Competition begins to bite at Cesky Telecom

31 Mar 2004

The Czech Republic’s dominant fixed line carrier Cesky Telecom yesterday reported a 3% decline in consolidated 2003 revenues, blaming the stagnation on the increased level of competition in the wireline sector and the saturated state of the country’s mobile market. Cesky said total turnover fell to CZK51.5 billion as the effects of carrier pre-selection legislation introduced in mid-2003 began to eat into its traditional fixed line telephony revenues. Revenues from local telephony subscription charges fell by 1% to CVZK10.5 billion due to a decrease in the number of fixed lines under its control from 3.7 million to 3.6 million. Revenues from ISDN, internet, ADSL and value added services grew by 14% to CZK8.4 billion. At the end of 2003 Cesky had 477,000 ISDN channels in operation, a rise of 23%, with the number of internet accounts increasing by the same level to 865,000. Cesky launched ADSL services in March 2003 and claimed 15,000 connections by the end of the year.

Cesky’s total consolidated operating costs rose by 4% to CZK27.7 billion in 2003, a figure which included a one-off charge of CZK1.6 billion to take account for the operator’s decision to reduce its workforce by almost 3,000 over the year. Net debt levels soared from CZK22 billion to CZK45.1 billion due to Cesky’s decision to pay EUR850 million for the 49% of mobile subsidiary EuroTel Prague that it did not already own. It also made a shareholder dividend payment of CZK18.5 billion during the year. EuroTel Prague ended 2003 with 4.215 million customers and a market share of 43.6%, compared to 3.89 million subscribers and a share of 45.3% the year before. EuroTel faces stiff competition for subscribers from T-Mobile Czech Republic and Cesky Mobile, both of which signed up a bigger proportion of new subscribers in 2003. At the end of the year the Czech mobile penetration stood at 94.7%, up from 84.1% at the end of 2002.

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