MILAN: Telecom Italia blamed weakness in Italy and a slowdown in Brazil, its two largest markets, for a 7.7 percent fall in core earnings over the first nine months of the year.
However, the company said it saw brighter prospects in its home Italian market, pointing to a slowdown in the pace of revenue decline.
"The signs of change coming from the domestic market are now a reality," Chief Executive Marco Patuano said in a statement, noting that a price war was over and that more than 150,000 customers had subscribed to a new premium broadband service.
Europe's ninth-biggest phone company by market value said core earnings, or EBITDA, fell to 6.59 billion euros ($8.2 billion), broadly in line with analyst expectations.
Revenues fell 9.1 percent to 15.97 billion euros and net debt stood at 26.6 billion at the end of September.
The company is selling assets such as its Brazilian mobile towers to cut debt and help fund much-needed network investments.
Shares in Telecom Italia rose as much as 2.4 percent in early trade as investors welcomed the broadly in-line numbers and slowing declines in its recession-hit domestic business.
"Telecom Italia has successfully delivered the previously signalled inflection in domestic revenue trends, and in doing so, better underpinning the three year guidance," analysts at Jefferies said in a note.
Patuano is moving forward with a 4 billion euro plan presented last year to roll out fibre networks in Italy and upgrade its mobile network in Brazil, without prejudicing efforts to keep cutting debt.
Yet he faces possible challenges stemming from the fast-consolidating Brazilian market, as well as from looming changes in the group's shareholder base, with France's Vivendi due to take an 8 percent stake to become the largest investor.
Italian revenues saw a slower decline of 7.2 percent in the nine months thanks to growth in fixed broadband and to stabilisation of user revenues from its traditional mobile phone services.
The fall in the first and second quarters was more than 8 percent.
Core earnings rose at its 67 percent-owned Brazilian unit TIM Participacoes, helped by cost cutting.
Comments
Comments are closed.