Italian telecoms group fears lower core business gains after revenue from partnership with OTT provider lower than expected
TIM, Italy's telecommunications giant and sponsor of the Italian top flight Serie A, has issued its third profit warning of the year, cutting its forecasted earnings. The group has cited its partnership with live streaming provider DAZN as one reason for the disappointing figures.
Earlier this year TIM entered into an agreement with DAZN to screen Italian football as a way to boost interest in its broadband and pay TV packages. Revenues generated from this deal are said to have been below initial expectations which is a contributory factor to this latest forecast.
The group is also considering an offer from a US fund called KKR which is looking at a possible takeover. The board of TIM met recently to discuss it but any decision on this will likely have to wait until the group's new business plan in the new year, an anonymous source said. "Telecom can't evaluate the KKR approach at the moment because the conditions are not there," the source said.
On the earnings forecast, TIM now predicts a "low-teens decrease" in organic earnings before tax. This comes after previously anticipating a "high single-digit decrease" in October. This indicates a very tough fourth quarter for the company in 2021.
With DAZN seemingly taking a large chunk of the blame for this underperformance, TIM is now looking at cost cutting the deal after its distribution of Serie A football yielded far less revenue than expected. Negotiations with DAZN are ongoing.
This comes after DAZN itself was investigated by an Italian communications watchdog after consumers experienced outages and other technical difficulties trying to watch Serie A on the online platform.
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