Telecom Italia H1 revenues up 1.7% to EUR14.8bn

2 Aug 2012

Telecom Italia (TI) has reported consolidated revenues of EUR14.793 billion (USD18.186 billion) for the six months ended 30 June 2012, up 1.7% from the EUR14.543 billion reported in 1H11. Of the total, EUR8.570 billion was derived from TI’s core domestic interests, down 4.1% year-on-year. Revenues generated by the group’s Brazilian interest TIM Participacoes (TIM Brasil) increased 6.7% to EUR3.733 billion, and Telecom Argentina weighed in with revenues of EUR1.823 billion, an improvement of 20.6% on an annualised basis. EBITDA for 1H12 was EUR5.859 billion, down 1.6% on the corresponding period in 2011, while the company posted a consolidated net profit of EUR1.245 billion, an improvement of some EUR3 billion compared with the same period of 2011. In 1H11 TI initiated a goodwill write-down of non-current domestic assets worth EUR3.18 billion; the valuation was based on the deterioration of the financial markets in terms of interest rate trends. In comparable terms, excluding the aforementioned goodwill write-down, the company saw net profit increase by 9.2%.

In operational terms, at 30 June 2012 domestic fixed line retail accesses dropped 14.6% to 14.277 million, whilst broadband subscribers totalled 7.037 million (-1.8%), with a further 1.985 million wholesale connections (+1.9%). IPTV subscriptions slumped 31.5% on an annualised basis, to 224,000 and voice-over-internet protocol (VoIP) users declined 24.7% year-on-year to 1.326 million. Telecom Italia Mobile meanwhile claimed 32.225 million subscribers in its home market at end-June, an increase of 3.1% y-o-y. Telecom Argentina witnessed subscriber growth in all sectors of its business, with fixed lines growing 0.7% to 4.148 million thanks to uptake of bundled services. Meanwhile, broadband subscriptions grew 9.4% to 1.594 million, and customers of the Telecom Personal mobile unit reached 18.723 million by end-June, up 7.7% y-o-y. Elsewhere, TIM Brasil saw its mobile subscriber base rise 24% year-on-year to 68.860 million.

Franco Bernabe, CEO of Telecom Italia, commented: ‘The company returned to solid earnings in the first half of 2012 despite the worsening of the economic conditions in Italy and the slowdown in Latin America. Even more importantly we reduced debt by EUR800 million from 30 June 2011, down to EUR30.4 billion at the end of second quarter of 2012, after outlays for dividends exceeding EUR1 billion. Moreover, in an extremely difficult credit climate for the majority of Italian firms, Telecom Italia successfully placed bonds for EUR1.5 billion, maintaining the liquidity margin at sufficient levels to cover our debt maturities until 2014. Important results were achieved in the first half of 2012 on the domestic front, in particular in the consumer segment, while the SME area has suffered from the tough market conditions, aggravated by the credit squeeze. In Latin America too, despite an economic climate that reflects the global slowdown, we can report positive results. In Brazil, our constant commitment to network expansion, confirmed by the recent purchase of the 4G frequencies, ensures growth for our local activities. In Argentina, as mobile number portability was introduced, we continued to invest in the repositioning of our mobile offering, which will deliver benefits in the future … Although the macroeconomic and financial picture does not look likely to improve in the coming months either in Italy or Latin America, we will not allow it to threaten our stated objectives, above all debt reduction. We shall exploit all the flexibility that the various levers of management allow, in the knowledge that the exceptionally complex situation which we are currently facing demands not only coherence and rigour, but also the ability to find new directions to continue to pursue the growth path which, with the latest planned investments, we have embarked upon.’