MILAN, May 19 (Reuters) - Shares in Telecom Italia (TIM) fell 7% on Tuesday after Italy's biggest phone group gave no guidance on its 2020 core profit target as it reported a drop in first-quarter earnings.
The former monopoly, whose investors include France's Vivendi and investment firm Elliott, said organic EBITDA fell 7.5% in January-March from a year earlier as store and business closures during lockdowns due to the coronavirus hit usage of its services including roaming.
The company confirmed its financial guidance for 2021-2022 but made no reference to its 2020 core profit target, leading analysts to believe that this year's EBITDA guidance had been dropped.
Asked by Reuters whether analyst notes were correct on this point, a TIM spokesperson said it had nothing to add to what it had said in the earnings statement.
The company maintained its 2020 EBITDA-capex ratio forecast and a cumulated equity free cash flow target of 4.5 billion euros to 5 billion euros ($4.9 billion-$5.5 billion) through 2022.
"Due to COVID-19 uncertainties, TIM expects to be able to preserve only EBITDA-Capex guidance for 2020. Service revenue and EBITDA guidance is therefore dropped," JPMorgan analysts said in a note.
"TIM's language on guidance of 'keeping EBITDA – capex guidance' highlights the current uncertain climate and leaves the possibility of further reduced forecasts," they added.
The company's share price has now fallen 36.5% since the start of this year, reflecting the impact of the coronavirus and stiffer competition on its underperforming business.
TIM said organic earnings before interest, tax, depreciation and amortization (EBITDA) totalled 1.8 billion euros for January-March.
Domestic revenue fell 11.3% to 3.11 billion euros in the quarter, hit by stiffer competition in the mobile business coupled with the effects of shop closures and reduced roaming traffic. Analysts had a consensus forecast of 3.18 billion euros. Organic EBITDA strips out one-off and currency effects.
TIM said it would preserve its financial targets through cost cuts and further reducing its mobile tower operations in Italy.
The company said it is in exclusive talks with a consortium led by French investment firm Ardian over the sale of a "significant minority stake" in the holding company of Italy's biggest mobile tower company INWIT, after the consortium presented a binding offer.
TIM owns 33.2% of INWIT so it could sell up to 16.6% of INWIT, which would be worth up to around 1.5 billion euros at current market values.
$1 = 0.9137 euros Reporting by Elvira Pollina; Editing by Susan Fenton