Telecom Italia Media: Board of Directors examines and approves the Group's Interim Report on Operations as of 30 September 2014

11/04/2014 - 06:10 PM

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NET RESULT: - 7.0 million euro (-128.1 million euro in the first nine months of 2013, which included the value of Discontinued Operations associated with the sale of La7 and MTV Italia for 133.5 million euro)

REVENUES: 50.6 million euro; -5.9 million euro compared to the first nine months of 2013 (56.5 million euro)

EBITDA: 18.9 million euro; -7.1 million euro compared to the first nine months of 2013 (26.0 million euro)

EBIT: -2.2 million euro; -6.9 million euro compared to the first nine months of 2013 (4.7 million euro)

NET FINANCIAL DEBT: 262.7 million euros; 259.9 million euros at the end of 2013

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The Telecom Italia Media Board of Directors, chaired by Severino Salvemini, examined and approved the Group’s Interim Report on Operations as of 30 September 2014.

Consolidated Group revenues reached 50.6 million euro in the first nine months of 2014, down by 5.9 million euro compared to the first nine months of 2013 (56.5 million euro). The downturn is fully attributable to the Network Operator and is due to the expiry, at the end of 2013, of contracts with some customers only partially offset by revenues from new customers and by the consolidation of the third quarter revenues of Rete A S.p.A. (4.5 million euros) not present in 2013.

The EBITDA  amounted to 18.9 million euros; it is down by 7.1 million euros compared to the first nine months of 2013 (26.0 million euros) and mainly reflects the reduction in revenues only partially offset by a reduction of the operating costs of the Network Operator (1.4 million euros including the costs of the third quarter of 2014 of Rete A S.p.A. for 3.4 million euros not present in 2013). Excluding the activities of Rete A, the Group's EBITDA fell by 8.2 million euros. The EBITDA of Telecom Italia Media S.p.A. also fell by 1.4 million euros mainly following the lower releases of other funds, present in the first nine months of 2013, for 1.0 million euros.

The EBIT amounted to -2.2 million euros; it is down by 6.9 million euros compared to the first nine months of 2013 (4.7 million euros) and was affected by lower depreciation and amortisation for 0.2 million euros fully attributable to the Network Operator, which included the depreciation and amortisation of Rete A for 1.2 million euros not present in 2013.

Net result amounted to -7.0 million compared to -128.1 million for the first nine months of 2013, period which included a total value of Discontinued Operations, associated with the sale of La7 and MTV Italia, equal to -133.5 million euro.

Net financial debt was 262.7 million euros, up by 2.8 million euros compared to the end of 2013 (259.9 million euros). The performance is mainly attributable to the requirements resulting from the industrial investments of the period for 4.8 million euros (relative to the implementation of the Transport and Backup Network and to the new “Playout” broadcasting infrastructure for the television channels of the Network Operator, including 0.2 million euros of investments by Rete A), the result of the positive operations of the period (EBITDA -18.9 million euros and D Working Capital 4.7 million euros), the net effect deriving from the consolidation of Rete A (21.1 million), and the income from tax consolidation for 17.7 million euros. Other net disbursements for 8.8 million euros, which mainly include the net financial expenses for the period for 6.5 million euros, should also be added.

Network Operator

Network Operator revenues and incomes amounted to 51.3 million euro, decreasing by 7.1 million euro compared to the same period of 2013 (58.4 million euro). This result, as highlighted above, is attributable both to the expiry of some contracts and the decrease in other income, only partially offset by higher revenues from other customers and the increase in revenues and other income pertaining to the consolidation of the activities of Rete A in relation to the third quarter of 2014.

EBITDA  amounted to 24.2 million euro, a 5.7 million euro decrease compared to the first nine months of 2013 (29.9 million euro). This performance was mainly affected by the lower revenues previously described, only partially offset by a reduction in purchases of goods and services and by lower operating costs deriving from lower provision charges pertaining to trade receivables and future expenses, as well as costs pertaining to the consolidation of Rete A activities (materials and services procurement, cost of personnel and other operating costs) relating to the third quarter of 2014.

The EBIT amounted to 3.1 million euros and is down by 5.6 million euros compared to the same period of 2013 (8.7 million euros) due to both the change in the EBITDA and the lower depreciation and amortization, which included the depreciation and amortization relative to Rete A not present in 2013. Note that, from 2014, the service life of the frequencies has been extended from 31 December 2028 to 31 December 2032.

The investments of the first nine months of 2014 amounted to 4.8 million euros and mainly refer to the completion of the transport and backup network, the implementation of the broadcasting infrastructure (Playout) for television channels and the investments made by Rete A in the period 1 July 2014 – 30 September 2014.

From the first of July 2014, due to the effect of the transfer of Rete A S.p.A. to Persidera S.p.A., the technical and commercial management of the digital Multiplexes expanded to include, in addition to the 3 MUXES already owned by Persidera, the 2 MUXES owned by Rete A. At 30 September 2014 the three digital multiplexes of Persidera S.p.A. covered over 95% of the Italian population. The relative signals are transmitted by approximately 800 broadcasting sites distributed throughout the country. The transmission capacity allocated amounts to around 98 Mbps which represents around 87% of the available capacity. Also at 30 September 2014, the coverage of the 2 Digital Multiplexes of Rete A amounted to approximately 92%. The relative signals are transmitted by 400 broadcasting sites distributed throughout the country.

INTEGRATION OF THE DIGITAL TERRESTRIAL NETWORK OPERATOR ACTIVITIES

On 30 June 2014 Telecom Italia Media and Gruppo Editoriale L’Espresso completed the integration of the digital terrestrial network operator activities respectively owned by Persiderea S.p.A. (former TIMB) and Rete A S.p.A. (Rete A).

The integration was implemented through the transfer of 100% of Rete A shares owned by GRUPPO ESPRESSO to Persidera S.p.A.. As a result of the transfer, TI Media and the GRUPPO ESPRESSO respectively hold 70% and 30% of the shares of Persidera S.p.A. which owns the entire share capital of Rete A.

This operation gave rise to the largest independent network operator in Italy with five digital multiplexes and an infrastructure with extensive national coverage, wide diffusion and capable of providing high quality services. The group resulting from the operation is the reference provider for the main non-integrated national and foreign television editors operating on the Italian market. The operation also allows significant industrial synergies to be achieved.

Persidera is currently focused on implementing the plan of integration with Rete A in order to accelerate and maximize the benefits and operational synergies deriving from the aforementioned merger by incorporation, which will take effect from 1 December 2014.

The Company valuation process is continuing according to plan. Telecom Italia Media and Gruppo Editoriale l’Espresso are assisted in this competitive process by the advisors Mediobanca and Banca Imi.

OUTLOOK FOR THE 2014 FINANCIAL YEAR

The Telecom Italia Media Group, following the sale of its television business units La7 and MTV, has focused its development strategy on the implementation of initiatives aimed at restoring the Group’s efficiency and profitability. In light of the current economic and regulatory environment in which Telecom Italia Media operates, and considering the effects of the integration of Persidera S.p.A. and Rete A, in 2014 the plan is to maintain the Network Operator's current level of bandwidth rental also through new customers, expand the offering of additional services and, maintaining tight control over costs, thereby generate positive cash flow from the operating activities.

CORPORATE GOVERNANCE ISSUES

The Board of Directors has approved a new Procedure for the internal management and disclosure to the public of sensitive information  which is currently being published on the Company's website.

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Pursuant to sub-section 2, clause 154-bis of the Consolidated Financial Law, the Manager responsible for preparing the corporate accounting documents, Luigino Giannini, has declared that the accounting disclosures contained in this press release correspond to the data records, accounting books and accounts entries.

Rome, 04 November 2014