By Elvira Pollina
MILAN (Reuters) – Telecom Italia (TIM) core profit fell a touch less than feared last year, helped by lower costs and some signs of improvement in its battered domestic business in the fourth quarter, the former Italian phone monopoly said on Tuesday.
Italy’s biggest phone group said earnings before interest, tax, depreciation and amortisation (EBITDA) including lease costs fell 10.6% to 5 billion euros in the 12 months to Dec. 31.
That compares with a “low-teens” decrease targeted by TIM and was in line with an average analyst forecast of 4.988 billion euros, according to a company-provided consensus.
Total group service revenue rose by 1.3% to 14.6 billion euros, exceeding analysts expectations for a rise of 0.6% and the company’s target for a ‘low single digit decrease’.
Net financial debt stood at 25.4 billion euros as of Dec. 31, up by 3.2 billion euros from the year before.
TIM, led by CEO Pietro Labriola, is facing an uncertain future as leading shareholders and the government try to reshape the company.
Earlier this month, U.S. investment firm KKR, which is already a minority investor in TIM’s landline grid, offered to buy a controlling stake in a unit comprising TIM’s fixed network assets and submarine cable unit Sparkle.
Hit by a steady erosion of its earnings and sales over the past decade amid stiff price competition on its home turf, TIM said its domestic service revenues, which contribute the bulk of overall group sales, fell by 3.4% to 10.8 billion euros in 2022.
TIM is expected later on Tuesday to issue an update of its business plan for 2023-2025, including new financial targets.
It is also expected to provide more details of its turnaround strategy, centred on reorganisation into several units in order to sell assets and cut debt.
TIM confirmed its board would meet on Feb. 24 to assess KKR’s non-binding bid for its network.
“TIM remains open to assessing any alternatives that may arise in the meantime and will continue talking to its stakeholders,” it said.
TIM’s second biggest investor, state lender CDP, is also studying an offer together with Australian infrastructure fund Macquarie for an asset over which the government has special powers to block unwanted interest.
(Reporting by Elvira Pollina; Editing by Keith Weir)
