Milan - Telecom Italia SpA reported a slower decline in revenue in the first quarter as sales in Italy showed signs of recovery, supported by lucrative fast broadband services.
Sales fell 2.6 percent to 5.05 billion euros ($5.7 billion), compared with a decline of 12 percent a year earlier, Italy’s largest phone company said in a statement on Thursday. Analysts projected 5.04 billion euros, the average of 10 estimates compiled by Bloomberg.
Telecom Italia shares rose 1.2 percent to 1.05 euros in Milan at 9:29 a.m. The stock has gained 19 percent this year, giving the company a market value of 19.2 billion euros.
In Italy, where the Milan-based carrier generates about 70 percent of revenue, Chief Executive Officer Marco Patuano is adding services to boost phone bills in a saturated market where Telecom Italia competes with Vodafone Group and VimpelCom. Telecom Italia is investing in faster broadband as part of a 14.5 billion-euro spending plan in Italy and Brazil.
“A positive tone is evident in the statement relating to the domestic market,” Berenberg analysts including Paul Marsch said in a note to clients. “Management talks of a progressive recovery in domestic turnover, a slowing contraction of traditional services, a stronger competitive position in mobile and continued demand for wireline broadband.”
’Progressive improvement’
Domestic revenue dropped 2.6 percent to 3.63 billion euros, as sales in the consumer segment fell 1.5 percent to 1.72 billion euros. Telecom Italia said the performance confirms a recovery trend observed from the second half of last year.
Earnings before interest, taxes, depreciation and amortisation dropped 7.7 percent to 2.03 billion euros, in line with estimates.
“Telecom Italia seems to have grabbed the right trend in containing the sales decline, but there’s still so much to do and prove in terms of reversing the company’s trend,” said Andrea Giuricin, a professor at Milan’s Bicocca University who specialises in media and telecommunications.
Telecom Italia forecast a progressive improvement in operating performance on both the domestic market and in Brazil for the current year and is targeting “stabilisation” of Ebitda in its home market next year.
“Potential consolidation in the Italian and Brazilian mobile markets remain the mains reasons to own the shares,” the Berenberg analysts said.
Net debt fell to 27.4 billion euros, 99 million euros lower than a year earlier.
Bloomberg