(Recasts first sentence with CEO details, adds financial details)
MILAN, Feb 23 (Reuters) - Telecom Italia (TIM) said on Tuesday it expected profit and sales to stabilise this year after a difficult 2020 as it prepares to hand CEO Luigi Gubitosi a second term at the helm of Italy’s biggest phone group.
As the pandemic ravaged Italy’s economy, revenue at Telecom Italia fell to 15.8 billion euros ($19.2 billion) last year from 18 billion euros in 2019, a touch ahead of a consensus forecast provided by the company.
Full-year organic earnings before interest, tax, depreciation and amortization (EBITDA) after lease costs fell 6% to 6.24 billion euros, also broadly in line with forecasts. The group kept its dividend stable at 1 cent per ordinary share.
TIM said it expected organic EBITDA after lease costs to either remain stable or show low single-digit growth in 2021.
The group aims to cut net debt after lease costs to around 16.5 billion euros at the end of 2021 from 18.6 billion in December, to reach a debt ratio of 2.6 times the EBITDA in 2023.
Domestic revenue, which accounts for nearly 80% of the total, fell 7.7% year-on-year in 2020 net of one-off items.
Under the new business plan to 2023 unveiled on Tuesday, TIM said it would seek to build up new sources of revenue with its newly created cloud unit and by expanding its cybersecurity Internet of Things (IoT) services.
The firm’s outgoing board proposed keeping CEO Gubitosi in the job as part of a slate of directors which shareholders will vote upon at the group’s annual general meeting on March 31.
Sources have said the slate is part of a broader compromise accord between Italy’s government and TIM’s top shareholder, Vivendi, to pursue plans to create a unified ultra-fast network in the country comprising TIM’s fixed-network assets.
Italy’s previous government viewed the scheme as key to closing the country’s digital gap and avoiding a duplication of investments in the sector.
New Prime Minister Mario Draghi has put digital infrastructure at the heart of his agenda but he is yet to clarify his stance on the single-network plan.
Gubitosi has been balancing negotiations over the single network with efforts to extract value from TIM’s network assets.
The slate put forward by the board also includes Vivendi CEO Arnaud de Puyfontaine and Giovanni Gorno Tempini, chairman at state lender CDP.
CDP, the second-largest shareholder in TIM behind Vivendi, partly owns Open Fiber, a fiber-optic provider whose assets would be merged with TIM’s under the single-network plan. ($1 = 0.8235 euro) (Reporting by Elvira Pollina in Milan Editing by Valentina Za and Matthew Lewis)