By Mauro Orru 
 

Telecom Italia SpA said late Tuesday that it returned to profitability in the fourth quarter of 2019 as well as in the full year amid its continuing cost-reduction program.

The Italian telecommunications company reported net profit for the quarter of 64 million euros ($72.6 million), compared with a net loss of EUR543 million the previous fourth quarter.

The company also posted net profit of EUR916 million for the full year, recovering from a net loss of EUR1.41 billion in 2018, when an impairment of EUR2.59 billion in relation to its core domestic and international wholesale businesses took its toll.

Analysts were expecting a 2019 net profit of roughly EUR1.27 billion, according to FactSet.

Earnings before interest and taxes for the quarter jumped to EUR463 million compared with a loss of EUR56 million the previous fourth quarter.

Quarterly earnings before interest, taxes, depreciation, and amortization rose to EUR1.65 billion from EUR1.63 billion.

Telecom Italia posted revenue of EUR4.55 billion for the quarter, down from EUR4.86 billion the previous fourth quarter.

The company said the board of directors backed a proposal to pay a new dividend of EUR0.01 per ordinary share, with a dividend per savings share of EUR0.0275, unchanged from the previous year.

Telecom Italia said it expects to reach a cumulative equity free cash flow of between EUR4.5 billion and EUR5 billion over the period from 2020 to 2022, with organic services revenue projected to be slightly lower in 2020 and slightly higher between 2021 and 2022.

"The world is living an unprecedented period of extraordinary sanitary emergency. The impact on GDP world-wide and in Italy, hence on Telecom Italia's plan, is difficult to quantify at the moment and will be a function of the duration, intensity and effectiveness of containment action," the company said in a veiled reference to the coronavirus epidemic.

The reported spike in earnings comes just days after the European Commission granted conditional approval to the merger between Telecom Italia's Infrastrutture Wireless Italiane SpA and Vodafone Group PLC's Italian tower unit, a deal that is expected to facilitate the deployment of 5G at lower costs across a wide geographical area in Italy.

Telecom Italia also confirmed recently that investment firm KKR & Co. submitted a nonbinding offer to be its exclusive partner in fiber-network development as the Italian telecommunication company continues to assess possible forms of integration between its own and wholesale operator Open Fiber's optical-fiber networks.

 

Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94

 

(END) Dow Jones Newswires

March 11, 2020 02:32 ET (06:32 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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