The following is a summary of the Telecom Italia S.p.A. (TIIAY) Q4 2023 Earnings Call Transcript:
Financial Performance:
Telecom Italia reported 2023 Group service revenue growth of 2.3% year-on-year and EBITDA up by 5.7%.
The domestic level saw stable service revenues with EBITDA increasing by 1.7% year-on-year.
TIM Brazil over-delivered versus full-year guidance, freeing significant operating cash flow, reaching over 17% of net revenues.
Successfully achieved cost base transformation, achieving slightly over the €800 million target, including around €500 million OpEx and €300 million CapEx savings.
Reported full year Group service revenues growth accelerated in Q4 at 3% up from 1.7% in Q3. Group EBITDA surged to 6.5% in Q3 and 6.8% in Q4.
EBITDA after lease increased by 9.4% in Q4, significantly accelerated by sites decommissioning in Brazil.
Domestic level service revenues remained stable with EBITDA increase of 1.7% year-on-year, reaching the upper part of the forecast.
Spent around €4.0 billion on capital expenditures, whilst equity free cash flow remained flat over the year.
Reported Q4 revenues of €981 million with a strong performance reported from their cloud business, earning €183 million - double what was expected.
Business Progress:
Moving towards a binding conclusion on a transaction with KKR, dependent on clearance from antitrust authorities.
Final stages of becoming one of the world's first 'we send only' operators with NetCo.
Managed a year of strategic transformation, presenting results in line with full year guidance.
Improved domestic operations despite the challenging macroeconomic scenario and laid the foundation for future structural growth.
Plans for the future include accelerating delayering strategy, shifting focus from an integrated company to ServiceCo.
Service revenues started growing after 22 quarters, indicating a robust growth scenario.
Transformation plan, including Opex stability and a successful closing of the NetCo deal, is on track.
Managed to secure over €700 million of NRRP funds and refinance more than €4 billion, covering maturities till end of 2025.
Continual work on churn reduction through bundling services like TIM Vision is discussed. A focus on artificial intelligence for potential savings is also recognized.
Significant investments being made in Italy in FTTH and 5G, with a focus on NRRP projects, and an expansion of 5G coverage in Brazil.
Repricing activities have led to a significant increase in ARPU while ensuring the stability of churn rate.
Expected to maintain a stable churn trend as they continue expanding in convergence and shifting towards more high-margin infrastructure services.
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