Telecom Italia [NYSE:TI] has reported a 32% rise in net profit to EUR503 million (USD564 million) for the first quarter of 2003, thanks to increased cash flow and reduced investments. Operating profit reached EUR1.87 billion, a rise of 7.8% in line with predictions, although sales fell 1.9% to EUR7.1 billion. The operator also chopped its debt by around EUR2 billion in the three month period in preparation for a planned merger with its highly indebted parent company Olivetti, which is expected to be approved at the end of this month. Analysts believe that once the merger goes ahead, the two companies’ debts will be able to be reduced more rapidly thanks to better debt ratings and financial flexibility.
Telecom Italia’s promising first quarter results have been mainly attributed to its mobile arm Telecom Italia Mobile (TIM), which reported an operating profit of EUR897 million. Revenues rose 4.7% to EUR2.62 billion and sales reached EUR2.62 billion, up from EUR2.5 billion the previous quarter. The cellco, which reported a 2.7% rise in its customer base to 40.2 million, said that its strong domestic results offset weak currencies in Latin America. The cellco said it will continue to focus on the development of GSM services in Latin America during the rest of 2003.