Telecom Italia has swung to a net loss of €1.4 billion ($1.86 billion) for the first six months of 2013, compared with a net profit of €1.2 billion for the same period last year, due to goodwill write-downs totaling €2.2 billion.
Even excluding the impact of the write-downs, profits would have been 33% lower than over the first half of 2012 with sales under pressure at home and in the operator’s Latin American markets.
Revenues for the first half of the year totaled €13.76 billion, down 2.7% in organic terms compared with the first six months of 2012.
Telecom Italia (Milan, Italy) said it remained committed to spinning off its access network in a form of functional separation that would help it to raise capital, pay off debts and operate in a more transparent manner from a regulatory perspective.
Its spin-off plans recently secured the approval of Agcom, Italy’s telecoms watchdog.
“Telecom Italia is implementing significant actions aimed at increasing the level of operational efficiency and ensuring that the deleverage impetus is given to the development of the new fibre network,” said Franco Bernabe, the chief executive of Telecom Italia.
Bernabe also insisted that Telecom Italia had responded positively to an increase in pricing pressure in the domestic mobile market by introducing “highly competitive offers” and “investing a part of the margin in the defense and acquisition of customers … through the use of innovative fixed-mobile convergent offers”.
The company’s net debt has fallen by €1.5 billion, to €28.8 billion, since June 2012 as it presses on with deleveraging efforts.
Telecom Italia confirmed its full-year guidance for “stable” organic revenues, compared with sales in 2012, and adjusted net debt of about €27 billion, but said earnings before interest, taxation, depreciation and amortization would decline at a “high single digit” rate, instead of the “mid single digit” rate previously forecast.
Bernabe said the operator’s investments in new fibre networks in Italy would help stabilize earnings in future.
Capital expenditure in Italy remained roughly the same as in the first half of 2012, despite the investments in next-generation networks, because of lower spending on equipment needed for the traditional fixed-line access business.