Asset sale and cost-cutting plump up TDC profits

5 May 2004

Denmark’s dominant telecoms service provider TDC reported an eleven-fold increase in profits for the three months to 31 March 2004 thanks largely to a one-off gain from the sale of its Belgacom shares and the successful implementation of a cost-cutting programme. The telco said that net profits rose sharply to DKK5.63 billion (USD904 million) from DKK485 million for the corresponding period of 2003, and turnover was up by 2.8% at DKK10.3 billion – the first increase in seven quarters. However, it booked a one-time gain of DKK5.4 billion in the first quarter by selling its stake in Belgacom at the Belgian PTO’s initial public offering; excluding this gain, profits stood at DKK602 million, from DKK442 million a year ago. Analysts had predicted a figure of DKK638 million.

TDC has shed around a tenth of its workforce at its fixed line division where sales have fallen three years in a row, as people make fewer and fewer calls over traditional land lines. The fixed line and internet unit reported turnover of DKK4.59 billion, down 0.3% year-on-year as customers switched to mobile services. On a more positive note the company reported rising sales of internet connections and its mobile arm posted an 18% increase in revenues to DKK1.47 billion, buoyed by the purchase of smaller rival Telmore in January. At the end of March TDC Mobil had 2.42 million subscribers, up 17% from a year ago.