Telecom Italia Posts 1.6 Billion-Euro Loss After Writedown
The net loss was 1.6 billion euros, compared with a loss of 4.8 billion euros in 2011, the Milan-based company said yesterday. The writedown was related to the purchase of Olivetti in 1999 and the acquisition of Telecom Italia Mobile minorities in 2005, Telecom Italia said.
As competition and contracting economies in Europe hurt sales and profitability at the region’s former phone monopolies, Telecom Italia has announced dividend cuts and is working on asset sales. Its Telecom Italia Media SpA (TME) unit this week agreed to sell the La7 television channel to Cairo Communication SpA. (CAI) Telecom Italia is also considering disposing of a stake in its fixed-line network to reduce borrowings and raise money for investments.
“The market is probably ready to reconsider the value of Telecom Italia’s shares,” Stefano Vulpiani, an analyst at Instituto Centrale delle Banche Popolari Italiane SpA, said by telephone.
Telecom Italia shares rose 2.4 percent to 59.2 cents at 10:43 a.m. in Milan, paring the drop to 13 percent this year and giving the company a market value of 11.1 billion euros.
The writedowns “were made necessary by the persisting recessionary tensions and the challenging global macroeconomic climate” and “in no way compromises the company’s debt- reduction strategy,” Chairman Franco Bernabe (BNBC) said in a statement.
Telecom Italia reiterated its forecast for 2013 earnings before interest, taxes, depreciation and amortization to drop by a low-single-digit percentage, excluding currency swings, acquisitions, disposals and non-organic income, and for revenue on that basis to be stable.
The company said on Feb. 8 that it planned to cut its dividend after Ebitda fell 4.2 percent to 11.7 billion euros last year, missing analyst estimates. Telecom Italia proposed a dividend of 2 euro cents per common share, in line with analyst estimates.
Telecom Italia, which had adjusted net debt of 28.3 billion euros at the end of 2012, released the earnings details after market close yesterday.
To contact the reporter on this story: Daniele Lepido in Milan at email@example.com