Telecom Italia core profit up 3.8% in Q1, debt rises

MILAN (Reuters) -Telecom Italia (TIM) said on Wednesday its core profit rose by 3.8% year-on-year in the first quarter, thanks to strong growth from its Brazilian unit and stable domestic revenues, but debt rose.

Italy's biggest telecoms company said group core earnings before interest, tax, depreciation, amortisation (EBITDA) on a like-for-like basis stood at 1.46 billion euros ($1.6 billion)in the three months ending March.

That was in line with a company-provided analyst consensus.

Its net financial debt rose to 25.8 billion euros as of March 31, up by 500 million euros compared with Dec. 31, 2022.

TIM confirmed its financial targets for the year, including a stabilisation of service revenue and of core earnings at domestic level.

"The first quarter results....are fully in line with the full year 2023 targets as disclosed to the market last February", the companu said.

Domestic service revenues, which made the bulk of the group's total sales, fell by 2.4% to 2.55 billion euros in the three months ending March, slightly below expectations of 2.56 billion euros.

TIM said the end of contributions from activating fixed line offers weighed on the figure. However, total domestic revenues were broadly flat at 2.84 billion euros.

In its statement on Wednesday TIM did not mention any further developments on plans to sell its prized landline grid and submarine cable unit Sparkle ahead of next month's deadline for bids.

Hit by a steady erosion of earnings and sales over the past decade amid stiff price competition on its home turf, TIM is seeking a sale of the asset to cut its financial burden.

But valuation and regulation issues have so far thwarted CEO Pietro Labriola efforts.

Last week TIM set a final deadline of June 9 for rival suitors KKR and a consortium comprising Italian state lender CDP and Macquarie to improve their multibillion bids. ($1 = 0.9084 euros)

(Reporting by Elvira Pollina, editing by Alvise Armellini and Keith Weir)