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.

More details: Telecom Italia S.p.A. Sponsored ADR IR

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