Telecom Italia cuts 2021 core profit goal on home market weakness

·1 min read
FILE PHOTO: Telecom Italia new logo is seen at the headquarter in Rozzano neighbourhood of Milan

MILAN (Reuters) - Telecom Italia (TIM), Italy's largest telecoms company, on Wednesday said it had further cut its 2021 core profit guidance to reflect worsening market conditions.

It said its board had discussed a possible reorganisation to extract value from the group's assets and asked CEO Luigi Gubitosi to continue to study options.

Organic earnings before interest, tax, depreciation and amortisation after leases (EBITDA-AL) fell 7.6% year-on-year to 1.46 billion euros in the third quarter, just below an analyst consensus provided by the company of 1.47 billion euros.

Europe's sixth-largest telecoms group said domestic revenues fell 3.2% year-on-year to 3.1 billion euros, in line with expectations.

Like other European peers, TIM is grappling with aggressive price competition on its crowded home market, which accounts for nearly 80% of sales.

TIM said it expected its organic EBITDA-AL to post a mid- single digit drop this year, versus a previous forecast for a low-to-mid single digit decline.

TIM also pushed back a goal to stabilise domestic service revenues in 2021, forecasting a low single digit decrease.

It now sees the cumulated free cash flow over the 2021-2023 period at around 3.5 billion euros from around 4.0 billion euros previously.

A source close to French media group Vivendi, TIM's top investor behind state lender CDP, on Wednesday said the group remained committed to supporting TIM despite the disappointing results.

In July TIM had pushed back a target to stabilise its core profit this year citing the start-up costs of a partnership with sport video streaming app DAZN to distribute Italy's top-flight soccer matches.

(Reporting by Elvira Pollina; editing by Valentina Za and Aurora Ellis)

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