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Telecom Italia improved its underlying debt position in the first half, even though net debt rose because of the integration of its TIM mobile phone unit, preliminary results showed on Tuesday.
Net debt stood at €44.1bn ($53.2bn) on June 30, up from €32.9bn at the end of 2004, an increase that leaves Telecom Italia with debt of similar size to France Telecom and Deutsche Telekom.
Telecom Italia said it spent €13.8bn on the acquisition of TIM shares, and €2.3bn in dividends.
These effects would have pushed Telecom Italia's debt up to €49bn, but strong cash generation in the first six months of the year enabled the company to cut that figure by almost €4.9bn.
The group said on Tuesday that, with TIM's integration complete, it was appointing Marco De Benedetti, a former head of TIM, as one of its three chief executive officers. He will continue to be responsible for the mobile phone business.
Telecom Italia's first-half ebitda (operating result before depreciation and amortisation, capital gains and losses, and revaluations and write-downs of non-current activities) rose by 2.6 per cent over the first half of 2004 to €6.5bn.
Its operating result was affected by costs related to the expansion of its broadband services in France and Germany, a digital television project, and the launch of a new generation of ink-jet printers by its Olivetti subsidiary.
Telecom Italia recorded 40 per cent revenue growth in its Brazilian mobile phone business.
Telecom Italia's overall revenues in the first six months of this year were up 5.2 per cent at €14.7bn.