Telecom Italia 9-mth revenues down 3%, won't meet FY debt target

Telecom Italia (TIM) reported consolidated revenues of EUR 14.2 billion in the 9 months to 30 September, up 1.1 percent year-on-year on an organic basis but down 3.1 percent on a comparable basis, hurt by regulatory impacts including a return to monthly billing in Italy, a weakening of the exchange rate in Brazil and an adverse competitive impact at home. The company said comparable earnings before interest, tax, depreciation and amortization (EBITDA) in the first nine months fell 2.9 percent to EUR 6.03 billion (up 0.4% organically), while adjusted net financial debt stood at EUR 25.19 billion at the end of September. EBIT in the first nine months of 2018 came to EUR 617 million, down 73 percent year on year due to the negative impact of a EUR 2 billion write-down on the goodwill of the core domestic business. Without these charges the EBIT would have declined by EUR 68 million or 2.3 percent year on year.

Third quarter revenues came to EUR 4.66 billion, down 4.1 percent year on year on a comparable basis compared to EUR 4.91 million a year earlier but up 0.2 percent on an organic basis. Comparable EBITDA was up 0.6 percent to EUR 2.11 billion but the company’s consolidated EBIT came to a EUR 997 million loss compared to a positive EUR 963 million in the third quarter of 2017.

As a result of these factors and a possible domestic fine of EUR 74.3 million imposed on the phone group after the Italian government activated the so-called “golden power” rule, TIM announced that it is no longer able to reaffirm its net debt to core earnings target for the end of the year. The company had previously guided for a net debt to EBTIDA ratio of around 2.7 times in 2018.

In its domestic market, Telecom Italia released 9-month figures showing flat revenues of EUR 11.31 billion, with the company’s recent upward trend slowing somewhat in the third quarter, with sales down EUR 25 million or 0.7 percent year on year. The company said service revenues inched up to EUR 10.39 million, benefiting from sustained mobile and fixed ARPU levels due to a 1.2 million year on year rise in fibre customers to 3.0 million, offsetting a EUR 237 million fall in traditional voice services.

TIM added that domestic mobile market service revenues were essentially flat at EUR 3.43 million in the January to September period in spite of a challenging regulatory and competitive environment prompted by the entry of low-cost challenger Iliad in May.