Mobistar Profits Up Despite Price Pressures

Belgium based Mobistar has reported a slight rise in first-quarter revenues of 2.5% to reach EUR 371.2 million (US$483.8 million) - although its customer base rose by 6.4% over the same period. The company said the disparity was determined in part by the continuing price pressure in a highly competitive market, by the regulatory decisions (lowering of the mobile termination rates in May and July 2008) and a reduced activity in the business market.

The turnover is increasingly under pressure due to the slowdown in economic activity, but also because of a decrease of the roaming revenues in the business segment.

The group reported net profits down 12.5% to EUR 60.1 million (US$78.3 million) for the quarter. This decrease is primarily the consequence of the increased interest charges due to the optimisation of the balance sheet structure and the evolution of the EBITDA.

Despite an increase in the total turnover, the profitability of the Mobistar group came under pressure due to increasing costs in the first quarter of 2009. Several factors had an impact on the cost structure of the operator. For example, the tariff plans with an abundance of SMS increased the interconnection costs and more mobile phones and smartphones were purchased. There was an increase in the operational network costs as a result of an accelerated deployment of the 3G network in 2008, and an index adjustment of 4.51 % was implemented on the salaries since January, resulting in a negative impact on the cost structure.

Despite the expected regulatory pressure and the continuous competition, Mobistar maintains its guidance for the financial year 2009: a turnover on the same level as in 2008 and an EBITDA margin of the service revenues close to 40 %. The net result will lie between EUR 240 and 260 million.

Posted to the site on 24th April 2009