Telecom Italia S.p.A.

Reported first-half 2026 group revenue was EUR 6.8 billion, up 2.0% year over year; EBITDA after lease was EUR 1.8 billion, up 1.2% year over year. Excluding the MVNO transition, revenue growth would have been 3.3% and underlying EBITDA after lease growth would have been 6.3%; the MVNO transition reduced first-half revenue by around EUR 80 million and EBITDA after lease by approximately EUR 84 million versus last year. CapEx was EUR 0.9 billion in the first half, or 12.6% of revenue, and equity free cash flow was EUR 0.7 billion. Net debt after lease was EUR 7.3 billion, with leverage at 1.94x. For the second quarter, group OpEx increased 1.9% or EUR 44 million year over year; group CapEx was EUR 0.4 billion, equal to 12.7% of revenue; and equity free cash flow was positive by more than EUR 1.0 billion, helped by the collection of the 1998 concession fee just below EUR 1.0 billion. Looking ahead, TIM confirmed 2026 targets of 2% to 3% group revenue growth, 5% to 6% group EBITDA after lease growth, CapEx intensity below 14%, and about EUR 1.8 billion of equity free cash flow after lease. For 2027, TIM targets around 3% CAGR revenue growth from 2024 to 2027, 6% to 7% EBITDA after lease CAGR, CapEx intensity around 13%, and about EUR 1.1 billion of equity free cash flow after lease, with leverage comfortably below 1.7x even including I-Systems and split-payment VAT effects.

Pietro Labriola framed the quarter as one of execution, saying TIM continues to deliver on commitments across operating performance, capital structure and shareholder value creation. He emphasized that the business is stronger underneath the MVNO headwind, with pricing discipline, portfolio quality and cost transformation driving better profitability. He also highlighted strategic milestones including the share buyback, credit rating upgrades, the planned Sparkle disposal, and the Board’s approval of the Poste transaction as another step toward long-term value creation. His tone was confident but measured, repeatedly stressing discipline, realism and the need to keep executing in a competitive environment.

Piergiorgio Peluso said second-quarter OpEx rose 1.9%, mainly because of Brazil, where costs increased 4.9% due to inflation and higher content costs; in Italy, OpEx rose only 1.0% and was tied to revenue-driven items, partly offset by lower labor and industrial costs. He said group CapEx in the quarter was EUR 0.4 billion, equal to 12.7% of revenue, and noted that Italy has hedged around 80% of expected 2026 energy consumption and approximately 50% for 2027. On cash flow, he pointed to the concession fee reimbursement of just below EUR 1.0 billion, a positive working capital contribution of EUR 660 million, financial charges of EUR 98 million, and equity free cash flow above EUR 1.0 billion in the quarter. He also detailed below-EFCF items including EUR 61 million of dividends to TIM Brasil minorities, EUR 692 million tied to savings share conversion, EUR 240 million for I-Systems, and EUR 48 million for buybacks, while reiterating net debt after lease of EUR 7.3 billion and leverage of 1.94x.

Analysts focused on the fixed-line slowdown, FiberCop service quality, INWIT and FiberCop negotiations, broadband ARPU, spectrum regulation, and the Poste transaction. Management said the fixed-line weakness was driven by earlier repricing, legacy voice disconnects, and a slight deterioration in delivery and assurance from the wholesale fiber provider, which they do not view as structural; they also said the FiberCop issue is about service quality, not pricing, and that the company is not aiming to use penalties but to restore customer experience. On INWIT, Pietro said it is too early to comment on the legal process, and on spectrum he said the regulator’s direction looks closer to TIM’s preference for investment commitments rather than lump-sum payments. Asked about the Poste offer fairness if Poste’s share price moves, management said the Board’s fairness opinion was based on the conditions at launch and will not be revisited during the tender offer period.