Telecom Italia to raise 2022 outlook on core profit

Telecom Italia SpA raised its 2022 profit forecast after the Italian telecommunications company reduced costs and stabilized sales in the second quarter.

The former phone monopoly improved its earnings forecast for the rest of the year in a statement on Wednesday that confirmed an earlier Bloomberg News report.

The company reduced operating costs in the first half by about 200 million euros ($203 million), reaching about 70% of its goal for the year, Telecom Italia said in the statement.

Telecom Italia is working to accelerate a turnaround plan that would see it give up control of its network, the firm’s most valuable asset. Last month, the board told Chief Executive Officer Pietro Labriola to cede control of the grid and cut more than 30 billion euros in gross debt by breaking the phone carrier into several units and finding new partners.

Earnings before interest, taxes, depreciation and amortization will drop by a percentage in the “high single digits” this year compared to an earlier prediction of a decline in the “low teens.” Ebitda excluding leases will fall by a percentage in the “low teens” from an earlier forecast of a “mid to high teens” decline, the company said in the statement.

Telecom Italia reported organic Ebitda for the second quarter declined 8.5% to 1.56 billion euros, compared to the average analyst estimate of 1.59 billion euros. Total organic revenue in the quarter declined slightly to 3.91 billion euros.

Revenue for Telecom Italia’s enterprise unit increased about 9% in the first half because of growth in cloud services. Sales from the cloud business rose more than 60% compared with the same period a year earlier. Bloomberg