May 20, 2021
Telecom Italia (TIM) CEO Luigi Gubitosi expressed some confidence about the success of the plan to create a single fiber network in Italy through a merger of TIM's FiberCop with Open Fiber.
"Am I more optimistic? Yes," he said during TIM's earnings call on Thursday. Gubitosi indicated that this heightened optimism is largely based on the fact that Italian utility Enel recently agreed to sell its 50% stake in Open Fiber to state lender Cassa Depositi e Prestiti (CDP) and Australian fund Macquarie.
CDP is raising its stake from 50% to 60% and will also appoint a new CEO for the company. Macquarie will then own the remaining 40%.
"Enel has been a major slowdown factor in our discussion," Gubitosi said, pointing out that it took the utility eight months to complete its examination of the Macquarie proposal. "Things take some time to happen, but they do happen as expected," he said.
Although he does not expect discussions to be necessarily "less difficult" in terms of reaching final agreements, he thinks the matter is now going in the right direction, at least as far as TIM is concerned, and could progress at a quicker rate.
It also remains to be seen what will happen at the political level. Mario Draghi, Italy's latest prime minister, was said to have given the plan a thumbs-down after reports suggested that European competition authorities were horrified by plans to let TIM take control of Open Fiber.
Stable first quarter
Meanwhile, Telecom Italia (TIM) was clearly relieved to report that revenues were "finally flat" year on year in the first quarter of 2021 (Q1 2021), although the ongoing COVID-19 pandemic continues to leave its mark.
TIM said revenue on a like-for-like basis was €3.75 billion (US$4.57 billion), which is unchanged from the previous year on a comparable basis. It also confirmed that financial targets are being maintained.
Gubitosi said "importantly" revenues were "now becoming much more sustainable than they were in the past. And we continue to do what is needed to make them sustainable and cash generating."
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Organic earnings before interest, tax, depreciation and amortization (EBITDA) after lease costs fell 1.7% to €1.38 billion ($1.68 billion) in the January-March period, which Reuters noted compared to an analyst consensus provided by the telco of €1.37 billion ($1.7 billion).
The telco also managed to further trim its net debt, which fell to €21.15 billion ($25.8 billion) in the first quarter, down from over €26.7 billion ($32.6 billion) a year previously. Net debt after leases stood at €16.6 billion ($20.3 billion), down €5.1 billion ($6.2 billion) year-on-year and €2 billion ($2.4 billion) quarter-on-quarter.
In terms of strategic initiatives and growth drivers, football (aka soccer) TV content is set to play an even bigger role at TIM.
Much to Sky Italia's disgust, Italy's Lega Calcio recently awarded the TV rights to DAZN for exclusive broadcasts of seven Serie A matches weekly on all platforms with TIM.
TIM said its offer will launch from July 2021 once the rights have passed from Sky to DAZN. It is already positioning its TIMvision service as "the" choice for football and creating the term "fiber to the football" as a nice one-liner for interested pundits.
The operator is also placing heightened emphasis on what it calls "beyond connectivity," such as the Internet of Things, the cloud with its new Noovle venture, the smart home and a new smart district program with TIM factories.
Over in Brazil, an agreement has been signed to develop the fiber network with industrial partner IHS Fiber Brasil, which will acquire a stake in the new FiberCo, the owner of the secondary fiber network. The aim is to reach 8.9 million households in the next four years.
— Anne Morris, contributing editor, special to Light Reading
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