Telecom Italia earnings drop fails to spook analysts

Telecom Italia saw earnings drop year-on-year in the third quarter and opening nine months of 2015, but the figures satisfied analysts by being broadly in line with the company's forecasts and consensus estimates.

The operator's overall profit for the third quarter fell from €583 million ($634 million) in the 2014 quarter to €494 million in the recent period, as the figure for total operating revenues and other income declined from €5.5 billion to €4.8 billion. EBITDA followed a similar pattern, falling from €2.2 billion in the third quarter of 2014 to €1.9 billion in the recent quarter.

Telecom Italia's figures for the nine months to end-September were also down year-on-year. Overall profit fell from $1.4 billion in 2014 to €933 million in the 2015 period, while the figure for operating revenues and other income declined from €16.2 billion to €15 billion. EBITDA for the opening nine months fell from €6.5 billion in 2014 to €5.6 billion in 2015.

Despite the declines, analysts were happy with the operator's performance in the nine-month period, Reuters reported. The news agency noted that Telecom Italia's nine-month EBITDA figure was in line with consensus forecasts, and closely matched the operator's own forecast of €5.65 billion.

Telecom Italia's third-quarter figures also gave cause for optimism, the Wall Street Journal reported pointing to a 1.5 per cent year-on-year improvement in sales at the operator's mobile business.

Telecom Italia's overall earnings for both periods were impacted by lower sales at its domestic business, and continued struggles in its operation in Brazil.

In a related report, the Wall Street Journal noted that Telecom Italia's board approved a share conversion plan that would dilute French media company Vivendi's holding from around 20 per cent currently to just over 13 per cent, and also reduce the impact of a recent share build by French telecoms tycoon Xavier Niel.

NJJ Holding, Niel's investment company, this week told Italy's stock market regulator Consob that it is not colluding with Vivendi by increasing its holding in Telecom Italia.

For more:
- see Telecom Italia's earnings documents (PDF)
- read this Reuters report
- view this Wall Street Journal article
- see the Wall Street Journal share plan report
- view this NJJ Holding statement

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