Leading position and good results in the face of adverse economic trends and regulatory changes
- Revenue down 6.2%; EBITDA before exceptional items down 5.8% with stable margin at 39.2%
- Company’s internal transformation project finalised, new organisational structure as of 1 May
- Government announcement on exponential increase in annual frequency fees to significantly impact HT’s business operations
T-Hrvatski Telekom (Reuters: THTC.L, HT.ZA; Bloomberg: THTC LI, HTRA CZ), Croatia’s leading telecommunications provider, announces its unaudited results for the three months ended 31 March 2014
As Croatia’s leading telecommunications provider, at the end of the first quarter of 2014, T-HT had over 1.2 million fixed line customers, almost 2.3 million mobile subscribers, 623,951 broadband retail access lines, and 392,201 TV customers
In the first quarter of 2014, T-HT generated HRK 1.6 billion revenue, which was 6.2% below the same period the previous year, as a result of continuous economic crisis and regulatory alignment with the EU, primarily in the area of roaming and call termination.
The voice segment recorded an 18.7% fall, which was partially moderated by 3.9% growth of non voice revenue and 20.8% growth in ICT revenue. In the non voice segment, growth of mobile broadband revenue and TV service revenue continued. The ICT segment was marked by further development of cloud computing and projects related to IT infrastructure and professional solutions delivery.
T-HT maintained a stable EBITDA margin before exceptional items of 39.2%, which was 0.1 percentage points above the first quarter of the previous year. Net profit amounted to HRK 199 million, which was 16.5% below the comparable quarter of the previous year. Capital expenditure amounted to HRK 188 million and was directed towards further development of network infrastructure, increase of broadband capacities and availability, and IP transformation.
Commenting on the results for the first three months of 2014, Davor Tomašković, President of the Management Board and CEO of Hrvatski Telekom, said:
“T-HT holds a firm leading position on the Croatian telecommunications market and the results of the first quarter are in line with our business plans. The economic crisis and regulatory changes continue to have a strong impact on the Company’s performance.
With a view to further strengthening its leading position and achieving good results, at the beginning of 2014 T-HT started its internal transformation in order to make the organisation even more flexible and efficient, as well as fully focused on its customers. We have significantly simplified the organisational structure and redesigned the parts of the organisation where customer-related processes are managed.
The Management Board of HT will have a new Member in charge of customer experience, the Chief Customer Officer, with the aim of raising customer focus to the highest level within the organisation. This new organisational structure will come into force on 1 May.
Along with the internal transformation, this year we also plan, as previously announced, to initiate more significant investments in infrastructure development and service quality improvement, as well as the realisation of potential opportunities for regional business expansion. On 29 April, the General Assembly of the Company supported our proposal for the distribution of the net profit generated in 2013, the aim of which is to increase investments in the development of the Company.
However, our plans to intensify investments are significantly affected by the Government’s announcement of an exponential increase in the annual frequency fees. This will have a strong impact not only on our business operations, but also on the telecommunications sector as a whole.
The increase in the annual cost for frequencies is of such significance that all our previous plans for investments and development of new networks, services, and technologies would have to be significantly reduced.
In order to mitigate the negative impact of such a considerable cost increase and ensure business sustainability, jobs and investments in development, Hrvatski Telekom has no other option but to include such an increase into prices for mobile services.“