Italian telecom services group Teleunit has seen its share price slump by around a third since the turn of the year, weighed down by news that investment in new products and services was impinging upon profitability.

Sure enough April’s full year results to December were marked by profits down €400,000 at €5.2m (broker Daniel Stewart forecasts a further fall to €3.7m next year before the trend reverses) and yet there were several positives too. Revenues, for instance, increased 41% to €85.4m, while the group’s fledgling mobile content services business – which provides ringtones, games and screensavers – increased its turnover contribution from €200,000 to €3.6m.

A recent deal has seen this business expand beyond Teleunit’s traditional Italian base and into Turkey, a market chief executive Francesco Cimica describes as being ‘one of the fastest growing markets in Europe with the youngest population.’

Progress hasn’t been as smooth for all divisions, however. The group’s fixed line telecoms operation has seen sales fall and prospects now seem dependent on uptake of VoIP by business and residential customers. A major investment in network infrastructure, meanwhile, looks set to be usurped by wireless WiMaX technology (for which Teleunit recently secured a test licence covering the Florence region).

With profits anticipated to fall next year before rising to €6.9m in 2007, investors may experience a bumpy ride over the next 18 months. Risk takers only.

Teleunit	AIM	£4.44m	2.38p	0.00p
Click here for interactive charting
Other company articles:
Teleunit			01/06/2006
Tech Watch, by Elliott Davis			01/11/2005
Appointments			01/07/2005
Teleunit SpA			16/12/2004
Global appeal			01/11/2004