The operator reports falling revenues but TIM maintains perhaps the highest margins of any telco in Europe.
After yesterday’s board meeting, TIM is also progressing a number of big deals that could profoundly change the operator.
First, the earnings: for the half year to the end of June, TIM reported a net profit of €678 million, which is up 23% year on year. Net debt for the half year is down to €1.697 billion, a fall of €2.4 billion year on year.
The number of mobile subscribers remained stable in the half, but TIM acquired more than 500,000 new fibre customers. Service revenues were €7.3 billion, down 7.4% on the same period last year, due to the impact of the COVID-19 outbreak, but the company said, “revenue trend reflects rationalisation of the product portfolio and greater discipline in commercial processes launched last year”.
Hence “organic” earnings before interest, taxes, depreciation, and amortisation was €3.5 billion in the first half, which is down 6.9% year on year and 6.4% in the second quarter, but with margin at 46.1% – an improvement of 1.8% over last year.
The board supports the separation of the so-called secondary network, which includes the 80% share held by TIM in Flash Fiber, and the partnership with KKR Infrastructure and Fastweb (known as FiberCop).
KKR Infrastructure’s binding offer of €1.8 billion is for the purchase of 37.5% of FiberCop on the basis of an enterprise value of about €7.7 billion (equity value €4.7 billion) and was accepted by the board, subject to a resolution being found to the impasse that has dogged efforts to consolidate the country’s fibre infrastructure so far.
Hence KKR's FiberCop offer has been extended to 31 August after a commitment by the government to intensify efforts to form a single fibre network.
The board said it was in favour of accelerating the Single Network project and “will be enthusiastically taking part in the works the Government intends to launch over the next few hours, consequently duly appointing the Chief Executive Officer to discuss all the relevant aspects with the government authorities”.
Assuming this is resolved, and the KKR transaction goes ahead, Fastweb will hold 4.5% of the share capital of FiberCop in exchange for the transfer of the 20% it holds currently in Flash Fiber.
Brazil and INWIT deals
The board approved the binding offer of 16.5 billion Reais (€2.637 billion) for the acquisition of the mobile business of the Brazilian Group Oi made by TIM Brasil, VIVO and Claro. If accepted, the offer will make the consortium a “stalking horse” in the sale process during the year.
Finally, TIM has signed the long-mooted contract with the consortium led by Ardian Infrastructure to acquire a minority stake in the holding company that owns TIM’s stake in the infrastructure firm INWIT. It expects to collect the agreed price of €1.6 billion by the end of the third quarter.