Telecom Italia reported a 5.3 percent year-on-year rise in fourth-quarter revenues to EUR 5.10 billion, driven by an improved macroeconomic situation and soaring data demand in Brazil as well as the best quarterly result for its domestic unit since 2007. On an organic basis, revenues rose 0.8 percent year on year in the last three months of the year, an improvement on a 1.2 percent fall in Q3 and the first positive quarterly result for 18 quarters. EBITDA for the quarter also rose, by 5.9 percent year on year in organic terms, to EUR 2.14 billion, attributed above all to a series of cost cuts launched in the second quarter in Italy and in the third quarter at its TIM Brasil unit.
On an annual basis, Telecom Italia’s 2016 revenues came in at EUR 19.04 billion, declining a less than expected 3.5 percent on a reported basis and 2.5 percent on an organic basis excluding forex effects. However, full-year EBITDA soared by 14.4 percent to EUR 8.02 billion, with the company’s EBITDA margin improving to 42.1 percent from 35.5 percent in 2015. TIM said it expected annual revenues and domestic EBITDA to continue rising for the next three years, the latter at a low-single digit percentage rate. Net debt was cut by EUR 2.2 billion to EUR 25.1 billion in 2016, aided by the sale of the group's stake in Telecom Argentina, while full-year capex was down EUR 321 million to EUR 4.88 billion.
Telecom Italia said that fourth-quarter domestic mobile revenues improved by 3.1 percent year on year, compared to increases of 1.1 percent and 0.7 percent in the previous two quarters, thanks to a series of autumn offers, expansion of 4G coverage to 96 percent of the country and an increase in ARPU to EUR 13.3 a month at the end of 2016, compared to EUR 12.8 a year earlier.
In the fixed segment, the company’s fourth quarter service revenues fell 3.6 percent, affected by a reduction in voice service revenues, only partially offset by the continued growth in broadband customers as well as content enabling products (Smart TVs and decoders). Line losses fell 83,000 in the last quarter of 2016 but fibre subscriptions accelerated strongly, with the company adding 125,000 in the fourth quarter to reach an NGN client base of over 1 million and fibre-optic coverage of 60 percent of Italian homes.
Separately, the company announced an investment of around EUR 11 billion in its domestic market as part of its new three-year business plan to 2019, with some EUR 5 billion to be spent on rolling out fibre-optic cables to reach 95 percent of the Italian population by 2019 and extending its 4G network to cover over 99 percent of the country. Presenting the plan, Telecom Italia CEO Flavio Cattaneo said the goal was to make EUR 1.9 billion in efficiency savings by 2019 and to transform the company via an approach based on content, convergence, ICT services, innovation and customer proximity. TIM recently announced a strategic agreement with public broadcaster RAI to air RAI Cinema premieres on its TIMvision video-on-demand service, part of its quadruple play acceleration strategy.
