Europe’s fifth largest telecom operator Telecom Italia (TI) has announced disappointing but not unexpected 2007 results. Net profit was down 18.8% from a year earlier with full-year net profit of EUR2.45 billion (USD3.8 billion), falling from EUR3.01 billion in 2006. Full-year sales were almost unchanged at EUR31.1 billion, while EBITDA fell 9.6% to EUR11.6 billion. The company said core earnings were hit by one-off regulatory items, including a cut in international roaming and fixed/mobile termination tariffs and the so-called ‘Bersani Decree’ that eliminated mobile top-up fees.
New Chief Executive Franco Bernabe, who was appointed in December, will have a hard task to turn the company’s fortunes around as it has a huge debt to contend with and faces declining margins in the domestic market. Although TI plans to invest EUR6.5 billion over the next decade to upgrade its domestic network to handle super-fast broadband, pressure from regulators to open up its networks to competitors could cause revenue to suffer further and its debt burden to increase.