Telekom Austria 3Q Net Profit Surges to EUR127.8 Million

  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 [e-mail]

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