Telecom Italia presented new targets for 2012-2014 alongside its annual results. For 2012, the Italian operator targets stable revenues and EBITDA and increased focus on cash generation. It maintained its target for net debt of EUR 27.5 billion by end-2012, versus EUR 30.41 billion in 2011, but noted this now takes account of payments for LTE licences. For the three-year period, the operator expects cumulative cash flow (EBITDA-capex) of over EUR 22 billion, capex of more than EUR 15 billion and net debt of EUR 25 billion by 2013. Net debt should drop to less than 2x annual EBITDA from 2014.
For 2011, the company lowered its dividend to EUR 900 million and said it will increase the dividend again once it meets its debt reduction targets. That compares to a previous plan targeting a 15 percent increase in dividends over the three years to 2013. Telecom Italia reported revenues up 8.7 percent to EUR 29.96 billion, driven by its takeover of Telecom Argentina and growth in Brazil. This offset a 5.2 percent decline in revenues in its home market. EBITDA increased 7.3 percent to EUR 12.25 billion, while the margin fell half a percent point to 40.9 percent. Capex rose by EUR 1.5 billion to over EUR 6 billion, due to the EUR 1.2 billion for LTE frequencies in Italy, while operating cash flow fell by EUR 446 million to EUR 5.77 billion.
In Italy, annual revenues fell 5.2 percent to EUR 19.03 billion, and EBITDA was down 1.6 percent to EUR 9.24 billion. In the fourth quarter, fixed-line revenues were down 2.7 percent to EUR 3.50 billion, and mobile revenues fell 2.2 percent from a year earlier to EUR 1.83 billion. The operator lost another 214,000 fixed lines in the three months, to finish the year at 16.745 million, down 4.9 percent from 2010. Retail broadband customers fell by 16,000 in Q4 to 7.125 million, and IPTV subscribers fell by 29,000 to 267,000. On the mobile market, TIM gained 548,000 new customers in the quarter, to finish the year at 32.227 million, up 3.9 percent from 2010. Handset sales were up 40 percent from a year earlier to over 1.8 million, while ARPU fell 10 percent from a year earlier to EUR 16.9.