Telecom Italia bets on Lat Am for future growth

Suvradeep Bhattacharjee/Ovum | August 12, 2010

With domestic revenue still in decline, Telecom Italia's growth engine remains Brazil, as demonstrated in its recently-published 1H earnings.

TIM Brazil increased its mobile subscribers to 44.4 million, up 17.4% on the first half of 2009. The unit's success has prompted TI to eye market opportunities in neighboring Argentina, and the results and its M&A activities in the half prove it is betting on Latin America to drive future growth.

The unit continues to deliver strong results based on the solid growth of its mobile subscriber base, which in the first half increased 17.4% to 44.4 million.

TIM Brazil saw an acceleration of growth in post-paid lines, which increased 11.7% year-on-year in the second quarter, after growing only 6.9% in the first quarter.

The operation stabilized ARPU at 24.10 reai ($13.62) per month by the end of the second quarter, which will bring some relief to senior management because ARPU had been on a declining trend and had fallen by 2.60 reai at the end of first quarter.

Both voice and VAS revenues continued to grow sequentially, while handset revenues fell 42.1% during the quarter after TI stopped offering subsidies on handsets.

By comparison TI’s group revenues were €13.22 billion for the half year to 30 June 2010, down 0.7% on the first half of 2009. Group EBITDA grew 3.4% at €5.73 billion, but free cash flow declined 4.1% to €2.15 billion.

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