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TIM expects net debt to reach €7.5 billion by 2024 after network sale

Telecom Italia’s pro-forma net debt following its planned landline network sale will rise to about 7.5 billion euros ($8.2 billion) this year, the company said after a special board meeting to analyse a market rout of its shares.

TIM held an extraordinary board meeting on Sunday, after the presentation of its three-year strategy prompted the biggest daily fall in its shares on record.

The sale of TIM’s most prized asset is a key plank of CEO Pietro Labriola’s efforts to cut its debt load and refocus the group around its services business.

However, net cash flow is expected to be around zero in 2025 and about 500 million euros in 2026, the former phone monopoly said in a statement on Monday.

Shares rose around 1% in early trade, bucking a 0.8% drop in Milan’s blue-chip index.

Debt has long been seen as one of the factors holding back TIM, along with tough competition in its home market.

Analysts had on Thursday pointed out that the forecast debt level of the venture emerging from the disposal of the company’s domestic fixed line network, which TIM expects to complete in the middle of this year, was above market expectations.

The group’s pro-forma net debt – after the sale of the grid – was at about 6.1 billion euros at the end of last year.

That compares with an actual reported adjusted net debt figure of 25.6 billion euros.

The additional disclosure TIM provided after its shares plunged 24% on Thursday showed that even after the grid divestment, net debt would rise by 1.4 billion euros this year.

TIM said the change in net debt reflected both ordinary and extraordinary items.

It mentioned its core profit after lease costs and interest payments among the former, and separation costs and possible price adjustment in the network’s sale among the latter.

TIM confirmed its 2024-2025 outlook, and said earn-outs related to the sale of the grid and the potential disposal of Sparkle, its submarine unit for which the Italian Treasury has submitted a bid, may drive its forecast higher.

Normalised net cash flow is expected to reach around 0.4 billion euros in 2025 and 0.8 billion euros in 2026. Reuters

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