Telecom Italia 1st Half Net Profit Up 81% On Accounting,Capital Gain"
MILAN -(Dow Jones)- Telecom Italia SpA (TIT.MI) said Thursday its first half consolidated net profit increased by 81% thanks to accounting changes and capital gains from asset disposals.
Italy's leading telecommunication operator said in a statement its net profit in the six months to June 30 was of EUR1.775 billion, up from EUR979 million reported in the same period of a year ago.
The figures were reported for the first time under International Financial Reporting Standards, which boosted the operating profit figure.
"The net profit improvement is mainly in accounting terms rather than organic terms," explained a telecom analyst.
The company said the EUR421 million in capital gains it made in the period from asset disposals boosted its first-half net profit.
The company already released preliminary results in July, which showed a 5% revenue increase to EUR14.69 billion, mainly driven by sales growth at its mobile unit in Brazil and by its broadband activities.
Earnings before interest and taxation, or EBIT, grew 6.2% to EUR3.98 billion also thanks to the elimination of the goodwill amortization introduced by the IFRS.
Earnings before interest, taxation, depreciation and amortization, or EBITDA, increased 2.6% to EUR6.519 billion. In July, this EBITDA figure raised analysts' concerns that the company might fall short of its 2005-07 guidance, which saw an average annual EBITDA growth of 6%-8%.
Telecom Italia's net debt at the end of June totaled EUR44.11 billion, climbing from EUR32.8 billion at the end of 2004 as the company spent EUR13.8 billion in the buyout of TIM's minorities and EUR2.3 billion in dividend payments.
The fixed line unit kept bucking the European trend of declining revenue with a 2.1% sales growth, driven by value added services and by the new handset sales.
Telecom Italia's broadband customer base reached 5.568 million adding 605,000 new clients from the end of 2004.
The mobile unit reported a 10.6% revenue increase to EUR6.248 with a 9% EBITDA growth EUR2.83 billion driven by performance in Brazil and the sale of the new third generation handsets.
At 1313 GMT Telecom Italia shares were almost flat at EUR2.57.
Company Web site: http://www.telecomitalia.it
-By Serena Saitto, Dow Jones Newswires; +39 0258219907, serena.saitto@dowjones.com
(END) Dow Jones Newswires"
Posted to the site on 8th September 2005
