TP forecasts stabilization

The telecom’s annual profit falls are slowly diminishing

Telecoms operator Telekomunikacja Polska (TP) recorded a net profit of zł.285 million for Q1 2010, a y/y fall of 13 percent. Its revenues dropped 10.2 percent, to zł.4.31 billion.

TP, which is controlled by France Telecom, has been under pressure from regulatory price cuts and a contracting fixed-line market. Its subsidiary PTK Centertel was also displaced from the top of the mobile-phone-services market last year by Polkomtel. “Two big mobile termination rate reductions [enforced by the regulator] hit the company hard last year, while it also faced really tough competition from broadband-service providers,” said Jakub Viscardi, an analyst at brokerage IDMSA.

The first quarter net-profit drop was actually less than was expected by a Reuters poll of analysts. TP is confident that revenue declines will continue to slow as the effects of regulatory price cuts begin to ease.

“Our results are still not up to our ambitions, but we are working hard to turn around the key trends,” Maciej Witucki, TP’s CEO, said in the earnings report. “We have to wait for a decisive change in our earnings until the second half of the year, but the first quarter stands as a good beginning to a breakthrough year in 2010,” he added. Mr Viscardi agreed that quarterly falls in net profit will continue but decrease in size over the year. He expects the company’s results to stabilize by Q1 2011 at the earliest, though.

The company’s shares were the worst performers on the WIG20, Warsaw’s blue-chip index, in 2009, dropping by 17 percent over the year. So far in 2010, TP’s shares have risen 4.5 percent, which is still below the index’s average. TP’s share price fell by 0.72 percent on the week.

Gareth Price