Tough times for Croatian incumbent

October 31, 2013 08.45 Europe/London By Chris Dziadul

Hrvatski TelekomGrowth in its TV business was one of the few highlights in what was an otherwise challenging first nine months of the year for Hrvatski Telekom (T-HT).

The Croatian incumbent ended September with 361,748 residential TV customers, or 9.9% more than a year and 2.4% more than in Q2 2013.

Its business TV customer total was meanwhile 21,566, representing increases of 7.9% and 2.4% on a year and three months earlier.

T-HT saw its residential broadband subscriber total fall by 4% year-on-year to 521,453 and rise by 4.3% year-on-year in the business segment to 109,455.

Although T-HT maintained its leading market position in residential mobile, fixed line ands IP, its financial performance was disappointing.

Group revenues in the first nine months of the year amounted to €689 million, down from €753 million a year earlier. EBITDA was down by 19.5% to €284 million and net profit nu 30.6% to €128 million.

Commenting on the results, Ivica Mudrinic, president of the management board (CEO), said: “During the third quarter of 2013 there was again no improvement in Croatia’s national economy and in the absence of any signs of recovery, a third credit ratings agency downgraded Croatia to sub-investment grade. On 1 July 2013, Croatia became a member of the EU and in light of the country’s fiscal challenges Croatia will enter the EU’s Excessive Deficit Procedure (EDP). EU accession and the related adoption of the EU regulatory framework has impacted the Group’s performance, with a greater fall in visitor revenue than had been expected. Consequently, revenue for the third quarter of 2013 fell 12% and EBITDA before exceptional items was 21.6% lower.?

“Whilst the imminent move into EDP may hasten the implementation of structural reforms in Croatia’s economy over the medium term, given the Group’s third quarter results we have amended our Outlook for the full year. We now expect an EBITDA before exceptional items margin of between 42% to 43%. However, the remainder of the Outlook is unchanged. ?Despite the current economic challenges, the Group has nevertheless held on to its leading market position.

“We continue to focus on developing new products and innovative services in line with the business transformation strategy currently underway. The Group will endeavour to remain at the forefront of technological development to ensure we provide services that both anticipate and meet our customers ever evolving requirements, and maintain our position as the leading provider in our markets.”