Telecom Italia cuts expected decline in core earnings for 2022

The Tim logo is seen at its headquarters in Rome, Italy, November 22, 2021. REUTERS/Yara Nardi

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MILAN, Aug 3 (Reuters) – Telecom Italia (TIM) (TLIT.MI) trimmed its 2022 expected profit decline to raise its outlook based on its second-quarter results, helped by lower costs and the company’s contribution. Brazilian subsidiary.

TIM is struggling to stay competitive in its home market, where it makes the bulk of its revenue, and posted a record net loss of 8.4 billion euros ($8.5 billion) last year to following a series of downward revisions to its targets.

Confirming what sources had previously told Reuters, the company said on Wednesday it expects organic or self-generated core profit or EBITDA after rental costs to fall this year at a rate of “low percentage of teenagers”.

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That’s a slower pace compared to a previous forecast of a decline in “mid-to-tall teens.”

TIM, heir to Italy’s former telephone monopoly, said its base revenue after rental costs fell 12.3% to 1.3 billion euros in the April-June period, slightly ahead of a consensus of analysts provided by the company of 1.29 billion.

Total services revenue rose 1% in the second quarter to 3.64 billion euros, against an analyst forecast of 3.59 billion.

Italy’s biggest telecoms firm had accelerated its earnings release, which was due later on Wednesday, after media reports indicated an improvement in its 2022 forecast.

“The stabilization and revamping of the domestic business continued in the second quarter, as well as the acceleration of the development of TIM Brasil,” the company said, adding that it had already reached approximately 70% of its 2022 target of cost reduction.

TIM is now targeting savings of around €1.5 billion from a previous forecast of €960 million under a plan through 2024.

TIM shares gained 3.8% to 0.222 euros, outperforming a 1% rise in the Italian blue chip index (.FTMIB). However, the title remains close to a historic low in July.

Under Pietro Labriola, TIM’s fifth CEO in six years, TIM is seeking an overhaul of its business centered on ceding control of its landline network to state lender CDP in a bid to raise cash and reduce debt. Read more

Yet valuation and regulatory issues are thwarting those efforts, while the collapse of the coalition government led by Prime Minister Mario Draghi has further complicated plans.

In a separate statement, TIM said Sparkle Undersea Cables Unit Head Elisabetta Romano will replace Stefano Siragusa as head of TIM’s network operations.

TIM has also confirmed that it has renegotiated a contract with sports streaming service DAZN, giving up an exclusive right to distribute top Italian football league matches on its Timvision content platform. find out more ($1 = 0.9876 euros)

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Reporting by Elvira Pollina; Editing by Gianluca Semeraro, David Holmes and Josie Kao

Our standards: The Thomson Reuters Trust Principles.

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