Telecom Italia S.p.A.

Reported first-half 2026 group revenue increased 2.0% year over year to EUR 6.8 billion, while EBITDA after lease increased 1.2% to EUR 1.8 billion. Excluding the MVNO transition, revenue growth would have been 3.3% and underlying EBITDA after lease growth would have been 6.3%. Capex was EUR 0.9 billion, equal to 12.6% of revenue, and equity free cash flow was EUR 0.7 billion in the first half. Net debt after lease stood at EUR 7.3 billion, with leverage at 1.94x. For the second quarter, OpEx increased 1.9% year over year, or EUR 44 million, and CapEx was EUR 0.4 billion, equal to 12.7% of revenue. In Q2, cash flow benefited from collection of the 1998 concession fee reimbursement of just below EUR 1.0 billion, producing a positive working capital contribution of EUR 660 million; excluding that effect, working capital absorption would have been EUR 313 million. Management confirmed full-year 2026 guidance: group revenue growth of 2% to 3%, EBITDA after lease growth of 5% to 6%, capex intensity below 14% of revenues, and equity free cash flow after lease of approximately EUR 1.8 billion. For 2027, the company targets revenue CAGR of around 3%, EBITDA after lease CAGR of 6% to 7%, capex intensity around 13%, and equity free cash flow after lease of around EUR 1.1 billion while keeping leverage below 1.7x.

Pietro Labriola framed the quarter as one of disciplined execution across operations, capital structure and shareholder returns. He emphasized that TIM is confirming guidance because the underlying business is improving, with consumer repricing, enterprise cloud growth, and Brazil’s profitable momentum offsetting temporary MVNO noise. He also stressed that TIM’s strategy remains focused on value creation, simplification, and the next phase of growth through customer platform, digital sovereignty, and new adjacencies such as defense, mission-critical services and AI.

Piergiorgio Peluso highlighted that OpEx rose 1.9% in Q2, mainly due to Brazil inflation and higher content costs, while Italy OpEx growth was only 1.0% and tied to revenue-driven items. He said group CapEx was EUR 0.4 billion in Q2 and EUR 0.9 billion in H1, keeping spend within the company’s framework, and noted energy is substantially hedged, with around 80% of expected 2026 consumption and about 50% of 2027 covered in Italy. On cash flow, he pointed to the just-below-EUR 1.0 billion concession fee reimbursement, EUR 98 million of financial charges in Q2, more than EUR 1.0 billion of quarterly equity free cash flow, and net debt after lease of EUR 7.3 billion at 1.94x leverage.

Analysts focused on weak fixed-line trends, FiberCop service quality, INWIT/MSA discussions, broadband ARPU, mobile pricing, spectrum rules and the Poste offer valuation. Management said the fixed-line softness was driven by earlier repricing, legacy voice disconnections, and some deterioration in delivery/assurance by the wholesale fiber provider, which they view as non-structural but needing prompt correction. On the Poste transaction, management said the fairness opinion is fixed at launch-date conditions and cannot be revisited during the tender period; on spectrum, they welcomed the direction of the draft but said the details still matter, and on mobile pricing they argued Italy’s market remains too cheap and that TIM Priority is designed to support more value-based pricing.