Telecom Italia has returned to profit for the first time in three years as Italy’s largest telecoms group begins its biggest investment to date to modernise its mobile and broadband networks.
The group was on the way to becoming a “real public company”, according to chairman Giuseppe Recchi, following an overhaul of its broadband and corporate governance.
Net income rose to €1.4 billion in 2014 after a loss of €674 million the year before when results were hit by an impairment charge. Revenues fell almost 8 per cent to €21.6 billion, with earnings before interest, tax, depreciation and amortisation down a similar amount to €8.8 billion. The group said yesterday that it would raise €2 billion though a bond issuance to refinance its existing debt. Telecom Italia remains rated at junk status by rating agencies with net debt at €26.7 billion, only down slightly from the year before but still much higher than its market capitalisation of about €20 billion.
The company warned that traditional telecoms services such as voice would continue to fall, but that these would be partly offset by revenues from products sold on the back of demand for high-speed connectivity and digital services. A fall in the domestic market would still be the result, it said, but “considerably less so than that seen in previous years, particularly on mobile”.
Marco Patuano, chief executive, said: “The positive trend of our business in the early months of 2015 is in line with goals we previously set and shows the company is on the right path.”