Telecom Italia ServCo Performance Slightly Ahead Of Consensus; Slight Positive

Telecom Italia’s accounts are never the most transparent in the world but pro-forma ServCo trends look good with slight beats on revenue and EBITDAal; CapEx was lower than expected though this reflects a slowdown in certain segments while we didn’t get any indication on H1 cash flow which is something the rating agencies are paying a lot of attention to.

• Q2 revenue +4.2% YoY (+1.2% vs. company-provided consensus) with service revenues +4.5% YoY (+0.8% vs. consensus). Growth continues to be driven by Brazil at +7.5% YoY while Domestic lagged at +2.7% with the largest component, Consumer, seeing a a marginal decline.
• EBITDAal was healthy at +10% YoY (+1.1% vs. consensus) with Domestic +6.8% and Brazil +13.7%.
• CapEx was -7.5% YoY (-9.9% vs. consensus) with the decrease entirely from the Domestic operation on a slowdown in activities in the IT and Mobile Platform segments.
• Little said about cash flow in H1 though “the evolution of the net financial position in the second half of the year forecasts is expected to generate a positive net cash flow of approximately 0.6 billion euros”.
• Net financial debt for ServCo stands at EUR 8.1bn post deleveraging.
• FY guidance confirmed.
• Results; https://blinks.bloomberg.com/news/stories/SHI5Q4TVI5MO