Competition begins to bite for Cesky Telecom

28 Feb 2003

Preliminary results for 2002 show that Czech PTO Cesky Telecom [SPTTq.L] witnessed a sizeable decline in net profit, a figure which had remained relatively static for a number of years. Net income fell to CZK4.3 billion (USD132.53 million) from CZK6.1 billion in 2001, having hovered between CZK6 billion and CZK6.4 billion since 1997. The telco also reported a 3.7% decline in EBITDA to CZK26.2 billion on revenues of CZK52.9 billion, down 5% year-on-year. The woeful performance comes as the Czech market begins to embrace liberalisation. The wireline sector was opened up to competition at the start of 2001 and newcomers are beginning to take a greater slice of the action, despite having yet to install their own infrastructure. While some analysts have said they will continue to back Cesky Telecom, taking into account the fact that it holds a 51% stake in profitable domestic mobile operator Eurotel, others have slammed the telco, claiming that its results are poor even on an operating level. Cesky Telecom itself said that it had performed strongly in light of the liberalised market and strong regulatory framework designed to promote competition.

Czech Republic