Telecom Italia cut its core profit outlook for the full year, reflecting deteriorating domestic market conditions as it faces up to ongoing aggressive competition across the fixed and mobile market in Italy.
The operator’s forecast remained at a single-digit decline in core earnings, but instead of the low-to-mid range previously predicted it now expects this to be firmly in the middle.
Telecom Italia warned in July it would struggle to stabilise core profit in 2021, as it faced aggressive price competition in the mobile sector in Italy, ignited by French disruptor Iliad’s low cost entry [1] into the market in 2018.
In its earnings statement, Telecom Italia highlighted growth in mobile lines and its “lowest” level of churn for a third quarter in the past decade.
Capex of €900 million was up 21 per cent year-on-year, though the comparable 2020 quarter’s figure was impacted by Covid-19 (coronavirus).
The mix on investments is dedicated to growth across fibre, cloud and data centres, and content partnerships in Italy and Brazil.
Net profit dropped from €500 million to €159 million, on revenue of €3.8 million, 2.1 per cent lower.
Domestic revenue fell 3.2 per cent to €3.1 billion, though Brazil was boosted by growth in services which delivered a “significant increase” in ARPU, resulting in a 2.8 per cent increase in revenue to €731 million.
Net financial debt fell by €3.3 billion to €22.2 billion, as it made progress with a range of strategic initiatives.
[1] https://www.mobileworldlive.com/featured-content/top-three/iliad-5g-high-end-goal
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