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TIM, 2023 financial results. Comment from CEO Pietro Labriola

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TIM, 2023 financial results. Comment from CEO Pietro Labriola

CEO Pietro Labriola’s comment directly from the official website gruppotim.it

“Today we presented to the market the preliminary results of the TIM Group for 2023, the second year of management of the current management team but also a turning point in the history of the Group: this is the last time we refer to TIM as we are used to knowing it, a single integrated company.

The last two years have been intense – not to say that we have navigated the “perfect storm” – and we have done two jobs at the same time: managing the operations and refinancing of the company and at the same time streamlining TIM, to pursue our strategic vision to long term of an operator no longer vertically integrated.

When we started 2022, inflation did not exist, the risk-free rate was in negative territory and the Italian economy was in good shape. Since then, a sequence of events has made the macro scenario much more complex: two wars, the boom in energy prices, an inflationary spiral to which the market and industry were no longer accustomed. This was followed by a sharp increase in interest rates that is still present today.

Let’s not forget that in 2021-2022 the Italian market was driven by very strong price competition and that we were the first to introduce elements of rationality. Today the market remains probably the most competitive in Europe, but has improved in the last two years. For example, portfolio revaluation has been implemented by almost all operators, and the ‘washing machine’ effect in the mobile sector is significantly lower.

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Despite these challenges, we managed to improve operations in Italy and lay the foundations for long-term structural growth, while Brazil reaped the benefits of what was sown in 6 years of restructuring.

For the second consecutive year we present full year results in line with forecasts on all metrics, something that has never happened in the last 12 years.

The 2023 results represent another important step in building investor confidence and the positive development of our bonds indicates that the market believes in our streamlining strategy. For us, this is very important and, of course, we are fully committed to a timely and successful closing of the agreement for the transfer of fixed network access infrastructure.

At the Group level, Services Revenue increased by 2.3% year-on-year, achieving the Low-Single-Digit growth target, while EBITDA increased by 5.7% year-on-year, in line with the goal of growth at Mid-Single-Digit.

In Italy, Service Revenues are essentially stable, while EBITDA increased by 1.7% year-on-year, in line with the flat or Mid-Single-Digit growth objective.

At the start of 2023, we were confident we would hit our forecast because we knew operations would continue to improve. However, achieving the objectives was not a given and I am happy that our execution was flawless.

Performance in Italy continues to improve both year-on-year and sequentially. For the first time in 22 quarters, Service Revenue returned to growth in the fourth quarter. EBITDA turned positive in the second quarter after more than five years and is increasing for the third consecutive quarter with robust growth of +5.5% year over year.

The direction is clear: Italian operations are progressively moving towards structural growth. We are confident that the perimeter of what will be the new TIM is well positioned to confirm this trend, not only from an economic point of view but above all from a financial point of view.

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Going into the detail of the individual businesses, the trend in revenues from services in the TIM Consumer sector is constantly improving and TIM Enterprise has developed faster than the market also in 2023, with revenues from services increasing by more than 5% year on year. A week ago, TIM Brasil reported solid results on all fronts, exceeding full-year forecasts. Thanks to operational performance, the company achieved its highest operating cash flow ever, reaching more than 17% of net revenues, a solid cash generation base that supports solid shareholder compensation. Once again, we anticipated this performance when we acquired Oi and have delivered on our promise. NetCo confirms the positive trend in revenues thanks to the new regulated prices that we have strongly requested to guarantee an adequate return on investments and the improvement of the technological mix.

The transformation plan is well executed, we are ensuring full cost discipline and we can push further in this direction.

I also remember that we collected over 700 million in PNRR funds and refinanced more than 4 billion in the year, with maturities covered until the end of 2025.

I therefore conclude by saying that we are proud of what we have achieved against all odds. But the fun never stops… and in 3 weeks we will meet to open the chapter on the future of TIM.”

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