Business News

Telekom Completes Merger with Its Mobile Arm

Ljubljana, 01 July (STA) - Telco Telekom Slovenije completed the planned merged with its mobile arm Mobitel on Friday, in a move that will according to Telekom chairman Ivica Kranjcevic bring an $extraordinary potential$ to the company in working in an increasingly challenging telecommunications market.

Kranjcevic labelled today's merger a milestone, but stated that the step should have been taken sooner, as was the case with major telecommunication companies in the world.

The new company, employing 2,765 people, is to bring an optimisation of costs and business operations, a single market presence, comprehensive services for users and more focus on clients.

The direct financial effects of the merger are assessed at over EUR 140m by 2015, while the first benefits should be seen already this year.

Telekom's share capital will increase by some EUR 200m as a result of the merger, which is to be reflected also on the book value per share.

Telekom is also introducing a system of corporate management of subsidiaries under which a management board member will be in charge of a specific area not only in the parent company but in the entire group.

The merger will enable Telekom to offer to clients a one-stop shop for fixed and mobile telephony solutions. The company also plans to introduce a single invoice for all services on 1 January 2012.

According to Kranjcevic, the number of Telekom users continued to drop in the second quarter of 2011, but the trend is slowing and a turnaround was noticed in the past two weeks.

The positive business results from the first quarter are also continuing and Kranjcevic hopes that the half-year results will meet the target. The company expects to end the year with a net profit of EUR 28m.

The merger of Mobitel, Slovenia's biggest mobile operator, with the state-owned telco is a part of the restructuring process in the Telekom Slovenije group.

The group already carried out a merger of its search engine and IT services company Planet 9 on 1 April as part of the process.

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