TIM expects tough market conditions in Italy and Brazil

TIM management headed by chairman Fulvio Conti has a big task to turn around its telecom business units in Italy and Brazil.
TIM Brazil network
TIM Group revenues dropped 4.6 percent to 4,471 million euros in the first quarter of 2019 due to a decrease of 155 million euros in Italy and 54 million euros dip in Brazil.

TIM, despite bringing a new management in place, could not revise its revenue or Capex targets.

TIM group service revenues are expected to post low single digit decrease for 2019, while low single digit growth is targeted for both 2020 and 2021.

TIM group EBITDA-AL is expected to decrease low single digit in 2019, while low single digit growth is targeted for both 2020 and 2021.

TIM Italy service revenues are expected to decrease low single digit over the period of the plan, with the aim of stabilizing from 2020.

TIM Brazil service revenues are expected grow by 3-5 percent in 2019, growing mid-single digit in both 2020 and 2021.

TIM Italy Capex is targeted at around 2.9 billion euro per year. TIM Brazil Capex will be about 12 billion Reais cumulated in the 3-year period.

Capex

TIM reported capital expenditure (Capex) of 607 million euros in Q1 2019.

TIM Italy spent 455 million euros in Q1 2019 vs 507 million euros in Q1 2018. The main focus of TIM Italy’s investment was on the fixed and mobile access components due to the coverage levels already achieved.

TIM’s Brazil Business Unit has posted capital expenditures of 152 million euros in Q1 2019 vs 153 million euros in Q1 2018. The main focus of TIM’s Brazil Business Unit was in the expansion of mobile broadband infrastructure and the development of the fixed broadband business of TIM Live.

Italy

TIM said revenues reached 3,502 million euros (–4.2 percent) in the first quarter of 2019.

TIM’s mobile services revenue in Italy dropped 12.9 percent to 616 million euros due to competition.

TIM’s fixed services revenue in Italy rose 0.7 percent to 868 million euros, reflecting a decrease in accesses, more than offset by higher ARPU levels.

TIM’s business segment revenue in Italy rose 0.3 percent to 1,142 million euros.

Brazil

TIM Brasil reported revenue of 4.191 billion reais (+1.7 percent). The main goals of the new strategy are to increase purchases of new connected devices giving TIM customers access to broadband services on 3G / 4G networks and to support new retention offerings for higher-value post-paid customers.

TIM Brasil’s mobile ARPU was 22.8 reais (+5.3 percent) due to an overall repositioning on the post-paid segment and new commercial initiatives aimed at boosting use of data and the customer’s average spending.

TIM Brasil has lost 0.8 million connections to reach the total base to 55.1 million from 55.9 million on December 31, 2018.

TIM Brasil said it lost 1.2 million prepaid customers and 0.4 million post-paid customers during the first quarter.

TIM Italy’s fixed consumer ARPU grew 9.4 percent and fiber customers reached almost 6 million lines.

TIM Italy added mobile lines and touched 31.7 million at the end March, up 2.3 percent.

TIM Group organic EBITDA was 1.8 billion euros, –2.1 percent, improved vs. –9.9 percent in Q4 2018. EBITDA margin grew to 40.7 percent from 40.4 percent thanks to cost cutting actions.

TIM has already reached around 99 percent of the population with 4G and 80 percent with fiber, and is committed to cover the entire country with fiber deployment, 5G and fixed wireless access.

Baburajan K