Telecom Italia reported a sharp fall in first-half net profit, to EUR 29 million from EUR 543 million a year earlier. The company was hurt by a range of one-time charges for restructuring, legal settlements and financial transactions. Telecom Italia said that without these one-times, profit would have reached EUR 650 million.
The group's revenues were also down 4.3 percent from a year earlier to EUR 10.097 billion, with a 2.1 percent fall in Italy and 10.7 percent drop in Brazil. On an organic basis, excluding currency effects and changes in scope, revenues fell 3.3 percent. EBITDA dropped to EUR 3.633 billion from EUR 4.345 billion a year ago, and the margin fell to 36.0 percent from 41.2. Excluding the EUR 399 million in one-time charges, EBITDA was down just 5.0 percent, with a margin at 39.9 percent.
Operating cash flow declined to EUR 701 million from EUR 1.044 billion, hurt by the cost of renewing the GSM licence in Italy and investments in new services. Adjusted net financial debt reached EUR 26.992 billion at the end of June, up by EUR 341 million from the end of 2014, as income from the Inwit IPO and towers sales was offset by higher costs for real estate and towers leases.
Telecom Italia said it was on track with the targets in its strategic plan for 2015-2017. The operator expects a gradual improvement in results this year on the way to stabilising EBITDA in 2016. It will continue to step up investment in technology and infrastructure to drive the recovery in revenues, including EUR 10 billion in Italy over the course of the three-year plan.
In the first half of this year, the company invested EUR 1.506 billion in Italy, an increase of EUR 326 million from a year ago. This included EUR 117 million for the GSM licence as well as EUR 257 million extra for new services. The revenue trend in Italy showed a gradual improvement, with the drop in sales slowing to 1.6 percent in Q2 from 2.6 percent in Q1 and 5.0 percent in Q4. Total revenues over the first half were down 2.1 percent to EUR 7.375 billion, and EBITDA fell 18.7 percent to EUR 2.846 billion.
Telecom Italia said the drop in mobile revenues slowed thanks to a cooling off of competitive pressure and demand for mobile data. While the total number of mobile customers was down by 65,000 compared to March to 30.075 million, the LTE user base rose over the same period to 2.7 million from 1.8 million. Mobile ARPU rose to EUR 11.9 from EUR 11.3 in Q1.
In the fixed market it also saw ARPU start to stabilise thanks to its recent pricing efforts and upgrades to fibre. The number of retail broadband customers was up by 26,000 in the three months to 6.971 million, and broadband ARPU rose to EUR 20.9 from EUR 20.4 in Q1. The number of customers on the fibre network rose to 374,000 from 290,000 in Q1.
