Telecom Italia, facing a takeover approach from US fund KKR, has cut the 2021 earnings forecast for its domestic business due to lower-than-expected fixed line revenue from its partnership with DAZN to screen Italian soccer.
In its third profit warning in a year, TIM said it expected a "low teens decrease" in 2021 organic earnings before interest, tax, depreciation and amortisation after leases for the domestic business.
In October, it had forecast a "high single-digit decrease" for the business.
Earlier this year, TIM entered into a €1 billion deal with sport streaming service DAZN to try to boost its broadband and pay-TV services.
TIM is now looking to cut the cost of the deal with DAZN after the accord to distribute Italy's top flight soccer league matches generated less revenue than expected.
Any non-recurring provision will be determined in light of the ongoing negotiation of the DAZN agreement and will be booked in 2021, TIM said in a statement.
TIM, Europe's sixth largest telecoms group, said it expected group EBITDA-AL for 2021 to be higher than €5.4 billion thanks to growth at its Brazil business unit, which was confirmed at a "mid single-digit" rate.
EBITDA-AL was €6.3 billion in 2020, according to TIM's annual report, and the group had previously flagged a "mid-single digit" drop for this year.
After a €435m payment for licences, the company's adjusted consolidated net financial debt is expected to be around €17.6 billion.
TIM's board is due to meet on Friday to discuss how to respond to the €33 billion takeover proposal from US fund KKR.
Four sources have told Reuters that TIM's top investor Vivendi is considering pushing for a board reshuffle in an attempt to oust former CEO Luigi Gubitosi, who it considers responsible for TIM's underperformance.
Gubitosi quit as TIM chief executive last month, however he did not step down as a board director, preventing his designated successor Pietro Labriola from becoming CEO as he is required to join the board first.
