Telecom Italia SpA, Italy’s largest phone company, reported first-quarter earnings that missed analysts’ estimates as revenue in its home country plunged 10 percent.
Operating income before taxes, depreciation and amortization fell 10 percent to 2.67 billion euros ($3.52 billion), the Milan-based company said today in a statement. Analysts had projected Ebitda of 2.73 billion euros, according to the average of estimates compiled by Bloomberg.
Telecom Italia directors today authorized an “in-depth” review of a possible combination of the company’s mobile-phone business with Hutchison Whampoa Ltd.’s Italian unit, according to the statement. Chief Executive Officer Franco Bernabe is betting on a linkup with Hong Kong billionaire Li Ka-shing’s Hutchison to revive a stock that hit a 15-year low last month.
A panel led by Bernabe to explore the potential tie-up with the Hong Kong company “acknowledged that there are no impediments to start a discussion,” the company said in the statement today. The panel suggested “to mandate the top management to verify with the other party the existence of realistic negotiation margins,” recommending the conclusion of the analysis within 30 days.
The company also said the review of a possible network spinoff will be completed at a special board meeting scheduled for May 23.
Total sales dropped 8.1 percent to 6.8 billion euros as consumers cut spending on phone services. That was in line with analysts’ average estimate of 6.81 billion euros. Revenue in Italy fell to 4.02 billion euros from 4.48 billion euros. Net income fell to 364 million euros in the period from 605 million euros a year earlier.
Telecom Italia fell 0.6 percent to 63.7 euro cents in Milan today, giving it a market value of 11.7 billion euros.