Telecom Italia (TIT) Q3 2024 earnings summary

Executive summary

• Group revenues for the first nine months of 2024 rose 3.4% year-over-year to €10.7 billion, with domestic revenues up 1.8% to €7.4 billion and Brazil revenues up 7.2% to €3.3 billion.

• Group EBITDA after lease increased 11.1% year-over-year to €2.7 billion, with domestic up 8.3% to €1.5 billion and Brazil up 14.4% to €1.3 billion.

• Net financial debt after lease fell below €8 billion, reflecting the successful completion of the NetCo sale and ongoing deleveraging.

• The company is operating as a new entity post-NetCo separation, with increased financial flexibility and a focus on operational efficiency.

• The sale of NetCo to KKR finalized in Q3 2024, marking a major transformation and enabling a new business model focused on industrial components.

Financial highlights

• Group service revenues rose 4.1% year-over-year to €10 billion; domestic service revenues up 2.7% to €6.8 billion, Brazil up 7.1% to €3.2 billion.

• Group EBIT for the first nine months was €1.3 billion, up 42.8% year-over-year; net loss attributable to owners was €509 million, improved from €1,124 million loss in 2023, aided by NetCo sale proceeds.

• CapEx for the period was €1.37 billion (12.5% of revenues), with domestic CapEx at €814 million (10.5% of revenues) and Brazil at €558 million.

• Group EBITDA after leases minus CapEx reached €1.4 billion, up 35% year-over-year.

• Operating free cash flow was €1.74 billion, up from €1.62 billion in 2023; equity free cash flow after lease was -€835 million, a slight improvement year-over-year.

Outlook and guidance

• Guidance for 2024 is confirmed, in line with the "Free to Run" Business Plan, supported by strong segment performance and ongoing cost containment.

• Group revenues and EBITDA after leases are in line or above full-year guidance, with further acceleration expected in Q4.

• Deleveraging target for year-end is on track, with net financial debt after lease to organic EBITDA after lease expected at or below 2x.

• CapEx is expected to remain soft, providing an advantage in EBITDA after leases minus CapEx.

• 2024-2026 CAGR targets: Group revenues ~3%, EBITDA AL ~8%, leverage 1.6-1.7x at target.