Telecom Italia took a writedown of €3.18bn as expected on its domestic operations in the first half, giving it a net loss of €2bn over the period.

Revenues rose 10 per cent to €14.5bn ($20.5bn) in the first half of 2010 benefiting from the group’s increased focus on faster-growing markets of Brazil and Argentina.

Mediobanca analysts said at the domestic level the first half figures were weak while “quite strong” on the foreign one.

They noted that the company had been unable to offset heavy erosion of its average traffic price at home and Italy’s weak economic growth “keeps biting especially on the SME/ Corporate segment”.

Franco Bernabè, chief executive, said the goodwill writedown would have “no financial consequences and no impact on the group’s debt reduction plan or dividend distribution”.

Stripping out the writedown, Telecom Italia would have posted a net profit of €1.1bn, the same as in the first half of 2010, the group said.

Debt at Italy’s leading telecoms operator, and one of Europe’s most highly indebted, fell slightly to €31bn. Free operating cash flow increased €360m.

Mr Bernabè said the repositioning of the group towards markets with better growth prospects had helped it to improve its revenues.

Brazil and Argentina now make up 34 per cent of Telecom Italia’s revenues.

Mr Bernabè added that revenues from the group’s home market in Italy did show some signs of improvement in part due to stabilising prices in the mobile sector.

Earnings before interest, tax, depreciation and amortisation rose 4.3 per cent to €5.98bn compared with the same period a year ago.

Its ebitda margin was down 2.2 percentage points to 41.1 per cent over the same time.

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