Bloomberg News

Hrvatski Telekom 2011 Net Income Declines for a Second Year

February 15, 2012

(Updates with comment from chief executive from third paragraph.)

Feb. 14 (Bloomberg) -- T-Hrvatski Telekom d.d., Croatia’s main phone company controlled by Deutsche Telekom AG, said profit fell for a second year in 2011 as a sluggish economy and a tax on mobile phone services hurt business.

The company’s full-year net income fell to 1.81 billion kuna ($313 million) from 1.83 billion kuna in 2010, it said in a Regulatory News Service statement today. Revenue fell to 8.07 billion kuna from 8.37 billion kuna, while earnings before interest, taxes, depreciation and amortization fell to 3.62 billion kuna from 3.79 billion kuna in 2010.

“Despite a difficult business environment, Hrvatski Telekom has achieved solid business results,” Chief Executive Officer Ivica Mudrinic told reporters in Zagreb. The company will continue to invest into infrastructure for its fixed and mobile networks, he said.

The management board proposed a dividend payout of 22.14 kuna per share, down from 22.76 kuna in 2010, Mudrinic said. Dividends will be paid in equal parts in February and May.

Broadening Services

The phone company, 51 percent owned by Deutsche Telekom, is looking beyond its traditional business to the Internet, pay television, and mobile-phone services to strengthen its business as the former Yugoslav republic struggles to emerge from recession. The government last month forecast 2012 growth of 0.8 percent, while the International Monetary Fund on Feb. 6 predicted a decline of 1 percent. Hrvatski Telekom said today it expects no improvement in the economy.

The new Social Democrat-led Cabinet reintroduced a 6 percent tax on revenue generated by mobile services on Feb. 1, after its one-month suspension by the former government. The European Commission advised the government on Feb. 7 that the tax is against EU rules. The company said today the tax had an impact of 145 million kuna in 2011.

Croatia is expected to become the European Union’s 28th member in July 2013.

--Editor: Douglas Lytle

To contact the reporter on this story: Jasmina Kuzmanovic in Zagreb at jkuzmanovic@bloomberg.net

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


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