Domestic and international woes hit Telecom Italia

Domestic and international woes hit Telecom Italia

07 AUG 2015

Telecom Italia said it will “continue to defend its market shares and invest in the development of infrastructures,” as it continues to battle tough conditions both in its home market and Brazil.

In the company’s H1 results statement, it said that its home market “confirmed the trend to progressive recovery” in turnover, with a smaller drop than in previous quarters. In particular, it noted some positives in mobile, where market share was maintained and limited ARPU erosion seen, supported by greater penetration of mobile internet.

In its domestic fixed segment, the revenue recovery trend was supported by positive growth in broadband ARPU, progressive growth in ADSL customers, with premium bundle/flat offers and the development of ICT services.

EBITDA in the domestic unit was €2.85 billion, down 18.9 per cent on an organic basis, on revenue of €7.38 billion, down 2.5 per cent.

In Brazil, the market has been affected by a “determination of the macroeconomic scenario”. With regard to this, it “maintained its market share in the Mobile segment, significantly increasing its postpaid customer base, but, at the same time, a worsening trend in turnover due to acceleration of the phenomenon of migrating from traditional voice/SMS services to innovative-IP solutions, and a further reduction in mobile termination rates (MTR) in force since the end of February 2015”.

Its Mobile woes were partially mitigated by growth in its fixed business.

Brazilian EBITDA was €784 million, down 1.8 per cent on an organic basis, on revenue of €2.69 billion, down 6.1 per cent.

Group H1 results
Net profit for the period was €29 million, down from €543 million, on total revenue of €10.23 billion, down 4.7 per cent from €10.73 billion. EBITDA of €3.63 billion was down 16.4 per cent from €4.35 billion.

In a statement, it said that net profit “would have exceeded €650 million”, but was impacted by issues such as non-recurring charges and income, the negative impact of bond buybacks, and “some items of a purely accounting and valuation nature”.

In particular, a charge of €399 million was taken “connected with events and operations that, by nature, do not take place continuously in normal operations”.

This, it said, includes “reorganisation/restructuring, charges consequent to regulatory disputes and sanctions and related liabilities, charges for disputes with former employees and liabilities with customers and/or suppliers”.

It was also noted that EBITDA, excluding non-recurring charges and other exceptional items, showed sequential improvement from the first quarter to the second, with a 4.8 per cent year-on-year drop narrowing to 2.7 per cent.

The period also saw the listing of TI’s domestic towers unit, Inwit. TIM Brasil also concluded the first tranche of its towers sale (to American Tower).

Looking forward
For the rest of the year, it is expected that the present trends will continue to influence future services, with a “further overall fall in the domestic market, 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,” which was attributed to increased penetration in the mobile market, the migration away from traditional voice and SMS towards internet services, and the impact of termination rates.

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