Italian network operator Telecom Italia hit rock bottom on Friday, predicting
virtually zero growth for 2008 and admitting there would be no "miracles" or
"fireworks" to help relaunch the struggling company.
Shares in Telecom Italia (nyse: TI news people ) tumbled 9.4%, or 15 euro
cents (23 cents), to an alltime low of 1.44 euros ($2.21), during afternoon
trading in Milan on Friday. The stock has fallen 32.3% over the past year,
weighed down by uncertainty over the companys future, as it struggles with a
mountain of debt and an inability to catch up to acquisitive peers like France
Telecom (nyse: FTE news people ) and Vodafone (nyse: VOD news people ).
But now even Telecom Italia has admitted that there is no chance of significant
change in the shortterm. While presenting the companys 20082010 business
strategy Friday, Chief Executive Franco Bernabe said the current situation did
not look good. He warned that shares were currently too depressed to fund
acquisitions, while there was limited opportunity to ease the 35.7 billioneuro
($54.8 billion) debt burden through asset disposals. "There will be no miracles,
no fireworks," Bernabe reportedly said, instead promising hard work and rigorous
financial management to change the companys fortunes.
Telecom Italia now expects around 31 billion euros ($47.5 billion) in sales for
2008, which would show no improvement on the 2007 figure of 31.3 billion euros
($48.0 billion) revealed on Thursday. The company had previously targeted 1% to
2% growth, but now it believes positive growth will not take place until 2009.
Although sales growth seems to be completely stuck in limbo, the company itself
has gone through a major management shakeup over the past year. A consortium of
Italian banks, led by Spanish network operator Telefonica (nyse: TEF news
people ), bought a controlling 23.6% stake in Telecom Italia last April. But
reported disagreements between the stakeholders meant new chairman Gabriele
Galateri and new Chief Executive Bernabe were only approved in December.
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