O2’s revenues fall in Czech Republic

But in neighboring Slovakia, telecoms firm sees surge in clients for its subsidiary

O2 Czech Republic, the largest Czech mobile operator, cut its H1 revenues 8.9 percent to 21.8 billion Kč, the company announced in a press release today.

“In the highly competitive and declining market in the first half of 2014, the company reported continued downturn of the customer base as well as revenues,” the press release stated. Other factors to which O2 Czech Republic ascribes the decline in revenues are the lengthy economic recession, pressure to cut prices, and the European Union’s regulatory policy.

The company’s revenues from mobile services dropped 16 percent to 9.4 billion Kč in the January-June period, while its fixed operating revenues in the Czech Republic decreased 5 percent to just under 9.7 billion Kč.

The figures were in line with market expectations.

“The main trends in the firm’s performance were in line with estimates. The year-on-year drop in profit was caused above all by the ongoing decline in performance in the firm’s mobile segment,” analyst Tomáš Tomčány of company Patria Direct said.

“But the falling trend has slowed down, partly also thanks to a seasonal effect, as second-quarter results are usually better,” Tomčány said.

In the second half of the year, the company expects an improvement in the dynamics of revenues, O2 CFO Tomáš Kouřil said, adding that O2 also expects an improvement at the level of its operating profit.

The number of O2 mobile customers decreased 42,000 to 5.06 million, while the number of tariff clients rose 2.5 percent to 3.25 million. The segment of pre-paid services recorded an annual drop of 5 percent to 1.81 million clients, resulting from a change to one of free tariffs and a transfer to a virtual operator.

The amount of minutes used was raised 12 percent to 5.744 billion thanks to unlimited calls.

Smartphone penetration rose eight percentage points on the year to 38 percent.

O2 has agreed with T-Mobile to shorten the period of the shared construction of an LTE network from five to three years, O2 CEO Tomáš Budník said.

The company wants to cover 90 percent of the population with its high-speed LTE and 3G Internet by the end of this year, Budník said.

Neighboring Slovakia provided some good news for the company, as the number of clients increased nearly 13 percent to 1.61 million. Total operating revenues in the country amounted to 103 million euros (an increase of 0.8 percent on the year), and its operating profit grew at an annual rate of 8.3 percent to 34 million euros.

The number of prepaid customers in Slovakia grew 9.5 percent year of year, while the number of contract customers showed an increase of a whopping 15.7 percent, reaching 821,000.

In the second half of the year, O2 wants to continue restructuring, which should involve a reduction of middle management costs by a quarter, a reduction of staff numbers in service processes and a strengthening of customer care units.

Investment group PPF owns a majority stake in O2 Czech Republic and Slovakia.

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