Tim closes 2022 "exceeding guidance thanks to a further improvement in operating trends in the fourth quarter" and the positive contribution of Brazil. This was communicated by the Board of Directors which approved i results preliminaries of the year 2022, specifying that "over twelve months, revenues from services at group level amounted to 14,6 billion (+1,3%) and organic EBITDA amounted to 6 billion, down by 6,7% (+2,7, 5% in the fourth quarter), while the Group's organic ebitda after lease amounted to 10,6 billion, down XNUMX%.
Il title of the telecommunications company went positive in the last part of the session, to +0,48%, before the accounts and awaiting news on the network. Tim - reads the note - continues with its strategy which aims to "overcome vertical integration through the separation of fixed network infrastructure assets (NetCo) from services (ServiceCo with Tim Consumer, Tim Enterprise and Tim Brasil) and the reduction of 'indebtedness through transfer operations and valorisation of some assets'.
Fourth quarter 2022 results
Compared to Q2021 XNUMX, i revenues totals grew by 3,3% year on year, to 4,3 billion euro (+1,1% in the third, -1,4% in the second and -4,5% in the first quarter), while the revenues from services increased for the third consecutive quarter with an increase of 3,6% to 3,9 billion euro (+3% in the third, +1% in the second and -2,5% in the first quarter). The Capex group was equal to 4 billion euro, of which 3,1 billion domestic. L'net financial debt group after lease amounted to 20 billion, stable compared to 30 September and growing compared to 2021 exclusively for extraordinary items, such as those linked to 5G frequencies.
The results of NetCo and Tim Enterprise
In the twelve months, NetCo recorded total revenues and revenues from services both down by 4%. The reduction “is mainly due to one-off transactions booked in the first half of last year. As at 31 December, NetCo managed approximately 16 million fixed accesses (of which approximately 72% in FTTx technologies) with a market share of approximately 80%. The technical units reached with FTTH technology were 7,7 million, equal to a coverage of approximately 32%, up by 7 percentage points compared to the end of 2021.
Record results also for Tim Enterprise: revenues grow by 8% and those from services by 11% year on year. Performance is driven by Cloud, Security and IoT services which more than compensate for the modest reduction in the other business lines. In detail, the Cloud business soars by 54 percentage points in one year, followed by the cybersecurity component at +41% and excellent results also for the IoT which grows by 11%.
Tim Brasil: +19,2% revenues in 2022
Good results for too Tim Brazil. The Brazilian subsidiary closed 2022 with a fourth quarter above analysts' estimates. Revenues for the year grew by 19,2% and amounted to 3,8 billion, while Ebitda rose by 16,4%, equal to 1,9 billion. Finally, the cost containment target for 2022 was achieved at 112%. The growth also in the fourth quarter of total revenues (+21,4%), revenues from services (+20,8%) and Ebitda (+16,9%) was particularly significant “thanks to a solid organic performance and the contribution made to Oi's assets,” underlines the release.
The 2023-2025 business plan has also been approved: in 2023 revenues will return after 6 years
ll 2023 it will be the year of the return to growth of Tim's domestic business after 6 years: this is one of the main objectives put on paper in the new Business plan 2023-2025 by Tim presented by labriola and approved by the board unanimously. The BoD also resolved not to co-opt a Director to replace Arnaud de Puyfontaine, taking into account the approaching Assembly which will be called to decide on the appointment. “Despite a profoundly changed macroeconomic context compared to last year, the new plan is in continuity with the previous one and with the project presented at the Capital Market Day (July 2022). In particular, thanks to the better-than-expected results for 2022, the plan provides for a further one acceleration at Group level” says a note from Tim.
I revenues from services are expected to grow in low single digit in 2023 with the domestic business essentially stable and Brazil in high single digit growth. Group revenues from services expected to grow at low single digit CAGR '22-'25. EBITDA Group workforce is expected to grow mid single digit in 2023, with the domestic business stable or growing low single digit and Brazil growing low double digit. At group level Organic EBITDA is expected to grow over the plan period mid single digit CAGR '22-'25. Group Organic After Lease EBITDA expected to grow low to mid single digit for 2023 while Group Organic After Lease EBITDA is expected to grow mid single digit CAGR '22-'25;
Group capex investments are expected to be approximately €4,0 billion in 2023, stable over the period of the plan, while annual investments of €3,1 billion are expected at the domestic level.
The cumulative Group Equity Free Cash Flow After Lease slightly positive over the horizon of the plan.
The strategic lines of the company configuration
Together with the plan based on the current organizational and business model, the optimized business configuration composed of specific entities provides the following strategic lines:
TIM Consumer: the initiatives aimed at implementing the premium positioning strategy 'Value vs. Volume', with the aim of differentiating from competitors. The progressive repricing of the customer base will also continue, together with the introduction of inflation adjustment mechanisms.
TIM Enterprise: Growth above the reference market is expected for 2023-2025, with a CAGR of revenues of 6% over the horizon of the plan, thanks to increased standardization and industrialization of offers and the consolidation of a bundled offer for the Public Administration.
TIM Brasil: The company maintains its focus on a value strategy and will gain an additional growth boost from the integration of Oi's assets, continuing on its path towards a 'Next Gen Telco'.
NetCo: TIM's strategic priorities are a strong push towards the migration of lines to FTTH technology, associated with an ambitious plan to cover the fixed and mobile networks. By 2025, the Group aims to reach 48% of the country's real estate units via FTTH. In the mobile segment, the priority is maximizing 5G coverage, which by 2025 will reach 90% of the population.
ESG: the 2023-2025 Plan defines ESG priorities for all business areas and operations with the aim of improving the environmental and social impact and at the same time business results. All this through the search for efficiency, the use of the circular economy in processes, innovative and sustainable purchases, the provision of new services for the PA and businesses, guiding the digital transition.
Labriola: "There will be consolidation"
During the press conference that followed the release of the 2022 results and the green light for the 2023-2025 Business Plan, the CEO answered a question about the possibility of M&A at European level, explaining that "the cross- border, when we talk about infrastructure, it doesn't make any sense. If here I have a mainly passive network, what are the synergies in bringing together several networks at European level?”. Margrethe Vestager spoke "more of services to customers, whether they are families or businesses". Cross-border agreements are possible on this".
Analyzing the situation even more in detail, Labriola stated that “Tim Enterprise has more need to consolidate in Italy with those who perhaps do system integration, more than with someone who does cloud at European level. For Tim Consumer there may be cross-border consolidation. However, we must evaluate whether the model is the one to make economies of scale or aggregate more services to extract more values". In any case, he added, "something happens I'm sure".
Labriola on the network: “Maintain a minority stake? Invalid option"
Then a reference also to NetCo. If during the conference call with analysts Labriola had said "There is strong interest in the sale of Netco", the CEO did not want to talk to journalists about NetCo, given the offer received from KKR and other proposals that could arrive in the coming days, like that of CDP-Macquarie. However, the manager clarified that on the network "we have the Kkr option on the table, it seems that another one will arrive, until recently we did not think that one would arrive". "Keep calm," he added, "this is a market that is going to consolidate, even quite quickly." If a sale were to materialize, Labriola underlined that “there are other strategic options: we are not standing still, we will evaluate based on what happens. From an industrial point of view, keep a minority stake doesn't seem like an option valid, but the positions can be revised with the negotiations”. “We are in the middle of a negotiation, and therefore it did not seem appropriate to give targets for Netco and a whole other set of details, which will be released as soon as possible,” he said in another passage of the conference.
What if no extraordinary operation were to take place? “Let's go from talking about a company that seemed unable to pay wages to one that solved all the problems – he said – Neither one nor the other is true. Over the course of the plan, up to 2025, we don't see any particular problems. If another war breaks out, rates double, the war on prices starts again, if the hypotheses on the table of the ministry are implemented, then everything could change”. Labriola then added: “there are no negotiations or interlocution with Iliad".
Broadening his gaze to the condition of the group and the path taken, he said: “Many things have changed in one year, we came out of 3 profit warnings, we had a macro impairment and in numbers they were what they were. We had an all-time low level of credibility from a market perspective. What we promised to do we did: we complied with the guidance, and indeed done better, Brazil is going exactly as we had said and is a cash cow, the domestic sector should finally grow again after 7 years on revenues and Ebitda”.
Labriola: "Difficult to return to the dividend on ordinary shares"
"We had the courage to say that the level of leverage we have today is a problem from an industrial point of view, which does not allow us to do many things, and weighs down the company's strategy in any direction we want to go - he added - We have so we separated several businesses and we talked about selling the network. I'm relatively satisfied, but we're halfway through the first leg, because what we have before us is a complex project, both in terms of continuity and in implementing the hypothesized inorganic options”. “In these conditions it is however “difficult to be able to think of going back to dividend payment on ordinary shares. The first objective must be to improve the numbers and do the deleverage, when we do both things we can go back to discussing the subject”.
(Last update: 15.32 pm on Wednesday 15 February)
