Telecom Italia sees 5-6% rise in core profit, to launch share buyback

By Elvira Pollina

MILAN, Feb 24 (Reuters) - Telecom Italia (TIM) on Tuesday said it would launch a share buyback of up to 400 million euros ($471.48 million), forecasting a 5-6% rise in core profits this year and reporting 2025 earnings in line with expectations.

TIM, which has been under pressure for more than a decade due to intense price competition in its key home market, returned in state hands last year, with Poste Italiane becoming its largest shareholder and replacing France's Vivendi.

The company has begun to reap some benefits of the assets and shareholder overhaul, with the stock more than doubling in value over the past 12 months.

The buyback would be the first form of shareholder remuneration since 2022, when Italy’s biggest telecoms operator suspended dividend payments as it embarked on a complex restructuring centred on the sale of its fixed‑network assets.

Last year TIM pledged to use half of the proceeds from the 700‑million‑euro sale of its subsea cable unit Sparkle to reward investors, after the 18.8‑billion‑euro disposal of its domestic landline network in 2024 was used to slash its debt pile.

TIM said the share buyback was subject to the completion of the sale of Sparkle later this year.

Earnings before interest, tax, depreciation and amortisation after lease costs (EBITDA‑AL) rose 6.5% this year to 3.7 billion euros, supported by growth in both its domestic and Brazilian operations, in line with a company‑provided consensus.    

Cash generation was better than expected, with TIM reporting 700 million euros in equity free cash flow after lease in 2025, above an analyst forecast of 530 million euros.

However, the net result, to be released next month, will be likely affected by TIM's adoption of a new forward‑looking method for recognising deferred contract costs on retail broadband customers.

Under the revised approach, the costs will be amortised over four years rather than eight, adding 600 million euros to 2025 expenses, TIM said.

($1 = 0.8484 euros)

(Reporting by Elvira Pollina, editing by Alvise Armellini and Chizu Nomiyama )