MILAN, May 19 (Reuters) - Shares in Telecom Italia (TIM) fell sharply on Tuesday as Italy’s biggest phone group gave no guidance on its 2020 core profit target after reporting a drop in first-quarter earnings.
The former monopoly, whose shareholders include France’s Vivendi and investment firm Elliott, said underlying core earnings (EBITDA) fell 7.5% in January-March from a year earlier, hit by a drop in domestic revenues.
The company confirmed its financial goals for 2021-2022 but made no reference to its target for a ‘low single-digit’ fall in 2020 core profit, leading analysts to believe this year’s guidance had been scrapped.
TIM shares ended down 8.63%, against a 1.8% drop in Italy’s all share index
Asked about 2020 core earnings during an analyst call, TIM’s CEO Luigi Gubitosi said it was too early to give a view with the government only lifting a series of restrictive measures imposed to curb the coronavirus pandemic on Monday.
Gubitosi said he was optimistic on longer-term business opportunities, adding the company remained committed to reducing debt and generating free cash flow by focusing on cost cuts and asset sales.
TIM said it was in exclusive talks with a consortium led by French investment firm Ardian for the sale of a “significant minority stake” in a company that will hold its 33.2% stake in mobile tower company INWIT.
It is also in talks with KKR to sell a 40% stake in its last-mile fibre and copper network.
Those transactions would help lower TIM’s debt excluding leases to 17.7 billion euros from 21.7 billion at the end of March, TIM said.
Asked about dividend policy, Gubitosi said TIM, which had reinstated a 1 cent dividend this year, would pay at least the same dividend going forward, provided deleveraging goals were achieved.
$1 = 0.9137 euros Reporting by Elvira Pollina, additional reporting by Stephen Jewkes; Editing by Susan Fenton and Mark Potter
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