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Cesky Telecom shows CZK 1.8 bn loss in 2003 due to assets write-off

The Czech Republic's dominant fixed-line operator Cesky Telecom (CT) showed a consolidated preliminary net loss of CZK 1.8 bn in 2003, down from a net profit of CZK 4.3 bn one year earlier.

The loss, the firm’s first in nearly 10 years, was mainly due to the company’s need to write down part of its assets. In 2003, CT posted an impairment charge of CZK 9.9 bn to write down part of the company’s investment in its network.

“In 2003, CT’s performance was highly influenced by the hostile regulatory environment, which historically has not allowed tariff rebalancing, has imposed economically unfair termination charges for internet dial-up and tolerates an absence of transparency in a number of regulatory decisions including the interconnection charges,” CT’s spokesman Vladan Crha told Interfax. CT’s financial results in 2003:

Selected Financial Highlights

CZK in billion

Total revenues

51.5

Payments to other network operators

(7.0)

One-off operating costs

(1.6)

Other operating costs

(19.1)

EBITDA

23.8

Depreciation and amortization

(19.4)

EBIT

(5.5)

Net Loss

(1.8)

Free Cash Flow

10.9

Source: Cesky Telecom

CT’s gross profit – EBITDA – dropped to CZK 23.8 bn in 2003 from CZK 26.1 bn in 2002.

Crha told Interfax earlier this month the firm would pay a dividend from retained earnings despite the expected 2003 loss. Last year, CT approved a policy of paying dividends worth between 50 % and 70 % of its consolidated net profits in 2004 and 2005. Analysts expect CT to pay a dividend of around CZK 10 per share. CT's shareholders will vote on dividends in mid-June 2004.

The firm’s consolidated revenues reached CZK 51.5 bn in 2003, a decline of 3 % yr/yr. CT’s 2003 revenues were driven dial-up and broadband internet access services.

CT reduced its workforce by 21 % last year to 10,911. Due to severance payments, this staff reduction will lead to a decrease in personnel costs starting from 2004, says the firm. CT’s investments reached CZK 7 bn last year, a decline of 38 % yr/yr.

The number of fixed lines operated by CT fell 2 % to 3.59 mln at end 2003, a fact the firm attributes to rising competition. While CT’s number of clients fell, mobile phone penetration continued to rise, reaching some 95% in 2003, up from 84 % in 2002. CT owns 100 % of the CR's biggest mobile operator, Eurotel.

CT will announce its final, audited 2003 financial results on March 29.

The state owns 51 % of CT through the National Property Fund (FNM). The TelSource consortium, made up of KPN and Swisscom, holds 27 % of CT, which it plans to sell. The state launched the privatization of its majority stake in January.

(Interfax 1.iii.04)

 
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