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Telekom Back to Profit Despite Lower Revenues (II)

Ljubljana, 26 May (STA) - Slovenia's incumbent telco Telekom Slovenije returned to profit in the first quarter of 2011, finishing the period with net earnings of EUR 14.5m, despite a 4% drop in revenues, the company said on Thursday.

Operating revenues at the group fell by 4% to EUR 196m, both on account of lower sales at the parent company and its mobile wing Mobitel.

But the first-quarter profit compares to a EUR 0.6m loss in the same period last year. The company is on the way of meeting the plan for 2011 of EUR 28m in net profit, Telekom management told the press in Ljubljana.

Meanwhile, earnings before interest, tax, depreciation and amortisation rose 11% to EUR 72.5m, while operating profit doubled to EUR 22.9m, chief financial officer Jozko Peterlin said.

Contributing to higher earnings were primarily cuts in costs, including purchasing and labour costs. The group cut its workforce in the first quarter of 2011 by 6% to 4,819.

Chairman Ivica Kranjcevic told the STA that one of the goals was reducing the costs for salaries to 16% of revenues, adding that the current share is at almost 19%.

Investments at the annual level were down from EUR 25m to EUR 12.3m, while the net financial debt was down 20% to EUR 480.3m. "This improved the company's capital adequacy, while we are still among the least indebted telecoms in the world," said Peterlin.

With 211,665 fixed broadband connections, Telekom Slovenije had a 43.1% market share at the end of 2010, a 42.7% share on the internet telephony market with 171,717 connections, and a 60.2% market share in internet television with 119,539 connections.

Mobitel meanwhile held a 54.7% market share with 1.16 million subscriptions.

The company is aware that it will not be able to secure stable long-term development only with cost-cutting, which is why it is planning a number of strategic projects set out in the company's strategy through 2015.

Telekom wants to boost its activities in cloud computing and intends to participate in all major projects in this field, such as e-health and e-administration as well as toll collection.

The group will also focus on digital advertising, growth of international operations and consistent rationalisation of costs and optimisation of supply channels.

In line with the strategy, the groupn expects to increase its annual net profit to EUR 100m by 2015, and experts to start making an operating profit in its subsidiaries in SE Europe as of 2012.

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