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Sustaining TIM’s Businesses Post-Spin-off: CEO Labriola’s Confidence and Strategy

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TIM’s chief executive Pietro Labriola recently voiced his strong belief in the sustainability of the company’s remaining businesses following the probable spin-off of its network operations. Labriola used the announcement of TIM’s first quarter results to assertively address concerns regarding the ServiceCo operations, which are not part of the widely-discussed NetCo business. He emphasized that ServiceCo comprises three unique businesses: TIM Brasil, the market leader after acquiring Oi’s assets; TIM Enterprise, offering good growth opportunities; and TIM Consumer, which is undergoing an operational turnaround.

The Consumer business has been the major cause of concern following the spin-off. Labriola sought to mitigate these worries by emphasizing the ongoing challenges faced by other players in the European market. He expressed confidence in the company’s direction, despite acknowledging that improvements will take time. The first quarter results have shown positive signs, with a 4.3% increase in revenues at the group level, driven entirely by TIM Brasil.

Labriola detailed the individual contributions to ServiceCo’s EBITDA AL, with TIM Brasil accounting for 43%, TIM Enterprise contributing 24%, and TIM Consumer constituting 33%. He stressed the importance of considering the combined performance of the three entities, stating, “ServiceCo is already sustainable, with a combined pro forma EBITDA AL expected to be significantly above €3 billion and with… free cash flow above €1 billion in 2023.”

Labriola also discussed the current status of the NetCo sale, as the company waits for better offers from KKR and the CdP Equity/Macquarie partnership that submitted non-binding bids earlier this year. Major shareholder Vivendi is seeking a higher valuation for the asset, and TIM has given the bidders until 9 June to submit new offers. Labriola characterized this as TIM’s final attempt to obtain more cash for NetCo, stating, “We believe it’s worth taking a few more weeks to explore this final opportunity as [the] NetCo disposal remains the main option to structurally deleverage TIM.” He maintained that the future sale price must be fair and based on the market value.

In summary, Labriola’s statements provide reassurances about the viability of TIM’s post-spin-off businesses, highlighting their individual strengths and combined contributions. The process surrounding the NetCo sale continues, with the company calling for improved offers from bidders and emphasizing the need for a fair market value price.

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