Telecom Italia talks “trend reversal”, as 2013 dividend cut

Telecom Italia talks “trend reversal”, as 2013 dividend cut

07 MAR 2014

Telecom Italia said that its 2013 results have “highlighted a trend reversal” over previous years, while acknowledging the continued influence of the “fragile” Italian economy and “the persistence of a strong competitive dynamic in the sector”.

But the company said its “financial discipline” means it will not pay dividends to ordinary shareholders, stating that “in light of the signs of recovery we can already see on the market, we will be able to remunerate all shareholders again in the next financial year”.

Marco Patuano (pictured), CEO, said: “After having taken on, while not agreeing to it, the price war on the mobile market and having helped to bring the competition back to the level of the quality of the networks and services, we close the year leader once again in terms of revenues.”

He continued: “In Brazil too, we intend to fully seize on the growing demand for data traffic, continuing to invest in infrastructures.”

For the year, the company reported a net loss attributable to shareholders of €674 million, compared with a prior-year loss of €1.63 billion, on revenue of €23.41 billion, down 9.1 per cent year-on-year.

It noted a goodwill impairment charge of €2.2 billion made during the first half of the year, without which it would have seen a profit of €1.5 billion.

On an operating level (EBIT), it saw a profit of €2.72 billion, up 59 per cent from €1.71 billion.

Some 69 per cent of TI’s revenue comes from its home market, with almost 30 per cent coming from Brazil. And it saw declines in both: revenue in Italy decreased by 9.6 per cent to €16.18 billion, while revenue in Brazil fell 7.1 per cent to €6.95 billion, with the latter impacted by exchange rates.

It noted that a decrease of 7.7 per cent in Italy in the last quarter of the year was reduced from 9.1 per cent in Q3 and 10.5 per cent in the first half. In the early part of the year, there had been “a sharp reduction in prices (particularly on mobile)”, and its revenue performance had been “significantly influenced by some factors of a regulatory nature”.

Its consumer mobile service revenue in Italy decreased by €693 million, as weakness in voice services (including termination rate cuts) and messaging were only partially offset by mobile internet growth.

In Brazil, mobile ARPU decreased by 2.6 per cent off the back of competitive pressures.

Group net financial debt of €26.8 billion is down €1.5 billion, meeting a goal set by its strategic plan.

It said it had made investments of €4.4 billion, of which more than €3 billion was in Italy, focused on “fixed and mobile ultrabroadband”. TIM has achieved the widest LTE coverage in Italy, with 651 municipalities reached.


Steve Costello

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