Telecom Italia (TIM) reiterated its full-year core profit guidance after reporting first-quarter organic revenues of EUR 3.75 billion, broadly flat compared to the year-earlier reading and a vast improvement on Covid-hit annual falls of 2.1 percent, 5.0 percent and 10.1 percent in the previous three quarters. The company’s EBITDA was down 1.3 percent year on year on organic terms to EUR 1.58 billion in the first 3 months of 2021 thanks to cost savings and a 3.0 percent rise in revenues at TIM Brasil that offset a 0.6 percent fall in domestic revenues to EUR 3.10 billion.
EUR 200 mln early retirement hit
In a statement, TIM said “the process of stabilising revenues and operating indicators continued” in the first quarter, “in addition to cash generation and debt reduction.” The latter fell by EUR 5.12 billion year on year on an after lease basis to EUR 16.59 billion at the end of March while Capex rose 26.8 percent year on year to EUR 691 million thanks to the first quarter effort to “speed up growth and transformation processes” in Italy (fibre networks, cloud and data centre drive, partnership with DAZN) and Brazil. The operator also reported a net EUR 200 million quarterly loss due to early retirement and voluntary redundancy costs affecting 1,300 staff. Net of this effect, net profit came to EUR 0.1 billion, flat year on year.
In its domestic market, TIM’s mobile customer base dipped to 30.2 million (human SIMs and M2M lines) on 31 March from 30.5 million a year earlier but rose by 52,000 in the first quarter of 2021, with the company keen to point out that it achieved the best result among Italy’s MNOs for the third consecutive quarter, resulting in an 18 percent fall in churn. However, mobile service revenues still fell, by 9.7 percent year on year, to EUR 757 million in Q1 due the slightly reduced customer base, coupled with lower ARPU and roaming traffic.
The company’s fixed line segment fared even better thanks to the accelerated migration of the customer base towards fibre broadband, an increasingly convergence-oriented portfolio and the government’s voucher scheme. TIM said it added 424,000 new retail and wholesale fixed broadband lines in the first 3 months of 2021 to reach 9.1 million units at the end of March, up 23 percent year on year. Fixed revenues dipped 0.5 percent to EUR 2.14 billion in Q1, mostly due to lower ARPU levels, partly offset by a 29.5 percent growth in revenues from ICT solutions.
Financial targets unchanged
Looking ahead, TIM reiterated the forecast set out in the new 2021-23 business strategy unveiled in February of an organic EBITDA after lease costs either stable or showing low single-digit growth in 2021. It also intends to cut net debt after lease costs to around EUR 16.5 billion at the end of 2021 with a view to reaching a debt ratio of 2.6 times EBITDA by the end of 2023.
