Network effects

7 March 2018 By Lisa Jucca Follow @LJucca

Boss Amos Genish has kicked off the separation of the telco’s fixed-line network, and will slash debt. A rerating of the network could help the group’s valuation, and a step-up in free cash flow brings the prospect of long-awaited dividends. Both should please shareholders.

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The board of Telecom Italia (TIM) met on March 6 to approve its 2017 results and a 2018-20 business plan, the first under new Chief Executive Amos Genish.

Group 2017 revenue grew 2.7 percent to 19.8 billion euros in 2017. Group EBITDA came in at 8.7 billion euros against 7.8 billion euros the previous year. Adjusted net financial debt stood at 25.3 billion euros at the end of 2017.

TIM targets cumulative free cash flow of around 4.5 billion euros over the life of the plan. The group is also looking to cut its net debt-to-EBITDA to around 2.7 times in 2018, down from around 2.9 times in 2017, and further reduce it afterwards.

The company last paid a dividend on ordinary shares in 2012.

TIM also announced it was formally launching the process to separate its fixed-line network into a unit, to be fully owned by TIM. Former CEO Flavio Cattaneo said in July the network was worth at least 20 billion euros.

Telecom Italia shares fell 0.3 percent to 0.8 euros as of 0935 GMT on March 7.

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