Telecom Italia SpA (TIT.MI) said its net profit rose in the first-quarter despite taking an earnings hit related to a fine imposed by the Italian government under the so-called “Golden Power” rule.
Italy’s largest telecoms operator reported late Wednesday an 8% increase in quarterly net profit to 216 million euros ($256.7 million) from EUR200 million a year earlier.
Revenue fell to EUR4.71 billion from EUR4.82 billion a year earlier, due to a negative exchange-rate effect in its Brazilian business, while earnings before interest, taxes, depreciation and amortization fell to EUR1.82 billion from EUR1.99 billion.
The company attributed the earnings decline to provisions covering a EUR74.3 million fine levied for alleged infringement of the “Golden Power” rule, a measure that gives the Italian government special powers to intervene in the affairs of companies in the security and national defense sectors.
Telecom Italia said it is contesting the fine and would appeal against it “shortly.”
The company said in a separate release that majority shareholder Vivendi SA (VIV.FR) was “no longer a party exercising direction and coordination” over the company. Earlier this month, activist fund Elliott Management Corp. took over two-thirds of Telecom Italia’s board in a vote at the operator’s annual general meeting.
Telecom Italia backed the guidance stated in its business plan for the next three years, which was issued on March.