Leaner company launches three-year “Free to Run” business strategy which suggests growth will come but so will further cost-cutting
Telecom Italia’s (TIM) board has approved a slate of candidates for its board directorships, with two-thirds of the approved names being new candidates, including business lawyer Alberta Figari for the role of chair, replacing Salvatore Rossi. Current CEO Pietro Labriola has been proposed again to continue the transformation of the telco. Telecom Italia shareholders will vote upon the board renewal on 23 April.
The slimmed down board will comprise nine members, which the company said reflects current practice among various large, listed companies. Existing board member candidates running again are: CEO Pietro Labriola; Giovanni Gorno Tempini; Paola Camagni; Federico Ferro Luzzi; and Maurizio Carli. New candidates include: chair Alberta Figari; Domitilla Benigni; Jeffrey Hedberg; Paola Tagliavini; Romina Guglielmetti; Leone Pattofatto; Antonella Lillo; Andrea Mascetti, Enrico Pazzali, and Luca Rossi.
The telco said its new leaner structure will deliver 8% CAGR core earning over the next three years following the planned sale of its Netco fixed line business. “The sale of the fixed network will allow TIM to move into the market with fewer financial and regulatory constraints,” TIM said in a statement after a board meeting approved a new three-year business plan set out by Labriola. The circa €22 billion Netco deal gives the telco the opportunity to cut debt and costs.
The new business plan, dubbed “Free to Run” also includes a revenue target of 3% CAGR. According to Reuters, the telco reported revenue of €14.4bn, on a proforma basis, for the new structure last year, while EBITDA including lease costs stood at €3.5bn on the same basis.
Domestic growth
For its domestic business, TIM forecast a growth of core earnings at an annual rate of 9-10% over the period on a compound basis, from €1.9bn euros last year. The business plan suggests that TIM’s domestic consumer business would stabilise its revenue base by building up partnerships to sell its customers a wide range of services beyond connectivity, according to Reuter, while the enterprise arm would continue its growth helped by an expanding cloud market.
The telco said it expects to generate positive free cash flow both in Italy and from its Brazil-listed unit in the period to 2026. The telco also expects its debt after lease to fall to 1.6-1.7 times its core earnings in 2026, from 3.8 times last year under the current structure, once the Netco deal is completed in the middle of this year.
Cutting more costs
Last week, TIM’s management opened negotiations with unions to reduce working hours for many of its Italian-based employees – with the alternative being potential job cuts if no agreement is reached. Management pointed the finger at the government ending a funded scheme linked to training programmes. TIM is reportedly seeking a 10-20% reduction in working hours until 30 June 2025 for almost 36,000 workers – with a similar reduction in pay.