The biggest phone company in Italy – Telecom Italia SpA, made an official statement today, revealing that its earnings over the first six months of the current fiscal year fell by 7.6%.
The company also said that its domestic revenue is still dropping, while the competition on the wireless market is intensifying. The results over the first half of the year were also affected by the weak Italian economy, which generates about 2/3 of the companys revenue, and a slowdown in Brazil. Overall sales fell by 11% and reached €10.6bn. Telecom Italia also posted a warning that its revenue would continue to decline at its home market over the second six months of the year.
The telecoms earnings before interest, taxes, depreciation and amortization declined to €4.35 billion ($5.8 billion), matching analysts expectations.
The company also said that falling demand for traditional telecom services such as voice and network access still has an impact on its overall performance.
Telecom Italia SpA was outrun by Telefonica on Tuesday this week, when the latter took the initiative and made a takeover offer of €6.7bn to the Brazilian company GVT seeking to expand its reach.
Carlo Alberto Carnevale Maffe, who is a professor of business strategy at Bocconi University commented on a telephone interview for Bloomberg: “Telecom Italia earnings show some shy, first signals of recovery in the domestic market thanks to ultrabroadband services.”
Telecom Italia SpA lost 2.00% to trade at €0.8085 per share by 11:10 GMT, marking a one year change of +71.66%. According to the information published on the Financial Times, the 25 analysts offering 12-month price targets for Telecom Italia SpA have a median target of €1.00, with a high estimate of €1.50 and a low estimate of €0.50. The median estimate represents a 21.21% increase from the last price of 0.825.
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