By Nicole Lundeen
VIENNA--Telekom Austria AG's (TKA.VI) net profit soared in the
third quarter, boosted by cuts to subsidies for devices and a
strong performance in some of the company's Central and Eastern
European markets, the company said Wednesday.
The telecommunications company, which is part owned by Mexican
billionaire Carlos Slim's America Movil S.A.B. de C.V., said net
profit for the three months ended Sept. 30 was 127.8 million euros
($161.6 million), compared with EUR51.3 million in the same period
a year earlier. The figure beat analysts' expectations of EUR69
million.
Revenue rose 1.2% to EUR1.05 billion in the third quarter, up
from EUR1.04 billion a year earlier and exceeded analysts' forecast
of EUR1.02 billion.
Telekom Austria has been facing declining revenue due to
competition in many of its markets. However in the third quarter,
Telekom Austria was able to increase revenue in Belarus as demand
for smartphones increased. Slovenia also provided a boost to
revenue, the company said. Revenue however declined in its home
market of Austria and in Croatia and Bulgaria. Fixed-access lines
also increased due to an increase in demand for broadband lines, it
added. The company said reduced marketing expenses, especially a
cut in device subsidies, significantly boosted earnings.
Telekom Austria also reiterated that a EUR1 billion capital
increase is planned by the end of the year. It said further details
would be provided when a date is set. The company also confirmed
its 2014 guidance.
Telekom Austria's two largest shareholders--America Movil and
the Austrian government's holding company Oesterreichische
Industrieholding AG, or OeIAG--reached an agreement in April to
pool their stakes in the carrier.
The agreement triggered a mandatory takeover offer under
Austrian law and gave America Movil operational control of Telekom
Austria. The extended purchase offer expired last week after which
late Monday, America Movil said it now holds around 59.7% of the
Austrian company's shares, while the OeIAG holds 28.42%.
America Movil plans to consolidate Telekom Austria in its
third-quarter earnings, also due Thursday. The Mexican company has
also said it wants to use Telekom Austria as a springboard for
acquisitions in Central and Eastern Europe, where the Austrian
company has a foothold.
Write to Nicole Lundeen at nicole.lundeen@wsj.com
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