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TIM: defined the perimeter of the potential separation of the fixed network (NETCO) from the services (SERVICECO) to overcome the vertically integrated model

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TIM: defined the perimeter of the potential separation of the fixed network (NETCO) from the services (SERVICECO) to overcome the vertically integrated model
Written by aquitodovale

The Board of Directors of TIM, which met yesterday under the chairmanship of Salvatore Rossi, has given a mandate to the Chief Executive Officer, Pietro Labriola, to carry out all activities useful for achieving the strategic objective of overcoming vertical integration and reducing the level debt of the company through the transfer and enhancement of certain Group assets. Any options will be submitted to the board for the appropriate resolutions.

The management illustrated to the Board a transformation plan based on the awareness that the Group operates in a market characterized by strong competition and by one of the most stringent regulatory constraints in Europe.

The plan provides for the possibility of separating the fixed network infrastructure assets (NetCo) from the services (ServiceCo with TIM Consumer, TIM Enterprise and TIM Brasil) and illustrates the market context, the perimeters and strategic activities for each entity, as well as the ways in which they will be able to compete in their respective reference markets in order to generate more value.

More in detail, the plan provides for the following breakdown:

  • NetCo: includes the fixed, primary and secondary network, domestic and international wholesale activities (Sparkle). Netco may represent the first case in Europe of the creation of a pole of fiber network infrastructures and technologies available to the whole market and with a widespread presence throughout the national territory. It will focus on the wholesale market with the task of further accelerating the deployment of the fiber network, benefiting in the medium-long term from investment cycles and the relative returns typical of the infrastructure market.
  • ServiceCo. It includes TIM Enterprise, TIM Consumer and TIM Brasil
    • TIM Enterprise. Includes all commercial activities in the Enterprise market, the digital companies Noovle, Olivetti and Telsy. Includes data center assets. By leveraging a leadership position in the Public Administration and large customers and on one selling proposition end-to-end unique and distinctive, it aims to conquer shares in a growing market thanks to the push towards digital services. An approach from Tech-companyincreasingly integrated, also organizationally, for an end-to-end offer that will fully exploit the uniqueness of the Group’s skills and assets, driven by the trends of Cloud, IoT and Cybersecurity.
    • TIM Consumer. Concentrate inside all fixed and mobile commercial activities in the Consumer and Small and Medium Business (SMB) retail market. Includes mobile network assets and service platforms. A profound reorganization of its activities, based on simplification, will be the key element to improve performance.
    • TIM Brasil. Player reference in the South American communications market, it will continue on its path towards a ‘Next Generation Telco’, which has already made it possible to double the remuneration of shareholders. Following the acquisition of the mobile activities of the Oi Group, an acceleration of revenue growth, Ebitda and cash generation is expected, with solid trends.

This business plan will make it possible to improve operational performance with a specific economic and financial focus for each entity and to attract new industrial and financial partners, allowing to accelerate innovative processes and the development of an offer on new businesses oriented towards digital transition.

Furthermore, with the new organization envisaged by the plan, it will be possible to take full advantage of the opportunities offered by the digital transition and at the same time achieve a sustainable capital structure, thanks to an important improvement path in the financial position that provides for the deconsolidation of the fixed network and the possible entry of new minority shareholders in TIM Enterprise.

Rome, July 7, 2022

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