Telecom Italia S.p.A.: Telecom Italia: Board of Directors examines and approves the Interim Report on Operations as of 30 Sep..
07 November 2013 - 6:42PM
Italian Regulatory (Text)
s a negative 28 million euros, up by 30 million euros compared
to the first nine months of 2012. In particular, during the first
nine months of 2012, the EBITDA was affected by the provision for
restructuring costs of 30 million euros made following the launch
of Olivetti I-Jet S.p.A. winding-up process. Excluding this
provision, the organic variation is equal to zero. The result for
the first nine months of 2013 is affected by charges totalling 9
million euros, following the fire on 19 March 2013 which completely
destroyed the spare parts warehouse. The total damage incurred by
the group following the fire was covered by appropriate insurance
policies and on 31 October 2013 the Olivetti group and the pool
of
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insurance companies agreed on a settlement of 19 million euros for
the claim as a whole; the associated economic and financial effects
will be felt in Q4 2013. Excluding the charges arising from the
destruction of the warehouse, the variation in EBITDA would have
been positive by 9 million euros (+32.1%), thanks to steady margins
on sales and the reduction in fixed costs. These two phenomena more
than matched the lower profits from declining sales. The reported
EBITDA in Q3 2013 was negative by 5 million euros (negative by 20
million euros in the same period of 2012).
The EBIT was a negative 32 million euros, up by 32 million euros
compared to the same period of 2012. The organic variation in EBIT,
excluding the provision for restructuring costs in the first nine
months of 2012, was zero. Excluding the losses due to the
destruction of the spare parts warehouse in the first nine months
of 2013, EBIT grew by 9 million euros (+28.1%). The reported EBIT
in Q3 2013 was negative by 7 million euros (negative by 23 million
euros in the same period of 2012). The headcount of 724 employees
fell by 54 units compared to 31 December 2012.
***
OUTLOOK FOR THE 2013 FINANCIAL YEAR As for the general performance
of the Telecom Italia Group for the current year, the goals
associated with the main economic and financial indicators for the
whole of 2013 are as follows: Essentially stable revenues compared
with 2012; "Mid-single digit" percentage reduction in EBITDA;
Adjusted net financial debt of less than 27 billion euros.
Please note that actual results may differ, even significantly,
from those forecasted for the whole of 2013. Forward-looking
information is in fact based on a number of assumptions, believed
to be reasonable, with particular reference to competitive
performance in the telecommunications market, continuous
development of the competition, which is a feature of the TLC
business as a consequence of the potential entry of new competitors
and the introduction of new and innovative technologies, prospects
for growth in the economy and the TLC market, in Italy and in the
other markets in which the Group operates, the potential
legislative and regulatory developments, the performance of
financial markets. By their nature, these assessments involve risks
and uncertainties arising from multiple factors, most of which are
beyond the Group's control. The main factors include: · Changes in
the general macroeconomic situation in the Italian, European and
South American markets, and the volatility of financial markets in
the "Euro zone": The global economic crisis and the continuing
weakness of the Italian economy over the past few years have
negatively affected the telecommunication business. The
continuation of this crisis may reduce
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·
·
·
·
purchases of products and services and adversely affect the Group's
results, cash flows and financial situation. Operations and
investments may be adversely affected by developments in the
overall, as well as economic, situation of the countries where the
Group is present. Fluctuations in exchange rates and interest rates
could adversely affect Telecom Italia Group's results. Changes in
business conditions: Intense competition in Italy and other
Countries could reduce the market share for the Group's
telecommunication services and may result in falling prices and
margins, with a resulting adverse effect on operating results and
financial position. In particular, mobile communication markets are
mature markets and the competitive pressure has further increased.
A general slowdown is taking place in the Brazilian economy. This
has had an effect on the mobile phone market, which is also
affected by an increasing amount of competition and competitive
pressure on prices. The continuation of these effects may have
negative consequences on the development prospects of the Company
and/or the Group in Brazil. Business performance and cash flow
could be adversely affected if new services to encourage greater
use of our fixed and wireless networks could not be implemented.
Continuing rapid changes in technology could increase the level of
competition, reducing the use of traditional services and requiring
us to make further substantial investments. Changes in legislation
and regulations: As the Group operates in a highly regulated
industry, decisions take by supervisory and regulatory Authorities,
including those regarding regulated tariffs, as well as changes in
the regulatory framework could adversely affect business
performance. Outcome of disputes and litigation with regulatory
authorities, competitors and other entities: The Group has to deal
with disputes and litigation with tax authorities, regulators,
competition and market authorities, other TLC operators and other
entities. The potential impacts of these proceedings are generally
uncertain. In the event of an unfavourable outcome for the Group,
these issues could, individually or collectively, have a negative
impact on operating results, financial position and cash flows.
Financial risks: The aforementioned unfavourable macroeconomic and
market environment requires us to consider a lowering of the credit
rating by rating agencies as one of the potential risks faced by
the Group. The Group's bond issues do not contain financial
covenants (such as Debt/EDITDA, EBITDA/Interest or similar ratios)
or clauses forcing the early repayment of loans in circumstances
other than insolvency. The risks and/or impacts of a potential
lowering of the credit rating on future refinancing, on the costs
associated with it and on the process of evaluating goodwill cannot
currently be estimated. The increased risk for our financial
counterparts that would result from a potential lowering of Telecom
Italia's credit rating could result in an increase in the costs
associated with managing the Group hedging derivatives portfolio,
costs which cannot currently be estimated either. ***
The Manager in charge of preparing the corporate accounting
documents, Piergiorgio Peluso, hereby declares, pursuant to
subsection 2, Art.154-bis of Italy's Consolidated Finance Law, that
the accounting information contained herein corresponds to the
company's documentation, accounting books and records.
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