TIM to invest €11 billion as sales, earnings jump in last quarter

Telecom Italia

Telecom Italia (TIM) will invest €11 billion over the next three years on premium digital services and improving its networks as part of a new three-year plan.

CEO Flavio Cattaneo unveiled the strategy as the operator’s preliminary 2016 financial results showed improving revenues and a marked jump in EBITDA after a positive end to the year.

The investments, ring-fenced for Italy, will see TIM’s LTE network reach over 99 percent of the population and its fibre network reach 95 percent by the end of 2019.

The operator said it expects to end losses to its fixed line network by the end of 2018, hinting that this would be managed in part by introducing IoT-related devices.

Content will also be key to its offering and TIM announced a deal with Italy’s national broadcaster RAI.

This sees subscribers to TIMvision, the operator’s on-demand TV platform, given access to premieres of 20 films released by Rai Cinema.

Cattaneo commented: “The initiative confirms our strategy, aiming to speed up on quadruple play.

“Together with RAI, we are also working on the launch of further joint projects aimed at developing film, television drama and audiovisual works."

[Read more: Telecom Italia is latest operator to roll out Vivendi’s mobile-first video app]

The RAI partnership and the strategic plan were timed to coincide with news that TIM Italy posted its best financial year since 2007.

Group sales rose 0.8 percent year-on-year and in organic terms to €5.1 billion in the fourth quarter thanks to an improved performance in its home market.

Revenues there grew 2.7 percent in the three months to December compared with a fall of 2.6 percent 12 months ago, while EBITDA was up by over 20 percent.

Notably, the ARPU of mobile services increased by €0.5 per month in the fourth quarter to €13.3.

There was also a marked improvement in Brazil, where a 15.3 percent decline in sales in Q1 improved to just a 1.7 fall in Q4.

However, the performance of TIM Brazil over the year pushed total revenues down 3.5 percent to €19 billion in 2016.

Sales in Brazil declined 8.9 percent in organic terms to €4 billion as the country’s economic crisis continued to hit the top line.

Sales in Italy were broadly flat at €15 billion as mobile services offset declines in fixed, and an increase in consumer revenues offset a fall in sales from business customers.

The improved revenue performance allied to cost-cutting pushed EBITDA up over 15 percent to €8 billion last year.

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