Telecom Italia cuts 2021 profit goal due to higher costs

MILAN: Telecom Italia (TIM) will miss a goal to stabilise core profit this year due to higher costs linked to a partnership with streaming service DAZN to distribute Italy’s top-flight soccer matches.

Like European rivals, TIM is grappling with the fallout from the pandemic which has added to the long-standing challenge of increasing competition in its domestic market.

The partnership with DAZN, which has won domestic rights to screen Italy’s Serie A championship, is part of a three-year plan aimed at developing TIM’S so-called adjacent businesses, such as cloud, cybersecurity and pay-tv services.

The accord will lit revenues and core earnings in successive years, TIM said, but core profit in 2021 would suffer also because of delays to a government plan to boost digital take-up through vouchers for households and firms.

“Market conditions remain very challenging,” TIM CEO Luigi Gubitosi said in an interview with the Monday supplement of Corriere della Sera daily.

“We had a goal to stabilise domestic revenues in 2021 and we’ll meet that. Core profit however will be affected by the soccer partnership kicking off and the delays in the voucher programme,” Gubitosi said.

The situation will improve in following years thanks to the partnership with DAZN, European Union funds to support the POST-COVID recovery and the transformation TIM is undergoing, Gubitosi said.

TIM said it expected organic earnings before interest, tax, depreciation, amortisation (EBITDA) and lease costs to drop by a low- to mid-single digit this year, versus a previous forecast for stable to low-single digit growth.

“We see this as bad as a profit warning can be, in spite of unchanged FCFE [free cash flow equity] targets and expected acceleration in 2022/23 EBITDA,” analysts at Milan’s Banca Akros said.

TIM shares fell 3.32 per cent by 1055 GMT compared with a 2.9 per cent fall in Italy’s blue chip index.

The company, which will release first-half results on July 27, now forecasts low- to mid-single digit growth in organic service revenue in 2022-2023, versus a previous forecast for low-single digit growth.

It expects core profit to show mid-single digit growth over the same period, from low- to midsingle digit growth previously. However, Intesa Sanpaolo analysts flagged uncertainties over the projected recovery in TIM’S business from 2022, citing possible antitrust issues over the DAZN deal and the imminent debut of low-cost French rival Iliad in Italy’s fixed-line market.

European shares fell and travel stocks hit February lows on Monday on worries that the fast-spreading Delta variant could hamper travel demand and slow the ongoing global economic recovery.

The pan-european STOXX 600 index fell 1.2 per cent, hiting its lowest in almost two weeks.

The German DAX dropped 1.1 per cent and France’s CAC 40 declined 1.3 per cent. UK’S FTSE 100 was down 1.2 per cent as rising virus cases overshadowedoptimismaboutengland’sreopening.

“The rise in the Delta variant case count may be spreading outside Asia and risk now seem to be tilting to the loosening of restrictions in many regions being delayed, hence growth momentum is faltering,” said Peel Hunt analyst Ian Williams wrote in a morning note.

Europe’s travel and leisure index dropped 2.9 per cent to its lowest level since mid-february. Britain’s government said on Friday it was scrapping a planned relaxation of COVID-19 quarantine rules for travellers from France.

Telecom Italia (TIM) is an Italian telecommunications company with headquarters in Rome, Milan, and Naples, (with the Telecom Italia Tower) which provides telephony services, and DSL data services.

CARS24 TO ESTABLISH FOOTHOLD IN UAE: CARS24, one of the world’s fastest-growing ecommerce plaforms for pre-owned vehicles, has entered the UAE with a wide variety of vehicles for the country’s car enthusiasts.

The company has invested heavily on its robust technology framework and as a result has become one of the first companies in the UAE to provide a seamless car buying experience entirely online.

A customer can browse through thousands of cars, identify and book their favourite car, complete the full payment and documentation process, and get the car home delivered. CARS24 has made car buying as easy and simple as shopping for groceries online.

All cars listed on the CARS24 plaform go through a 150+ point inspection check, are refurbished thoroughly, and undergo the stringent RTA test before they are listed online.

Every car bought from CARS24 comes with a 7 days return policy and 2 years warranty. CARS24 aims to enter the other Middle Eastern and Southeast Asian markets later this year. The company has already sold close to 400,000 cars in other international markets.

“UAE is known across the globe for its appetite for cars, and for early adoption of technology across industries. The growing population, and the fact that most UAE families have an average of two cars, makes this market an interesting playground for CARS24. We are here to cater to the needs of car lovers and have invested heavily in technology to ensure that they can buy cars with a click of a buton. We aim to offer our customers an easy, seamless, and transparent car buying experience,” said Abhinav Gupta, CEO, Gulf Region, CARS24.

CARS24 has earmarked an investment of over Dhs400 million for international markets in 2021. These funds will be utilised to build the brand in these new international markets, coupled with a strong supply of cars for the plaform and building a state-of-the-art workshop to recondition cars to ensure top quality.

“Our expansion into markets such as UAE, Australia, and Southeast Asia marks a milestone moment in the growth of CARS24 as we introduce a whole new world of cars to our new audiences.”