Telecom Italia said the results were broadly as expected and that its domestic business was gradually picking up after three years of decline. "As a whole we are in line with our plans and targets, which see a progressive acceleration in year-on-year recovery," said CEO Marco Patuano. In his first 6 months as CEO, Patuano has sold Telecom Italia’s Argentine unit, scrapped a dividend and announced the sale of wireless towers in Italy and Brazil. Last month he teamed up with Sky Italia on an IP-based TV service to attract broadband subscriptions. "The content agreement with Sky will allow us to immediately make premium offers available to our customers, starting with the broadcast of the FIFA World Cup on mobile devices," said Patuano.
Capex for the quarter fell to EUR 684 million from EUR 766 million in the year-earlier period, which the company attributed to the abandonment of certain platforms, adding that the savings were partly redirected to developing its LTE and fibre networks, which saw a EUR 42 million year-on-year increase in investment. Operating cash flow plunged to a negative EUR 14 million from a positive EUR 64 million a year ago, hurt by payments accrued in the previous quarter.
Telecom Italia’s domestic mobile unit TIM reported service revenues down 14.8 percent from a year earlier to EUR 1.18 billion, hit by the weak economy, strong competition and termination rate cuts. TIM lost 225,000 customers in the three months to March to end the quarter with a total of 31.0 million lines, 1.8 percent down on the year-earlier figure of 31.86 million. Minutes of use rose by 13.5 percent year-on-year to reach an average of 189 minutes per customer per month, but the high pressure on prices led to a 12.6 percent annual fall in ARPU to EUR 11.5. Handset sales dropped by 34.5 percent year-on-year to 510,000.
Fixed service revenues also fell by 6.9 percent to EUR 2.78 billion, which the operator attributed to the contraction in voice revenues (down EUR 69 million year-on-year). These were only partially offset by higher broadband revenues of EUR 398 million, thanks to a positive trend in ARPU (up 1.8 percent year-on-year to EUR 19.20) due to the higher proportion of customers signing up to convergent plans. However, another 183,000 fixed lines were lost in the quarter to reach 13.03 million, down 5.4 percent from a year earlier. Retail broadband lines rose by 18,000 in the quarter to reach a total customer base of 6.93 million.
