Business News

Telco Parent Cutting Investments

Ljubljana, 12 April (STA) - The parent of Slovenian telco group Telekom Slovenije will continue to reduce investments as part of a strategy of limiting expenditure due to the tough market conditions, its head told the press on Monday.

The parent company, which operates fixed telephony and internet services in Slovenia, will invest EUR 57m in 2010, a EUR 13m cut compared to last year, chairman Ivica Kranjcevic said.

This is the second year that Telekom has cut its investment budget. It made an even bigger reduction in investment spending last year, as it slashed its budget from EUR 118m in 2008 to EUR 70m in a response to the deepening economic crisis.

Among the curbed investments is the building of the fibre optics network in Slovenia. "We will not be investing as much in the fibre optics network in Slovenia as in previous years," Kranjcevic said on Monday.

Kranjcevic said one of the reasons for the move was relatively modest filling of capacities on Telekom's existing optical capacities. According to him, only a quarter of the 100,000 fibre optics lines are currently in use.

Another reason for cutting back on investment in the construction of the fibre-to-the-home network is the continued uncertainty regarding the decision of the telecoms regulator on the use of the network.

One of Telekom's main rivals, Amis, has petitioned the regulator to demand of Telekom uncoupling of the fibre optics network for wholesale use by its rivals.

Former Telekom chairman Bojan Dremelj said that a decision on the uncoupling of the fibre optics network could cut Telekom's annual revenues by as much as EUR 20m a year, forcing Telekom to drop investments in its expansion.

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