Telecom Italia warns of steeper revenue decline amid COVID-19Telecom Italia warns of steeper revenue decline amid COVID-19
Italian operator's CEO said revenue will suffer even as demand for communication and entertainment services booms.
April 9, 2020
Telecoms may have been regarded as one sector that could be reasonably immune to the impact of COVID-19, but Telecom Italia (TIM) has become the latest operator to indicate that company finances could be hard hit and targets missed.
Luigi Gubitosi, CEO of TIM, is said to have warned that revenue will be adversely affected by the closure of shops and the subsequent inability to sell phones and services, a postponement of investments by other companies, and a loss of roaming revenue because of travel restrictions.
TIM recently reported that its domestic revenue fell by 6.3% to €14.1 billion (US$15.3 billion) in 2019. For 2020, the operator had forecast a low single-digit decrease in organic revenue, with revenue then expected to increase slightly in 2021-2022. In the wider Italian economy, business lobby Confindustria expects gross domestic product to fall by 6% in 2020.
TIM is not the only operator to have warned that the health crisis will affect business growth. Proximus recently said that it is difficult to estimate what the overall impact will be, although it has already indicated that capex spending will fall and EBITDA will be negatively affected.
Sweden's Telia has also warned that its 2020 EBITDA outlook will not be reached, although it is reluctant to provide an updated outlook until more is known. France's Bouygues Telecom has also scrapped guidance over COVID-19 uncertainty.
Amid all the uncertainty, telecom operators are grappling with unprecedented network demand as more people work from home and also increasingly rely on streaming services for entertainment. TIM is one operator that has been stepping up efforts to respond to this demand. According to Reuters, Gubitosi also called for the operator's desired merger with Open Fiber to go ahead in order to reduce overall investments, although tensions between the two network providers have been running high in recent months.
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— Anne Morris, Contributing Editor, Light Reading
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