At a Glance:
- The analysts have predicted an 11% decline in annual profits for TIM.
- KKR has made a takeover approach last year in November.
- Board will be reviewing the Q1 results and publish the report later this week.
Recently, it was confirmed that Telecom Italia will be taken over by the U.S. fund KKR as an alternative to 10.8 billion euros. The official reports will be published this week that will not only highlight Telecom Italia’s annual results but also highlight the challenges it faces.
Telecom Italia was already battling with stiff competition in its home turf. The former phone monopoly is now debt-laden and appointed its fifth executive in January in six years. TIM has warned on its 2021 earnings three times, most recently in December.
Telecom Italia’s annual fall in core profit
The analysts are forecasting an 11% annual fall in core profit after leases, the decline has accelerated to more than 23% in Q4, according to company-piled consensus. The domestic revenue forecasts are estimated to fall 2.9% in 2021.
The changes in the tax scheme that offered a 5.9 billion Euro increase to TIM’s 2020 earnings have significantly reduced the impact but it is estimated that TIM could suffer a 4 billion Euro hit as a consequence.
Despite the loss of Telecom Italia, the main attention will be focused on the new CEO Pietro Labriola as he presents his standalone plan for TIM. Since last November, the company has been in the shadow of the KKR approach. Pietro has a new strategy for 2022-2024 and is expected to center on a split of TIMS’s assets and operations. The board of TIM will be reviewing the plan and signing off the results on Wednesday.
Efforts to renew Telecom Italia
The new executive will be looking to explore a new perspective and invest efforts to merge Telecom Italia’s fixed access network with that of rival state-backed fiber-optic firm Open Fiber—a move advocated by CDP. This move is expected to win control of the venture.
KKR has already shared its interest in TIM as it invested 1.8 billion Euros in 2020 for a 37.5% stake in the group’s secondary network.
