Telecom Italia reported a 1.6 percent year-on-year decline in revenues to EUR 4.74 billion in the first quarter, hit by falling sales at its TIM Brasil unit and provisions made for a domestic fine of EUR 74.3 million imposed on the phone group after the Italian government activated the so-called “golden power” rule last October to scale back Vivendi’s influence. The company’s EBITDA for the quarter fell 4.9 percent year on year to EUR 1.89 billion with a margin of 39.9 percent, down 1.4 percentage points year on year. On an organic basis, excluding exchange rate effects and non-recurring components, revenues were up 2.7 percent in the first three months of the year, with EBITDA rising 1.8 percent, boosted by a 1.7 percent rise in domestic sales. The group’s adjusted net debt came to EUR 25.54 billion at the end of Q1, some EUR 229 million higher than the Q4 result, with capex falling to EUR 660 million from EUR 831 million in Q1 2017.
In its domestic market, Telecom Italia’s first-quarter revenues rose EUR 62 million year on year to EUR 3.68 billion, confirming its recent progressive recovery, led by a 3.7 percent growth in mobile revenues to EUR 1.12 billion on the back of a 1.4 percent rise in its active customer base to 27.4 million, including 10.1 million 4G users, and steady ARPU levels. Revenues from product sales inched up by EUR 5 million to EUR 310 million in the first quarter, reflecting increasing sales of smartphones and other devices (including smart TVs, smart home products, modems, set-top boxes).
In the fixed segment, the company’s first quarter service revenues dipped by 0.2 percent to EUR 2.42 billion due almost exclusively to the fall in voice revenues, down EUR 47 million year on year. This was offset by a steady growth in broadband services, with the fibre-optic customer base rising 1.2 million year on year to 2.5 million, while the total fixed broadband user base grew from 9.32 million to 10.34 million over the same period. In addition, TIM revealed that subscribers to its TIMvision video-on-demand service rose to 1.43 million at the end of March compared to 1.35 million at the end of Q4.
Looking ahead, the company reiterated targets set out in the 2018-20 business plan published in March in which it said it would be looking to reach a total of around EUR 4.5 billion in equity free cash flow over the three years to 2020. Other objectives included 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.
Separately, TIM announced that leading shareholder Vivendi was “no longer a party exercising control and coordination” over the company after activist fund Elliott secured two-thirds of its board seats earlier this month. TIM also confirmed that it received a EUR 74.3 million fine from the government for flouting golden power rules on 08 May but that it would shortly lodge an appeal against allegations that it failed to notify the prime minister's office that Vivendi had taken over de facto control of the company.
