Brazil and Germany hit Telecom Italia results

11 Aug 2008

Telecom Italia has reported a 24% drop in first-half net profits due to poor margins at its operations in Brazil and Germany. Net profit for the six months to the end of June decreased to EUR1.14 billion (USD1.71 billion) from EUR1.5 billion in the year-earlier period, while sales fell 3.3% to EUR14.84 billion. Net debt increased from EUR35.4 billion at the end of March to EUR37.17 billion at end-June. The slow performance at the overseas units have prompted the firm to lower its 2008 profit and revenues guidance; group revenue is expected to be between EUR30.4 billion and EUR30.5 billion for the full year, well down on the March forecast of EUR31 billion. Chief executive Franco Bernabe commented: ‘In Brazil and Germany, the group has suffered unexpected setbacks as a result of the competitive conditions on the local markets.’ The domestic wireline unit continued a recent slowdown, with revenues falling 6.2% year-on-year to EUR7.5 billion, while sales dropped 5% at the Italian cellular business TIM as a result of regulator-enforced tariff cuts and negative subscriber growth; TIM’s Italian customer base decreased by 134,000 in the three months to the end of June to just under 35.8 million.