Tim, July 7 detailed plan on reorganization – CorCom

Tim’s reorganization plan will be unveiled on July 7, on the occasion of Capital Market Day that – as telco announces in a note following the approval of the quarterly accounts by the board – “overcoming the vertical integration model, it will allow to accelerate the path towards a sustainable generation of cash flows and to bring out the intrinsic value of the Group’s assets“.

The guidance and the numbers for the first quarter

In confirming the guidance already communicated with the approval of the 2022-2024 Business PlanTim closes the first 3 months of the year in substantial continuity with the trend already highlighted in the last part of 2021. “In the first quarter, the company maintained a premium positioning strategy (” value vs. volume “), despite the difficult competitive environment and the absence of the voucher plan for Consumer customers which had had a highly positive impact on its performance. period of last year ”, the note reads.

More specifically, revenues from Group services amounted to € 3.4 billion (-2.5% year on year). Organic EBITDA amounts to 1.4 billion eurosequal to a decline of 13.3% year on year. Net financial debt after lease at March 31, 2022 amounted to € 17.7 billionup by 1.1 billion in one year and by 0.1 billion euro compared to 31 December 2021. Net financial debt was 22.6 billion, up by 1.5 billion year on year and by 0.5 billion compared to December 31, 2021. Equity free cash flow is positive for 123 million on an after lease basis (301 million euros for equity free cash flow).

Tim Brasil and the cloud business compensate (in part) for the losses

The revenues of the Domestic Business Unit amounted to 2,846 million euros, down by 231 million euros compared to the first quarter of 2021 (-7.5%). In organic terms, they fell by 236 million euros (-7.7% compared to the first quarter of 2021). The service revenue component down 5.3% year on year. Results partially offset at Group level, by the good performance of Tim Brasil, which closed the quarter with revenues from services up 8.4%. Among the items with the plus sign innovative services, with a growth of 19% per year in total ICT revenues, supported by the strong growth in revenues from the cloud business.

The revenues from Handset and Bundle & Handset of the Consumer segment – equal to 115 million euros and down by 75 million euros compared to the first quarter of 2021 – recorded the worst performance: -39.4%, a delta, explains the company, “mainly due to a strong contraction in the demand for connectivity after the Covid-19 period and the end of government incentive programs, such as the recognition of vouchers for ISEE incomes of less than 20,000 euros”.

Mobile beats fixed

Total mobile revenues show a positive organic performance compared to the first quarter of 2021 (+ 1.2%) despite the negative contribution of revenues from stand-alone services (-1.3%). Total fixed income in organic terms underwent a change of -15 million euros compared to the first quarter of 2021 (-2.0%) generated by the reduction in sales revenues; revenues from services show growth of 1.5% mainly driven by the increase in revenues from ICT services.

The Group’s 4G network covers more than 99% of the national population, and the volume of data managed on Tim’s mobile ultrabroadband network grew by 47.8% on an annual basis. Tim’s 5G network as of March 31, 2022 reached 66 municipalities.

The roadmap of the fiber network

On the infrastructure front, the development of the FTTH network continues, with an increase in the coverage of real estate units by 7 percentage points in the last year. Ultra-broadband has been increased to over 94% of fixed lines. In the white areas this percentage is around 75%. Furthermore, the growth of the FTTH coverage which reached over 25% of the real estate units.

The telco announces that it has participated in the Italia 1 Giga, Connected Schools phase 2 and Connected Health Care tenders, with most of the investments absorbed in the 2022-2024 guidance.

15 million negative margin due to the Dazn transaction

The amount of 15 million euros represents the negative margin in the first quarter of 2022, for the football contract with Dazn in reference to the operating performance of the business. As detailed in the 2021 Financial Report, as part of the definition of the 2022-2024 Strategic Plan, the business plan assumptions relating to some contracts for the offer of multimedia content were updated. These analyzes highlighted a negative margin connected to some existing partnerships, including that between Tim and Dazn, and led to the need to carry out in the 2021 budget, a provision for a total of 548 million euros for the registration of a contractual risk fund for onerous contracts.

Completed the management team

The company announces that it has completed the management team. Enhanced internal and selected resources to guide the Consumer and Enterprise segments, experienced managers in the sector who guarantee the contribution of further skills.

Uncertainties weigh on the future: inflation, war and Golden power

“The foreseeable evolution of operations for the year 2022 could be influenced by risks and uncertainties depending on multiple factors, most of which are outside the Group’s sphere of control”, specifies Tim, highlighting the health emergency due to the spread of Covid-19, the Russia-Ukraine conflict and the increase in purchase costs associated with inflationary pressures. Furthermore, the following additional factors are recalled: the change in the market context, the entry of new potential competitors in the fixed and mobile field, the initiation of proceedings by the Authorities and the consequent delays in the implementation of the new strategies, the formalities connected to the exercise of special powers by the Government (Golden Power) with effects to be assessed in terms of strategic choices and the temporal development of the Plan objectives.

Impacts on Sparkle and energy expenditure

“For the Tim Group, in particular for Telecom Italia Sparkle, there may be repercussions in commercial relations, in the collection of trade receivables and in assets present in the country, the value of which, although dependent on the development of the conflict, is currently considered not significant “.

With reference to the cost of energy“It should be noted that the Tim Group has implemented a coverage program which, on the domestic perimeter, made it possible to cover most of the 2022 and most of the 2023 requirements in advance.

A point of particular attention deserves the impact that the current geopolitical context can have on the supply chain. “In particular, an inflationary scenario of energy costs can affect transport costs and those of raw materials. Furthermore, the prolongation of the Chinese lock-down is causing congestion in the main ports, an increase in average delivery times and difficulties in procuring some materials and equipment necessary for the development of the network and some contracts ”.

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Tim, July 7 detailed plan on reorganization – CorCom


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