Telekom Austria posted a 5-percent drop in third-quarter core earnings on Wednesday as domestic competition and price cuts ate into earnings, but it promised that a new asset in Belarus would help raise revenues.
Earnings before interest, tax, depreciation and amortisation
(EBITDA) declined to 521 million euros ($761 million) in the quarter to September as earnings of both its fixed-line and its mobile domestic businesses fell.
EBITDA came in slightly ahead of a Reuters poll of 14 analysts who on average had estimated 510 million euros. Revenues, which rose 3.6 percent, and net profit, which dropped 19 percent, also were both ahead of the average estimate.
The company, which last month agreed to buy Belarus mobile operator MDC, raised its revenue outlook for the full year because of MDC's contribution, saying it now expected 3 percent growth rather than stable revenues.
It said MDC's EBITDA contribution would help offset higher than expected fixed-line losses in Austria and the negative effects of price cuts ordered by the Austrian regulator in its mobile business. It sees EBITDA falling by 3 percent this year. Amortisation related to the MDC purchase as well as higher interest expenses due to the debt Telekom Austria has to take on to finance it will weigh on net profit, however. Telekom Austria forecast an 8-percent drop excluding one-off tax effects. Shares in Telekom Austria have dropped 5 percent so far this year, underperforming the DJ Stoxx European Telecoms Index, which is up 19 percent. They are trading at 15 times next year's estimated earnings, in line with the sector.