TIM beats expectations despite Latin American writedowns

4 Nov 2003

Telecom Italia Mobile’s (TIM) third quarter earnings beat analyst’s expectations as the cancellation of a telecoms tax helped offset writedowns at its Latin American operations. TIM’s operating income for the three months to the end of September 2003 rose to EUR1.12 billion, from EUR1.03 billion in the third quarter of 2002, as revenues rose by EUR180 million to EUR3.1 billion. Net profit was EUR977 million, compared to a loss of EUR43 million the year before. As Italy’s dominant cellco, TIM derives around 80% of revenues from its domestic operations and at the end of September boasted 26.1 million lines in its home market. The group posted total revenues of EUR8.64 billion for the first nine months of 2003, up 7.8% year-on-year, resulting in a gross operating profit of EUR4.16 billion, up 6.5%. In September the EU ruled against a tax on telecoms operators levied by the Italian government since 1999. TIM’s nine-month results included EUR543 million accrued from the cancellation of the tax up to December 2002. Whilst it made writedowns at its Peruvian and Venezuelan businesses to the effect of EUR478 million, its subsidiaries in the region posted year-on-year revenue growth; TIM Peru’s turnover rose by 76%, whilst Digitel in Venezuela saw sales rise 8.7%. The group’s Brazilian operations, however, made a nine-month operating loss of BRL427 million, despite more than doubling their revenues to BRL3.06 billion.