Telekom Austria AG (TKA), the phone company partly owned by Carlos Slim’s America Movil SAB, rose the most in four years after third-quarter profit beat analysts’ estimates even as revenue declined.
The shares climbed as much as 12 percent, the biggest intraday advance since November 2008. The stock was up 11 percent at 5.10 euros as of 4:11 p.m. in Vienna, paring Telekom Austria’s decline to 37 percent since June 15 when Slim’s company agreed to buy a 21 percent stake.
Net income fell about 23 percent to 99.2 million euros ($126 million), while sales slipped 1.6 percent to 1.09 billion euros, the Vienna-based company said today in a statement. It was expected to report profit of 53 million euros and revenue of 1.06 billion euros, according to the average analyst estimates compiled by Bloomberg.
“Telekom Austria’s third-quarter results were not as bad as either ourselves or the consensus had feared,” Espirito Santo Investment Bank said in a research note. “The bulk of the outperformance was in the Austrian unit.”
For Telekom Austria, which operates in seven eastern European countries, it was the 15th consecutive quarter that revenue has declined, according to data compiled by Bloomberg. The last time three-month sales advanced was during the fourth quarter of 2008, when the company collected 1.3 billion euros of fees.
“We have worked hard to improve our internal efficiency,” Chief Executive Officer Hannes Ametsreiter said in the statement. “The impact from intense competition combined with an overall challenging economic environment has overshadowed our efforts.”
Earnings before interest, tax, depreciation and amortization dropped 0.6 percent in the quarter. Operating income rose 6.5 percent to 177 million euros.
Telekom Austria has “material upside potential,” Carola Bardelli, an analyst at Deutsche Bank, wrote in a note to clients. She raised her recommendation on the shares to buy from hold.
Telekom Austria maintained a forecast for full-year revenue of about 4.2 billion euros and Ebitda of 1.4 billion euros to 1.45 billion euros. It plans to pay a 5-cent dividend for 2012 and 2013.
The company stands to gain from consolidation in its home market, where Hutchison Whampoa Ltd. (13) is bidding 1.3 billion euros to take over Orange, Austria’s No. 3 mobile phone operator owned by France Telecom SA and Mid Europa Partners. Telekom Austria is set to pay 390 million euros for 750,000 Orange pre- paid clients as part of the deal.
Consolidation will raise the value of Telekom Austria shares, Deutsche Bank’s Bardelli said. European Union and Austrian regulators are probing the acquisitions and are expected to rule before the end of the year.
Telekom Austria’s average revenue per user in Austria slipped almost 9 percent to 18.3 euros, while total sales in its home market fell about 5 percent to 686 million euros.
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