Telecom Italia continues Brazil review as H1 fails to impress

Telecom Italia continues Brazil review as H1 fails to impress

06 AUG 2014

Telecom Italia said it will continue to review the options for its Brazilian business, as a weak economic climate continued to weigh on its operations both at home and overseas.

“The board of directors examined publically available information on M&A activities underway in Brazil, a core market for the group. It confirmed the strategic value of the group’s activities in the area, therefore deciding to continue the in-depth examination of the strategic operations in Brazil”, the company said in a statement.

Operationally, the company said that its first half numbers were “affected by the recessionary tensions in the domestic market, where signs of recovery are still very weak, and a slowdown in economic growth in Latin American countries”.

EBITDA in Italy was €3.5 billion, down 7.9 per cent, on revenue which decreased by 8.2 per cent to €7.53 billion.

The company said that its numbers were impacted by factors which include falling demand for “traditional” services (voice, messaging, circuit-switched data), which was “only marginally offset by the development of innovative services” in fixed broadband, ICT and mobile internet.

Consumer mobile was particularly impacted by a falling ARPU despite a “gradual stabilisation of the customer base and market share”. Traditional voice and messaging shrinkage was only partially offset by growth in mobile internet services.

Business mobile was similarly impacted by voice and messaging declines, attributable to a shift of customers towards bundled plans with lower ARPU.

For Brazil, EBITDA was €840 million, down 8.6 per cent, on revenue which fell by 16.9 per cent to €3 billion.

Mobile revenue was impacted by an additional reduction in mobile termination rates.

The company reported a profit attributable to the parent company of €543 million, compared with a prior-year loss of €1.41 billion, on revenue of €10.55 billion, down 11.2 per cent. The prior year period included a €2.2 billion impairment charge.

On an operating level before the charge (EBITDA), revenue was €4.35 billion, down 7.6 per cent.

Looking forward, the company said it will “continue to defend its market shares, invest in the development of infrastructures, with a heavy increase in innovative investments destined in particular to Ultra Broadband, in order to maintain revenues from traditional services and promote the growth of revenues from innovative services, in compliance with its financial policies”.

Telecom Italia recently began tests of LTE-Advanced technology on its network in Turin.

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