Friday May 9, 05:50 PM
Telecom Italia Q1 net slips to 501 mln euros as operating profits worsen UPDATE
(Updates with clarification that company wants to remain present in Germany)
MILAN (Thomson Financial) - Telecom Italia SpA (Milan: TIT.MI - news) said its first-quarter net profit slipped to 501 million euros from 775 million euros, due to a worsening of the telecommunications company's operating profits and higher financial costs.
Financial analysts were expecting a bottom-line profit of 488 million euros to 546 million euros.
The group's sales fell 2.4 percent to 7.298 billion euros from 7.475 billion euros a year earlier, EBITDA slipped 6.7 percent to 2.966 billion euros from 3.178 billion euros and EBIT dropped 15.9 percent to 1.528 billion euros from 1.817 billion euros.
Overall, results were roughly in line with market expectations.
Analysts were expecting sales of 7.260 billion euros to 7.505 billion euros, EBITDA of 2.942 billion euros to 2.996 billion euros and EBIT of 1.492 billion euros to 1.532 billion euros.
Financial costs rose 1.859 billion euros in the quarter from 1.514 billion euros a year earlier. However, the group's taxes fell to 392 million euros from 561 million euros.
Telecom Italia said that without regulatory changes in tariffs, sales would have only fallen 0.5 percent and EBITDA would have risen 0.1 percent.
Net debt fell to 35.436 billion euros at the end of March from 35.701 billion euros at end-2007.
Analysts had forecast net debt at 35.2 billion euros to 35.4 billion euros.
The company confirmed its guidance for 2008, based on the average foreign exchange rate achieved in the first quarter and without considering the eventual impact of the nationalisation of Entel Bolivia, thanks to further cost-cutting.
The Bolivian government issued a decree on May 1 to nationalise the company controlled 50 percent by Telecom Italia.
In the first quarter, Entel Bolivia contributed 52 million euros in revenues and 24 million euros in EBITDA.
The book value of the stake in the Bolivian telecommunications company is 39.5 million euros.
Telecom Italia's guidance is for full-year revenues of 31 billion euros with an EBITDA margin of around 38.5 percent.
In a conference call, CEO Franco Bernabe said the group is in the final phase of selling its French broadband business Alice France.
He added that the group has received three binding offers for the business.
Bernabe said he is 'happy' with the offers and that the last stage of the disposal process has started.
Newspaper reports previously said that Iliad (Paris: FR0004035913 - news) , Neuf Cegetel (Paris: FR0004166072 - news) and Numericable have expressed interest in the business.
Turning to its German broadband unit Hansenet, Bernabe said that the company is facing a more competitive business environment.
When asked if the business could be sold, the manager said that he believes that the group has the opportunity to create value in Germany, but the management is open to whatever is more value-enhancing for shareholders.
'We are very candid about our broadband strategy, there is no other objective than creating value' for shareholders, he said.
A company spokesman however added that Telecom Italia intends to remain present in Germany.
Regarding Tiscali SpA, whose assets are up for sale, Bernabe said Telecom Italia has not presented an offer but will monitor the situation.
The newspaper Libero said that Tiscali (TIS.MDD - news) 's founder and main shareholder Renato Soru is ready to sell his 25 percent in the telecommunications company to Vodafone Group PLC, the daily Libero said without giving a source.
The daily added that a decision could be made as soon as Monday, when Tiscali holds a board meeting.
CFO Enrico Parazzini added that the company has received a 180 million euro tax bill related to the acquisition in 2002 of the mobile phone company Blu, but that the company will seek to suspend the payment until there is a final judgement on the case.
Telecom Italia also said that Bernabe, and the chairman Gabriele Galateri di Genola, will each buy 300,000 euros worth of shares in the company and have invited other board members to so the same.
'Some directors have already acted upon the suggestion,' it said in a statement.
Under the company rules, following the release of first quarter results, directors, auditors and key managers have the opportunity to buy shares until June 30.
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