TIM restores dividends as debt drops and Sparkle sale is agreedTIM restores dividends as debt drops and Sparkle sale is agreed

That's the plan outlined in the Italian operator's full-year results announcement, published late on Wednesday. The numbers look decent, although revenue growth was driven primarily by the Brazilian business, and growth at TIM's Consumer operations in Italy was a little soft.

TIM shared its financial figures just hours after disclosing that its board of directors had approved the sale of subsea cable business Sparkle to the Ministry of Economy and Finance (MEF) and partner Retelit for €700 million, as per the offer tabled at the back end of last year.

"The signing will take place by 11 April 2025 and the sale is expected to be finalized by the first quarter of 2026, once the preparatory activities, including obtaining Antitrust and Golden Power authorizations, will be completed," TIM said.

It noted that the cash from the Sparkle deal will be instrumental in enabling it to return to dividend payments next year.

It will pay out 70% of its free cash flow in 2026 and 2027, which will mean payouts of around half a billion euros per year. In addition, half of the proceeds from the Sparkle sale, or around €350 million, will go to shareholders as an extraordinary dividend in 2026.

TIM's share price ticked up on the news. At the time of writing it was trading at €0.31, which is noteworthy given that it represents an approximately 17-month high.

TIM chief executive Pietro Labriola was also on something of a high.

"2024 was a year of great transformation for our Group, marked by the completion of NetCo disposal and the strengthening of our position in our reference markets," Labriola said. "For the third year in a row we fully met the Group guidance, transforming TIM into a more solid and focused company."

Labriola described the Sparkle agreement as "the last step" of the strategic plan he laid out in 2022 that paved the way for the network spin-off and asset sales.

The plan has gone well, in that TIM has successfully hived off various bits of its business and brought down its debt pile; adjusted net debt after leases dropped to €7.27 billion as of the end of last year, down from more than €20 billion a year earlier on the back of the NetCo sale, organic cash generation in the second half of the year, and the sale of TIM's remaining stake in towers business INWIT.

And its numbers look pretty strong too, although there is clearly still work to be done at the Italian business.

TIM Brasil drove a 3.1% hike in group revenues to €14.5 billion; the Italian business played its part, but growth was lower at 1.5% to €10.2 billion. Both divisions posted earnings growth of 8.3% though, pushing group EBITDA to €4.3 billion.

TIM's Enterprise unit is its growth driver in its home market, posting a topline uplift of 4.1% to €3.3 billion, while the more competitively-constrained TIM Consumer unit saw turnover creep up by 0.6% to €6.1 billion.

The figures are evidence that Consumer is continuing "on its path of stabilization," TIM said, citing the impact of price hikes and reduced churn.

But they also serve to illustrate why there has been so much M&A talk swirling around TIM in recent months.

The latest rumours came just days ago, when it emerged that Iliad might be interested in merging TIM Consumer with its own Italian operations, essentially as a way to help ease the competitive pinch that it played a large part in triggering when it launched in Italy almost seven years ago.

Poste Italiane is now also on the list of possible TIM buyers, and a number of private equity firms remain in the frame. And noone's quite sure what TIM shareholder Vivendi's plans are in Italy.

But the TIM board had nothing to say on that front, at least publicly. They approved the numbers and the MEF offer for Sparkle, and that was all, which was probably not surprising. It's safe to say we haven't heard the last of a possible TIM takeover though.