Telefónica O2 CR reports rising profit on mobile growth

23 Feb 2007

Czech incumbent Telefónica O2 CR (formerly Cesky Telecom) has reported a 28% rise in net income to CZK8 billion (USD371 million) in 2006, up from CZK6.25 billion the previous year, on the back of rising mobile revenues, which helped offset declining returns from its fixed line business. Full year revenue was broadly unchanged on 2005, up just 0.4% at CZK61.3 billion. The Czech incumbent, a 69.4% subsidiary of Telefónica of Spain, says it plans to increase sales of wireless, data and internet services in 2007 to replace falling revenues from its traditional fixed line operation. Sales at the unit declined 5% to CZK29.9 billion last year as the number of main lines in service fell by 17% to 2.4 million, the company said.

The Prague-based company said it had 4.86 million mobile users at the end of 2006, up 4% from 4.63 million at the start of the year; mobile internet and data revenues were up 25%. According to Bloomberg, Telefónica O2 CR forecasts that revenues will climb by between 1% and 3% in 2007, and operating income before depreciation and amortisation (OBITDA) will stay unchanged or drop by one percentage point. The Spanish parent says the group’s Slovak business will have a negative impact on 2007 profit, but declined to provide further details. Telefónica plans to invest CZK9 billion in 2007, around one-fifth of which will be spent in the Slovak Republic to boost wireless market share to 5%.

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