Telecom Italia has announced a fall in Q1 revenue and profits as it continues to struggle, but is hopeful a new content deal with Sky will change its fortunes next year.
Revenues fell 11.9 percent year-on-year to €5.2 billion as its businesses in both Italy and Brazil suffered from a range of factors.
Sales fell 8.3 percent in its home market as falling demand for voice and messaging services was only marginally offset by increases in the fixed-line broadband and mobile internet.
ARPU in both the personal and business sectors continued to fall.
However, international wholesale revenues showed some growth, increasing 6.4 percent thanks to demand for voice services.
The company has continued to expand its presence in Brazil, although growth slowed in the mobile sector due to increased competition.
Revenues there fell 18.8 percent due to the devaluation of the Brazilian Real. In local currency, revenues were broadly flat.
The company saw its net profit fall from €364 million to €222 million, while net debt decreased by €1.2 billion to €27.5 million. Meanwhile, capex fell by €82 million to €684 million.
Telecom Italia CEO Marco Patuano commented: "We have accelerated our investments in new technology, strengthening our leadership in fixed and mobile ultrabroadband coverage.
“This has not meant a loss of focus on financial discipline, with major efficiency programmes on both costs and on traditional capex. Our offer is evolving from a price-based competitive rationale, relaunching competition based on quality and innovation.”
The CEO also talked up the content agreement with Sky, announced last month, that gives Telecom Italia customers access to Sky’s television offering from 2015.
The deal will be primarily directed towards customers who have an optic fibre connection, and will be a driver for the development of ultrabroadband.
However, Telecom Italia said will offer FIFA World Cup matches on mobile devices this summer.
“This agreement is part of Telecom Italia's overall strategy, which identifies the offer of premium content as an element that adds value to its new generation network infrastructure. Indeed, we are totally convinced that one of the main drivers of our business is the development of innovative services, particularly in entertainment for the consumer market," said Patuano.
“This partnership, which allows our customers to access the most extensive pay TV offer available on the market, is particularly satisfying for us, since it creates a new industrial model for the consumption of audiovisual content, thanks to the technological skill of Telecom Italia and the production know-how of Sky".