Telecom Italia Q2 2007 Earnings Call Transcript

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2007-07-25 12:29:38.0

Tags: Telecom Italia, Net Income, Call Transcript, Earnings, CFO, Taxes, Free Trade, Financial Planning, Finance, Seeking Alpha

Question-and-Answer Session

Operator

[Operator Instructions] The first question from Mr. Damien Maltarp from Cazenove. Mr. Maltarp, you may proceed with the question. Thank you.

Damien Maltarp - Cazenove

Thanks very much. Just a couple of questions; at the outset, you mentioned a fiscal accrual that has been recognized in Q2, if I understood that correctly. Is it possible for you to just quantify that figure, and also just indicate what that means in terms of the full year tax guidance that you have given in the past? And the second question, on the... of the 737,000 postpaid mobile customers that you've added, is it possible for you to give us an idea of what kind of upfront sac or subsidy we should be thinking about in relation to those customers? Thanks very much.

Enrico Parazzini - Chief Financial Officer

If I understand well, you put a question about the tax point. I understand well?

Damien Maltarp - Cazenove

Yes. Unless, I missed it... I thought you said the reason why you had confidence in the first half net income figure was that there was a tax rule in your favor.

Enrico Parazzini - Chief Financial Officer

Yes, yes.

Damien Maltarp - Cazenove

I was just wondering if you could quantify how much of that is worth?

Enrico Parazzini - Chief Financial Officer

In the first half of the year, we had a benefit from withholding tax we paid in 2004 according... that is related to interest in our affiliate Telecom Italia Finance withholding tax. That we repeated in the European course, because we sustained [ph] it was not payable. We...when there's appeal [ph] and as a result of that, we reversed these costs in first half of 2007 for an amount of about ?100 million, 153 gross of ?90 million net. and in the month of July we have compensated this from a cash standpoint. So in our P&L, for the first half of the year we should account for that and as a result of there's an improvement in net income level. And thanks to this, plus the affect of positive reduction in financial charges, net income is expected to be in line with 2006 first half.

Riccardo Ruggiero - Chief Executive Officer

The answer to your second question; we, now basically the increase of postpaid in particularly on business, is not affecting any costs basically or incremental sac. The overall cost to marketing and sales, on domestic mobile is more or less flat compared to last year. You have seen on page 24, we have increase plus 0.8% marketing and sales cost, and mainly it's due to the content. And so it's not related to product or any subsidiation of products. So basically, this has brought a level of value to our revenue. There is no incremental cost because of that change in mix.

 

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