Telecom Italia profits hit by regulatory provisions

Italian operator Telecom Italia announced its numbers for the first half of 2015 and revealed it only just managed to stay in profit thanks to a €399 million provision against regulatory affairs.

Overall revenues were down 3.3% compared to 1H 2014 at €10.1 billion but profits plummeted to just €29 million, down from €543 million a year ago. “The figure would have exceeded €650 million, without counting non-recurring items and income and those connected with the bond buyback, as well as by the dynamics of the valuation of the Mandatory Convertible Bond,” said the press release.

“The results of the second quarter of the year show solid improvement in turnover in Italy, which has grown by 113 million euros as compared with the first three months of the year, rising both in fixed and mobile,” said TI CEO Marco Patuano. “TIM is once again confirmed as the country’s top mobile operator, increasing revenues from innovative services by 21.8% on 2014. The fixed ultrabroadband clearly shows the benefits of the agreements we are stipulating with contents providers, increasing the demand for connection.

“Industrial margins have also continued to improve, whilst the absolute figure is affected by non-recurring factors and technical provisions connected with regulatory and legal affairs that are still underway and which we trust will have a successful outcome.”

In its public statements TI didn’t specify the nature of these regulatory charges, but they had been anticipated by financial analysts and, at least in part, will concern the scrutiny it’s facing over the behaviour of its wholesale operations. There was no apparent reference to the major restructuring this scrutiny is rumoured to be bringing about.