Telecom Italia has experienced several strategic and organizational changes in the last two years. The new management board had the mission to move the company towards the era of convergence: putting together Telecom Italia Group’s expertise in fixed and mobile communications and multimedia in order to build a solid multimedia communications company.
The management board had to pursue this objective in a difficult financial situation. The stabilisation of Telecom Italia’s finances was a primary objective to fulfil the strategic mission. During 2008, several key organizational changes were put in place to facilitate the implementation of the strategy.
The economic recession has also made the situation more complex, but yesterday’s results reveal that the internal restructuring and the economic recession have affected Telecom Italia’s performance, but not dramatically.
Telecom Italia Group’s revenues decline by 3.8% comparing the first quarter 2009 and the first quarter 2008. The Italian operations’ revenues decline by 4.5% in the same period with a peak of 7.1% for the mobile communications segment. The fixed communications operations’ revenues decline by 2%.
The role of broadband access and the diffusion of IPTV is becoming very important for the fixed segment. At the end of the first quarter 2009, Telecom Italia had 6,843,000 broadband users for €18.3 per month in ARPU. The number of IPTV subscribers went up to 365,000.
The mobile segment is experiencing the difficulties of the European mobile industry. Revenues from text and voice declined. Data revenues are not able to counterbalance that decline entirely. Instead, TIM Brasil had a slight positive result with an increase in revenues by 0.7%. However, it is not exceptional for the Latin American market.
These results are certainly not positive, but better than expected. However, the results on financial discipline are good: 70% of the debt is on fixed rate and €4.6 billion of liquidity. This means that the financial stabilisation of the company is promising and the board can focus more on operational aspects in order to boost revenues. Some areas of strategic and operational actions should be: mobile internet, mobile content services, TV over different platforms, enterprise segments, particularly for SMEs, and applications in vertical markets.
