Milan

Telecom Italia reports first half losses of 1.4 bn euros

Weighed down by 2.2 billion in goodwill writedowns

Telecom Italia reports first half losses of 1.4 bn euros

Milan, August 2 - Telecom Italia on Friday reported half-yearly losses of 1.4 billion euros on consolidated revenues of 13.76 billion euros, down 7% from the same period last year. The company said results were affected by 2.2 billion euros in goodwill writedowns. Exchange rates also took their toll. Excluding exchange rates and other variations, gross revenues fell 2.7%. Telecom Chairman and Chief Executive Franco Bernabe' said Italy's economic woes and slowed growth in Latin America weighed heavily on margins. Telecom Italia issued a profit-warning on its gross operating margin, which in the first half amounted to 5.236 billion euros, down 10.6%. ''In addition in Italy there was continued pressure on prices, particularly in the Mobile Consumer market, in which regulatory aspect added a significant negative impact,'' Bernabe' said. ''In this context, it was decided to respond strongly to offers made by competitors on the mobile market, investing a part of the margin to open the way for the defence and net acquisition of clients through innovative offers converging fixed and mobile (services),'' Bernabe' explained. The group confirmed its forecast for consolidated revenues and adjusted net debt of less than 27 billion euros. Telecom Chairman Franco Bernabe' reiterated the group's intention to spin-off its fixed-line network. Telecom Italia stock on the Milan bourse lost 3.9% during trading, touching 0.49 euro, near July's 16-year record low when it dipped below 0.48 euro.

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