Telefonica O2 CR first-quarter profits fail to meet analyst estimates

22 Apr 2008

Czech incumbent Telefonica O2 Czech Republic (formerly Cesky Telecom) has reported net profits of CZK2.43 billion (USD153.8 million) for the three months ended 31 March 2008, up 5.4% from CZK2.31 billion in 1Q07, driven by strong demand for the group’s mobile services. However, the profit figure was markedly below analyst expectations of CZK2.65 billion in a Thomson Financial News poll. The operator’s first-quarter revenues grew 1.5% year-on-year from CZK15.18 billion to CZK15.41 billion, again below market forecasts, which predicted sales for the group of CZK15.58 billion. Telefonica O2 CR’s operating income before depreciation and amortisation (OIBDA) dipped 4.5% to CZK6.72 billion, largely the result of costs related to its expansion in Slovakia, where it had signed up 523,000 subscribers by 31 March 2008, and also by rising provisions connected to uncollected receivables. Despite the weaker-than-expected performance, the group confirmed its FY2008 guidance for revenue growth of between 2% and 4%, and OIBDA of 0%-2% growth, and investment of CZK9 billion.

Telefonica O2 CR’s Q1 growth was driven by a 6.1% rise in revenues at its mobile arm, where sales were boosted by an expanding contract user base. This helped offset a 5.9% drop in turnover from traditional fixed line services. Whilst noting the continued slowdown of voice telephony sales, Telefonica was keen to point out that its internet and broadband sales climbed nearly 10% y-o-y.

Czech Republic,O2 Czech Republic (incl. CETIN),

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