Olivetti mobile division shrinks company losses

The Italian information technology and telecoms group Olivetti said last week it had narrowed its pre-tax loss in the first half of the year to L89 billion against a L334 billion loss in the same period last time.

In the six months to 30 June, turnover was up 59 per cent to L2,903 billion from L1,828 billion last time. This was the first time Omnitel, Olivetti's mobile phone subsidiary, contributed to revenue. The figures excluded contribution from Olsy, the services unit sold to Wang in March this year.

Olivetti also incurred exceptional items of L108 billion, of which a specified L34.6 billion was attributed to the write-down of the company's equity investment in Piedmont International.

In a statement, the group said its performance was improved by a 149 per cent increase in revenue for Omnitel. Olivetti added that it hoped to post a consolidated net profit for the year to 31 December.

The contribution from Omnitel was also a measure of Olivetti's refocus on the telecommunications market,which it claims accounts for up to 60 per cent of the group's revenue. Olivetti also disclosed that it will launch a tender offer for the acquisition of all the ordinary shares in Tecnost, the specialist information systems unit in which it has a 50.01 per cent controlling stake. The company has made an offer of L5,400 per share.

The move was seen as part of Olivetti's move out of the IT industrial sector, in which it intends to delist Tecnost share. If the offer is succesful, Olivetti's cashflow will reach an estimated L162 billion.

Recently, analysts warned that Olivetti's 1998 share performance was set to lose speed. The group's share value has more than doubled since the start of 1998, but is expected to decrease.