TIM: the Board of Directors approves the results at March 31, 2022
May 5, 2022
TIM’s Board of Directors met today under the chairmanship of Salvatore Rossi and approved the periodic financial reporting at March 31, 2022. Performance of revenues and organic EBITDA for the quarter is in line with the plan forecasts for 2022.
TIM Group has embarked on a substantial process of change, the first phase of which was completed only at the end of the first quarter and was achieved through the appointment of Chief Executive Officer, Pietro Labriola, at the end of January, the presentation of Group transformation guidelines in early March and the completion of the new executive team in April.
The first quarter, although characterized by business performance and results in substantial continuity with the trend already seen in the latter part of 2021, marks therefore a moment of discontinuity in the management of the Group, with a strong focus on respecting guidance.
On 7 July, to mark TIM’s Capital Market Day, the reorganization project will be unveiled to the market. The plan, overcoming the vertical integration model, will speed up the route towards a sustainable generation of cash flows and reveal the intrinsic value of the Group’s assets.
During the first quarter, the company maintained a premium positioning strategy (“value vs. volume”), despite the difficult competition and the absence of the voucher plan for consumer customers, which had a very positive impact on the performance of the same period last year.
Net financial debt after lease at March 31, 2022 stood at 17.7 billion euros, up 1.1 billion euros YoY and 0.1 billion euros on December 31, 2021. Net financial debt came to 22.6 billion euros, up 1.5 billion euros YoY and 0.5 billion on December 31, 2021. Equity free cash flow was positive for 123 million euros on an after-lease basis (301 million euros equity free cash flow).
In terms of strategic initiatives, the main changes are:
- Fiber Network: work to develop the FTTH network continues, increasing the FTTH coverage of technical units by 7 percentage points in the last year. As a result the TIM Group brought ultrabroadband to more than 94% of fixed lines.
- National Strategic Hub: TIM, together with Leonardo, Cassa Depositi Prestiti and Sogei, presented the final offer for the design, implementation and management of an infrastructure for the supply of cloud services for the public administration (National Strategic Hub). The offer follows the private initiative project finance proposal presented by the same companies in recent months and selected, last December 27, by the Presidency of the Council of Ministers - Department for Digital Transformation (Decree no. 47/2021-NRRP) as the reference proposal for launching the tender, with the “right to match”. In case of final award (the announcement is expected by the end of June), the new company would provide Cloud services and infrastructure to the Public Administration, acquiring them mainly from industrial partners.
- NRRP: TIM is participating to various tenders run by the public administration, including “Italia 1 Giga”, “Connected Schools phase 2” and "Connected Health Care”, with much of the investments absorbed in the 2022-2024 guidance.
- Brazil: last April 20, Oi’s mobile assets acquisition was completed by TIM Brasil, Claro and Vivo. was completed. The net present value of the synergies estimated for TIM Brasil is 16-19 billion Brazilian reais, while the incremental impact on revenues and EBITDA in the remaining months of 2022 is estimated respectively as 1.8 billion and 1.1 billion Brazilian reais.
- New organization and executive team: the organization has been redesigned and the new management team responsible to guide the company through the major transformation envisaged by the 2022-2024 plan has been completed. Internal resources have been promoted and external managers with solid experience in the sector have been appointed to guide the Consumer and the Enterprise segments, bringing additional expertise to the Group.
First quarter 2022 performance
The churn rate continues to improve in both fixed (3.4%, -0.2pp YoY) and mobile (3.7%, -0.1pp YoY) segments.
In mobile, both total lines performance (30.4 million) and ARPU (human ARPU €-0.1/month per customer) are stable, reflecting a partial return to rationality in the market, also visible in the slowdown of customer flows between operators (market mobile number portability -10% YoY).
In fixed, total line performance slows in the quarter (-108 thousand compared to the previous quarter) also due to the end of the first phase of the voucher program promoted by the Government and managed by Infratel Italia and the delayed launch of the second phase. Retail ARPU (BB+ICT) is up 2.5% YoY.
Ultrabroadband lines came to 10.2 million (retail and wholesale), increasing by 236 thousand lines in the quarter.
Revenues generated by innovative services continue to show strong growth, with total ICT revenues up 19% YoY, driven by the strong growth of Cloud services. Overall, the Domestic Business Unit service revenues are down by 5.3% YoY, partly offset on a Group level by the good performance of TIM Brasil, with service revenues up by 8.4% YoY.
Service revenues and organic EBITDA in the quarter are in line with guidance.
The quarter’s service revenues come to 3.4 billion euros, down -2.5% YoY.
The Group’s organic EBITDA at March 31 comes in at 1.4 billion euros (down -13.3% YoY) in line with guidance, with the Domestic Business Unit at 1.0 billion euros (down -18,3% YoY) and TIM Brasil at 0.4 billion euros (up 5.1% YoY). The reduction in the domestic margin is mainly related to the revenue trend, with operating costs stable YoY to support growth of the ICT and multimedia businesses.
The Group’s EBITDA after lease comes to 1.2 billion euros, down -16.3% YoY, while at domestic level it comes to 0.9 billion euros, down -20.4% YoY, with the negative performance mainly due to the presence, in the first quarter of 2021, of non-repeatable transactions in national wholesale. At Group level, investments stand at 0.9 billion euros, in line with the plan and with the increase in the quarter (+30.2% YoY) mainly driven by the speeding up of the network transformation in Italy (fiber and 5G mobile), Cloud and data center.
The net result attributable to the owners of the parent company stands at -0.2 billion euros in line with the 2021 first quarter results.
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