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4-Traders Homepage  >  Equities  >  Bolsa de valores de Sao Paulo  >  TIM Participacoes SA    TIMP3   BRTIMPACNOR1

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Telecom Italia earnings hit by litigation, severance costs

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11/10/2017 | 01:40pm CET
Telecom Italia CEO Amos Genish looks on during a debate at the RAI state television headquarters in Rome

Telecom Italia's (TIM) (>> Telecom Italia) quarterly results fell short of forecasts, dragged lower by litigation costs and severance payments in a tumultuous year for the former state monopoly.

Telecom Italia's (TIM) (>> Telecom Italia) quarterly results fell short of forecasts, dragged lower by litigation costs and severance payments in a tumultuous year for the former state monopoly.

TIM lost its chief executive in July as top shareholder Vivendi (>> Vivendi) tightened its grip on the company. Then last month Italy's government, alarmed at the French company's growing influence, activated a "golden power" to have a say in TIM's strategic decisions.

TIM's fixed-line business is losing value, new competitors are appearing in both broadband and mobile and its only foreign business, Brazil, is still in recovery mode.

Ousted CEO Cattaneo had made it a priority to revive growth in Italy, but on Friday the company said Italian sales growth slowed to less than 1 percent in the third quarter from 4 percent in the second. Profits in Italy fell 6 percent.

In the first set of results released under Cattaneo's replacement, Vivendi protege Amos Genish, TIM said its earnings before interest, tax, depreciation and amortisation (EBITDA) fell 2.5 percent to 2.1 billion euros (1.82 billion pounds), below a consensus analyst forecast provided by the company of 2.2 billion euros.

The shares were up 1.3 percent by 1223 GMT after a sharp early sell-off that traders blamed on human error.

"Domestic indicators have softened a bit, but Brazil is doing well and guidance was confirmed, so positive overall," a Milan-based trader said.

Earlier this week, TIM's Brazilian unit, TIM Participações (>> TIM Participacoes SA), beat estimates with its quarterly earnings as customers continued to shift away from pre-paid plans in the strengthening economy.


Genish inherits a company saddled with 26 billion euros of debt. The imminent arrival of low-cost French mobile challenger Iliad (>> Iliad) is likely to squeeze profits further. Rival investments in broadband infrastructure by power firm Enel (>> Enel) are also undermining TIM's broadband drive.

Non-recurring charges of 127 million euros for litigation, regulatory and severance items were bigger than expected. TIM did not say exactly what they related to.

However, the company gave a 25 million euro severance package to Cattaneo, who left after just 16 months in the job following clashes with Vivendi.

The company has been fighting a number of regulatory battles. Earlier this year Italy's antitrust authority launched an inquiry into TIM's roll-out of ultrafast broadband in rural and sparsely populated areas.

A conference call with Genish later on Friday could offer clues on the strategy that the former Israeli army captain and favourite of Vivendi chairman Vincent Bollore might pursue.

(Additional reporting by Stephen Jewkes and Danilo Masoni; editing by Tom Pfeiffer and Elaine Hardcastle)

By Agnieszka Flak

Stocks treated in this article : Vivendi, Iliad, Enel, Telecom Italia, TIM Participacoes SA
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Financials ( BRL)
Sales 2017 16 277 M
EBIT 2017 1 798 M
Net income 2017 921 M
Debt 2017 2 855 M
Yield 2017 1,02%
P/E ratio 2017 29,49
P/E ratio 2018 22,71
EV / Sales 2017 1,95x
EV / Sales 2018 1,83x
Capitalization 28 956 M
Duration : Period :
TIM Participacoes SA Technical Analysis Chart | TIMP3 | BRTIMPACNOR1 | 4-Traders
Technical analysis trends TIM PARTICIPACOES SA
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 11,9  BRL
Spread / Average Target -0,71%
EPS Revisions
Stefano de Angelis Chief Executive Officer & Director
Franco Bertone Chairman
Pietro Labriola Chief Operating Officer
Adrián Calaza Chief Financial Officer
Leonardo de Carvalho Capdeville Chief Technology Officer
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