Today we disclosed the TIM Group preliminary results for 2023, which is the second year since this management team took office and at the same time, marks a turning point in the history of the Group: this is the last time we refer to TIM as we are used to know it, a single integrated company.
The last two years have been eventful - not to say that we navigated in the “perfect storm” - and we have been carrying out two jobs at the same time: managing the operations and the re-financing of the company and Delayering TIM, to pursue our long-term strategic view of a no longer vertically-integrated operator.
When we started in 2022, inflation did not exist, risk free rate was in negative territory and the Italian economy was in a good shape. Since then, a sequence of events made the macro scenario much more complex: two wars, energy price soaring, inflationary spiral to which the market and the industry were no longer used. A sharp increase in interest rates followed and is still present today.
Let's not forget that in 2021-2022 the Italian market was driven by very strong price competition and that we were the first to introduce elements of rationality. Today the market remains probably the most competitive in Europe, but it has improved in the last two years. For example, back book re-pricing has been implemented by almost all operators, and the ‘washing machine’ effect in mobile is significantly lower.
Despite these challenges, we have managed to improve the domestic operations and lay the foundations for long-term structural growth, while Brazil reaped the benefits of what we seed in 6 years of restructuring.
For the second year in a row we present results in line with full year guidance on all metrics, something never happened in the last 12 years.
2023 results are another important step in building investors’ confidence and the successful development of our bonds signals that the market believes in our delayering strategy. For us, this is very important and, of course, we are fully committed to a timely and successful closing of NetCo deal.
At Group level, Service Revenues are up 2.3% YoY, reaching the Low-Single-Digit growth target, while EBITDA is up 5.7% YoY, in line with Mid-Single-Digit target.
At Domestic level, Service Revenues are broadly stable, while EBITDA is up 1.7% YoY, in line with Flat to Low-Single-Digit growth target.
At the beginning of 2023, we were confident to achieve the guidance because we knew that operations would continue to improve. Nonetheless, delivering the targets was not a given, and I am happy that our execution has been flowless.
Domestic performance continues to improve both year-on-year and sequentially. For the first time in 22 quarters, Service Revenues are back to growth in Q4. EBITDA turned positive in Q2 after more than five years and is up for the third consecutive quarter with a robust +5.5% YoY.
The direction of travel is clear: Italian operations are steadily moving towards structural growth. We are confident that the new TIM is well positioned to confirm this trend, not only on the economics but mainly on the financials.
Going into details of the different businesses, TIM Consumer service revenues trend is steadily improving and TIM Enterprise developed faster than the market also in 2023, with service revenues increasing over 5% YoY. One week ago, TIM Brasil reported strong results across the board, over-delivering versus full year guidance. Thanks to the operational performance, the company delivered the highest-ever operating free cash flow, reaching over 17% of net revenues, a strong base of cash generation supporting a solid shareholder remuneration. Again, we anticipated this performance at the time of the Oi acquisition and we delivered. NetCo confirms the positive revenue trend thanks to the new regulated prices that we strongly asked in order to ensure an adequate return on investments, and the improved technology mix.
The transformation plan is well executed, ensuring full cost discipline and we can push further.
We have cashed in over 700 million of NRRP funds and refinanced more than 4 billion in the year, with maturities covered until the end of 2025.
Let me say that we are proud of what we achieved against all odds. The fun never stops… and in 3 weeks we will reconvene to open the chapter on the future TIM.