Telekom Austria cuts outlook as profit slumps

Telekom Austria is the latest European operator to blame regulatory interference for a drop in earnings, as net profit plunged into the red during the first half.
 
Net income fell from €159.9 million at end June 2010 to a loss of €59.9 million this year, as fierce competition and a tough economic environment took their toll on revenues, which fell €67.3 million. The bulk of that decline - €43.4 million – was caused by a 54% drop in the value of the Belarus ruble against the Euro in May.
 
Earnings fell across the board despite the firm growing its mobile subscriber numbers and total data traffic. An EBITDA decline of €65.9 million is attributed to the effects of regulation, which accounts for €15.6 million of the fall, currency devaluations (€19 million), and tougher competition (€31.3 million).
 
Despite the bleak figures, chief finance officer Hans Tschuden said the firm performed well during the period. “The decline in revenues and earnings is in line with expectations. All in all, we were able to cope quite well with the devaluation of the Belarusian ruble, thanks to the early adoption of effective countermeasures.”
 
Chief Hannes Ametsreiter echoed the sentiment, noting the firm’s 1H performance came “against a backdrop of intensive competition and strong economic headwinds.”
 
However, the firm has cut its full year outlook, predicting revenue of €4.5 billion and EBITDA of €1.55 billion compared to the €4.6 billion and €1.6 billion it expected at end 1Q11.
 
Jitters over the European economy and tougher regulations also took their toll on the profits of Deutsche Telekom, France Telecom, Telefonica and Telecom Italia during the first half.

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