Versatel Q1 revenue slides 15% on drop in retail users, MTRs

13 May 2011

German fixed network operator Versatel Communications has reported its revenue for the three-month period ended 31 March 2011 dropped 14.5% year-on-year, mainly attributed to falling sales from its ‘mass market’ operating segment and the impact of lower mobile termination rates (MTRs) on the wholesale segment. Versatel said that its revenue fell from EUR186.8 million (USD265 million) in the first quarter of 2010 to EUR159.7 million twelve months later. Of that total, the majority – EUR63.4 million – was generated by the company’s newly created ‘mass market’ segment (comprising the former retail segment and around 16,000 small business customers supplied with similar retail products), a decrease of 18.9% compared to EUR78.2 million in Q1 2010. Versatel said the fall was partly due to a 10.4% drop in the number of mass market customers from 695,000 at 31 March 2010 to 622,400 twelve months later. In the first three months of 2011 sales generated by Versatel’s business segment (which now excludes SoHo and SME customers) totalled EUR49.6 million (down 2.2% year-on-year), while the turnover from the wholesale business fell 19.4% year-on-year to EUR46.7 million, due to the drop in mobile termination rates. The company reported adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell from EUR44.4 million in Q1 2010 to EUR36.5 million a year later, as the decline in the mass market segment could not be offset by cost savings, while the company’s net loss widened from EUR8.8 million to EUR9.0 million.

Earlier this week Versatel selected Ericsson to manage the field service for its complete fixed and transmission networks. The five-year agreement comprises managed services in the area of field services, maintenance, provision of customer connections, logistics and repair, including multi-vendor spare part management and systems support nationwide. The cooperation will enable Versatel to reposition its focus on the business customer segment.

Germany, 1&1 Versatel, Ericsson