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Telekom Slovenije 9-Month Profit Halved (adds)

Ljubljana, 20 November (STA) - National telco Telekom Slovenije saw its profit fall 55% year-on-year in the first nine months of 2009 to EUR 34.1m. Operating revenues of the group for the same period were flat at EUR 637m, the group said on Friday.

The group announced it was successful in maintaining operating revenues at last year's levels despite the global economic crisis and the stiff competition among telecommunications companies.

This resulted in a drop in profit margins, which coupled with the continuing shift from classic voice telephony to IP services put pressure on profit.

The group added that its profit was also affected by the unpaid liabilities of several alternative providers of communication services, which it estimates at EUR 12m.

"Making a profit is not something that is guaranteed in current conditions," said Telekom chairman Bojan Dremelj, who said that a number of telcos in the region had slipped into red numbers.

There are also others who completed internal consolidation earlier and have better results than Telekom, according to Dremelj, who added that these were role models for the Slovenian group.

He suggested that Telekom was running late with internal consolidation, which should have been carried out when it began to expand to markets in SE Europe five years ago.

Dremelj expressed hope that the new management - his term ends in March and he has announced he would not be seeking a second one - will be able to deal with the situation. He said that the supervisory board was aware that this was a priority.

The group's operating expenditure in the first none months of the year stood at EUR 580m, a year-on-year rise of 9%. Costs of services rose the most, by 14%, in this time.

The group's net financing debt rose by more than 50% to EUR 581m, chief financial officer Filip Ogris-Martic told the press today.

The company spent EUR 126.7m on the construction and maintenance of network infrastructure. The investments represent a drop of more than 20% year-on-year.

The parent company in the group generated operating revenues of EUR 300.5m, a drop of 4% compared to the first nine months of 2008. Net profit at the company fell 26% to EUR 65.9m.

Meanwhile, revenues at mobile operator Mobitel fell by 11% to EUR 306.9m. Its profit slumped by 42% to EUR 30m. Mobitel general manager Klavdij Godnic blamed the drop on new monthly plans that have reduced spending by customers.

Earnings before interest and tax (EBIT) at the group stood at EUR 59.5m, a drop of 46% on the nine-month period in 2008.

In a review of market trends, the group said that the number of standard phone lines in Slovenia dropped by around 15% to 586,163, whereas the number of broadband lines increased by 10% to 210,000.

As for further expansion abroad, Telekom said it was monitoring the situation on a number markets, but was for the time being focusing on increasing the profitability of its existing subsidiaries abroad.

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