By Giada Zampano DOW JONES NEWSWIRES ROME -(Dow Jones)- Telecom Italia SpA (TI) Friday posted a EUR2 billion net loss in the first half of the year after approving a goodwill write-down of EUR3.2 billion on its struggling domestic operations. However, Italy's largest telecommunications operator confirmed its full-year targets of broadly stable revenue and earnings before interest, tax, depreciation and amortization, or Ebitda. The Italian operator said the write-down valuation was based mainly on the deterioration of the financial markets in terms of trends in interest rates. Telecom Italia's domestic margins continued to suffer in the first half despite an improvement in the mobile sector and a strong performance in South America. The group posted a first-half net loss of EUR2 billion after the write-down, compared with a EUR1.2 billion net profit a year earlier. The economic weakness that hit telecom companies in southern and eastern Europe at the start of the year showed no signs of easing in the second quarter, while regulatory price cuts continued to eat into margins across the continent. Analysts noted that Telecom Italia faced particular risks from a stagnating Italian economy amid downbeat consumer sentiment and depressed domestic demand. Like many of its European peers, Telecom Italia has responded to increasing competition and stagnation at home by boosting investment in high-growth emerging markets. Net profit at its Brazilian mobile company TIM Participacoes SA (TSU) more than doubled in the second quarter as revenue rose 20% year-on-year to 4.25 billion reals (EUR1.90 billion) and its subscriber base jumped 25% to 55.5 million at the end of June. TIM Brazil last month bought Brazilian telecommunications infrastructure operator AES Atimus Group in a EUR700 million deal, further boosting Telecom Italia's presence in Brazil's fast-growing market. Telecom Italia's closely watched net debt stood at EUR31.1 billion at the end of June, up from EUR30.6 billion at the end of March. As part of its strategic plan announced in February, the Italian operator aims to cut its adjusted net debt to about EUR29.5 billion by the end of 2011 and to EUR25 billion by 2013. "The goodwill write-down has no financial consequences and no impact on the group's debt reduction plan or dividend distribution," Telecom Italia executive chairman and CEO Franco Bernabe said in a statement. -By Giada Zampano, Dow Jones Newswires; +39 06 69766920; giada.zampano@dowjones.com
