Telecom Italia turned an annual profit for the first time in three years, posting a consolidated net profit of €1.35 billion ($1.44 billion) in 2014 compared to a loss of €674 million in 2013.
However, the profit was below an average estimate compiled by Bloomberg from 12 analysts for profit of €1.41 billion. Group EBIT reached €4.53 billion, which Telecom Italia said was a 67 per cent increase compared to the €2.72 billion posted for 2013. The company previously reported preliminary results in February, when it said group revenue decreased in organic terms by 5.5 per cent year on year to €21.5 billion. Consolidated EBITDA fell by 6.8 per cent in organic terms to €8.7 billion.
Chairman Giuseppe Recchi said the return to net profit is a reason for "great satisfaction" for the company, which has struggled with debt in recent years and saw its credit rating downgraded to junk status. The net financial debt stood at €26.6 billion at the end of 2014, down by €156 million compared to 2013.
CEO Marco Patuano said the 2014 results "show that the choice to invest in our future is proving to be a winning one," adding that the positive business trend in the first months of 2015 also confirmed that Telecom Italia was moving in the right direction.
The company has recently focused on the expansion of LTE and fibre networks, and plans to continue to invest in the development of its infrastructure in the coming years.
In order to finance its future investment plans, Telecom Italia also said it would seek to raise up to €2 billion through a bond issue and would use the proceeds to fund previously announced capex plans.
In February, Telecom Italia revealed that a new three-year plan had been approved: a total of €14.5 billion is to be spent on investments in Italy and Brazil from 2015-2017. Around €10 billion has been earmarked for investments in Italy including the expansion of fibre (to 75 per cent population coverage) and LTE (to 95 per cent coverage), while more than €4 billion is to be spent on improving 3G and 4G coverage in Brazil.
In other announcements this week, the operator's board also approved the merger of Telecom Italia Media into Telecom Italia, as well as changes to bylaws that affect how it elects its board. Reuters noted that this would give more power to minority investors following years of dominance by Telco, which is now being dismantled.
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