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TIM Board Of Directors Approves Financial Report For June 2019

Financial results News - Published on Fri, 02 Aug 2019

Image Source: Telecom Italia
TIM's Board of Directors met under the chairmanship of Fulvio Conti and approved the financial report of the Group for the first half of 2019. The results for the first half of the year are in line with the objectives of the three-year plan “TIMe to deliver and delever”, both in terms of execution, thanks to the numerous strategic and business initiatives put in place, and in terms of debt reduction through significant cash generation.

Operating free cash flow reached 1.5 billion euros, an improvement of 604 million euros compared to the first half of 2018, and equity free cash flow was 786 million euros, +526 million euros YoY.

Consequently, net financial debt at June 30 fell by 539 million euros from the end of 2018 (and by 349 million euros compared to March 31, 2019), reaching 24.7 billion euros.

During the quarter, a binding agreement was reached for the sale of Persidera, which is expected to be finalized within this year and will result in a further reduction in net financial debt of 160 million euros.

On July 26, 2019 TIM and Vodafone have signed agreements to share the active component of the 5G network, to share active devices on the 4G network, and to expand their existing agreement on passive network infrastructure sharing. The agreements will enable more efficient implementation of 5G in Italy, with wider geographical coverage (national coverage expected by 2025) and significant cost reductions, including over 800 million euros of synergies each for TIM and Vodafone over the next 10 years. In addition, the new INWIT is expected to see an annual improvement of over 200 million euros in EBITDA by 2026, through synergies, commitments and new potential opportunities.

Finally, on August 1, 2019 an agreement was signed with Sky that puts an end to a contractual dispute started a few years ago and allows TIM to sell the NowTV-Ticket Sport great sport offer, including 7 out of 10 Serie A TIM matches. This important partnership allows TIM to build a TIMVISION offer package that aggregates and distributes the contents from other TIM partners: Discovery, Mediaset, Netflix, Amazon Prime and Eurosport.

The management has informed the Board of Directors on the progress of both the project for a partnership in financial services to support TIM’s business and of the discussions with Open Fiber and its shareholders (following the announcement on June 20, 2019 of the signing of a Non-Disclosure Agreement), on the latter confirming mandate to the CEO to continue negotiations.

Group revenues in the half year totalled 9.0 billion euros, down 3.4% YoY, almost entirely attributable to Sparkle's international voice traffic. Excluding this component and product revenues, the change in service revenues falls to -1.2% YoY.

Group reported EBITDA in the first six months was 4.1 billion euros, up 8.9% YoY due to the continuation of cost-optimisation actions and net non-recurring income including 662 million euros from the favourable outcome for TIM Brasil of the disputes over double taxation, partly offset by 296 million euros provisions.

Performance in the second quarter of 2019
Group revenues in the second quarter reached 4,523 million euros (-3.9% YoY on organic basis). Service revenues totalled 4,143 million euros, down by 107 million euros (-2.5% YoY) compared to the second quarter in 2018, in an improving trend on the first quarter of 2019 (-3.0% YoY), albeit influenced by the significant reduction in low- or zero-margin International Wholesale contracts since the beginning of the year implying an EBITDA boost for Sparkle (+17% in Q2 YoY). Net of this impact (-96 million YoY), service revenues were stable compared to the previous year (-0.4% YoY) at Group level (-2.0% in Q1) and down 1.2% for the Domestic business unit (-2.7% in Q1).

In Italy, in the fixed-line segment there was an increase in both consumer ARPU (+8.3% YoY) and broadband (+17.2% YoY) and in the number of fibre customers – retail and wholesale – to 6.3 million, up 45% YoY and 5.6% compared to the first quarter 2019. This ongoing migration from copper to fibre, together with the positive impact of the new regulated wholesale prices and the growth in business ICT (+16% YoY), led to service revenues improving of 2.2% YoY and overall revenues of +3.0% YoY, net of the above-mentioned changes in the International Wholesale segment (Sparkle).

The mobile segment showed a reversal of the downward trend in ARPU, which increased to 12.5 euros per line per month from 12.4 euros in the previous quarter. A sign of a return to market normality was the further decline in Mobile Number Portability, which decreased by 36% on an annual basis and by 11% compared to the previous quarter (2.6 million lines vs. 2.9 million lines). The total number of TIM mobile lines amounted to 31.7 million at the end of June, up 0.1% YoY. The churn rate fell by 1.7pp YoY and 0.9pp QoQ.

Strong performance of the Domestic Wholesale segment, which saw an increase in service revenues of 14.4% YoY, thanks to the aforementioned migration of customers from copper to fibre in addition to the stabilisation of regulated tariffs and the Business segment, whose revenues rose by 0.4%. The Consumer segment was affected by the performance of the mobile market, where service revenues fell compared to the second quarter of 2018 by 5.6%.

In Brazil, TIM recorded an increase in service revenues of 2.4% YoY (+1.7% YoY in the first quarter) driven by sales policies deployed in the mobile segment and despite the adverse macroeconomic and market dynamics, once again in line with guidance.

Group EBITDA After Lease stood at 1.8 billion euros (-1.4% YoY).

Group organic EBITDA (IFRS 9/15) was 1.9 billion euros, -2.6% YoY, with an EBITDA margin of 42.2% (+0.6 percentage points YoY) driven by cost containment initiatives. The EBITDA of the Domestic business unit was 1.5 billion euros (-4.4% YoY) while the EBITDA of TIM Brasil increased by 6.3% YoY, (+5.5% YoY in the first quarter).

TIM's 4G coverage reaches about 99% of the Italian population and its fibre coverage extends to 80% of the population. The company is committed to providing universal coverage in Italy by developing its fibre, 5G (national coverage by 2025) and Fixed Wireless Access networks.

Group investments in the second quarter totalled 874 million euros (-6.0% YoY) of which 659 million euros in Italy (-6.5% YoY).

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Posted By : TelecomGuru on Fri, 02 Aug 2019
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