The largest phone network in Italy, Telecom Italia, posted a 7.6% decline in first-half earnings as local-market revenue extended its fall in the wake of competition in the wireless sector.
Pre-interest, taxes, depreciation and amortization earnings tumbled to 4.35 billion euros or $5.8 billion), the firm said on Wednesday in a statement. Analysts surveyed by Bloomberg forecast 4.36 billion euros. Sales dropped 11% to 10.6 billion euros.
While trying hard to regain ground in home market sales where phone fees are shrinking because of competition, the Milan-based company is experiencing its hardest struggle in Latin America. Its Brazil firm Tim Participacoes faces competition from Telefonica’s Vivo, the nation’s biggest network, which has moved to take over Vivendi unit GVT to target broadband consumers.
“Telecom Italia earnings show some shy, first signals of recovery in the domestic market thanks to ultrabroadband services,” Carlo Alberto CarnevaleMaffe of Milan’s Bocconi University is quoted by Bloomberg as saying.
The company’s stock shed 1.8% to 81 cents as of 1:24 in Milan.
It said it was putting on the table all options in Brazil, including the likelihood of bidding for a business that would see it ward off competitor Telefonica.
The Brazilian market accounts for about one third of the company’s earnings. Despite recent economic weakness, the Latin America market is still Telecom Italia’s main driver of growth as Italy is yet to pick itself up from a long recession.
The company’s chief executive Marco Patuano said he was open to merging with GVT, but cautioned that Telecom, which is under heavy debt, would not rush into what he termed as a “crazy” deal in Brazil.
“We keep all options open, but we are not interested in anything that could be irrational,”Patuano is quoted by Reuters as telling analysts in a conference call on Wednesday.
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