Telekom Austria records a loss in 2008

Telekom Austria takes a hit

Telekom Austria takes a hit

Austrian fixed and mobile player Telekom Austria reported a net loss for 2008 in the wake of the global credit crunch and its continuing struggle to turn around its fixed line business.


Group net loss for the fourth quarter fell to Eur438m, compared to a profit of Eur41m in the same period in 2007. While full year loss hit Eur49m, down from a profit of Eur492m in the previous year.

Overall revenues were up 1.4 per cent in the fourth quarter to Eur1.3bn, and up 5 per cent for the full year to Eur5.2bn, mainly due to the performance of mobile operations including the consolidation of Belarusian operator Velcom, which helped offset the impact of EU roaming cuts and a lower contribution from the fixed line segment.

In the fourth quarter, Telekom Austria announced a restructuring program for its fixed operations, resulting in an expenses hit of Eur632.1m, affecting EBITDA, operating income and net income.

A redundancy scheme for up to 1,250 fixed line employees is to be executed throughout 2009, but the carrier said that against the backdrop of a shrinking domestic fixed line market, further cost cutting measures will also be necessary in the years to come.

Fixed net operating loss for the full year dropped to Eur531m from a profit of Eur151m in the previous year, although the introduction of new product bundles slowed down access line loss from 47,600 in 4Q07 to 2,400 in 4Q08 leading to net adds in November and December 2008 for the first time in 12 years. The number of access lines declined by only 97,600 lines during 2008 to 2.3 million, compared to 224,500 lines in 2007 reflecting a material slowdown of fixed net access line loss, Telekom said.

Mobile operating income for mobilikom in 2008 was up 8.1 per cent year on year to Eur689m, compared to Eur637.5m in 2007. The number of customers in the Mobile Communication segment grew by 15.2 per cent to 17.8 million customers as of December 31, 2008. More than three-quarters of this customer growth is driven by an increase of the contract subscriber base.

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