Telefonica O2 CR share price slumps to eight-year low on competition concerns

10 Dec 2012

Bloomberg writes that the share price of Telefonica O2 Czech Republic hit an eight-year low on the Prague bourse amid concerns that the advent of new competition will impact on its future earnings potential. The country’s largest telco by subscribers and revenue, backed by Telefonica of Spain, saw its share price slump by 3.1% to CZK323.5 (USD10.36) at the close on Friday, its lowest level since October 2004. With investors awaiting the outcome of the country’s tender for 4G mobile frequency licences and the arrival of new competition in the shape of PPF Mobile Services, the market is jittery over Telefonica’s medium-term fortunes. ‘There is a strong concern that Telefonica O2 CR will lose a significant part of its market share and new competition will cut calling rates and hence profits,’ says Josef Nemy, an analyst at Komercni Banka, adding, ‘investors are bracing themselves for a declining dividend.’ The telco’s mobile arm has already been hit by government-imposed cuts in mobile termination rates which prompted the unit to open its network to a mobile virtual network operator, Bleskmobil, last month.

Czech Republic, O2 Czech Republic (incl. CETIN)