Poland's TPSA 2Q Net Profit -9% On Falling Fixed-Line Revenue
WARSAW -(Dow Jones)- Telekomunikacja Polska, Poland's largest telecommunications operator, Tuesday reported second-quarter consolidated net profit was down 9% on the year as rising revenues from mobile telephony and lower financial costs failed to offset falling fixed-line sales.
Group net profit at the company, which is 47.5% owned by France Telecom, fell to 495 million zlotys ($179.3 million) in the second quarter from PLN544 million a year ago, below the average forecast of PLN556 million in a Dow Jones Newswires poll of six telecom analysts.
Group revenues of PLN4.51 billion in the second quarter were down 2.8% on the year, precisely in line with the analysts' average forecast.
For the six-month period, TPSA posted a consolidated net profit of PLN1.01 billion, down from PLN1.05 billion a year earlier. It generated PLN8.95 billion in revenue, down from PLN9.21 billion.
The company changed its full-year guidance to a 2.8% annual fall in revenues, from the original forecast of a 1% fall, while reiterating other financial and operational targets for 2007.
TPSA maintained its goal to have over 2.2 million broadband customers and over 13.5 million mobile telephony subscribers by the end of the year.
The company also maintained its goal of achieving a gross operational margin of between 42% to 44% for the full year, from 41.5% at the end of June.
By the end of 2010, TPSA said it aims to generate up to 50% of its revenue from non-regulated segments, and wants to create new revenue streams.
TPSA said that in the next three years it wants to double its "triple-pay" customers, or those using its combined fixed-line, mobile and Internet services, from the current 283,000.
The company wants to optimize its balance sheet, mainly by selling its real estate assets.
It reported net sales in the mobile segment were up 6.8% on the year to PLN3.82 billion in the first half, against a 9% annual decline in fixed-line revenues to PLN5.46 billion.
TPSA said mobile operations posted a PLN866 million operational profit in the first half of 2007, up from PLN591 million a year earlier.
Operational profit at its fixed-line business fell to PLN606 million in first six months, from PLN1.07 billion a year earlier. The company didn't provide quarterly operational data by business segments.
Revenue in the data-transmission business fell 0.6% in the first half, to PLN1.11 billion, while broadband revenues rose 4.2% to PLN602 million, despite growing competition from other broadband Internet providers after market deregulation.
TPSA mobile arm Centertel had 13.06 million subscribers at the end of June, up 17.3% on the year. However, its market share fell slightly over the year, to 33.4% at the end of June, from 34.3% a year earlier.
TPSA reiterated its full-year target of over 13.5 million customers in mobile telephony.
The number of broadband subscribers rose by 556,000 on the year, to 1.92 million. TPSA reiterated its full-year target of having over 2.2 million broadband subscribers by the end of 2007.
TPSA's bottom line benefited from lower interest and financial costs, which totaled PLN55 million in the second quarter, down from PLN108 million in the year-earlier period.
As for the second half of the year, "TPSA has to focus all its efforts on offsetting unfavorable effects of market and regulatory conditions on full-year results," the company said in a statement following the release.
TPSA shares opened down following the release.
At 0733 GMT, they were trading at PLN22.30, down 0.8% from Monday's close. TPSA shares have been under pressure over the last year due to market deregulation and increased competition.
"The second-quarter results look very weak at the first glance," telecom analyst Dorota Puchlew of PKO BP brokerage house in Warsaw wrote in a research note.
The numbers look slightly better after excluding general risk provisioning of PLN240 million, she added.
The revision of the full-year revenue target is not surprising, "but we still think that the scale of revenue fall will be higher than in the first half of the year," Puchlew said.
Other analysts added that TPSA's three-year strategy is not satisfactory and provides little detail.
"We believe most of the aforementioned are good reasons to underweight TPSA in the long term," said analyst Pawel Puchalski of BZ WBK brokerage in Warsaw.
BZ WBK has its TPSA rating under revision.
TPSA will hold its conference call of senior managers Tuesday at 0800GMT.
TPSA results are fully consolidated with those of France Telecom.
-By Malgorzata Halaba, Dow Jones Newswires; +4822 622-2766; malgorzata.halaba@dowjones.com
(END) Dow Jones Newswires"
Posted to the site on 31st July 2007
