News
Italian operator details three-year strategic plan that includes 12 billion in investments in its home market.
Telecom Italia posted a decline in revenues and earnings last year as encouraging signs in its domestic market were overshadowed by weakness in Brazil.
But the operator has a plan to turn the business around: it will spend €12 billion in Italy over the next three years and about €3 billion in Brazil with a view to leaving behind its traditional telco roots and becoming a digital operator and platform company.
The Italian incumbent posted group revenues of €19.72 billion for the 12 months to the end of December, down 8.6% on the previous year; on an organic basis the decline was 4.6%.
EBITDA fell by 20.3% on a reported basis and by 17.9% organically to €7 billion.
Italy contributed €15 billion to group revenues, down 2% on 2014. However, on a quarter-by-quarter basis the trend is improving, Telecom Italia said. Domestic revenues slipped by 1.1% in Q4 versus the year-ago quarter, which compares with a 1.5% decline in Q3 and 3.3% drop in Q1.
In the Italian mobile space Telecom Italia, which now uses the TIM brand for all its retail offers, said revenue grew by 0.7% in the fourth quarter and service revenues crept up by 0.1%.
"This recovery in revenues may be attributed to the commercial actions focussed on the progressive stabilisation of the customer base – with a market share that is growing slightly in both mobile and fixed broadband – and growth in ARPU, thanks to the growth of revenues from fixed broadband, ICT and mobile Internet," the telco said in its results announcement.
The picture was less rosy in Brazil, where full-year revenues reached 17.14 billion reais (€3.8 billion), down 12.1% on 2014. The fall was caused by a slowdown in core mobile revenues, which was only partly offset by growth in mobile data and content revenues.
Revenues from product sales almost halved to BRL1.75 billion, a reflection of the Brazilian economic crisis and a reduction in household spending, Telecom Italia said. Mobile ARPU dropped to BRL16.7 from BRL17.7, while mobile customers declined by 12.5% to 66.23 million at the end of last year, reducing TIM Brasil’s market share to 25.7% from 27%.
Also this week, Telecom Italia presented details of its strategic plan for the 2016-2018 period, although its strategy is clearly focused on Italy, with Brazil playing a minor role.
"Over the course of the plan, TIM plans to complete the transition from traditional telco to digital telco and platform company, enabler of the country’s digital life: a business model based on innovative infrastructure and an excellent customer service, increasingly aimed at disseminating premium services and digital content within a customisable platform, accessible anywhere and on any device," Telecom Italia said.
It will invest close to €12 billion in Italy over the three-year period, €6.7 billion of which will be ploughed into innovation, including next-generation networks, LTE, the cloud and platforms, and Telecom Italia Sparkle, the company said.
It aims to reach 84% of the population with fibre networks and will spend €3.6 billion to get there, and will invest €1.2 billion in LTE with a view to covering 98% of the population. Sparkle will get €400 million.
In Brazil the telco will spend BRL14 billion (€3.1 billion), mainly on the development of network infrastructure.
Whether Telecom Italia still has a presence in Brazil by the end of 2018 remains to be seen.
