The Tim plan moves towards the vertical separation of the business: services on the one hand with ServiceCo, landline on the other with NetCo. The Board, after a long five-hour meeting on Wednesday, mandated CEO Pietro Labriola "to carry out any useful activity" in this direction. The goal is to reduce debt, making the most of some assets of the group but also to open the capital to minority shareholders in Tim Enterprise.
Now Tim gives substance, providing more details to the market, al project launched in March which is also meant to carry out the project of single network with the competitor Open Fiber 60% controlled by CDP (also a shareholder of Tim with 10%) and 40% by Fondo Macquarie. Throughout the day, Tim will go into detail with investors and the press on Capital Markets Day. The expectation of the operators, explained on Wednesday by Equity, is to receive more information on the debt, Capex and free cash flow of the two new entities for the network and for services. Other topics will be the negotiation with Dazn for football contracts, of course. But it was and remains the theme of the single network is central with OF and its timing but above all its evaluation.
Tim plan: the separation of activities and the perimeter of NetCo and ServiceCo
La NetCo includes the primary and secondary fixed network, the domestic wholesale business and the international business (Sparkle). If successful, Netco will be the first case in Europe "of a pole of fiber network infrastructure and technologies available to the entire market and with a widespread presence throughout the country" observes the group's press release. As its competitor Open Fiber already does, NetCo will focus on the wholesale market. The goal is to speed up the implementation of the fiber network. NetCo will therefore be a pure infrastructure company such as, for example, Terna or Snam and will benefit from "the returns typical of the sector", the Tim note continues.
The more articulated ServiceCo which includes commercial activities. TIM Enterprise, TIM Consumer and TIM Brasil. In detail:
- Tim Enterprise. This includes the activities of the business sector as well as Noovle, Olivetti and Telsy. The unit also includes data centers. It aims to conquer shares of a rapidly growing market by leveraging Cloud, IoT and Cybersecurity
- Tim Consumer includes fixed and mobile commercial activities in the retail market from consumer to small and medium-sized businesses. Tim consumer includes mobile network assets and service platforms. The CEO Labriola foresees "a profound reorganization of its activities, based on simplification" as a key element to improve performance.
- Tim Brazil. Tim's South American jewel will continue with the "Next Generation Telco" strategy and after the now completed acquisition of the Oi Group's mobile businesses it estimates "an acceleration in revenue growth, Ebitda and cash generation, with solid trends ”.
The Tim Plan
Tim with the new plan aims to improve profitability and also to "attract new industrial and financial partners", pushing the accelerator on innovation and digital transition. But above all we want to achieve "a sustainable capital structure" with the deconsolidation of the fixed networkae the eventual entry of new minority shareholders in TIM Enterprise.
