I Tim's accounts, without the weight of the network, surprise on the upside, especially the Ebitda. The results of the first nine months Part 2024 mark revenues growing by 3,4%, to 10,7 billion, with a differentiated trend between Brazil (+7,2% to 3,3 billion) and the domestic market (+1,8% to 7,4 billion). TheTotal EBITDA grows by 8,7% to 3,3 billion, with the Italian market recovering by 8,3% (1,6 billion) and Brazil rising by 9% to 1,6 billion, aligning itself with the domestic market. Even better is theebitda after lease, which increased by 11,1% to 2,7 billion (+8,3% to 1,5 billion in Italy and +14,4% to 1,3 billion in Brazil).
Il title is bouncing on Piazza Affari, gaining more than 2,5% to 0,22 euros, after a morning in which it had lost ground.
Business Area Performance
Team consumer, despite the market challenge, keeps revenues stable at 4,5 billion, confirming the stabilization path undertaken in previous quarters. Revenues from services increased by 0,2%, reaching 4,2 billion, thanks to repricing initiatives, an increase in TimVision's Arpu (+23%), stability of churn and a good performance of revenues from virtual operators and roaming.
Team enterprise records a 5,8% jump in revenue to 2,3 billion, signing new contracts for 3,5 billion, up 67% year over year. The division continues to outperform the reference market, with cybersecurity in the foreground: the segment marks an 84% growth, while the Internet of Things grows by 27% and the cloud by 22%.
Sparkle, the subsidiary for international cables of interest to the Treasury and Retelit, totalled revenues of 740 million (-1,1%).
Il Brazil continues to represent an important driving force for Tim. “It is evident – he underlined Peter Labriola, CEO of Tim, during the conference call with analysts – the continuous improvement of our Brazilian asset. It is also worth mentioning that domestic EBITDA is also growing faster than revenues; therefore, we have good operating leverage thanks to revenue growth and tight cost control”.
Net debt down and positive operating cash flow
The transfer of the network has allowed a strong debt reduction: I'adjusted net debt drops to 10,9 billion (from 25,6 billion at the end of 2023) and thenet debt after lease falls below 8 billion, to 7,99 billion, a decrease of 12,36 billion compared to the end of 2023. Regarding this reduction, Tim's CEO stated: "Net debt is decreasing as expected, in the fourth quarter we expect the trend to accelerate as every year, so the reduction will become more substantial".
Il operating cash flow is positive, with a value of 1,737 billion (1,624 billion in the same period of the previous year), while theequity free cash flow is negative by 368 million (-238 million in the first nine months of 2023).
Il Net income of the first nine months is in the red for 509 million, but the loss is more than halved compared to -1.124 million in 2023. Tim explains that the result includes the proceeds from the sale of NetCo, with a positive impact of approximately 0,2 billion euros, subject to possible post-closing adjustments.
Year-end outlook
In the wake of these results, Tim has confirmed the estimates for 2024, in line with the 2024-2026 business plan. By the end of the year, leverage will decrease as expected, with a ratio between adjusted net debt after lease and organic EBITDA after lease lower than or equal to 2 times. The target does not include the proceeds from the sale of the residual stake in Inwit, the closing of which is expected on November 29 at a price of 10,43 euros per share, for a proceeds of approximately 250 million euros.
Looking further ahead, Pietro Labriola announced that with the Presentation of the 2025-2027 plan, due to February, “after the first year of the new Tim, we will have much more space to give details about the return to the possible remuneration of members”.
In view of new opportunities, Tim also looks at partnerships with other sectors. Pietro Labriola confirmed: “Partnership with energy providers? Yes, we are interested, at the end of March we will do something of this kind. What matters is that we have been playing the bundling game with other services for several years now”, declared Labriola, confirming the strategy of expanding the offer through alliances with energy providers.
Tim challenges the Government: "We will ask for the enforcement of the payment of the concession fee"
Tim is ready to “get serious” about the refund of the concession fee by the Government. “We will ask for the payment to be made,” said Tim’s CEO. The case concerns the 500 million euro fee, dating back to 1998, that the State had requested from Tim more than 25 years ago, but now, with interest, the amount exceeds one billion euros. “In this period, nothing prevents discussion of a transaction between the parties,” added Labriola, leaving open the possibility of an agreement between the two parties, but without making any discounts. In the meantime, the Government has appealed to the Court of Cassation against the ruling that found in favor of Tim, and general counsel Agostino Nuzzolo explained that the decision of the Court of Cassation could arrive between the end of 2025 and the beginning of 2026. “The government will probably ask for a stay,” anticipated Nuzzolo, “but we will oppose it.” In short, the bill is high and the game is far from over.
Vivendi and Sparkle: The Showdown Is Near
In addition to the accounts, the market's attention is focused on what will happen in the next few days. In fact, by November 30, the consortium formed by the Ministry of Finance and the Asterion fund will have to present thebinding offer for the purchase of 100% of Sparkle. A proposal that could mark an important step in the reorganization of the group.
In the meantime, Tim's future remains partly hanging on quarrel with Vivendi, the first shareholder with 23,75% of the shares. The French have in fact appealed against the sale of the network to Kkr, and Thursday November 14 will be held thecourt hearing, with a possible ruling that could rewrite the rules of the game. If the court were to rule in favor of the French, the telco could find itself having to review some strategic choices that are crucial to its future.
Updated at 12:07 on Thursday 14 November.
