Telecom Italia cut its guidance for its mobile unit through 2008:
TIM Brazil, the second largest Brazilian mobile carrier, is now targeted to grow 10% per year through 2008, as opposed to the previous expectation of 18% growth through 2007. EBITDA is projected to grow from 16.3% last year to over 20% this year and over 30% in 2008.
TIM Italy: Annual growth rates were reduced from 3-4% to 2-3%. EBITDA will stay constant through 2008 at the 50.6% level.
The good news for Telecom Italia: TI is one of the best performing incumbents in Western Europe. As Ovum analyst Cesar Bachelet notes, Telecom Italia has made a number of smart moves including capitalizing on broadband growth through its acquisition of French ISP LibertySurf, resulting in more than doubling its non-domestic European broadband operations. TIM Brazil has been a phenomenal success for TI with 48.4% subscriber growth in 2005.
The bad news for Telecom Italia: Much the same as incumbent carriers throughout Europe. They've underperformed the WSJ's index of fixed line carriers over the last twelve months (see chart). Bachelet writes: "Telecom Italia will have to keep running harder just to stand still...Key to achieving [its] less ambitious objectives will be the realisation of the synergies from its recently-introduced One Company model. The fact that successful operators such as Telecom Italia are facing these challenges is an indication of just how tough the market has become."
TI Benchmarked Against Fixed Telecommunications Service Providers