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MILAN (Reuters) -Telecom Italia (TIM) lifted its core earnings targets for this year on the back of second-quarter results, helped by cost cutting and the contribution from the company’s Brazilian subsidiary.
TIM has been struggling to stay competitive in its home market, where it makes the bulk of its revenue, and reported a record 8.4 billion euros ($8.5 billion) net loss last year following a string of downgrades of its targets.
Confirming what sources previously told Reuters, the company said on Wednesday it sees organic or self-generated core earnings or EBITDA after lease costs falling this year at a “low-teens” percentage rate.
That is a slower pace compared with a previous forecast of a “mid-to-high teens” decrease.
TIM, heir to the former Italian phone monopoly, said its core earnings after lease costs fell by 12.3% to 1.3 billion euros in the April-June period, marginally ahead of an analyst consensus provided by the company of 1.29 billion.
Italy’s biggest phone company had brought forward the publication of its results, which had been due later on Wednesday, after media reports indicating an improvement to its 2022 guidance.
In June, Chief Executive Pietro Labriola said he hoped the group could surprise markets with positive first-half results.
Telecom Italia (BIT:TLIT) shares gained 3.8% to 0.222 euros, outperforming a 1% rise in the Italian blue-chip index. Yet the stock remains close to an all-time low hit in July.
“The stabilization and revamp of the domestic business continued in the second quarter, together with the acceleration of the development of TIM Brasil”, the company said, adding it has already met around 70% of its 2022 target for cost-cutting.
Total service revenue rose by 1% in the quarter to 3.64 billion euros, against an analyst forecast of 3.59 billion.
Under Labriola, TIM’s fifth CEO in six years, the company is seeking an overhaul of its business centred around ceding control of its landline grid to state lender CDP in a bid to raise cash and cut its debt pile.
Still, valuation and regulation issues are thwarting these efforts, while the collapse of the coalition government led by Prime Minister Mario Draghi has further complicated the company’s plans.($1 = 0.9876 euros)
