• Telecom Italia has been struggling to make gains in its home market
• It has now seen a modest increase in second-quarter revenue in its Italian operation
• Brazil has also contributed to overall performance
• The operator has issued an update on its plan to sell fixed unit NetCo

Telecom Italia (TIM) has reported stabilised second-quarter results in its domestic market for the first time in years, as the operator makes headway with its plan to sell NetCo, its fixed access and international networks division.

In its earnings report for the period ending 30 June 2023, the Italian operator booked total revenues of €4bn, up 2.8% year on year, which was in line with its own targets in its business plan for the three-year period to 2025.

The operator's very modest year-on-year increase in revenue in the country of 0.6% to €2.9bn represented “the first growth in 20 quarters”. Nonetheless, it was a challenging period as mobile revenue in the market dropped 4.2% to €719m, while revenue from fixed services was up a mere 0.2% to €2bn.

Its revenue in Brazil was 9.2% higher at €1.1bn than in the same period in 2022, driven by price increases in post-paid services and the migration of fixed customers to fibre.  

The telco’s Consumer segment booked a 5.6% year-on-year decline in total revenue, which it claimed was an improvement compared to previous quarters, while its Business unit revenue was up 1.1% year on year, with the main contributing factors being its cloud, security and other IT services. However, performance from traditional telephony and internet of things (IoT) services was down in the period.

Progressing as planned

Telecom Italia highlighted its NetCo performance was on the up, with revenue growing by 7.8% year on year in the quarter, though it did not disclose specific figures in its statement. A “better mix of technologies (from copper to fibre)” and new regulated prices for 2023, reversing a 10-year trend of tariff reductions, were the main driving forces behind this growth.

The plan to sell NetCo is “progressing as planned” and the telco is now in exclusive negotiations with private equity firm KKR (Kohlberg Kravis Roberts), which is believed to have offered more than €23bn for TIM’s fixed-line business. While it did not confirm the value of the bid, the company’s latest financial statement noted that the “necessary activities to receive a conclusive binding offer by September 30 are ongoing.”

The cash from the deal would without a doubt come in handy for the telco, which is still in the red: It booked a net loss of €124m in the second quarter (though this was down from a loss of €279m in the second quarter of 2022).

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV