TIM this week warned that earnings at its domestic business in 2021 will be lower than it had previously forecast.

There’s a Groundhog Day vibe about this announcement. It’s the third time this year alone that the Italian incumbent has issued a profit warning, with its previous forecast downgrade coming as recently as October. That’s not great, by anyone’s standards.

The telco said it expects organic EBITDA AL for its domestic business unit to decline in the “low teens” in the current fiscal year compared with last. In October it guided for a high single-digit decrease, while in July it was looking at a mid-single digit decrease. As a result, this latest forecast is some way off the “stable” earnings performance it expected to bring in at the start of the year.

Its reasons have been consistent; it’s all about fixed-line and football. The trouble started thanks to the distribution deal for top-flight football it inked with DAZN earlier this year, which as well as proving controversial from a competitive point of view, has proved much less lucrative than TIM had hoped. Indeed, earlier this month Reuters reported that the telco is looking to renegotiate the terms of the accord, which it says is costing around €1 billion over three years.

The forecast downgrade reflects “lower revenues from wireline, partly attributable to the performance of the partnership with DAZN for the distribution of the Serie A TIM,” the operator confirmed, in an announcement that was shared surprisingly – or perhaps not – late in the evening on Wednesday. Unlike a separate release trumpeting TIM’s new European speed record; it hit 5 Gbps on a live 5G standalone network in Rome, using mmWave and 3.7 GHz frequencies, it proudly proclaimed mid-morning on Thursday. As distraction techniques go, it’s a pretty good one, but the industry is unlikely to overlook some serious issues at TIM’s Italian business just because a 5G trial went well.

Problems at the wireline unit are not all down to DAZN, incidentally. In the summer TIM noted that delays in a voucher scheme designed to provide access to high-speed connectivity for low-income homes and businesses were impacting on its performance, while in October it blamed start-up costs for new strategic initiatives and general market conditions.

TIM is keen to point out that all is well in Brazil, but its one major overseas operation will not be enough to offset the weakness in Italy.

“Thanks to the growth of the Brazil Business Unit (‘mid single-digit,’ as previously communicated), 2021 Group EBITDA AL is expected to be higher than 5.4 billion euros,” TIM said.

Which sounds positive, doesn’t it? Until you look at the telco’s 2020 annual results as discover that group EBITDA AL came in at €6.25 billion last year. We’re looking at a decline of around 13%-14%.

TIM reiterated its guidance on group organic service revenues – a low single-digit drop – and said net financial debt will be around €17.6 billion after the payment of licences to the tune of €435 million, including €140 million following the award of 5G spectrum in Brazil. It said it will submit its 2022-2024 plan and three-year guidance alongside its 2021 results. The guidance “will take into account the expected consolidation of the Oi mobile assets and the reorganization activities required to face the still challenging competitive context,” TIM said. That should make interesting reading.

In the meantime, TIM, its new CEO, and a raft of executives in new and updated job roles have to keep things moving along against the backdrop of the KKR takeover bid. Challenging times indeed.

Image courtesy of YouTube