TIM Targets 12%-13% Annual EBIT Growth For 05-07

MILAN -(Dow Jones)- Telecom Italia Mobile SpA (TIM.MI) said Tuesday it is targeting double-digit operating profit growth for the next three years as it seeks to save on costs after its merger with parent Telecom Italia SpA (TI), boosts its Brazilian business and wins more third-generation mobile clients at home.

Telecom Italia Mobile said it is targeting annual growth of earnings before interest and taxes, or EBIT, of 12%-13% from 2005 through 2007.

Group revenue should rise 7%-8% a year over that period on average, TIM said in a statement.

TIM Chief Executive Marco De Benedetti is presenting the company's three-year plan to analysts Tuesday.

TIM expects 10% to 11% average annual growth in group earnings before interest, taxes, depreciation and amortization over its three-year plan.

In its main market, Italy, TIM expects average annual EBIT growth of 5% to 6%, EBITDA growth of 4% to 5%, and revenue growth of 3% to 4%.

In Brazil, TIM's other large market, the company expects EBITDA to rise by around 95% in the three years covered by the plan.

Group capital expenditure should amount to around EUR5.6 billion, 70% of which will go on the domestic business, TIM said.

TIM said it expects to have a unique position in Italy as technological convergence between fixed-line and mobile platforms allows it to benefit from its integration with Telecom Italia.

TIM said it will spend more than EUR1 billion on its Universal Mobile Telecommunications System network in Italy. The company said it plans to have around 9.4 million UMTS lines on its domestic network by 2007, while the total number of third-generation lines, including those served by the EDGE platform, should be 18.7 million.

TIM, which is facing pressure at the high end of its market from Hutchison Whampoa Ltd.'s (0013.HK) 3 business and also from Vodafone PLC's (VOD) Live! service, expects that to give it a 54% share of the domestic market in 2007.

Value-added services should post annual growth rates above 20%, TIM said.

In Brazil, TIM is seeking to be the No. 2 player in a fast-growing market, and is targeting a 24% market share by 2007.

TIM said its TIM Brasil unit boosted customers by 62% in the first two months of 2005 from the same period a year earlier and now has a 21% total market share.

At 1310 GMT, TIM shares were trading down EUR0.05 at EUR5.17.

Telecom Italia shares were down EUR0.03, or 1%, at EUR2.93.

-By Christopher Emsden, Dow Jones Newswires; +39-02-58-21-99-05; chris.emsden@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 12th April 2005