TP: Q1 net profit halves

28 Apr 2009

Polish telecoms firm TP Group has reported a bigger than expected 52% drop in first quarter net profit because of regulatory cuts in mobile termination rates (MTRs) and a weaker local currency. TP, which is 47.5% owned by France Telecom, earned PLN328 million (USD94.4 million) in the three months ended 31 March 2009. Sales fell 5% to PLN4.312 billion. But, despite falling revenue and margins, TP said it targets 2009 free cash flow of at least PLN3 billion, due to plans to optimise costs and revision of investment plans. In the first quarter, TP generated PLN526 million of free cash flow and its debt decreased by PLN522 million on the year, to PLN4.84 billion. Because of a 15% cut in MTRs in May 2008 and another 36% cut in March 2009, TP mobile unit’s sales revenue fell by 4.5% in the first quarter, to PLN2 billion, while EBITDA margin fell by 10.6 percentage points, to 28.2%. While the negative impact of cuts in MTRs on mobile segment was expected, the deterioration in its subscriber base, down 2.3% on the year to 13.68 million, was not. ARPU fell to PLN44.8 in the first quarter, from PLN47.8 a year earlier.