Italy's TIM confirms guidance after third quarter profit meets forecast

FILE PHOTO: Telecom Italia new logo is seen at the headquarter in Rozzano neighbourhood of Milan, Italy, May 25, 2016. REUTERS/Stefano Rellandini/File Photo

MILAN (Reuters) - Telecom Italia (TIM) TLIT.MI on Tuesday confirmed its financial guidance through 2022 after recovering demand in its home market in the third quarter helped Italy's biggest phone group to limit a drop in revenue.

Revenue at Europe’s sixth-largest telecom group fell to 3.9 billion euros ($4.6 billion) in the three months through September, down from 4.4 billion a year before but slightly above an analyst consensus of 3.8 billion euros provided by the company.

Domestic revenues, which account for nearly 80% of the total, fell 7% on a yearly basis to 3.2 billion euros in the period, partly thanks to higher ultra-broadband demand.

Organic earnings before interest, tax, depreciation and amortization (EBITDA) after lease costs fell 8% to 1.6 billion euros, broadly in line with forecasts.

Italy’s economy rebounded strongly in the third quarter after a slump driven by restrictions to fight COVID-19 contagion that were eased over the summer.

A resurgence in the pandemic has now prompted the Rome government to put in place new curbs, but TIM expressed confidence its commercial strategy would eventually allow it to stabilise revenues and core profit.

TIM said it had spun off its data-centre business, which it is in the process of developing further under a strategic partnership with Google GOOGL.O into a new company that was expected to start operating in the first quarter of next year.

In addition, fixed-network unit FiberCop, to which TIM is transferring its last-mile network, is set to start operations by the end of March, the group said.

TIM added that it was continuing to discuss with the government and state lender CDP a plan to merge FiberCop with state-backed rival Open Fiber.

Reporting by Elvira Pollina; editing by Valentina Za and Mark Heinrich