Telecom Italia (TIM) reported a 6.6 percent year-on-year decline in revenues to EUR 4.0 billion in the fourth quarter, with improved results at its TIM Brasil unit offset by a fall of EUR 291 million (-7.6% year on year) at its domestic unit. TIM’s EBITDA for the quarter came to EUR 1.7 billion, down 1.6 percent compared to Q4 2018 on an organic basis, with a domestic decline of 12.8 percent largely offset by a strong performance in Brazil, where it’s teaming up with Telefonica to bid for Brazilian operator Oi's mobile business.
Full-year group revenues were down 4.9 percent year on year to EUR 18.0 billion on an organic basis, although 12-month EBITDA was up 1.2 percent year on year to EUR 7.5 billion thanks to ongoing cost optimisation and a positive balance of non-recurring items, including EUR 685 million from favourable taxation disputes at TIM Brasil. The company posted a net profit of EUR 916 million for the full year, recovering from last year’s EUR 1.4 billion loss and prompting the board to approve TIM’s first dividend on ordinary shares since 2013, amounting to 1 eurocent per ordinary share. The dividend proposed for savings shares was unchanged at 2.75 eurocents.
In its domestic market, Telecom Italia released annual figures showing revenues down EUR 950 million, or 6.3 percent, to EUR 14.0 billion, attributed to a changed regulatory and competitive scenario. In the fixed line segment, revenues were down 5.2 percent to EUR 9.4 billion, with mobile market revenues slumping by 9.9 percent due above all to reduced ARPU levels resulting from the generalised fall in prices in 2019. Fibre lines (retail and wholesale) reached 7.0 million units at the end of December, up by 27 percent year on year and 5 percent sequentially, with 93,000 switching to ‘ultra-broadband’ lines in Q4 alone.
TIM said its mobile lines stood at 31.0 million at the end of December, down from 31.2 million in Q3, albeit with a slightly lower churn rate of 5.5 percent compared to 6.2 percent in Q4 2018.
The operator took advantage of the publication of its annual results to release a new three-year business plan in which CEO Luigi Gubitosi pledged to accelerate cost cutting while continuing to upgrade fixed and mobile networks. The company said it saw significant growth in cash generation over the three-year plan and forecast cash generation of EUR 4.5-5 billion, well above EUR 3.5 billion in the previous plan.
TIM also announced that it was postponing its target to return to core profit growth in 2019 due to lower than expected service revenues. TIM had set a “low single digit” growth target in core profits starting this year but has now revised that to a low single digit decline in 2020 ahead of a return to growth next year.
It added that the impact on its plan of the coronavirus outbreak in Italy remains difficult to quantify at this stage and will depend on the duration, intensity and effectiveness of the containment action undertaken.
