The biggest phone company in Italy – Telecom Italia SpA made an official statement today, revealing its revenue for the first quarter of the financial 2014, that trailed analysts expectations. The weak performance is considered a result of a long-running financial crisis in Italy and strong rivalry of the nations big phone companies over the last few years.
The net profit of the company for the first financial quarter fell with almost 40% to 222 million euros (305.49 million dollars) in comparison with the 364-million-euro net profit posted for the same period a year ago.
The company announced that its sales fell by 12% and reached 5.19 billion euros (7.1 billion dollars), less than the 5.23-billion-euro sales that analysts projected. Telecom Italia SpA also revealed that its earnings before interest, taxes, depreciation and amortization decreased by 8.4% and amounted to 2.2 billion euros, also trailing analysts estimates.
According to the statement of Telecom Italia SpA, its sales in the companys home market fell by 8.3% to 3.7 billion euros due to “stiff competition”. Currently, about 72% of the total revenue of the company is generated by its home market. Moreover, the revenue generated from Brazil decreased by 19% and reached 1.45 billion euros due to the weak performance of the countrys currency against the euro.
Telecom Italia SpA also outlined its future goals. It said in its statement, which was cited by the Wall Street Journal: “Telecom Italia will continue to defend its market share.” It also added that it maintains the target to “invest in the development of infrastructure, with a heavy increase in innovation”.
The company explained that it expects its operating profit to gradually recover as there are signs of decreasing competition. Nevertheless, it projected another fall in the overall Italian telecommunication market.
Telecom Italia SpA was losing 5.08% to trade at 0.878 euros per share by 13:00 GMT, marking a one year change of +38.16%. According to the information published on the Financial Times, the 24 analysts offering 12-month price targets for Telecom Italia SpA have a median target of 0.90, with a high estimate of 1.25 and a low estimate of 0.34. The median estimate represents a -2.70% decrease from the last price of 0.925.
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