Netia back in the black despite revenue, subscriber losses

16 May 2013

Triple-play provider Netia continues to report subscriber and revenue losses, although adjustments to the company’s strategy in mid-2012 in light of weakening demand and tough competition have led to an expansion in EBITDA and net earnings. Revenues for Q1 2013 were down 9.8% year-on-year to PLN490.69 million (USD151.52 million), as total revenue generating units (RGUs) dropped from 2.793 million to 2.638 million. EBITDA for the period was PLN138.62 million with an EBITDA margin of 28.3%, compared to PLN124.14 million and 22.8% in the corresponding period of 2012. Net profits for the quarter were PLN13.144 million, reversing net losses of PLN9.846 million a year earlier. Alongside reducing its general administrative expenses (down 19.7% y-o-y), Netia cut back its marketing costs (-14.2%), whilst its shifting focus towards on-net services reduced sales costs by PLN51.01 million including a PLN21.41 million reduction in interconnection charges.

Netia claimed 866,077 broadband subscriptions at end-March 2013, of which 398,162 utilised its own network whilst 178,393 were served via local loop unbundling (LLU) and 289,522 through bitstream access. In response to intensifying competition, especially from cablecos offering triple-play bundles, Netia cut broadband prices in Q1 2013 leading to a slight decline in monthly ARPU to PLN56. Subscriptions to voice services, including WiMAX voice and voice-over-internet protocol (VoIP) but excluding mobile, declined to 1.595 million from 1.728 million twelve months earlier. Netia commented that it is looking to concentrate on revenues and margins in the fixed voice segment, rather than subscriber numbers. TV service subscriptions increased to 91,237 from 61,804 a year earlier, whilst wireless voice and data services – offered via a mobile virtual network operator (MVNO) agreement with P4 – declined to 56,451 (-6.8%) and 29,272 (-3.9%) users respectively.

Netia’s network covered a total of 1.048 million homes with its next generation access (NGA) networks, including 708,000 VDSL, 142,000 fibre-to-the-building (FTTB) and 198,000 fibre-to-the-home (FTTH) homes passed. A further 361,000 homes were connected by ADSL2+ networks, bringing the total homes passed to 1.409 million. As previously reported by CommsUpdate, in 1Q13 Netia agreed to purchase network assets in Krakow and Warsaw covering some 446,000 homes from its US-backed rival UPC Poland: the deal was completed in May 2013.

Poland, Netia