Telecom Italia (TIM) announced that its board of directors approved a plan to voluntarily separate its fixed access network, creating a legal entity (Netco) that’s 100 percent controlled by the company. TIM said it will continue to own the access network (from the exchange up to customers’ homes) and all the corresponding infrastructure (buildings, electronic equipment and IT systems), with the unit staffed appropriately to provide wholesale services independently.
It described the plan as the most advanced network separation model in Europe, creating a “one-stop-shop” access point for regulated and unregulated wholesale services for all operators including TIM, and delivering a fully neutral and equivalent model. The approval comes after TIM revealed in December that it was exploring the separation of its last-mile network to address concerns from the Italian government, competitors and regulators, including communications watchdog Agcom, which will now be notified of the company's proposal.
TIM announced the project as its board met to sign off on quarterly and annual results and to approve its 2018-20 ‘DigiTIM' strategic plan to digitise more processes andposition the group as a "pure digital player". In the fourth quarter, the operator posted a 2.8 percent year-on-year rise in organic revenues to EUR 5.1 billion, driven by the ongoing recovery at its TIM Brasil unit, where sales were up 5.3 percent year on year, and a 2.4 percent rise in domestic services revenues, its best result in the last 10 years.
However, TIM’s EBITDA for the quarter plunged 25.8 percent year on year to EUR 1.6 billion, down EUR 547 million on the previous quarter due to EUR 661 million in non-recurring charges in the last three months of 2017, mainly staff restructuring costs. Excluding those costs, EBITDA was up 4.1 percent year on year, with a margin of 43.5 percent compared to 42.9 percent a year earlier. Full-year group revenues were up 2.7 percent year on year to EUR 19.8 billion, and TIM also managed to cut its adjusted net debt by EUR 920 million sequentially to EUR 25.3 billion but 12-month EBITDA fell 2.6 percent to EUR 7.79 billion.
In its domestic market, Telecom Italia released full-year figures showing revenues up 2.3 percent year-on-year to EUR 15.4 billion, confirming its recent progressive recovery, led by a 3.6 percent growth in consumer mobile revenues to EUR 3.9 billion, while consumer fixed revenues surged 6.3 percent to EUR 3.8 billion. Business revenues also rose, by 2.8 percent year on year, to EUR 4.6 billion, offsetting a 5.1 percent fall in wholesale revenues to EUR 1.7 billion.
The company also released its first three-year business plan under new CEO Amos Genish, committing to boost shareholder returns as it aims to become a more digital player. “The DigiTIM strategy combines careful financial discipline based on cost control and optimisation of investments, to increase cash generation and create value,” said the company in a statement, adding that the use of data analytics would allow the company to improve investment efficiency and opex. It said it would be targeting a total of around EUR 4.5 billion in equity free cash flow over the three years to 2020.
Other objectives include accelerating fibre coverage to reach 80 percent of Italian households and 100 cities by 2020 in a cumulative programme of investments amounting to EUR 9 billion, over 50 percent of which will be spent on network expansion and innovation. The company said it aims to grow its fibre customer base to over 5 million in the consumer segment through additional video, music and gaming content, much of it exclusive. In mobile it intends to increase LTE penetration from 76 percent to over 95 percent over the course of the plan while significantly boosting digital engagement with customers.
The newly-created Transformation Office will oversee the execution of the programme, which has more than 250 separate initiatives running across the company with clear responsibilities and accountability, added TIM.
