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Full-year revenues fall 1.5% year-on-year, while EBITDA slips 4.2%

Telecom Italia EBITDA Falls 4.2%

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2/8/2013
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MILAN -- The Telecom Italia Board of Directors, chaired by Franco Bernabè, yesterday examined and approved the Group’s Preliminary Financial Statements at 31 December 2012. Franco Bernabè commented: “The Group has succeeded in achieving revenue growth in 2012, while maintaining good profitability, among the strongest in the industry, also thanks to its domestic performance that has met all the targets for the year and reaffired its vital role as a key source of cash flow for the group. We can also look ahead with greater confidence thanks to the fresh regulatory approach taken by the EU to guarantee stability of wholesale copper prices and proper incentives for investment in new fibre networks. This new approach will allow us to act more effectively in the challenging competitive environment which the evolution of web-based services is producing.” TELECOM ITALIA GROUP PRELIMINARY RESULTS
Revenues in FY 2012 came to €29,503 million, down 1.5% from €29,957 million in 2011; the fall of €454 million is primarily due to the Domestic Business Unit, offset by improvements enjoyed by the Argentina Business Unit (+€564 million) and the Brazil Business Unit (+€134 million). In terms of organic variation, consolidated revenues rose by 0.5% (+€151 million). In detail, the organic variation in revenues is calculated by excluding:

  • the effect of foreign exchange rate fluctuations of -€569 million, mainly affecting the Brazil Business Unit (-€535 million) and to a largely negligible extent the Argentina Business Unit (-€55 million) and other Group companies (+€21 million);
  • the effect of changes to the consolidation area (-€14 million), largely due to sale of Loquendo (Domestic BU) on 30 September 2011 and Matrix (Other Operations) on 31 October 2012;
  • the effect of a €22 million reduction in revenues due to the settlement of business disputes with other carriers. EBITDA came to €11,665 million, down €506 million (-4.2%) on the previous year, with EBITDA margin of 39.5% of revenues (40.6% in FY 2011). In organic terms EBITDA fell by €246 million (-2.0%), 1 pp lower in proportion to revenues, down from 41.2% in 2011 to 40.2% in 2012, due to the greater weight of South American revenues, where margins are lower than for Domestic Business, and to higher mobile handset sales, aimed at a greater penetration of data services. Capex came to €5,196 million in FY 2012, of which €3,072 million for the Domestic Business Unit, a decrease of €899 million compared with 2011. In particular:
  • the Domestic Business Unit reported a fall of €1,113 million. Excluding FY 2011 investments in purchasing the rights to use LTE mobile telephony frequency bands (€1,223 million) there is a €110 million increase attributable in particular to the development of next generation networks (LTE and fibre) in part offset by the lower requirement in relation to delivery of new systems owing to the slowdown and contraction of fixed-line business;
  • the Brazil Business Unit reported an increase of €210 million (including a negative forex effect of €94 million), for the purchase of rights to use fourth generation (4G) mobile telephony frequency bands (€145 million) as well as investments to improve the quality of the network infrastructure;
  • the Argentina Business Unit reported capex in line with the previous year (+ €1 million already including a negative forex effect of €9 million). Besides the costs of client acquisition, expenditure was aimed at enlarging and upgrading broadband services to improve transmission capacity and increase access speed, traditional fixed-line access to meet demand and backhauling to support mobile access growth. Telecom Personal also invested primarily in increased capacity and enlargement of the 3G network to support Mobile Internet growth. Telecom Italia SpA
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