Telecom Italia S.p.a Stock Earnings Reports

Key points for investors: Q1 results were in line with company expectations and management confirmed full-year 2026 guidance. Group revenues grew 1.4% y/y to EUR 3.3bn; EBITDA after lease declined 2.7% to ~EUR 0.8bn but that decline is entirely attributable to the front‑loaded MVNO transition. Excluding MVNO, underlying revenues and EBITDA after lease showed solid growth (revenues +3.1% ex-MVNO; EBITDA after lease +4.1% ex-MVNO). CapEx was disciplined at EUR 0.4bn (12.5% of revenues). Equity free cash flow was negative ~EUR 0.4bn in Q1, driven by seasonality and reversal of advanced public administration payments; net debt after lease was EUR 7.3bn (leverage 1.99x). Domestic highlights: service revenues broadly stable; consumer repricing (4m+ lines repriced in Q1) supporting ARPU (wireline ARPU +5.4%, mobile ARPU +1%) and underpinning the volume-to-value strategy; TIM Premium launched to monetize high‑performance connectivity. Enterprise continues strong momentum (15% cloud growth; sovereign cloud/National Strategic Hub +50% y/y) and TIM plans ~EUR 500m of investment in digital sovereignty 2026–2028. Brazil delivered mid-single-digit top-line and EBITDA growth and remains a cash generator. Corporate and capital actions: savings shares conversion proceeding (capital reduction completed, voluntary conversion May 6–19), 10:1 reverse stock split planned for June to improve investability, and a EUR 0.4bn buyback authorized but conditional on Sparkle disposal. Tower/infrastructure strategy: RAN sharing preliminary agreement with Fastweb (c.15,500 sites), a non‑binding tower JV with Fastweb (c.6,000 new sites), plans to use ~8,500 third‑party towers and potential path to a full exit from INWIT over ~10 years while preserving operational continuity. Cost transformation initiatives include an announced pre‑retirement scheme (c.1,000 employees, one‑off provision ~EUR 0.2bn booked in Q1; expected annual savings ~EUR 60m once implemented). Management emphasized AI/Agentic AI adoption as a strategic productivity and service-quality lever (targeting H2 2027 go‑live and significant automation gains). Key near-term items for investors: MVNO phasing (front‑loaded Q1 impact with stabilization in H2), completion/outcome of the Poste Italiane voluntary offer review and related board/fairness process, progress on Sparkle disposal (impacts buyback timing), and updates at the Q2 results/CMD where management will provide a refreshed plan and incorporate FX trends (notably a stronger BRL).