Český Telecom - results for 1Q04 beat our expectations

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Investiční bankovnictví KB

      The company announced financial results for 1Q04, which beat our as well as the market expectations at the EBITDA, EBIT and net profit levels due to better-than-expected results of Eurotel and high-than-expected cost saving in fixed line business. Revenues reached CZK 15.0bn, up by 18.2% y/y. Full consolidation of Eurotel accounted for vast majority of the y/y growth, as the company consolidated only 51% of Eurotel in 1Q03. Traditionally, call revenues went down in fixed line (-24.5%) and mobile (-5.3%) businesses. On the contrary, this decline is balanced with demand for data services thanks to improving accessibility of ADSL services (+16.0%) and flat-rate internet access in mobile business (+19.5%). Cost-cutting measures enabled the company to keep attractive EBITDA margin at 50%. Nevertheless, higher leverage and FX losses caused that the fixed line business showed a loss of CZK 309m. Fixed-line business showed net profit of CZK 183m in 1Q03. Higher profitability of Eurotel (net profit of CZK 2bn according to US GAAP) lifted the consolidated net profit by 44.1% y/y to CZK 1.4bn.

       We consider the figures positive. The company manages to keep attractive EBTIDA margin and continue to generate strong cash flow.

      

       IFRS, consolidated (CZK m)................1Q04...........1Q03...........%ch

       Revenues........................................15,030.........12,712..........18.2

       EBITDA.............................................7,574...........6,331..........19.6

       EBIT................................................2,358...........1,708..........38.1

       Net profit..........................................1,399..............971..........44.1

       EBITDA margin....................................50.4..............49.8

       Source: company data

      

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