Telecom Italia Q1 profit down, expects profit recovery

MILAN: Telecom Italia said on Tuesday it expected a gradual recovery in earnings this year after posting an 8.4 per cent fall in first-quarter core profit reflecting declining sales in Italy and a weaker currency in Brazil.

Italy's largest telecoms company posted 2.20 billion euros ($3 billion) in core profit, or earning before interest, taxes, depreciation and amortisation (EBITDA), broadly in line with a Thomson Reuters I/B/E/S consensus.

Revenues fell 11.9 per cent to 5.19 billion euros, against a consensus forecast of 5.22 billion.

In Italy, which accounts for more than two thirds of total sales, the heavily indebted group saw an 8.3 per cent decline in sales due to the lagging effects of a mobile price war and weakness in traditional voice and messaging services. In Brazil revenues were flat excluding currency effects.

Telecom Italia said results met expectations and confirmed it saw a gradual recovery in operating performance in Italy, helped by cost cutting measures.

"As a whole we are in line with our plans and targets, which see a progressive acceleration in year-on-year recovery," CEO Marco Patuano said in the statement.

This is the first set of results under a new board which saw Patuano confirmed as chief executive in April.

Patuano, who took over the reins of the former phone monopoly in October, is carrying out asset disposals to cut debt and fund investments with the aim of keeping revenue and core profit stable by 2016.

Since his arrival the stock has gained 45 percent, helped by speculation of possible consolidation in Brazil, its second-largest market where it operates through wireless operator TIM Brazil, and by a recovery in Italy.

Adjusted net debt edged up to 27.5 billion euros, slightly above a consensus estimate of 27.2 billion.