Telecom Italia changes direction, steps up investment

Written by on February 16, 2016 in News with 0 Comments
People walk past a Telecom Italia phone booth in Rome.   REUTERS/Max Rossi

People walk past a Telecom Italia phone booth in Rome. REUTERS/Max Rossi

MILAN (Reuters) – Telecom Italia said on Tuesday it plans to step up investments in faster fixed and mobile networks over the next three years in its home market in Italy where it sees core earnings returning to growth from 2017.

The former telecoms monopoly, which has been struggling for years with a lack of clear strategy and is regarded as a potential takeover target, is seeking new sources of income as its traditional phone services lose appeal amid competition from Internet rivals.

Outlining its new investment plan to 2018, the heavily indebted company said it would spend 12 billion euros ($13.4 billion) over the period in Italy, including 3.6 billion to lay fiber optic cables.

The development of ultra-fast broadband infrastructure is one of the top priorities of Prime Minister Matteo Renzi’s government. Telecom Italia’s new investment target for Italy is 20 percent higher than what the phone group earmarked in its previous three-year plan.

Telecom Italia said its fiber optic cables would reach 84 percent of Italy’s population by 2018, while its 4G mobile network would cover more than 98 percent.

Not more than 14 billion Brazilian reais ($3.49 billion) will be spent to upgrade its mobile network in Brazil, where the company expects its local unit TIM Participações SA to raise market share and grow its EBITDA margin over the plan period.

Telecom Italia, whose top shareholder is French media group Vivendi with a 21.4 percent stake, said it plans to strengthen its position in multimedia entertainment, including in video, music, gaming and publishing.

The group said its net debt would fall to below 3 times EBITDA by the end of 2018, despite the negative impact of accounting adjustments worth 2 billion euros. The new target is less ambitious than the 2.5 multiple Telecom Italia forecast for end-2017 in its previous plan.

(Reporting by Agnieszka Flak and Stefano Rebaudo; editing by Silvia Aloisi)

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