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Brazil drags down Telecom Italia results

Bnamericas Published: Tuesday, February 16, 2016

Telecom Italia saw its revenues drop by 6.7% year-on-year in 4Q15 to 4.84bn euros (US$5.4bn), impacted mainly by negative sales in Brazil in euro terms, according to the company's financial report.

Full-year revenues were down 4.6% in organic terms to 19.7bn euros.

Ebitda dipped 33.2% year-on-year to 1.39bn euros in Q4, while Ebitda margin declined 11.3 percentage points to 28.7%.

While quarterly revenues in Italy fell 2.6% to 3.87bn euros, in Brazil they plunged 20.2% to 940mn euros. Full-year revenues in Brazil were down 12.1% to 4.64bn euros, accounting for 23.5% of the group's total revenues, compared to 28.9% in 2014.

Earlier this month, TIM Brasil reported its net profit had increased 3.3%, boosted by tower sales, despite its drop in revenues.

Results in Brazil were mainly impacted by reductions in mobile termination rates, lower handset sales and decreasing revenue from traditional mobile services, as well as macroeconomic headwinds, slightly offset by mobile data and VAS, company executives said during a live conference with analysts in London.

At the conference, Telecom Italia CEO Marco Patuano said the company would focus its 2016-2018 investments in Brazil on 4G LTE and mobile data expansion. He also admitted that there is a "lot of concern about Brazil" and that the company was are aware of it and was working on raising efficiency.

Patuano was heavily questioned by analysts over Telecom Italia's debt, which reached 27.3bn euros in 2015, some 67mn euros higher than at end-2014. The executive said that net debt would fall to below the ratio of three times EBITDA before the end of 2018.

ARGENTINA, CONSOLIDATION

During the conference, executives said Telecom Italia expects to conclude the sale of its Argentine subsidiary by the end of this year.

With regard to a potential merger between TIM Brasil and Oi, Patuano said there are no current negotiations taking place at the moment.

He also said that, for such a deal to take place, regulatory, financial and industrial conditions need to be worked out.

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