(Reuters) – Telecom Italia (TIM) on Wednesday reported a 5.5% rise in its second-quarter core profit, helped by strong performance from its Brazilian unit as sales at the company’s ailing domestic business also edged higher.
Italy’s biggest telecoms company said core earnings beforeinterest, tax, depreciation and amortisation after lease costs(EBITDA-AL) on a like-for-like basis stood at 1.4 billion euros ($1.53 billion) in the three months ending June. which was above a company-provided analyst consensus of 1.3 billion euros.
Domestic revenue, which contributes the bulk of the group’s total sales, rose for the first time after five years by 0.6% to 2.9 billion euros, the company said.
TIM’s net financial debt rose to 26.1 billion euros ($28.57 billion) as of June 30 from 24.6 billion euros in the same period last year.
The company confirmed its financial targets for 2023, including a stabilisation of service revenue and core earnings at the domestic level.
Hit by cut-throat price competition on its home turf which steadily eroded earnings over the past decade, debt-laden TIM is seeking to reshape by selling its prized landline grid to KKR.
Last month TIM granted the U.S. fund an exclusivity period until the end of September to negotiate a binding bid on the back of a preliminary proposal worth some 23 billion euros.
“The delayering plan for the sale of NetCo is progressing as planned after the decision made by TIM’s Board of Directors last June 22 to start exclusive negotiations with KKR, necessary activities to receive a conclusive binding offer by September 30 are ongoing,” the company said.
Championed by TIM CEO Pietro Labriola, the plan has won support from some leading officials within Prime Minister Giorgia Meloni’s administration, sources familiar with the matter have said.
The government has special vetting powers on any deal involving TIM’s grid and wants to join KKR’s bid to keep a strategic oversight on Italy’s main telecommunications infrastructure.
The grid sale has faced heavy reservations from TIM’s top investor, Vivendi, which is demanding a higher valuation to back a deal. With its 24% voting stake, the French media giant may throw a spanner in the works at any TIM shareholder meeting to vote on a deal.
($1 = 0.9130 euros)
(Reporting by Elvira Pollina in Milan and Urvi Dugar in Bengaluru; Editing by Chris Reese and Leslie Adler)
