Telecom Italia shares fell after the company set out a target to reduce its hefty debt load that analysts said required further explanation, and projected revenue and earnings growth through 2026.
At 1054 GMT Thursday, shares in Telecom Italia dropped 7.9% to EUR0.26, taking their year-to-date loss to 13%.
The Italian telecommunications company said it aims to bring down its debt ratio to between 1.6 and 1.7 times its earnings before interest, taxes, depreciation and amortization after leases in 2026. This would mark a significant reduction compared with a debt-to-Ebitda after leases ratio of 3.8 at the end of 2023.
Telecom Italia’s debt-reduction target missed Equita Sim’s expectation of an improvement to 1.3 times in 2026 and details on the process will need to be better understood, analyst Domenico Ghilotti said in a research note. Nevertheless, the company’s earnings growth ambitions over the period look strong and front-loaded to this year, he added.
The company targets average annual growth of 3% in revenue and 8% in organic Ebitda after leases between 2023 and 2026, it said. For 2024, it aims for revenue growth of between 3% and 4% and Ebitda after leases growth of 8% to 9%.