Bloomberg News

Telekomunikacja Triples Profit, Plans Buyback on Emitel Sale

July 27, 2011

(Updates with analyst’s comment starting in fourth paragraph.)

July 27 (Bloomberg) -- Telekomunikacja Polska SA said second-quarter profit tripled on the sale of a broadcasting unit, allowing Poland’s largest phone company to propose a share buyback.

Net income jumped to 995 million zloty ($361 million) from 325 million zloty a year earlier, the Warsaw-based unit of France Telecom SA said in a regulatory statement today. That beat the 782.7 million-zloty estimate of 10 analysts surveyed by Bloomberg.

Telekomunikacja signed a final agreement in June to sell TP Emitel Sp. z o.o., an operator of television and radio towers, to Montagu Private Equity LLP for 1.7 billion zloty, adding about 1.2 billion zloty to pretax profit for the quarter. Telekomunikacja today proposed an 800 million-zloty buyback, saying it would allocate about half the proceeds from the largest Polish acquisition by a private equity firm.

“What’s most important is the buyback; it should have a positive impact on the price,” Konrad Ksiezopolski, an analyst at Wood & Co, said by phone from Warsaw today. “The results are neither great nor bad.”

Telekomunikacja’s shares rose as much as 1.8 percent to a one-month high of 16.89 zloty at 9:05 a.m. today. The benchmark WIG20 Index declined 0.3 percent.

Adjusted net income, excluding both the Emitel sale and a 458 million-zloty writedown for a fine imposed in June by European Union antitrust regulators, was 265 million zloty, the company said.

Sales Decline

The decline in adjusted profit followed the trend in revenue, as fixed-line phone sales decreased 8.3 percent to 2.1 billion zloty and mobile segment revenue rose 0.9 percent.

Telekomunikacja expects the trend in total sales to improve in the second half from the first six months, for which the company posted a decline of 4.3 percent, Chief Executive Officer Maciej Witucki said on a conference call. The company plans to focus on speeding up the trend of broadband Internet sales, and the second half has “traditionally” been better for Telekomunikacja, he said.

Ksiezopolski said he expects an improvement in the broadband business in the second half. Compared to Telekomunikacja’s biggest broadband competitor Netia SA, net additions in the segment remain “poor,” he said.

The operator added 14,000 Internet customers in the second quarter, increasing its share of net additions to 21 percent from 10 percent in the first three months of the year. Earlier this year Telekomunikacja, which has 35 percent of Poland’s broadband Internet market, started offering services in cooperation with broadcaster TVN SA.

--Editors: Nathaniel Espino, Andrea Dudikova

To contact the reporter on this story: Maciej Martewicz in Warsaw at mmartewicz@bloomberg.net;

To contact the editor responsible for this story: James Gomez at jagomez@bloomberg.net


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