Bloomberg News

Telefonica Czech Quarterly Net Down 6.9% as Call Spend Eases

May 10, 2012

Telefonica Czech Republic AS (SPTT), the country’s largest phone operator, posted a 6.9 percent decline in first-quarter profit as clients spent less on calls and mobile termination rates eased.

Net income for the three months ended March 31 was 1.62 billion koruna ($83 million) down from 1.74 billion koruna a year ago, the Prague-based company said, according to a statement. Revenue declined 3.3 percent to 12.47 billion koruna.

“Revenues continued to be impacted by prevailing competitive pressure largely in corporate and small and medium business mobile segments and lower mobile termination rates year on year,” the company said today.

Telefonica Czech is battling a decline in earnings, which peaked in 2005, by streamlining operations and laying off employees. The Czech unit of Spain’s largest telecommunications company plans to start deploying fiber-optic network and next- generation mobile technology to offset a decline in traditional voice services and competition in mobile broadband.

Revenue from fixed-line services in the Czech Republic fell 6.2 percent to 5.3 billion koruna in the quarter from a year ago, the company said. Mobile revenue dropped 5 percent to 6.1 billion koruna. Sales in Slovakia continued with a “solid growth” of 27 percent to 43.9 million euro ($56 million) in the quarter from a year ago.

Share Repurchase

Telefonica Czech, which said today it would buy back shares as much as 2 percent of shares outstanding, rose 7.5 koruna or 2 percent to 376 koruna as of 2 p.m. in Prague.

“The decision to commence share buyback should boost the stock today,” J&T Banka AS analyst Milan Vanicek wrote in a note to investors today. Otherwise, the results are “neutral” to share price, Vanicek wrote. Vanicek recommends investors to “hold” the stock.

The company reiterated its full year guidance, including investment of as much as 6.2 billion koruna excluding acquisitions.

Telefonica Czech said it will consider the terms of an uction of unused transmission frequencies this year by the ountry’s telecommunications regulator.

To contact the reporter on this story: Lenka Ponikelska in Prague at

To contact the editor responsible for this story: Alan Crosby at

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