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Telco revises up its outlook as earnings in Italy grow in second quarter, CEO promises ‘new developments’ from September.
Telecom Italia this week upgraded its full-year outlook, revealing that it expects earnings at its domestic business to grow in 2016, after a strong performance in Italy in the second quarter.
The Italian incumbent’s chief executive Flavio Cattaneo declared Q2 its "best quarter in Italy since 2009."
The telco’s figures showed a 1.2% decline in domestic revenue to €3.7 billion, a slight fall in the wireline business offsetting wireless growth. Domestic EBITDA grew by 39.4% – or 6.9% on an organic basis – to €1.72 billion.
"The dynamics of commercial and business development, accompanied by a strengthening and considerable acceleration of the efficiency and cost cutting programme, represent the foundation for a further improvement in operating performance, with the aim of achieving low single digit organic growth in EBITDA within 2016," Telecom Italia said.
The telco had previously said it aimed to stabilise EBITDA in 2016.
For the first half of the year, Telecom Italia posted domestic revenues of €7.25 billion, down by 1.7% on the year-earlier period, while EBITDA grew by 11.9% to €3.18 billion.
"The organic EBITDA has started to grow again on both a quarterly and half yearly basis, the turnover of the mobile segment has improved its development trend and the landline segment has shown important signs of recovery, pulled along by the investments in ultra broadband," Cattaneo said.
"We are therefore in the best conditions to face the second part of the year, which from September will see further new developments," he added.
Telecom Italia, which provides services under the TIM banner across both its fixed and mobile operations, saw total mobile connections in Italy fall by 104,000 during Q2 to 29.74 million, but better competitive dynamics contributed to increased service revenues.
On the fixed side the revenue slide came from voice services and was partially offset by growth in broadband revenues and customers. The company’s broadband connections – including retail and wholesale – grew by 37,000 over the three months to 8.99 million.
TIM hopes to boost its fixed broadband business by teaming up with rival player Fastweb. The pair this week shared their plans to create a joint venture company that will roll out fibre-to-the-home (FTTH) technology to 3 million premises in the next four years.
At group level, Telecom Italia’s first-half revenues reached €9.1 billion, down by 9.9%, or 4.9% organically, on the first six months of last year, while reported EBITDA grew 2.4% to €3.73 billion, giving a 41% margin,
The revenue slide was in no small part due to weakness in Brazil, where the telco saw turnover fall by 31% to €1.86 billion. Currency effects and macro-economic issues were partly to blame; on an organic basis revenue in Brazil fell by 13.9%.
