Telecom Italia (TIM) reported an organic 2.1 percent year-on-year decline in revenues to EUR 4.15 billion in the final quarter of 2020, up 2.9 percent sequentially, with service revenues rising 5.2 percent compared to the previous quarter and falling 1.2 percent compared to Q4 2019. TIM said its annual revenues for 2020 as a whole fell 12.1 percent on a reported basis and 6.4 percent on an organic basis to EUR 15.81 billion but that it expected them to continue stabilising this year amid a backdrop of significantly improving commercial indicators.
Organic earnings before interest, tax, depreciation and amortisation (EBITDA) after lease costs came to EUR 1.62 billion in Q4, down 0.8 percent year on year but up 7.4 percent sequentially, thanks above all to a 3.0 percent year on year rise at the group’s TIM Brasil subsidiary, which won the tender – together with Vivo and Claro – for the purchase of Oi Group’s mobile assets.
In its domestic market, Telecom Italia’s revenues for 2020 as a whole fell 8.3 percent year on year to EUR 12.91 billion, attributed to a challenging competitive scenario and Covid-19 restrictions, but improved to a 3.4 percent fall in Q4 to EUR 3.43 billion.
Full-year revenues from fixed market services came to EUR 8.80 billion, down 6.1 percent compared to 2019, mainly due to fewer subscriptions and lower ARPU levels, partly offset by the growth in revenues from ICT services (+15.6% year on year).
Revenues from mobile market services amounted to EUR 3.38 billion in 2020, down 10.5 percent year on year and attributed mainly to ongoing competition, regulatory impact and reduced footfall due to Covid-19. The latter led to a EUR 198 million fall in handset revenues to EUR 1.30 billion in 2020.
According to preliminary results, TIM said its domestic mobile customer base stood at 30.2 million at the end of December, up by around 5,000 lines compared to the previous quarter despite the partial lockdown in November and December. Excluding M2M connections, mobile customers fell to 19.8 million at the end of December from 21.0 million a year earlier.
However, customer churn continued improving and the loss of around 35,000 ported lines in Q4 was TIM’s best result since Q2 2018. The company added that it activated 437,000 new retail and wholesale fibre lines (FTTC and FTTH) in 2020 to reach 8.6 million at the end of December, up 24 percent year on year.
2021-2023 Strategic Plan
The company also unveiled a new 2021-23 business strategy dubbed ‘Beyond Connectivity’, in which it outlined plans to build up new sources of revenue via its new ‘Noovle’ cloud unit, cover the country with its FiberCop secondary access network, consolidate the growth of its TIMvision pay-TV platform via new content deals and expand its cybersecurity and IoT services. It also intends to cut net debt after lease costs to around EUR 16.5 billion at the end of 2021 from the current figure of EUR 18.6 billion with a view to reaching a debt ratio of 2.6 times EBITDA by the end of 2023.
Board approves new slate of directors
Separately, the company’s outgoing board approved a new slate of directors in which it proposed retaining CEO Luigi Gubitosi and chairman Salvatore Rossi for another 3-year term. The 10 candidates proposed for the 15-strong board also includes Arnaud de Puyfontaine, CEO of TIM’s largest shareholder Vivendi, Giovanni Gorno Tempini, chairman of state lender CDP, plus six independent directors. Shareholders will vote on the renewal at TIM’s 31 March AGM.
