Business News

Telekom Slovenije Returns to Profit, Launching TV (adds)

Ljubljana, 01 March (STA) - The group of incumbent telco Telekom Slovenije returned to profit last year although its operating revenues dropped by 2% to EUR 824.5m. The company on Thursday reported a net profit of EUR 34m for 2011, after EUR 210m in loss the year before, while also announcing the launch of television channel Siol TV.

The group saw EBITDA rise by 3% last year to EUR 255.6m with earnings before interest and taxes (EBIT) at EUR 63.25m, which compares to EUR 178.5m in operating loss in 2010 due to substantial write-downs on investments.

The figures follow from the unaudited annual report that the majority state-owned company published on the website of the Ljubljana Stock Exchange a day after it was reviewed by the supervisory board.

"Fierce competition, regulation and relentless macroeconomic conditions demonstrate that generating revenues and ensuring the necessary profits has also in the electronic communications market become increasingly difficult to achieve," the management said.

The challenging situation is reflected in falling market shares in Slovenia, also in divisions where subscriber numbers are up such IP-television and IP-telephony, board member Marko Boštjančič told a press conference in Ljubljana.

He said that the economic crisis was making users more price-aware and that Telekom was doing its best to adapt the services on offer to that trend.

Commenting on the performance of subsidiaries in Slovenia and SE Europe, board member Zoran Janko pointed to a marked improvement in the operating results of Kosovo subsidiary Ipko, while Macedonia's One still generated high losses, but is to break even in 2013.

The group's business plan for 2012 with the projection by 2016 is focused on the search for new sources of revenue, and in the short-term, mainly on cost cutting.

The effects of restructuring are already reflected in the operating results for 2011, with a similar trend projected for 2012 due to the changes planned.

For this year, Telekom Slovenije plans EUR 55m in profit with EBITDA of up to EUR 280m, and capital expenditures of EUR 120-135m. These were down to EUR 92m in 2011 from EUR 113.6m in 2010.

At the same time the group managed to reduce its financial debt by 23% to EUR 388.6m and capital rose by 1% to EUR 815m.

According to a press release issued today, the group is continuing with its transition from being a provider of mainly infrastructure services to become a provider of the most demanding IT and multimedia services. Part of these efforts is the project of a TV channel Siol TV, which was endorsed by the supervisors on Wednesday.

Telekom's comparative financial statements for 2010 were adjusted following last year's acquisition of the mobile arm Mobitel so as if the two companies have been operating together in the comparative period.

In the second half of 2011 Telekom verified the fair value of its investments in subsidiaries, establishing that the recoverable amount of investments in some of the subsidiaries has fallen below their book value.

The company carried out a downward adjustment of its financial investments in the companies One and Primo Communications for the difference between the book value and recoverable amount of the investments, which amounts to EUR 6.5m.

Janko today also repeated Telekom's position that it did not violate anti-trust legislation with the monthly plan for students marketed by its mobile arm Mobitel as found by the market regulator last month. The company plans to fight the charge "with all means at its disposal".

The official also said that the court's decision to launch debt restructuring rather than receivership at its rival T-2 would not affect Telekom's operations as the claims had been factored in.

But he said the company expected the court-mandated debt restructuring to force T-2 to meet its current liabilities on time.

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