By Elvira Pollina
MILAN (Reuters) -Core profit at Telecom Italia (TIM) fell 11.2% in the third quarter from a year hit earlier as shrinking domestic revenues outweighed cost cuts and the contribution from TIM's Brazilian unit.
Italy's biggest phone company on Wednesday said earnings after interest, tax, depreciation, amortisation and lease (EBITDA-AL) were 1.31 billion euros in July-September.
That is in line with an analyst consensus provided by the company and down from 1.48 billion euros a year ago.
Revenue in Italy, where the former phone monopoly makes the bulk of its turnover, fell by 5.3% to 2.92 billion euros, also matching expectations.
In confirming its guidance for the year, TIM said its EBITDA-AL would fall by a "low-teens" percentage rate.
TIM said it was axing plans to take advantage of some tax measures on goodwill in order to use funds to strengthen its business instead. As a consequence, it wrote off deferred tax assets for a net 1.96 billion euros.
Adjusted net debt was up 15% year-on-year to 25.5 billion euros at the end of September.
Under pressure for years in its fiercely competitive domestic market, debt-crippled TIM is seeking a revamp centred on break-up of its operations into several units in a bid to cut debt.
As part of the efforts, TIM is expected to launch a process to sell a minority stake in its enterprise service arm, a division including connectivity services for big corporate clients as well as cloud, Internet of things and cybersecurity businesses.
TIM has also been in talks over a multi-billion sale of its prized landline grid to state lender CDP, which is keen to control a national broadband network champion combining TIM's grid with that of its smaller unit Open Fiber
Sponsored by the previous government of Prime Minister Mario Draghi, the single network project is being reassessed by a right-wing government that was sworn in last month.
A potential rethink of the plan to create a unified network champion would include a CDP-backed takeover bid for TIM as a whole, with Vivendi and infrastructure funds joining the process, sources have said.
Cabinet undersecretary Alessio Butti had previously called on CDP to pursue the goal of a unified broadband company taking over TIM, whose stock is trading close to a record low.
(Reporting by Elvira Pollina; editing by Keith Weir and Valentina Za)