earlier urged CDP to pursue the objective of a unified broadband business acquiring TIM.

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