Telecom Italia heckled on the Milan Stock Exchange

After a tough year 2018, the Italian telecom operator warns that the first half of 2019 may not be better.

By Zeliha Chaffin Posted today at 09:41

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The Telecom Italia logo, in Rozzano, near Milan, Italy, in May 2018.
The Telecom Italia logo, in Rozzano, near Milan, Italy, in May 2018. MIGUEL MEDINA / AFP

Telecom Italia's financial troubles (TIM) continue, while the battle raging between its shareholders for several months, continues to weigh on the future of the group. Thursday, January 17, the Italian telecom operator issued a warning on its results in 2018, following a meeting of its board of directors in Rome.

At the time of the publication of its 2018 preliminary annual results, the telephony group expects in particular to expect a decline in the group's organic EBITDA, which should fall to around 8.1 billion euros. last year, and that the first half of 2019 is in a similar vein.

A decrease mainly due, according to the operator, to the increased competition on the Italian market since the arrival of Iliad. "The presence of a new [acteur] put the operators under pressure: to cope, everyone has launched its low cost brand and prices have fallen. Until now, Telecom Italia was a bit in denial, ensuring that it did not suffer like its other competitors Wind Tre and Vodafone "says Alexandre Iatrides, an analyst at Oddo. "New board seeks to regain market confidence ", says Iatrides, who sees in Thursday's announcement a new willingness to "Transparency" from the operator.

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To the exacerbated competition on the domestic market is added the amount paid by TIM (2.4 billion euros) at the auction of frequencies 5G in Italy in 2018, which weighs heavily on its finances.

Tensions between shareholders

These poor results, coupled with the weak financial outlook of the telecom group for the beginning of 2019, have not reassured the markets. At the Milan Stock Exchange, the share price of Telecom Italia was severely punished, Friday, January 18. During the afternoon, the title lost up to more than 8% in an Italian market yet rising.

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The difficulties would be due, according to the operator, the increased competition on the Italian market since the arrival of Iliad

What revive tensions between the shareholders of the Italian group, who have fiercely disputed the governance of the operator for several months. Contacted by The world, Vivendi, the largest shareholder of Telecom Italia, with 24% of the capital, told itself one more time " very worried " these poor financial performances. " Since[e le fonds d’investissement américain] Elliott [qui possède 9 % des titres] took control, May 4 [2018], there is no plan, and the action of Telecom Italia has dropped more than 45% »observes a spokesman for the French media group, which makes every effort to get the operator out of this situation. "Since Elliot is protected against a fall in the stock price, it does not matter to them that the price drops. But we are here for the long term, and Vivendi will continue to fight "he continues. The French is ready to request the convening of a new general assembly this summer if the results do not improve significantly.

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