TARGETING FOREIGN MARKETS
Italtel closed 2004 with increased profit margins, focusing on international markets and growth in turnover.
Strengthening Italtel's competitive position in the international markets and aiming for growth in turnover, leveraging on relationships established with recently acquired clients, turning attention towards other clients in the EMEA area (Europe, Middle East and Africa) and identifying opportunities in other countries: Mauro Righetti, the company's CEO, highlighted these objectives when presenting the financial statement March 24th of this year.
2004 closed with a slight dip in turnover, going from 591.8 million euros to around 542 million, but with fresh growth in EBITDA, which rose to 17.6% of revenues (equal to 95.34 million euros), compared to 17.3% in 2003.
There has been constant growth in EBITDA since 2001, the year in which Italtel started a restructuring program which defined a gradual discontinuance of manufacturing activities, growing focus on innovation and productivity, and effective measures taken to gradually but continuously reduce debt.
Concluding this phase in 2003, during the last period Italtel turned its attention to repositioning itself towards the more innovative segments of the telecommunications market: convergence of voice, data and video and VoIP (Voice over IP), an area expected to register attractive growth rates in forthcoming years. The compound annual growth rate for the 2004-2009 timeframe is in fact expected to be 47% (source: IDC) for the worldwide NGN (Next Generation Networks) market, currently Italtel's core market.
"We're satisfied with the high level of profitability Italtel was able to maintain during the year, even if there was a slight reduction in revenues. - Righetti states - The repositioning strategy launched in 2004 has proven very successful because it responds to the growing demand for convergent solutions. We are now facing a new growth path along which we will proceed with determination, also encouraged by indications of market recovery."
Even though there were still signs of caution on the part of telecommunications operators to invest in 2004, Righetti now sees fresh openings in the market: "Last year we paid for the general physiological downturn in the market and a reduction in orders from the fixed line operators. - Italtel's CEO continues - In Italy, for example, two of our big clients, Telecom and FastWeb, limited their investments. In general, therefore, there was an average drop in vendors' revenues of more than 20% in the sector, with a drop for Italtel that was definitely slighter than the market average. Now, though, in the Voice over IP sector, new projects are starting. By now, the study and evaluation phase of new technology available in the market has concluded and big players, like FastWeb, have announced ambitious investment programs. Telecom Italia is also moving more towards sectors where we have significant interests, like integration between fixed and mobile telephony for instance."
The drop in Italtel's turnover can be attributed to not just a fall in operator investments, as highlighted by Righetti, but also macroeconomic factors, like the euro appreciation against the dollar, and a progressive reduction of traditional components in Italtel's offer portfolio, which in 2004 came to about just 3%.
While market conditions in Italy were unfavorable, Italtel achieved nevertheless significant successes abroad, positioning itself among the top five players of the VoIP market worldwide and as leader in EMEA.
"In the first half of 2004, we didn't see any great signs of recovery in the VoIP and New Generation Networks sector. - Righetti continues - In the second half of the year though, the market showed signs of recovery and Italtel knew how to leverage on the competitive advantage fully, in terms of products and competence, which has matured in recent years, in particular realizing solutions for Telecom Italia. We've therefore been able to acquire new clients abroad, leading international players, including Cegetel in France, Cable&Wireless in Great Britain and Belgacom in Belgium."
Concerning Belgacom, the principal fixed and mobile telecommunications operator in Belgium, Righetti considers the project being developed perhaps the most advanced Italtel is involved in at the moment: "We're talking about implementing a new generation network for innovative broadband services. The network architecture has already been realized by Italtel and it was expressly studied in order to permit possible integration with the mobile world."
For the near future, Italtel intends to keep on providing leading edge solutions and products to Telecom Italia, one of the most innovative TLC operators in Europe. Additionally, the company aims to further strengthen its competitive position within international markets, both on its own and through its enhanced alliance with Cisco Systems.
One of the sectors of greater interest for Italtel's growth strategy is enterprise IP Telephony: Italtel is aiming to expand the adoption of IP Communication technologies across the Italian enterprise and public sector market areas with the new Business Voice (BVS) solution developed together with Cisco.
Furthermore, through its subsidiary One-Ans, Italtel is working on projects that focus on the development of network management and control solutions as well as system integration activities for the management of Service Providers' business needs, especially mobile telephony operators. In addition, Italtel is extending its application convergence solution offerings for mobile telephony operators by leveraging existing relationships with some of the world's leading market players.
2004 Results
Italtel's consolidated statements of December 31, 2004 highlight the following principal results:- Revenues of 541.66 million euros, compared with 591.8 million registered in FY 2003;
- Ebitda of 95.34 million euros, equal to 17,6% of revenues compared with 17.3% registered in FY 2003,
- Pro forma net income not including goodwill amortization of 12.46 million euros, compared with a negative equivalent result of 24.9 million, registered in FY 2003. Net income for FY 2004 is negative and equal to 30.67 million euros.
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