While revenue is still falling, Telecom Italia (TI) has a more positive outlook, at least domestically, thanks in part to mobile subscribers’ hunger for 4G capacity, said CEO Marco Patuano.
Overall Telecom Italia’s revenue fell by 2.6 per cent to €5.1 billion, as the company’s other major operation, Brazil, struggled.
TI blamed macroeconomic factors in Brazil, alongside a switch away from voice/SMS towards data apps, and a cut in mobile termination rates in February 2015. Revenue in Brazil fell by 2.8 per cent to €1.4 billion.
Domestically, TI saw revenue creep down by 2.6 per cent to €3.6 billion but Patuano (pictured) pointed out this is a marked improvement from a year ago when revenue careered down by 8.3 per cent in Q1 2014. “It’s a totally different pace,” he said.
Part of the reason for a more positive picture in Italy is 4G. Patuano said 4G users are breaking their bundles, beneficial for TI. Data usage is higher than average bundle size, he pointed out.
And TI has doubled down on 4G with LTE capex up 32 per cent year-on-year. The 4G network now covers 80 per cent of the country’s population and has 1.8 million subscribers (out of a total of 10.5 million ‘mobile broadband’ subscribers).
“More coverage, more customers and now we see more revenue,” he said.
Q1 profit was €258 million against €367 million in the same period in 2014.
Looking forward, TI forecasts a further fall in domestic revenue “but considerably less so than that seen in previous years, particularly on mobile.”
“In Brazil growth is forecast, albeit at lower rates than those recorded in previous years, due to the progressive penetration and saturation of the mobile market, the migration away from traditional voice-SMS services towards internet services and the impact of the reduction in mobile termination rates (MTR),” it added.