Mobile and broadband push Telecom Italia

9 Mar 2007

Telecom Italia has reported a 6.3% drop in net profits in 2006, although sales were up 4.5%. Net income fell from EUR3.216 billion (USD4.232 billion) in 2005 to EUR3.014 billion last year due to lower capital gains and higher taxation, while turnover rose from EUR29.919 billion to EUR31.275 billion. The main drivers of growth were the domestic and Brazilian mobile operations and the European broadband internet segment, more than compensating for a slight decline at the Italian wireline unit. EBITDA reached EUR12.850 billion, from EUR12.517 billion in 2005. The company says it expects domestic wireline revenues to fall by between 2.5% and 3.5% annually over the next three years, while the Italian mobile unit will also see a drop in sales. This will be offset by growth at TIM Brasil, however, with sales forecast to rise by 15% a year.

At the end of December Telecom Italia’s domestic mobile subsidiary TIM had 32.4 million subscribers, up from 28.58 million a year earlier. The total included 4.2 million 3G users, representing 13% of its customer base. Meanwhile, TIM Brasil claimed 25.4 million subscribers, up from 20.2 million at end-2005. The group’s European broadband operations had 8.7 million customers, including 6.8 million in Italy.

Separately, Telecom Italia has confirmed that it is still in talks over a possible international alliance with Telefónica of Spain. A company spokesperson added, however, that the negotiations are not exclusive and Telecom Italia is speaking with other potential partners. Talks between Telefónica and Telecom Italia shareholder Pirelli are currently on hold; Pirelli is looking to offload part of its stake in Olimpia, a holding company which has a 18% interest in Telecom Italia.