Telecom Italia S.p.a Stock Earnings Reports

Q1 2026 results were in line with management expectations and full-year guidance was confirmed. Group revenues rose 1.4% y/y to EUR 3.3bn (3.1% ex-MVNO headwind). Reported EBITDA after lease fell 2.7% to ~EUR 0.8bn but, excluding the MVNO phasing, underlying domestic EBITDA grew (~4.1% y/y). CapEx disciplined at EUR 0.4bn (12.5% of revenues) and EBITDA-after-lease-minus-CapEx improved >5%. Equity free cash flow was negative ~EUR 0.4bn in Q1 due to seasonal working capital and reversal of advance public receipts; net debt after lease was EUR 7.3bn (leverage 1.99x). Key operational highlights: (1) MVNO revenue transition is front-loaded in H1 and management expects a normalized MVNO run-rate through H2 supporting a back-end loaded domestic EBITDA profile; (2) TIM launched TIM Premium (higher-performance connectivity + value-added services) to monetize network superiority and capture higher-value consumer segments; (3) TIM Enterprise continues mid-single-digit growth, with cloud up 15% y/y and the National Strategic Hub growing ~50% y/y — management plans ~EUR 500m investment in sovereign/cloud between 2026–2028; (4) Brazil delivered robust, profitable growth and remains operationally disciplined; (5) progress on capital structure actions — savings-share conversion proceeding (conversion period early May), a 10:1 reverse split planned for June, and a EUR 0.4bn buyback program conditional on Sparkle disposal; (6) tower strategy being updated (RAN sharing with Fastweb, nonbinding JV for ~6,000 new sites, use of third-party towers) with a feasible path to exit INWIT over time and deliver OpEx/CapEx efficiencies; (7) cost transformation and AI initiatives (Agentic AI) are being scaled to improve customer care and back-office automation (targeting significant automation and resolution-time reductions by H2 2027); (8) a new pre‑retirement program launched, expected to yield ~EUR 60m annual run‑rate savings once fully implemented. Risks/near-term items for investors: MVNO phasing impacts short-term reported EBITDA, equity free cash flow seasonality in H1, ongoing regulatory/strategic uncertainty around the Poste voluntary tender offer (Board has appointed advisers and will assess in shareholders’ interests), and tower/INWIT negotiations. Management will provide an updated mid‑term plan around Q2 results.