Telecom Italia is the latest big-five incumbent to record lower profit in 1H11, as a goodwill write down on its domestic business dragged the firm to a loss during the period.
The operator swung to a loss of €2 billion ($2.86 billion) during the period from to a profit of €1.2 billion in 1H10, after a write down of €3.18 billion on its home market offset marginal revenue growth across the board. Sales were maintained by the firm’s operations in Argentina and Brazil, which negated a 6.7% decline in domestic revenue.
Chief Franco Bernabè said the results bear testament to the firm’s strategy of focusing on the growth markets of South America, however he noted that measures to turn around its domestic operations also bore fruit. “The trend in domestic revenues is improving, in particular, due to price stabilization in the mobile segment and protection of value in the fixed-line customer base.”
The results make Telecom Italia the fourth incumbent in Western Europe to report lower income for the first half, with Deutsche Telekom yesterday revealing profit for the period fell by a third to €828 million, and France Telecom and Telefonica also suffering.
However, Telecom Italia’s confidence in achieving full-year guidance of broadly flat earnings boosted investor’s confidence in the firm, WSJ.com reports.