Brazil hits Telecom Italia results in first quarter

16 May 2016

Telecom Italia, which offers fixed and mobile services in Italy and Brazil under the TIM brand, has reported a 15.8% fall in EBITDA for the first three months of 2016 to EUR1.71 billion (USD1.93 billion). The firm said that in organic terms, excluding the effect of fluctuations in exchange rates, EBITDA would have fallen 11.3%. Revenues dropped 12.1% to EUR4.44 billion, with the decline attributed in part to one-off items such as restructuring costs. Domestic sales were down 2.3% at EUR3.55 billion, while TIM Brasil saw revenues plummet 36.5% to EUR897 million, with the drop blamed on the macroeconomic situation on Brazil and the unit’s decision to move its focus away from the sale of handsets. Net profit attributed to parent company shareholders rose from EUR82 million in Q1 2015 to EUR433 million a year later.

In operational terms, Telecom Italia saw the number of mobile customers in Italy fall 1.0% in the twelve months to 31 March 2016 to 29.85 million, while the number of broadband subscribers rose 1.9% year-on-year to 8.96 million. In Brazil, total mobile subscriptions were down 11.2% at 67.27 million.

The group has raised its target for cost-cutting efficiencies to EUR1.6 billion by 2018, up from the previous target of EUR600 million, with EUR800 million of savings to be made on operating expenditures and EUR800 million to be cut from planned capital expenditure. Meanwhile, Telecom Italia is also considering an initial public offer (IPO) of its international wholesale unit Sparkle, Reuters reports, citing ‘two sources close to the matter’. The group had been discussing a possible sale of Sparkle to the government investment fund Cassa Depositi e Prestiti (CDP) as part payment for a holding in Milan-based fibre network operator Metroweb, but the two sides could not agree on Sparkle’s valuation.