Tim's board approved i accounts 2018, the new industrial plan presented by CEO Luigi Gubitosi and a network sharing agreement active and passive mobile phones with Vodafone, the "enemy" of all time, the Number One competitor of the national Tlc champion. It should be remembered that Vodafone has just announced that it has created the world's first smartphone-to-network connection in 5G. And now Vodafone and Tim are starting one exclusive negotiation for a newco on the passive infrastructure linked to the new technological standard.
Thus begins the Gubitosi era in Telecom Italia, with a move that he intends play the net game all the way, just as the is open on the landline table with Open Fiber, the company 50% Enel and 50% Cdp which is laying the optical fiber throughout Italy with the FTTH model (Fiber inside homes). On the other hand, the decline in revenues that characterizes the entire TLC sector, competition with no holds barred and sharply falling prices are pushing towards agreements that make investments to incorporate technological advances less onerous. All this while a new offer and an exclusive negotiation was started, informs the press release released at the end of the Board meeting.
TIM BOD, THE NEW 2019-2021 INDUSTRIAL PLAN
Time for results and to reduce debt. The new 2019-21 strategic plan approved by the Tim Board of Directors could be translated and summarized in this way. In English “Time to deliver and to deliver”, as the group's note is titled. What is it about? Sustainable return on invested capital, network sharing to improve ROIC (Return on invested capital), revitalization of domestic business, strengthening of Brazil. These are the first objectives of Gubitosi's project which has obtained the go-ahead from the shareholders. The first moves in this non-organic strategic direction are, precisely, the start of the partnership with Vodafone about sharing 5G networks and the table started with Open Fiber on the fixed network with an all-round negotiation. The focus, the Tim press release repeatedly underlines, is on execution, as the Elliott Fund has been asking for for some time. Which means, concretely, moving from words to deeds. But without, it would seem, disregarding Vivendi's expectations on the fixed network.
Ad Gubitosi aims to reduce debts to 22 billion from the current 25,3 at the end of the period. 3 billion annual investments are planned for the Domestic division, Ebitda and revenues still declining in 2019 but recovering in 2020 and 2021. Finally, the group expects a further reduction in the cost base of 8 percent at the end of the period.
BOD TIM, THE PARTNERSHIP WITH VODAFONE
“Vodafone Italia and the Telecom Italia Group intend to start a partnership for the sharing of the active component of the 5G network, evaluate the sharing of the active devices of the 4G network and expand the current passive sharing agreement. In practice, the agreement "would allow joint development of the 5G infrastructure, with faster times, over a wider geographical area and at a lower cost" thus the two companies presented the Memorandum of Understanding which will now continue with a negotiation in exclusive on the overall project. Project that also calls into question inwitt as "the two companies intend to cooperate to adapt their respective fiber transmission networks for mobile backhauling and evaluate the aggregation of their respective passive infrastructures into a single entity, for a total of 22.000 towers in Italy".
BOD TIM, IN ACCOUNTS 2018
Group budget closes with write-downs of 2,6 billion and a loss of 1,4 billion against revenues down to 18,9 billion and Ebitda of 7,4 billion. Making the 2018 data comparable (the year in which Tim adopted the new accounting standards Ifirs 9 and Ifirs15) revenues amount to 19,1 billion (-3,6%) and Ebitda to 7,7 billion. The investments include 2,4 billion of the purchase of new 5G licenses and 4,2 billion of the ordinary capex. Tim will pay a dividend of 2,75 on savings shares only.
In fourth quarter of the 2018 Telecom Italia achieved revenues of 4,9 billion, down 5,0% compared to 5,1 billion in the last three months of 2017. At an organic level, the decrease was 2,5%. However, Ebitda grew by 6,7% to 1,7 billion with an Ebitda margin of 34,4%. At the organic level, the change in Ebitda is always positive and equal to 10,9 percent. However, the write-downs of non-current assets weighed heavily for 593 million (5 million in the fourth quarter of 2017) and brought the Ebit down by 35 million compared to the corresponding period of 2017.
The strategic plan announced by Tim, which the CEO will present in a conference call at 14 pm on Friday 22 February, and the news on Vodafone and Open Fiber have had a strong impact on the Stock Exchange where the Telecom Italia share is rewarded with a 3% increase at 12 in the morning.
(Article updated at 12 noon on Friday 22 February)
