Bloomberg News

Telekomunikacja May Cut Investment in New Phone Lines (Correct)

March 06, 2007

(Corrects date in second paragraph of story published March 5.)

Telekomunikacja Polska SA, Poland's biggest telecommunications company, may reduce planned investment in phone lines to keep net income ``stable'' as it introduces new services, Chief Executive Officer Maciej Witucki said.

The Warsaw-based unit of France Telecom SA (FTE) said Jan. 30 it will invest between 16 percent and 19 percent of sales this year, versus 16.1 percent last year. Telekomunikacja expects revenue to decline by 1 percent in 2007 from 18.6 billion zloty ($6.2 billion) last year. Profit fell 5.5 percent to 2.09 billion zloty in 2007.

Like other phone companies across eastern Europe, which started losing their dominant positions in the 1990s after the collapse of communism, Telekomunikacja is turning to its broadband Internet, mobile-phone and television businesses to boost growth. The company will present the details of a new three-year strategy by the end of this summer, according to the executive.

``We will be as aggressive as possible in terms of sales,'' Witucki, who became chief executive in November, told journalists in Warsaw today. ``Our clients are now mature enough to buy convergent services, including TV and video on demand.''

Acquisition Targets

The former telecom monopoly is mulling using acquisitions to expand services, and aims to start buying ``small'' Internet and software companies as soon as next month, the executive said. The company may also start operating outside Poland, he added.

It is also considering buying Polish mobile phone dealer GTI Sp. z o.o., said Investor Relations Director Artur Tarnowski. The company would pay 30 million zloty for GTI's network of 170 stores, newspaper Puls Biznesu reported Feb 28.

The company will combine its sales and marketing teams with those of its mobile unit, PTK Centertel Sp. z o.o. as part of a plan to offer joint products, the chief executive said.

Within three months, Telekomunikacja plans to call for bids on a contract to set up a billing system to be shared with Centertel, Witucki said.

The company is also reshuffling some managers. Grazyna Piotrowska-Oliwa, who currently heads Telekomunikacja's regulatory affairs department, will replace Jean-Marc Vignolles as the head of the mobile unit.

Iwona Kossmann, head of Centertel's marketing department, and Piotr Muszynski, director of sales and services for Telekomunikacja, will join Telekomunikacja's management board.

The company's supervisory board will make a final decision on management changes on March 29, Witucki said.

Shares of Telekomunikacja have fallen 2.6 percent during the past 12 months, giving the company a market value of about $11 billion. Magyar Telekom Nyrt., Hungary's former phone monopoly, has fallen 8.6 percent over the same period. It has a market value of about $4.9 billion.

To contact the reporter on this story: Katarzyna Klimasinska in Warsaw at kklimasinska@bloomberg.net Nathaniel Espino in Warsaw nespino@bloomberg.net

To contact the editor responsible for this story: Tony Barrett in London at tbarrett4@bloomberg.net


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