Black Friday for Tim who on the Stock Exchange, around 15pm on Friday, dropped 5,7% to 0,5108 euro while the Ftse Mib was down by 1%.
TIM ANNOUNCES DEVALUATION
The accounts for the first nine months approved yesterday late in the evening (November 8) by the company's board of directors weighed on the stock's performance. As of September 30, Tim in fact recorded a loss of 800 million due to the home goodwill write-down for 2 billion euros. Without this, the net profit would have been positive for 1,2 billion euros. "This devaluation - explains the company led by Amos Genish - decided following the impairment test process, has no impact on cash flows and is due to the deterioration of the competitive and regulatory framework and higher interest rates".
"The write-down - continues Tim - does not change the strategic priorities of the three-year plan and does not take into account the revisions that will soon be submitted to the approval of the Board of Directors with the aim of continuously improving the Company's operational and financial performance".
During today's conference call, CEO Amos Genish underlined that: "the write-down is not of a cash nature and does not change the priorities of Tim's plan to which we remain faithful".
"Most of the board of directors - explained the managing director of the Tlc company - decided to write down the goodwill on the domestic business unit due to the performance of yields on BTPs that were higher than in the past and which had a negative impact on the cost of capital and more due to the deterioration of market dynamics”.
YOU MAY ALSO BE INTERESTED IN: More investments and less revenues, among the big uphill challenges
VIVENDI RETURNS TO THE ATTACK
The decision to devalue the domestic goodwill did not please Vivendi who issued a fiery statement. The French giant, Tim's top shareholder with 23,9% of the capital, announced that the decision to proceed with the write-downs during the year was taken with Vivendi voting against and confirmed the fact that it was not called a meeting to appoint the auditing firm.
Speaking with the Reuters agency, the group's spokesman also stated that the company does not rule out the possibility of convening a meeting to nominate its representatives to the board and "does not rule out any initiative that is suitable for protecting its interests".
Vivendi accuses Elliott, a minority but majority shareholder on the Board, of being responsible for the "disorganization" of the group and the fluctuating performance of the stock on the Stock Exchange.
THE NINE MONTHS ACCOUNTS
Going back to the accounts, in the first nine months of 2019, i revenues amount to 14,077 billion euros. Using the same accounting standards (compared to the same quarter in 2017), the figure comes to 14,217 billion (-3,1%): "the substantial stability of the revenues of the Domestic Business Unit was offset by the reduction of the Brazil Business Unit (-460 million euros) entirely related to the devaluation of the Brazilian real, by more than 20% compared to the first nine months of 2017”, explains the company.
As of 30 September theebitda headcount is equal to 6,2 billion euros, stable compared to the same period of 2017 (net of the non-recurring component and other “one-offs”), the gross operating margin for the 9 months is instead equal to 5,778 billion. Finally, the comparable EBITDA: 6,03 billion (-2,9%).
THEebit is 617 million euro but the comparable figure amounts to 762 million, down by -73,1% compared to the first nine months of 2017 with an EBITDA margin of 5,4% (19,3% in the first nine months of 2017). EBIT for the first nine months, underlines Tim, "discounts 2.000 million euros relating to the impairment of goodwill attributed to Core Domestic, as well as the negative impact of other non-recurring expenses (128 million euros, 185 million euros in the first nine months of 2017, at constant exchange rates and taking into account the "one-offs" included in EBITDA). Without these charges, the organic change in EBIT would have been negative by 68 million euros (-2,3%), with an EBIT margin of 20,3% (21,0% in the first nine months of 2017" ).
As of September 30, thenet financial debt adjusted amounted to 25,190 billion, down by 118 million euros compared to 31 December 2017 (25,308 billion euros).
THE GOAL ON THE DEBT
The company also revised its debt target downwards. The board "does not confirm the ratio between adjusted net financial debt and EBITDA of approximately 2,7 times at the end of 2018, before financial requirements for the acquisition of the frequency spectrum". Expectations are reduced "in consideration of numerous factors including, but not limited to, the fine connected with the Golden Power proceeding, the consolidation of an adverse competitive environment and regulatory tensions in the Domestic market, as well as the weakening of the exchange for the Brazilian Real”.
"Everything will depend on the trend of the EBITDA - explained the CFO, Pier Giorgio Peluso in the afternoon - the EBITDA-debt ratio in 2017 was equal to 3 and could realign itself to this level".
At the same time, Genish anticipated that the targets of the industrial plan "will be reviewed by the board at the beginning of 2018". The industrial project, however, explained the number one of Telecom, will continue to focus "on the reduction of the debt and on the increase of the free cash flow".
THE FUTURE: "OPEN TO COLLABORATE WITH OPEN FIBER"
"We are open to a collaboration with Open Fiber in the development of the ftth network that is positive for everyone, i.e. for consumers, society, users and Italy in general, which will be able to satisfy the government's digitization agenda". Genish said again, adding that “A development (of the relationship with Open Fiber) will be positive when it happens. let's give”
The manager then clarified that there are currently 3 million fiber connections. "Adoption of fiber is still slow and migration to FTTH is slower than to FTTC." For the CEO, growth will lengthen the pace in the next few in terms of speed, gigabytes and offers in the right areas.
Staying on the net, but talking about the spin-off, the CEO of Telecom Italia explained that “the plan for the legal separation of the network has not changed. This is the most important project," said Genish, who however said: "The public interest in legal separation has, however, decreased and therefore the project has slowed down compared to the past." The manager said that in any case Telecom continues "to discuss with Agcom and with the other institutions to make people understand how important this project is".
The CEO then spoke of Brazil specifying that Tim Participacoes remains a strategic asset. “It is the highest performing unit and therefore will remain a strategic asset if there are any mergers and acquisitions, they will be done to improve the company's competitive advantage. If there are opportunities we will seize them, but it is not a priority”. Genish said that "already after the elections we have seen a new stability and we think that the scenario will improve". Genish, on the other hand, did not unbalance himself on Nextel: "We can't talk, I can say that we are interested, but we are in an initial phase".
5G: FIRST LAUNCHES IN 2019
Impossible not to mention the towers and 5G. According to the Israeli manager “There is no doubt that the development of 5g is a fantastic business opportunity for Inwit, whose towers are becoming increasingly important”, said the CEO. “We are aware that Inwit repeaters with 5G will give us a competitive advantage. We will use the opportunity as best we can to correlate cell towers with our 5G strategy. Tim's strategy is to support the Inwit towers".
Remaining on 5G, Genish then announced the first launches of 5G services for next year, although the real offers will start in 2020. “We believe that 5G will be the catalyst for our business and will also help improve the business model of our agency". More specifically, the CEO explained: “We are working with suppliers to ensure launches in the first half of 2019, at the latest in the third quarter of 2019. The launches will be carried out in some key cities, where the commercial offers will be beyond the so-called pilot, in order to understand the services of 5G. However, the offers will start in the main Italian cities, only in 2020 when the terminals and equipment will be available".
(Last update: 16.13 am on 9 November).
