Telekom Austria sees Q3 profit down by 48 per cent

Telekom Austria, which last month paid out more than €1bn in the Austrian LTE spectrum auction, has reported a drop in third quarter profit of almost 50 per cent. Net income for the period was €52.13m, down 48.3 per cent year on year from €99.2m, while revenue declined 5.3 per cent to €1.04bn.

The firm, which operates in eight markets across Central and Eastern Europe, said that it saw a “substantial revenue decline” at its Austrian, Bulgarian and Croatian operations, while there was a slight increase for its Belarusian property. In its domestic market Telekom Austria was hit by the migration of customers into multiplay “all-in tariffs” the firm said, with the decline in fixed voice usage “only partly offset by higher broadband and TV revenues.”

Bulgaria was negatively affected by political and economic instability, the firm said, while Croatia felt the impact of regulatory pressure on roaming and interconnect revenues. Telekom Austria added that intense competition across all of its markets remains a significant challenge, and described European Commissioner Neelie Kroes’ plans for a single European telecoms market as a threat.

“Fierce competition presents an issue in almost all markets, exerting downward pressure on mobile prices,” the firm said, adding that its economic performance therefore depends on its “ability to safeguard margins by continuously increasing cost efficiency.”

It continued: “Furthermore, regulatory provisions in the form of interconnection and roaming rate reductions cause added drag on revenues, especially in those segments which must conform to EU regulation. In addition to existing glide paths, the proposal for a single European telecommunications market currently awaiting approval by the European parliament poses a threat.”

CEO Hannes Ametsreiter said that a focus on high end customers would enable the firm to safeguard its business. “With a focus on the premium customer segment combined with higher time-limited subsidies for smartphones, we are on the right track to safeguard our core mobile business across the Group,” he said. “The almost stable development of our fixed line business in Austria also demonstrates that we are on the right strategic path.”