Telecom Italia sales up on mobile growth

MILAN: Telecom Italia SpA posted first-quarter sales that beat analysts’ estimates, driven by growth in domestic mobile and broadband subscriber numbers.

In the carrier’s first results since US activist investor Elliott Management Corp took control of its board this month, Telecom Italia said revenue rose 2.7% in organic terms to 4.71bil (US$5.5bil). That compared with the average prediction of analysts of 4.67bil. Domestic mobile sales advanced 4.7%.

Elliott defeated Vivendi SA after shareholders supported its call to improve corporate governance and push for asset sales and a reintroduced dividend.

Elliott, with about 8.9% of the stock, said the carrier has suffered under the influence of Vivendi, the biggest shareholder with about 24%. Telecom Italia shares rose 1.4% at 9:05am in Milan yesterday.

The spat over the board comes as Telecom Italia’s management braces for competition from French discount carrier Iliad SA, whose imminent Italian foray will create a fourth mobile operator with assets it bought from CK Hutchison Holdings Ltd and Veon Ltd – which merged their local units to form Wind Tre.

Telecom Italia said the quarterly results showed strength in Italy, including “impressive” growth in the mobile business, and a recovery of its Brazilian unit.

“We continue to see the investment case in TI (Telecom Italia) as one of the most interesting in the sector,” James Ratzer, an analyst at New Street Research said in a note to clients.

“Political issues, potential technical selling post the Elliott Board victory, and commentary from the company in advance of the first-quarter results haven’t helped the stock in the past two weeks, but we still see the longer-term bull case from growth in the broadband market as very much intact.”

Adjusted earnings before interest, taxes, depreciation and amortisation fell 4.9% to 1.89bil. Profit was hit by one-time charges of

95mil, mainly linked to a 74.3mil fine for allegedly breaking Italy’s so-called Golden Power rule.

Telecom Italia is contesting Italy’s decision last year to exercise the rule over the former monopoly’s assets deemed of national importance – a move aimed at reducing Vivendi’s influence. — Bloomberg