T-Hrvatski Telekom (Reuters: HT.ZA; Bloomberg: HTRA CZ), Croatia's leading telecommunications provider, announces its unaudited results for the nine months to the end of 30 September 2014.
In the first nine months of 2014, HT reported revenue of HRK 5.1 billion, a fall of just 2.2% compared with January-September 2013, marking a slowdown in the pace of decline. During the period, the Group saw some areas of revenue increase - primarily in ICT and mobile communications, where revenues were notably boosted by seasonal visitors and mobile data.
Despite the increased costs related to the transformation of the Company undertaken in 2014, EBITDA before exceptional items for the first nine months totaled HRK 2.0 billion, and marking a slowdown in the decline to 2.9 percent. In the first nine months of 2014, net profit totaled HRK 717 million.
In the first nine months of 2014, the telecommunications industry in Croatia was significantly impacted by the protracted economic downturn and regulatory changes, as well as the imposition of a new spectrum fee by the Government. Nevertheless, in the face of this challenging environment, HT has managed to maintain its leading position in all business segments and remains the leading telecommunications provider in Croatia.
At 30 September 2014, Hrvatski Telekom had 1.2 million fixed line customers, 2.3 million mobile subscribers and 617,000 broadband retail access lines and provided TV services for 393,000 customers.
Optima Telekom (OT) was fully consolidated into HT Group's financial statements as of 1 July 2014, following the takeover of control of OT by HT.
Company Transformation as Basis for Future Growth and Business Expansion
To build the foundations for the future growth and expansion of the Group's operations, against the backdrop of the ongoing economic crisis and continued deterioration of the Croatian telecommunications market, the first nine months of the year were characterized by the transformation of the Company.
In order to increase the level of efficiency and customer focus as part of the Company's transformation, a new organizational structure has now been implemented, with substantially fewer managerial positions.
A new Collective Agreement has been agreed with the Unions, providing a high level of rights to HT employees, but also reflecting the present economic situation and conditions under which the Group operates. The undertaken headcount optimization involved further 144 employees in third quarter 2014.
In order to increase infrastructure quality, whilst optimizing costs with regard to construction and maintenance, a contract to outsource the services of construction and maintenance of HT's infrastructure was signed with Ericsson for a five-year period and 638 employees started working in the newly established company from 1 September 2014.
The first nine months of the year were also marked by the intensive implementation of the programme to migrate PSTN to IP, and 67% of residential and business customers have now been migrated to IP technology. Throughout 2014, HT has continued to focus on the further development of the network infrastructure, enhancing broadband access and capacity and facilitating migration to the IP network, whilst further developing its technology leadership to ensure continuity of operations and the long-term sustainability of the Group's leading market position.
Davor Tomašković, President of the Management Board of HT: Company Transformation and Solid Results Marked First Nine Months of 2014
Commenting on the results for the first nine months of 2014, Davor Tomašković, President of the Management Board and CEO of Hrvatski Telekom, said:
"Operating in the face of a worsening economic crisis, which has been exacerbated for the telecommunications industry by the Government's introduction of a new spectrum fee, in the first nine months of the year Hrvatski Telekom managed to maintain its leading position in all segments of the telecommunications market and to improve its key financial indicators.
Compared to the same period last year, we slowed the pace of revenue decline, and have almost stabilized our revenue performance. In the third quarter of 2014, our activities were primarily focused on the transformation of the Company. We will continue to implement transformation initiatives in the forthcoming period in order to create a firm foundation for the future growth of the business in both the domestic and regional markets. Despite the challenging economic situation and regulatory changes, the positive impact of the transformation activities we have undertaken to date has enabled us to maintain our outlook for 2014."