news


TIM annual revenues drop 5.1% but eyes future through convergence

Telecom Italia has reported its financial results for 2019, with Group revenues standing at €17.97 billion, a 5.1% year-on-year decline.

While performance in the Brazilian business stood relatively stable in comparison to the previous year, the domestic Italian unit saw the dramatic drop. Revenues in Italy were €14.08 billion, a 6.3% decline, as competition in the market continues to take a bite out of the operator’s fortunes.

Although this does not make for the prettiest of pictures, the Board of Directors has also approved the 2020-2022 Strategic Plan. As part of the plan, TIM has outlined several key objectives for the next 24 months:

  • Increase Equity Free Cash Flow to €4.5-5 billion
  • Bring group net debt below €20 billion by 2021. Proceeds from the sale of 12.4% of INWIT will contribute towards this element of the plan
  • Group Organic Services Revenues will decline slightly over this period, as are Revenues from Domestic services
  • Domestic Capex is expected to be roughly €2.9 billion each year

In the consumer division, convergence is the key word. The core business of connectivity is key to this drive, though adjacent services (TV, smart home, security or gaming for example) are expected to grow revenues and improve the resilience of the business. The deployment of ultrabroadband services is another area to bolster the offering here.

Another interesting element of the consumer business unit is the ‘TIMVision’ initiative. This content proposition is taking more of an aggregator approach and is starting to look very healthy. Partnerships with Disney, Netflix, Sky, Dazn and Amazon are creating an attractive platform, which when bundled effectively, might give TIM an edge in the ultra-competitive environment.

Looking at the business and whole elements of the business, these are two areas which have been primed for growth by the team. The recently announced partnership with Google Cloud will certainly open up new opportunities in the increasingly important cloud services market, while tie-ups with the likes Olivetti in IoT and Telsy in cybersecurity have the potential to open new revenue streams.

In wholesale, the full-fibre deployment plan will see 5.1 million homes passed in 2022. Opening up this network does increase competition in the market, though the wholesale opportunity does look like an attractive one.

Looking at the financials and competition elements of TIM alone does not create the most comfortable reading. Italy is a tricky market, though TIM is pivoting to create a more diversified and future-proofed business. The groundwork looks to be effective but soon enough the team will have to enter into execution phase. There is opportunity, but Italy is a fast-evolving market.


Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Polls

What do you think will be the most likely role 5G operators will play in private 5G networks?

Loading ... Loading ...