© Reuters. FILE PHOTO: Telecom Italia new logo is seen at the headquarter in Rozzano neighbourhood of Milan

MILAN (Reuters) – Italy’s biggest phone group Telecom Italia (MI:) (TIM) reported a drop in first-quarter core earnings on Monday as stiffer competition in its main market hit domestic revenues

TIM said its organic earnings before interest, tax, depreciation and amortisation (EBITDA) fell 2.1% to 1.8 billion euros ($2 billion), matching an analyst consensus provided by the company of 1.794 billion euros.

The former monopolist said revenues in the period fell 2.9% to 4.5 billion euros, in line with expectations. Domestic sales fell 4% to 3.5 billion euros.

French telecoms group Iliad entered the Italian market last year with a low-price mobile offer that forced competitors to follow suit.

Net debt at the end of March stood at 25.1 billion euros from 25.3 billion euros end December.

Commenting on the outlook, the incumbent confirmed its guidance for the next three years, but updated some numbers to take account of the adoption of new international reporting rules.

The group said it was targeting an “after-lease” debt of around 20.5 billion euros in 2021, before non-organic operations, compared to 22 billion euros under previous rules.

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