Telecom Italia reported first-quarter revenues down 8.1 percent year-on-year to EUR 6.796 billion. Domestic revenues fell 10.1 percent to EUR 4.024 billion, and revenues from Brazil and Argentina were dampened by negative currency effects. EBITDA declined 10.1 percent to EUR 2.672 billion, and the margin dropped to 39.3 percent from 40.2 a year ago, hurt by a larger share of business from South America, where margins are lower, and higher smartphone sales. Net profit dropped to EUR 364 million from EUR 605 million in the year-earlier period.
The Italian mobile unit TIM reported service revenues down 17.9 percent from a year earlier to EUR 1.292 billion, hit by price erosion, termination rate cuts and the weak economic environment. TIM lost 301,000 customers in the three months, to finish March with a total 31.858 million lines. Minutes of use rose slightly to an average 167 per customer per month, but the intense price competition led to a 17.3 percent annual fall in ARPU to EUR 13.1. Handset sales more than halved compared to Q4, to 775,000.
At the Italian wireline business, revenues were down 7.7 percent from a year earlier to EUR 2.976 billion. Another 201,000 fixed lines were lost in the quarter, for a total 13.777 million, and retail broadband lines dropped by 36,000 compared to December to 6.984 million. Broadband ARPU was still up 3.5 percent year-on-year to EUR 18.9.
Capex fell slightly to EUR 878 million, and operating cash flow plunged to EUR 137 million from EUR 626 million a year ago, hurt by accumulated payments for the previous quarter. This led to an increase in adjusted net debt to EUR 28.77 billion from EUR 28.27 billion at the end of December. The operator still targets debt of less than EUR 27 billion by year-end and said its repayment obligations are covered for at least 24 months going forward.
It reiterated an outlook for flat revenues and a low-single digit percentage drop in EBITDA this year. In addition, the company approved the partial spin-off of its carrier services division Telecom Italia Sparkle, expected to be completed by the third quarter.
