Telecom Italia revenues down 2.7% in H1, starts evaluating asset sales

Telecom Italia (TIM) reported a 2.7 percent year-on-year decline in first-half revenues to EUR 9.51 billion on a comparable basis, hit by the devaluation of the Brazilian real at its TIM Brasil unit, a recent jobs deal, the return to monthly billing in Italy and other regulatory impacts. The company’s EBITDA was EUR 3.92 billion in the first six months, down 4.8 percent compared to the year-earlier result of EUR 4.11 billion, while the margin fell 0.9 percentage points to 41.2 percent. TIM added that organic EBITDA net of non-recurring components and other one-offs totalled EUR 4.04 billion, some EUR 2 million higher than a year earlier, while capital expenditure fell EUR 381 million to EUR 1.68 billion on a comparable basis.

In its domestic market, TIM’s first-half revenues inched up by 0.3 percent or EUR 24 million on an organic basis to EUR 7.52 billion, consolidating its recent recovery, again driven by a 1.7 percent growth in mobile revenues to EUR 2.27 billion despite “regulatory and competitive scenario challenges”, including the arrival of French low-cost brand Iliad, which claims to have gained 1 million customers in Italy in the 50 days since launching.

In the fixed segment, the company’s first half service revenues dipped by 0.6 percent to EUR 4.90 billion due to a EUR 142 million fall in voice revenues, partly offset by a steady growth in broadband services, with the fibre-optic customer base rising 1.2 million year on year to 2.7 million on 30 June.

The company refrained from referring to its full-year financial outlook but said it had examined the financial implications that could derive from its participation in Italy’s forthcoming 5G auction and “has started an evaluation process of the strategic options related to its subsidiaries”. TIM confirmed that the sale of its 70 percent stake in broadcasting unit Persidera should continue but made no specific mention of plans to list or sell off its international services arm Sparkle or the national fixed access network (Netco) it’s in the process of setting up. 

Those were two of the proposals of activist fund Elliott Management, which seized control of TIM’s board from leading shareholder Vivendi following a shareholder vote held on 04 May. Bloomberg subsequently cited unnamed sources indicating that Sparkle is among the assets the company is evaluating for sale to boost its stock price. The sale would free up cash that TIM could spend on cutting debt and paying dividends, said the sources, adding that the company is also looking to refocus on its home market.