Telecom Italia to review Brazil options as core profits fall
MILAN (Reuters) - Italy's biggest phone company Telecom Italia said on Wednesday it would examine its strategic options in Brazil as first-half core profits fell 7.6 percent hurt by a weak economy in its domestic market and a slowdown in Brazil.
The broadly in-line set of results at the heavily indebted Italian firm come amid increasing signs of possible consolidation in its two markets, a factor which has buoyed its share price in the last few months.
On Tuesday, Telefonica made a 6.7 billion euro (5.3 billion pounds) bid for Brazilian broadband company GVT, stealing the initiative from Telecom Italia which has not ruled out a possible merger of GVT, a unit of France's Vivendi, with its own TIM Brasil.
Telecom Italia said it decided to continue an in-depth evaluation of its strategic options in Brazil, saying the country - which accounts for almost one third of its sales - was a core market for the group.
It reported earnings before interest, tax, depreciation and amortisation (EBITDA) of 4.345 billion euros (3.43 billion pounds), in line with an analyst consensus estimate of 4.379 billion.
Revenues fell 11.2 percent to 10.551 billion euros, hit by a devaluation of the Brazilian real, while adjusted net debt was 27.358 billion euros, up 551 million euros from end-2013.
The company said despite economic weakness price competition in the Italian mobile business eased. It said demand for investment-hungry broadband services rose at the expense of traditional products such as voice and network access.
Telecom Italia said revenue trends were uncertain but confirmed expectations of a gradual recovery of its operating performance in Italy in 2014, helped by cost cutting.
(Reporting by Danilo Masoni; editing by Jason Neely)
