Telecom Italia SpA has reported a rise in earnings for the second quarter, indicating that the company's strategy of raising prices and focusing on profitable services in its domestic market is yielding positive results. The telecom firm's organic earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 5.6% to €1.64 billion ($1.8 billion) compared to the same period last year, surpassing analysts' estimates.
Although the company recorded a net loss of €124 million, its sales rose by 2.8% on an organic basis to €3.99 billion in the second quarter. Of particular significance is the fact that revenue in Telecom Italia's highly competitive Italian market increased for the first time in five years, with a 0.6% rise to €2.92 billion. This growth can be attributed to CEO Pietro Labriola's efforts to accelerate the company's core business and implement a wider turnaround plan, which includes divesting control of Telecom Italia's landline network.
The divestiture of its landline network is aimed at reducing the company's €30 billion gross debt, a crucial undertaking considering the rise in interest rates last year. Telecom Italia is currently in exclusive talks with US private equity firm KKR & Co. regarding the sale of its grid, a deal estimated to be worth up to €23 billion. The company confirmed that the network sale project is progressing as planned and is expecting a final binding offer from KKR by September 30.
Telecom Italia's focus on increasing profitability and optimizing its operations in the Italian market has proved successful, leading to positive financial results for the second quarter. With the ongoing efforts to divest its landline network, the company is taking significant steps towards reducing its debt burden and securing a more stable financial position in the long term.