Group revenues 7,104 million euro +4.4% compared to Q1 2004; organic growth +4.7%
Consolidated net Income 656 million euro
+10.3% compared to Q1 2004
In the first quarter net financial debt reduced by over 3 billion euro from post TIM PTO level
Wireline revenues 4,350 million euro +1.3% compared to Q1 2004;
organic growth +1.6%
End-April Broadband accesses over 5 million, of these 4,435,000 in Italy
TELECOM ITALIA GROUP
REVENUES 7,104 MILLION EURO +4.4% COMPARED TO Q1 2004; ORGANIC GROWTH +4.7%
EBITDA 3,302 MILLION EURO +3.8% COMPARED TO Q1 2004;
ORGANIC GROWTH +4.3%
EBIT 2,038 MILLION EURO
IN LINE WITH Q1 2004 (2,049 MILLION EURO) ORGANIC GROWTH +0,9%
NET INCOME 656 MILLION EURO +10.3% COMPARED TO Q1 2004
NET FINANCIAL DEBT 43,502 MILLION EURO ON 31 MARCH 2005
REDUCED BY OVER 3 BILLION EURO SINCE TIM PTO
The Board of Directors of Telecom Italia, chaired by Marco Tronchetti Provera, met today and approved the quarterly report for the period ended 31 March 2005.
TELECOM ITALIA GROUP
The financial results of the Telecom Italia Group in the first quarter 2005 and the related periods of comparison have been reclassified under the IAS/IFRS accounting standards. Figures used for comparison have been restaded to take into account activities sold or in the process of being sold (discontinued operations): Entel Chile Group, Finsiel Group, Digitel Venezuela and TIM Hellas. In the first quarter of 2005, Databank, Televoice, Innovis and Cell-Tel left the area of consolidation.
Revenues in the first quarter of 2005 amounted to 7,104 million euro, up 4.4% compared to the first quarter of 2004 (6,806 million euro). Excluding the positive effect of exchange-rate variations and the negative effect of changes to the scope of consolidation, organic growth was 4.7% (+316 million euro). Growth stemmed from increases in revenues at the mobile business unit, due to the positive contribution of activities in Brazil and the positive performance of Value Added Services on the domestic market, and from the wireline business unit’s successful development of the Broadband market in Italy and in the rest of Europe.
EBITDA (operating result before depreciation and amortisation, capital gains/losses and revaluations/writedowns of non-current activities) was 3,302 million euro, up 3.8% compared to the first quarter of 2004 (3,182 million euro). Excluding exceptional items, organic growth was 4.3% (+138 million euro). EBITDA margin was 46.5% (46.8% in Q1 2004).
EBIT (operating result) was 2,038 million euro (2,049 million euro in the first quarter of 2004). Excluding the effect of exchange-rate variations, changes to the scope of consolidation, and exceptional items, organic growth was 0.9% (+19 million euro). The result was impacted by the increase in the level of amortisation and depreciation generated by investments made in the previous year. EBIT margin in the first quarter of 2005 was 28.7% (30.1% in the first quarter 2004).
Consolidated net income was 656 million euro (827 million euro before minority interests), up 10.3% compared to the first quarter of 2004 (595 million euro, 851 million euro before minority interests).
Capital expenditure totalled 918 million euro, up 110 million euro compared to the first quarter 2004. The value of all investments was 14,789 million euro, of which 13,832 million associated with the merger of Telecom Italia and TIM.
Net financial debt was 43,502 million euro at the end of March 2005 (32,862 at end of March 2004).
The increase in net debt, resulting from the purchase of TIM shares, both ordinary and savings, tendered during the PTO (13,832 million euro) was cut by over 3 billion euro in the first 3 months of 2005. This was due to the partial conversion of the 2001/2010 Bond and the exercise of stock options (together -1,760 million euro), as well as to the disposal of non-strategic participations, such as Entel Chile and C-Mobil (-1,093 million euro), and to net cash flow generated during this period (-1,296 million euro).
At the end of March 2005, Telecom Italia Group headcount stood at 87,180 (80,868 excluding discontinued operations). At the end of March 2004, Group headcount was 93,041 (82,021 excluding discontinued operations).
BUSINESS UNIT RESULTS
First quarter 2005 data for TIM and Telecom Italia Media were published in press releases on 5 May and 6 May, respectively, following the Board Meetings which approved them. The Group’s IT operations are no longer reported separately, as they have been integrated into the Wireline business unit and other activities, following the merger of IT Telecom and Telecom Italia at the end of 2004.
WIRELINE
The Wireline business unit includes the group’s Internet activities, which were sold to Telecom Italia by TIMedia in 2005.
Revenues totalled 4,350 million euro, up 1.3% compared to the first quarter of 2004 (4,294 million euro); organic growth, excluding the effects of exchange rate variations and changes to the scope of consolidation, was 1.6% (+68 million euro).
This increase was due to the successful development of the Broadband market and innovative services and products, coupled with the stabilization of the core voice-telephony market and the development of the European Broadband Project.
The core voice-telephony segment diminishes at a progressively slower rate as VAS and innovative terminals offset declines in voice traffic and traditional accesses. The portfolio of Tutto 4 Star and Chat SMS VAS at the end of April, 2005, counted 2,339,000 units while the portfolio of innovative terminals (Aladino and Videotelefono) stood at 2,169,000 units at the end of April.
Revenues in the Internet segment totalled 295 million euro, an increase of 19.9% compared to the first quarter of 2004 due to sustained growth in ADSL revenues (+84 million euro and +66.1% compared to the first quarter of 2004).
The Wireline unit’s total portfolio of Broadband customers, at the end of April 2005, stood at 5,003,000 customers including 4,435,000 accesses in Italy (+425,000 compared to the end of 2004) and 568,000 in the rest of Europe (+148,000 compared to the end of 2004).
Revenues in the Business Data segment amounted to 475 million euro, an increase of 6.7% compared to the first quarter of 2004. This increase is driven, in particular, by strong development of Data VAS (Web Services and Outsourcing) which saw an increase of 41 million euro (+62.1%) compared to the first quarter of 2004 and innovative data transmission services, predominantly via xDSL technologies, which grew 21.4%
Strong growth in revenues from the European Broadband project (France, Germany and The Netherlands): 91 million euro in the first quarter of 2005 (+74.4% compared to the first quarter of 2004). In particular, Wireline’s total European customer portfolio reached 763,000 units at the end of April 2005.
EBITDA (operating result before depreciation and amortisation, capital gains/losses and revaluations/writedowns of non-current activities) was 1,993 million euro, up 3.0% compared to the first quarter of 2004 (1,935 million euro), equal to 45.8% of revenues (45.1% in the first quarter 2004). Organic growth, excluding changes to the scope of consolidation and exceptional items, was 3.0%.
EBIT (operating result) was 1,276 million euro, an increase of 2.3% compared to the first quarter of the 2004 (1,247 million euro), equal to 29.3% of revenues (29.1% in the first quarter of 2004). Organic growth was 2.3%.
Capital expenditure totalled 657 million euro, up 96 million euro compared to the same period of 2004. This increase was mainly due to investment in innovative technology and in the European projects.
OLIVETTI
Revenues amounted to 108 million euro, down 31 million euro compared to the first quarter of 2004; excluding the effect of exchange rate variations and changes to the scope of consolidation (with particular reference to the cessation of activities in the USA, Mexico and to Innovis S.pA), organic growth was a negative 20 million euro.
EBITDA (operating result before amortization and depreciation, capital gains/losses and revalutations and writedowns of non-current activities) was a positive 4 million euro, (8 million euro in the first quarter of 2004) and EBIT (operating result) reached breakeven (4 million euro in the first quarter of 2004). The organic variations for both margins were a negative 7 million euro, as a result of costs associated with the Office Division.
Capital expenditure amounted to 4 million euro and was unchanged compared to the first quarter of 2004.
Headcount on 31 March, 2005, stood at 1,755 units. The 353 unit decrease compared to 31 December, 2004, was mainly due to the removal of the companies Innovis S.p.A. (222 units) and Cell-Tell S.p.A. (112 units) from the scope of consolidation.
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The Board of Directors today also approved the 2004 Annual Report (Form 20-F), the Balance Sheet prepared in accordance with US regulations, as Telecom Italia is also listed on the New York Stock Exchange.
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The first quarter 2005 results will be illustrated to the financial community in a conference call tomorrow, Tuesday 10 May, at 16.45 (Italian time).
Journalists can listen to the presentation by calling: +39 06 33168. For those unable to participate in real time the presentation will be replayed at: +39 06 334843 (access code 77271#).
Milan, 9 May 2005
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