16 de febrero de 2016 / 8:09 / hace un año

UPDATE 2-Telecom Italia steps up spending at home, slows debt reduction

4 MIN. DE LECTURA

* Targets 2016-18 Italy spending of 12 bln euros

* To push broadband development, expand in multimedia

* 2015 EBITDA falls 20 pct on one-off charges, weak Brazil

* Shares fall 5 pct on weaker than expected results (Recasts, adds analyst comments, details throughout)

By Agnieszka Flak

MILAN, Feb 16 (Reuters) - Telecom Italia plans to step up spending on building out faster fixed and mobile networks in its home market as the government pushes to bring Italy's digital reach up to speed with the rest of Europe and help kick-start a flagging economy.

The development of a national ultra-fast broadband network is one of the top priorities of Prime Minister Matteo Renzi, but the former state phone monopoly has long resisted the push, deeming it too expensive.

However, as demand for higher-margin broadband services has been on the rise and under pressure from the government, Telecom Italia accelerated its investments at home.

Outlining its new plan to 2018, the heavily indebted company said on Tuesday it would spend 12 billion euros ($13.4 billion) in Italy, including 3.6 billion to lay fibre optic cables. The target is 20 percent higher than the sum it had earmarked in its previous three-year plan.

"We view today's announcement as an effort to appease the government," Societe Generale analysts said in a note.

Telecom Italia, which is regarded as a potential takeover target, said its fibre optic cables would cover 84 percent of the country by 2018, while its 4G mobile network would cover more than 98 percent.

The additional spending is expected to stimulate demand and return domestic core earnings to growth from next year in a market where Telecom Italia's traditional fixed-line phone services are losing appeal amid competition from Internet rivals.

The renewed focus on Italy comes at a time when the worst economic downturn in decades has weighed on majority-owned Brazilian unit TIM Participações SA.

The company capped planned spending on upgrading its mobile network in Brazil, where it expects to grow market share and EBITDA margin, at 14 billion reais ($3.5 billion).

Telecom Italia, whose top shareholder last year became French media group Vivendi with a 21.4 percent stake, also said it plans to strengthen its position in multimedia, including in video, music, gaming and publishing.

"There is a strong dose of Vivendi influence shaping strategy, not only in Telecom Italia's elevated expectations on high-speed broadband but also in multimedia and convergence," said Jerry Dellis, an analyst at Jefferies.

Telecom Italia's shares were down 5.2 percent at 0.83 euros by 1351 GMT after it reported earnings before interest, tax, depreciation and amortisation (EBITDA) fell 20 percent last year, hit by one-off charges totalling 1.08 billion euros and a further deterioration of its Brazilian business.

Analysts said the EBITDA result was slightly below expectations but they welcomed a return to growth in mobile service revenues in Italy in the last quarter of the year.

The group said its net debt would fall to below three times EBITDA by the end of 2018. However, the new target is less ambitious than the 2.5 multiple by the end of 2017 which management had forecast in its previous plan. An analyst said it was also less aggressive than the two multiple average target of European peers.

The stock is down 25 percent so far this year, making it the worst performer among European telecoms operators. ($1 = 0.8960 euros) ($1 = 4.0168 Brazilian reais) (Additional reporting by Stefano Rebaudo; editing by Greg Mahlich and Susan Thomas)

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