(Updates with analyst’s comment in fourth paragraph.)
May 13 (Bloomberg) -- Telecom Italia SpA, the country’s largest phone company, reported first-quarter revenue that missed analysts’ estimates as domestic revenue plunged amid competition in the wireless market.
Sales declined 12 percent to 5.19 billion euros ($7.1 billion), the Milan-based company said today. Analysts projected 5.23 billion euros, according to the average of estimates compiled by Bloomberg. Earnings before interest, taxes, depreciation and amortization fell 8.4 percent to 2.2 billion euros, in line with estimates.
Phone bills are shrinking as increasing demand for wireless Internet browsing isn’t enough to offset a drop in call prices and consumers switching to messaging services such as Facebook Inc.’s WhatsApp. Chief Executive Officer Marco Patuano, during his first months in the role, sold an Argentine business, put assets including wireless towers in Italy and Brazil up for sale and scrapped a dividend to revive the indebted phone company.
“Telecom Italia can no longer rely on revenue from voice and messages since over-the-top players like Facebook replaced it without giving apparently anything in return,” Carlo Alberto Carnevale Maffe, a business professor at Milan’s Bocconi University, said in a phone interview. “The company has to improve its ability to strike strategic partnerships and tighten the grip with Web companies.”
Telecom Italia shares fell 1.8 percent to 91 cents at 9:01 a.m. in Milan, giving the company a market value of 16.4 billion euros. They had risen 31 percent this year through yesterday and gained about 44 percent since Patuano took over in October.
Sales in Italy declined 8.3 percent to 3.7 billion euros as average revenue per customer dropped as a result of “stiff competition,” Telecom Italia said. Patuano is adding services in a bid to boost phone bills in Italy’s saturated market. In April, he teamed up with Rupert Murdoch’s Sky Italia SpA for an Internet-television service to attract broadband subscriptions, giving consumers an alternative to satellite TV.
Revenue from Brazil dropped 19 percent to 1.45 billion euros because of a decline in the country’s currency against the euro. Competition in Brazil also led to lower average revenue per mobile customer.
Net income was 222 million euros, compared with a profit of 364 million euros a year earlier. Competition in Italy’s phone market and writedowns led to cumulative losses of more than 7 billion euros in the past three years.
Telecom Italia’s newly elected board last month confirmed Patuano, 49, as CEO and elected Giuseppe Recchi, 50, as chairman after months of clashes over control of the carrier.