Telekom Austria shies away from giving 2013 profit forecast

Battle-scarred Telekom Austria has warned that revenue will fall this year for the fifth year in a row, but the incumbent fixed and mobile operator declined to give a forecast for earnings this year against the background of a fiercely competitive market.

This year is set to be an uncertain one for the Austrian mobile market in particular, as Hutchison Whampoa pushes ahead with plans to merge Orange Austria with 3 Austria, thereby reducing the number of major players from four to three.

Telekom Austria, which is set to benefit from this merger through the acquisition of Orange Austria unit Yesss, said revenue and margins will continue to come under pressure this year amid a continuing price war, Reuters reported.

According to Bloomberg, the operator expects revenue will decline to about €4.1 billion this year, compared to a forecast for 2012 of €4.2 billion. However, the company shied away from providing an earnings forecast, saying in a statement: "Due to continued low visibility in its major markets, Telekom Austria Group considers it prudent to limit the financial outlook for 2013 to revenue and capital expenditure."

Capital expenditures for this year is forecast at around €700 million, while a dividend of 5 cents per share will be paid for last year and 2013.

Analysts reacted negatively to the company's lack of visibility on earnings for 2013, and saw it as a fairly damning indictment of Telekom Austria's position. "That Telekom Austria lacks the confidence to give any guidance on EBITDA is in our view a cause for concern and underscores the lack of visibility for the company over the coming year," analysts at Espirito Santo Investment Bank wrote in a research note, according to Reuters.

The operator said it will intensify its cost-cutting measures to relieve the pressure on margins, and will also undertake further measures to improve its financial position. In its statement, the company said it will "focus on the high-value customer segment in its mature mobile markets," adding that the new focus "will impact margins in the short term."

For more:
- see this Reuters article
- see this Bloomberg article

Related articles:
Hutchison's €1.3B Orange Austria bid faces T-Mobile challenge
Hutchison set to get green light for Orange Austria buy
EU to launch 'full probe' into Hutchison's takeover of Orange Austria
Hutchison offers MVNO access to Orange Austria to gain regulators' approval
Hutchison grows anxious over Orange Austria deal progress
Hutchison, T-Mobile Austria clash over Orange Austria purchase
Hutchison Whampoa boosts European holdings with €1.3B Orange Austria buy