(Updates with comments on German broadband activity)
MILAN (Thomson Financial) - Telecom Italia SpA 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 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.
Newspaper reports previously said that Iliad, Neuf Cegetel 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.
philip.webster@thomsonreuters.com
pw/sal/pw/ra/pw/ra
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