TIM earnings jump after NetCo sale

The Italian incumbent late on Wednesday presented its first quarterly figures since the NetCo sale – it closed the disposal of the business to KKR two days into Q3 – and while its stock price is still in the doldrums, the numbers are broadly positive.

Earnings are the highlight, with group EBITDA after leases rising by 11.1% year-on-year to €2.7 billion for the nine months, including a creditable 8.3% rise in the domestic market. In the third quarter alone EBITDAaL was up by 7.6% to €1.1 billion, driven by 7.9% growth in Italy.

All the telco's numbers are presented on a like-for-like basis, incidentally, to account for the sale of NetCo.

Italian financial daily Il Sole 24 Ore described TIM's financial performance as a post-network outfit as "better than expected, especially with regard to EBITDA."

The operator reported growth in its top line too, with overall revenues growing by 3.4% to €10.7 billion in the first nine months, driven by expansion in Brazil. However, that all-important domestic figure came in up 1.8% to €7.4 billion, with service revenue growth slightly bigger at 2.7%.

TIM's performance in Italy came thanks largely to its Enterprise division, where revenues increased by 5.8% on-year to €2.3 billion. In particular TIM highlighted a solid performance in cloud services, where revenues grew by 22% and were given a boost by the telco's involvement in Italy's Polo Strategico Nazionale, or National Strategic Hub project. It also pointed to good growth in security and IoT services.

Cloud is an area TIM identified as an after-NetCo growth-driver for the Enterprise business earlier this year. That suggests the telco's current strategic plan is starting to come together, which is doubtless something of a relief for chief executive Pietro Labriola, who remains under fire from certain corners. Last week he told Bloomberg that he had no intention of stepping down, despite reports to that effect from the Italian press, and remains committed to seeing through his turnaround plan.

That plan targets a 2% CAGR in domestic revenue over the 2023-2026 period and, as the latest set of figures shows, TIM is close but not there yet. It could do with generating some growth from its Consumer business, where revenues were flat at €4.5 billion in the first nine months, while service revenues crept up by just 0.2%.

Increasing ARPU is key, but that's easier said than done. TIM attributed its top line stabilisation in Consumer to the impact of price hikes earlier this year and a hefty 22% increase in ARPU at TIMVision, as well as growth in MVNO and roaming revenues. However, while fixed consumer ARPU did increase by a couple of euros in Q3, TIM glossed over a decline in average mobile revenues, which slid by 20 cents to €10.60.

That said, this is a pretty good set of numbers from TIM. It remains in the red, but its net loss more than halved to €509 million in the first nine months. And as of mid-morning its share price was starting to tick upwards.

So far, so good for ServCo TIM.