Tim’s reorganization plan will be revealed on July 7, marking Capital Market Day That – as the telecommunications company announced in a note after the Board of Directors approved the quarterly accounts – “Overcoming the vertical integration model, it will allow to accelerate the path towards sustainable cash flow generation and highlight the intrinsic value of the group’s assets“.
Directions and figures for the first quarter
To confirm the guidance already sent approving the work plan 2022-2024Tim closes the first 3 months of the year In great continuation with the trend already highlighted in the latter part of 2021. “In the first quarter, the company maintained its premium positioning (“value for size”) strategy, despite the challenging competitive environment and the absence of a coupon scheme for consumer customers which had a very positive impact on its performance last year,” the note reads.
More specifically, the Group’s services revenue amounted to €3.4 billion (-2.5% YoY). Organic EBITDA is €1.4 billionwhich equates to a decrease of 13.3% year-on-year. The net financial debt after lease as on March 31, 2022 was €17.7 billionup by 1.1 billion euros in one year and by 0.1 billion euros compared to December 31, 2021. Net financial debt was 22.6 billion, up 1.5 billion year-on-year and by 0.5 billion compared to December 31, 2021. Free cash flow is positive versus 123 million on a basis After leasing (€301 million for equity free cash flow).
Tim Brasil and Cloud Business (partially) compensate for losses
Domestic business unit revenue was €2,846 million, down €231 million compared to the first quarter of 2021 (-7.5%).. In terms of membership, it decreased by 236 million euros (-7.7% compared to the first quarter of 2021). The services revenue component decreased 5.3% year over year. The results were partially offset at the group level, by the good performance of Tim Brasil, which ended the quarter with revenue from services up 8.4%. Among the items marked with the plus sign Innovative services, with a 19% year-over-year growth in total ICT revenue, supported by strong revenue growth from the cloud business.
Revenues for phones, bundles and phones from the consumer segment – equal to 115 million euros and decreased by 75 million euros compared to the first quarter of 2021 – recorded the worst performance: -39.4%, Delta, the company explains, “is mainly due to the strong contraction in demand for connectivity after the Covid-19 period and the end of government incentive programmes, such as recognizing ISEE entry vouchers of less than €20,000.”
Fixed mobile beats
Total mobile revenue shows positive organic performance compared to Q1 2021 (+1.2%) Despite the negative contribution of independent services revenue (-1.3%). Gross fixed income in terms of organic value underwent a change of -15 million euros compared to the first quarter of 2021 (-2.0%) resulting from lower sales revenue; Revenue from services shows a growth of 1.5% mainly driven by increased revenue from ICT services.
The group’s 4G network covers more than 99% of the country’s population, and the volume of data managed on Tim’s mobile ultra-wideband network grew 47.8% year-on-year. As of March 31, 2022, Tim’s 5G network has reached 66 municipalities.
Fiber Optic Network Roadmap
On the infrastructure front, the development of the FTTH network continues with real estate unit coverage increasing by 7 percentage points in the last year.. Ultra broadband has been increased to over 94% of fixed lines. This percentage in white areas is about 75%. Moreover, the growth FTTH coverage, which reached more than 25% of real estate units.
The telecom operator announces its participation in the Italia 1G, Connected Schools Phase 2, and Connected Healthcare tenders, With most investments absorbed in the 2022-2024 directives.
15 million negative margin as a result of the Dozen deal
The €15 million represents negative margin in the first quarter of 2022, for the football contract with Dazen in reference to the operational performance of the business.. As detailed in the 2021 Financial Report, as part of the definition of the 2022-2024 Strategic Plan, business plan assumptions related to certain multimedia content display contracts have been updated. These analyzes highlighted negative margins associated with some of the existing partnerships, including between Tim and Dazen, and led to the need to implement In the 2021 budget, a total amount of 548 million euros To register the contractual risk fund for onerous contracts.
Management team completed
The company announces the completion of the management team. Optimizing internal and selected resources to guide the consumer and enterprise sectors, and managers with experience in the sector ensuring the contribution of more skills.
Uncertainty weighs on the future: inflation, war, and the golden power
Tim specifies, “The projected evolution of operations for 2022 could be affected by risks and uncertainties that depend on multiple factors, most of which are outside the Group’s control,” explaining The health emergency due to the spread of Covid-19, the conflict between Russia and Ukraine and increased purchase costs associated with inflationary pressures. Moreover, the following additional factors are called: change in the market context, entry of new potential competitors in the fixed and mobile sphere, initiation of actions by the authorities and consequent delays in the implementation of new strategies, formalities associated with the exercise of special powers by the government ( golden power) with impacts to be evaluated in terms of strategic options and the time evolution of the plan’s objectives.
Effects on Sparkle and Energy Expenditure
For Tim Group, In particular for Telecom Italia Sparkle there may be repercussions in business relations, in the collection of trade receivables and assets located in the country, which, although dependent on the development of the conflict, are not currently considered significant.
Referring to the energy costIt is worth noting that Tim Group has implemented a coverage program, on the local perimeter, that made it possible to cover most of the 2022 requirements and most of the 2023 requirements in advance.
A point of special attention deserves the impact that the current geopolitical context can have on the supply chain. “In particular, the inflationary scenario of energy costs could affect transportation costs and raw material costs. Moreover, the prolongation of the Chinese lockdown has caused congestion at major ports, increased average delivery times, difficulties in procuring some materials and equipment for network development and some contracts.
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