Telecom Italia (TIM) is to present a €10.8 billion plan to avoid a takeover by US fund KKR this week. However, the presentation will be against a bleak backdrop of its annual results, says Reuters.
On three occasions this TIM has presented warnings about its 2021 earnings, most recently in December. Now analysts are forecasting an 11 per cent annual fall in core profit after leases. The rate of decline in profit actually rose to 23 per cent in the last quarter of 2021, according to a company-compiled consensus. Domestic revenues are forecast to fall 2.9 per cent in 2021. One-off impairments and write downs will darken the picture, Reuters’ sources have predicted.
Changes to a tax scheme created a €5.9 billion boost to TIM earnings in 2020, which may have distorted have significantly reduced the perception of the underlying malaise at the telco. Milan-based broker Akros has calculated that the reality adjustment made by analysts could see TIM suffer a €4 billion write-down as a consequence.
The main event will be the dramatic conflict between new CEO Pietro Labriola and the Wall Street fund holders KKR. Labriola’s rallying speech will comprise his strategy for 2022-2024, which is expected to centre around a split of TIM’s assets and operations.
The TIM board is due both to review the plan and sign off on the results on Wednesday March 2nd.