Business News

Telekom Group's Profit Dwindles in 2009

Ljubljana, 25 February (STA) - The group around Slovenian telecoms incumbent Telekom Slovenije posted in 2009 a net profit of EUR 24.6m, which is less than a third of the net profit from the year before, when it stood at EUR 85.98m, according to the group's unaudited annual report for 2009.

The report published on Thursday on the website of the Ljubljana Stock Exchange added that the Telekom Slovenije group increased operating revenues in 2009 by 1% to EUR 856.1m.

Telekom management and supervisors commented on the results at a press conference today, with chief supervisor Tomaz Berginc saying that the company had followed the trend in the branch, including optimisation of costs, merging of networks and services and development of new broadband content.

"The situation in the economy certainly had an impact on the companies of the Telekom group in Slovenia," he said, adding however that the management should have responded more quickly and resolutely to the new economic situation.

According to him, the results are also a consequence of certain decisions of the Agency for Post and Electronic Communication (APEK) and settlements with other telecommunication companies.

Telekom management board member Filip Ogris Martic admitted that the results were substantially worse compared to 2008, but pointed to a 1% increase in revenues, which was in line with plans.

The group was also faced with poor operating results abroad, and a bond issue also had a certain impact. This resulted in the net profit missing the target by EUR 14m, according to the company.

The group's investments in construction, modernisation and development of networks in 2009 amounted to EUR 185m, down EUR 68m compared to the year before.

The acquisition of Macedonia's second largest telecom company, Cosmofon, worth EUR 185.6m, increased the net financial debt of the group by 55% to EUR 590m.

Telekom's subsidiary Mobitel, Slovenia's biggest mobile operator, meanwhile saw its operating revenues drop by 9% to EUR 410m, and net profit fall by 30% to EUR 41m. Given the fierce competition, the results are very good, said outgoing Mobitel CEO Klavdij Godnic.

Chief supervisor Berginc announced that the management launched an internal audit into the acquisition of Kosovo's Ipko. The supervisory board has also ordered an external audit into the acquisition of Macedonia's Cosmofon, he added.

According to Berginc, the supervisors opted for the audit in Macedonia because of the value of the deal and the fact that the EUR 190m acquisition took place at the beginning of 2009, only a few months before the new supervisory board of Telekom took over.

Economy Minister Matej Lahovnik called at the beginning of February for audits into the deals in response to suspicions of irregularities.

Lahovnik responded to a report in daily Dnevnik, which said that Telekom was being suspected of heavily overpaying its takeover targets in its expansion to SE Europe, while also being excessively generous to minority shareholders.

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