Business News

Telekom Group Posts EUR 211M Loss in 2010 (II)

Ljubljana, 24 February (STA) - The group around Slovenian telecoms incumbent Telekom Slovenije posted a EUR 211.2m loss last year, which compares to a EUR 29.5m net profit in 2009. The group's operating revenues meanwhile dropped by 1% to EUR 843.6m, Telekom said in a press release on Thursday.

The loss is a consequence of write-downs of investments, primarily in Telekom's subsidiaries in Macedonia and Kosovo, in the total amount of EUR 208.2m, according to the unaudited business report for 2010. The group would have otherwise posted a profit of EUR 15m.

The company said that the adjustments would reduce capital and the ratio between capital and debt, but added that the group was still less indebted than other European telecom operators on average.

The liquidity of the Telekom Slovenije group will remain unchanged, and write-downs will not affect its revenues and expenditure, management board member Jozko Peterlin said at a press conference in Ljubljana.

Chairman Ivica Kranjcevic meanwhile said that the company would file two compensations claims by the end of March, but did not reveal the amount of sought compensations nor who will be sued.

Telekom supervisors last June ordered the management to audit the takeovers in Macedonia and Kosovo authorised by the previous management, which resulted in an impairment to the tune of EUR 190m.

The management is already implementing measures to improve the situation and achieve the plans set for 2011, including cutting all kinds of costs and restructuring of operations in Macedonia and Kosovo, Kranjcevic said, also announcing the sale of non-strategic investments.

One of the measures is the planned restructuring of the group's members in Slovenia, including a merger between the parent company and the country's No. 1 mobile operator Mobitel, which is expected to take place on 1 July.

While cuts in salaries and in the number of employees are expected, synergies brought by the merger are expected to save the group some EUR 150m in the following five years.

Telekom is also planning to improve real estate management by selling some of its property, including one of its buildings which will be vacated following the merger. The company expects to make a EUR 28m profit this year.

Beside the plans to preserve its market share in telecommunication services, Telekom is wrapping up a strategy envisaging expansion of operations to IT services and digital media.

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