Telecom Italia posted the best half-year results of Europe’s biggest operators so far as both revenues and profits rose.

Revenues were up 1.7 percent year-on-year to €14.8 billion between January and June.

Profits climbed by €3.3 billion to €1.2 billion over the same period.

"Despite the critical economic conditions in Italy and the slowdown in Latin America, Telecom Italia continues to have good results,” Frost and Sullivan analyst Saverio Romeo told European Communications.

In 2011, TI suffered a €4.7 billion loss following a multi billion write-down.

Growth is mainly thanks to its interests in Brazil and Argentina, which saw revenues climb 6.7 percent and 20.6 percent respectively.

There was 9.4 percent increase in broadband subscribers in Argentina, while in Brazil the number of mobile subscribers grew 24 percent.

Domestically, revenues fell 3.1 percent to €9 billion.

“Even more importantly we reduced debt by €800 million from 30 June 2011, down to €30.4 billion at the end of second quarter of 2012, after outlays for dividends exceeding €1 billion,” said TI chairman Franco Bernabè.

Romeo said the debt remained high, but the improved performance paved the way for “more challenging investments”.

“Telecom Italia is slowly regaining a global role, becoming a key player in one of the fastest growing economies in the planet,” he added.

“This role needs to be reinforced through continuous growth in Brazil and Argentina, but also through entering other markets.”

Romeo said he’d like to see the region “nourished with investment”.

He explained: “Boosting initiatives and activities in areas like M2M, mobile health and smart cities could be an important step to consolidate [TI's] presence in the region.”

Due in part to its recent purchase of 4G frequencies in Brazil, capex increased by €232 million to €2.3 billion in H1. 

Another bright spot for the operator was the growth of its IPTV services - the number of subscribers grew by 31.5 percent.

Romeo believes the operator must move ever more quickly to embrace this trend as the economic challenges continue.

“2012 and 2013 will be difficult years for the Italian economy and Telecom Italia will face challenging moments,” he said.

“Telecom Italia should increasingly move from being a telecoms provider to become a digital lifestyle provider for Italians. This implies an offering that goes well beyond connectivity of any sort - mobile, fixed, and broadcasting - and looks at the use of ICT in everyday life.”

Much of this is accounted for in what TI classes value-added services – revenues from this part of its business topped €1 billion in H1, a 4.8 percent increase.

“If supported by a robust innovation strategy, Telecom Italia can take this route. It is not an easy route, but the one that will take it through the economic crisis and into the era of the Internet of Things."