Italy’s biggest telecoms operator Telecom Italia kept its forecasts intact in the face of a rapidly-deteriorating economic climate at home, which took the sting out of a 2-billion-euro first-half loss due to a goodwill writedown.Telecom Italia has felt the heat from Italy’s glum economic outlook and fears that the euro zone’s third largest economy could be drawn into centre of the bloc’s debt crisis, helping send its shares down 18 percent in the past three months.The company blamed deteriorating markets and interest rate trends for its 3.18 billion euro goodwill writedown on its domestic operations.Still, the company said the writedown would have no impact on its dividend or plans to cut debt and stuck to its forecasts for the year, promising trends at home were improving.
Shares of Telecom Italia rose 1.9 percent in a morning of volatile trade, while Milan’s blue-chip index fell 1.6 percent as yields on Italian government bonds rose to new record highs
Excluding the writedown, the company reported first-half profit of 1.17 billion euros, above the Thomson Reuters I/B/E/S average forecast of 1.12 billion euros.The group’s net loss stood at 2.01 billion euros after the writedown. Analysts had earlier speculated that a writedown on goodwill stemming from previous merger and acquisitions was on the cards, given market turmoil was prompting companies to be cautious in valuations.Revenues rose 10 percent to 14.54 billion euros, above the average forecast of 14.47 billion euros, boosted by the company’s fast-growing operations in Latin America.Telecom Italia, which is controlled by a group of Italian investors and Spanish rival Telefonica, has in recent years relied on its Brazilian operations to drive growth and offset declines at home.Revenues at its closely-watched Italian mobile unit fell 10.5 percent, but the company said revenue was shrinking at a slower pace and that there were prospects for further improvement in the second half of the year.Locked in a fierce price war with rivals Vodafone and Wind, the unit has struggled since adopting a strategy targeting higher-value customers last year and investors have been seeking signs of a turnaround.
From / Gulf Today