Telecom Italia reported a 6.7 percent year-on-year fall in fourth-quarter revenues to EUR 4.84 billion in organic terms, hurt by the effects of the macroeconomic situation in Brazil and wholesale price revision in Italy. Domestic revenues came in at EUR 3.87 billion on an organic basis, down 2.6 percent year-on-year but a 0.7 percent improvement compared to Q3, while sales at its Brazil unit – TIM Brasil – plummeted 20.2 percent on an organic basis to EUR 940 million, impacted by lower handset sales and what the company described as challenging macro and regulatory environments. Group EBITDA fell 33.2 percent to EUR 1.39 billion, with the EBITDA margin dropping 11.3 percentage points to 28.7 percent at the end of Q4. The group said its net debt would fall to below three times EBITDA by the end of 2018. Full-year capex was up 18.5 percent to EUR 5.20 billion, reaching 27.2 percent of revenues.
Telecom Italia’s domestic mobile segment reported further improvement of service revenues, which increased by 0.7 percent year on year in the fourth quarter to EUR 1.38 billion thanks above all to greater numbers of mobile broadband users, up 296,000 in Q4 to 11.5 million, and improved ARPU, rising 0.8 percent year on year to EUR 12.8 per month. TIM’s customer base stood at 30.0 million lines at the end of December, 1.1 percent down on the year-earlier figure of 30.4 million.
In the fixed segment, the company’s revenues were affected by the recent wholesale price revision and monthly rental fee increases, partly offset by 40,000 net broadband adds in the final quarter of the year and improved broadband ARPU. Revenues from fixed services fell 3.1 percent year on year to EUR 2.66 billion in the fourth quarter, with the company’s total fixed line customer base of 11.74 million at the end of December, down 5.9 percent on the year-earlier figure of 12.48 million. However, broadband customers were up 1.5 percent to 8.84 million, with broadband ARPU increasing 5.3 percent to EUR 20.8 thanks to the development of flat-rate plans, re-pricing and customers upgrading to fibre. In total, Telecom Italia added 104,000 fibre customers in the quarter to reach 539,000 at the end of December, up 133 percent year on year.
Separately, the company also announced an investment of around EUR 12 billion on Italian broadband services as part of its new three-year business plan to 2018, around EUR 2 billion more than the previous plan. Telecom Italia will spend some EUR 3.6 billion on rolling out fibre-optic cables to reach 84 percent of the Italian population by 2018, up from 75 percent in the earlier plan, while it expects its 4G network to cover 98 percent of the country.
The ultimate aim of the increased investment, according to Telecom Italia, is to complete its transition from "traditional Telco to Digital Telco & Platform Company". The company said 4G customers are expected to account for around 70 percent of mobile broadband customers by 2018, thanks to almost blanket coverage of the country at 75 Mbps, with peaks of 300 Mbps in the eight main Italian cities. In the domestic fixed segment, Telecom Italia plans to reduce the fall in customer numbers starting in 2016, reaching 5 million in 2018 via the accelerated rollout of its fibre-optic network.
