Telefónica O2 CR posts record profit

30 Oct 2006

The Czech Republic’s incumbent fixed line operator Telefónica O2 CR (formerly Cesky Telecom) has reported a record 34% rise in nine-month net profits for the period January-September 2006, beating analyst forecasts and sparking a surge in its share price. Thetelco, which is now 69% -owned by Telefónica of Spain, reported net income of CZK6.85 billion (USD306.1 million), eclipsing even the highest forecast of CZK6.72 billion in a Reuters poll of analysts, as a result of lower one-off costs and strong growth from its mobile and data divisions, which offset declining sales of fixed line services. Revenues for the Q1-Q3 period were up 0.6% at CZK45.6 billion, outperforming the company’s own predictions of flat revenues for the full financial year.

Telefónica O2 CR said that while sales of voice traffic services dipped by 13.3% year-on-year and the number of main lines in service dropped by 15.5%, revenues from internet and broadband rose by 7% and mobile turnover was up 5.9%. Operating income before depreciation and amortisation (OIBDA) climbed 4.1% to CZK22.15 billion, prompting the operator to upgrade its full-year OIBDA outlook, saying it now expected about 2% growth for 2006 instead of the flat-line figure it had previously forecast. However, the company’s Chief Financial Officer Juraj Sedivy was keen to point out that the planned launch of wireless services in neighbouring Slovakia in 2007 would adversely affect OIBDA next year, although he gave no specific details. Telefónica O2 CR shares were up 1.2% at CZK464.80 in the wake of the announcement.

Czech Republic, O2 Czech Republic (incl. CETIN)