Telecom Italia reported a 12.1 percent year-on-year fall in first-quarter revenues to EUR 4.44 billion in organic terms, hurt by the continuing effects of the macroeconomic situation in Brazil and one-off charges. Domestic revenues came in at EUR 3.54 billion on an organic basis, down 2.3 percent year-on-year but identical to the previous quarterly decline, while organic sales at its Brazil unit – TIM Brasil – plunged 15.3 percent to EUR 897 million, impacted by the ongoing recession and provisions for customers' unpaid accounts. Group EBITDA fell 15.8 percent to EUR 1.71 billion, with the EBITDA margin dropping to 38.6 percent compared to 40.2 percent in the year-earlier quarter. Capex for the quarter came to EUR 944 million, including EUR 778 million in Italy, up EUR 102 million year on year.
In the accompanying statement, the company’s new CEO Flavio Cattaneo said he was determined to improve profitability at Telecom Italia, announcing that the target for cost-cutting measures would be tripled to EUR 1.6 billion by 2018, including EUR 800 million in operating costs and EUR 800 million in capital spending. “Our goal is combining acceleration in developing ultra-broadband networks – keeping coverage and quality level of services – with a careful cost-control,” said Cattaneo, with the company’s chairman Giuseppe Recchi adding that “a new phase starts today for the group, characterised by efficiency and focus on more challenging goals.” Cattaneo also announced “a strengthening of the efficiency plans” in Brazil “taking into account the major changes to the macroeconomic, political and market context seen in the country in recent months.” The company last week appointed Stefano De Angelis its new chief executive officer, replacing Rodrigo Abreu.
However, Telecom Italia’s domestic mobile segment continued its recent recovery trend, with revenues increasing by 0.6 percent year on year in the first quarter to EUR 1.06 billion thanks to the maintenance of market share and improved ARPU, which rose 2.5 percent year on year to EUR 11.6 per month. TIM’s customer base stood at 29.8 million lines at the end of March, 1.0 percent down on the year-earlier figure of 30.1 million.
The company’s fixed segment had a disappointing quarter, with service revenues down 4.3 percent to EUR 2.48 billion due to the reduction in the price of wholesale services and the loss of around 1 million voice lines, only partly offset by continued growth in broadband and fibre-optic customers. The total fixed line customer base came to 11.6 million at the end of March, down 5.5 percent on the year-earlier figure of 12.3 million. However, broadband customers were up 1.8 percent to 7.1 million, with revenues from innovative services rising 5.8 percent to EUR 590 million from EUR 558 million a year earlier.
