Competition drives Romtelecom's net profit down 75%

Romtelecom, Romania’s biggest telecom operator, in the first half of this year generated turnover worth 440 million euros, down 5.9% from last year’s first half.
The company’s H1 net income amounted to 14.6 million euros, 75.6% lower than in the corresponding period of last year. The figures were presented in the half-year report by OTE Greek telecommunications group, the majority shareholder of the Romanian operator.
“Tougher competition on the market generated weaker results in the first half of this year compared with the similar period of 2005, but Romtelecom already has a strategy for the launch of new products, voice, Internet or combined ones, which makes us believe our profitability indicators for the entire year are going to be positive,” stated Cristina Popescu, a PR manager with Romtelecom.
Panagis Vourloumis, OTE’s CEO, is of the same opinion. “The telecommunications company is facing stronger competition, but the delayed implementation of a new stage in the rebalancing process was another factor behind the company’s turnover decline,” added Vourloumis.
In the first quarter of this year, Romtelecom reported total revenues worth 222.8 million euros, while net income stood at 18.8 million euros. At the same time, the company ended the second quarter of the year with weaker results – revenues worth 217.1 million euros, down 9.2% from the same period of last year and net losses standing at 4.1 million euros, a decrease from the 46.8 million-euro net income posted in the second quarter of last year.
The operator’s long-term debts shrank by 29 million euros, while Romtelecom’s cash volume advanced by 42.5%, to 224.4 million euros.
OTE explained Romtelecom’s revenue slide was due to the decline in the number of phone lines, to 3.77 million, and to the diminishing traffic on the segment of individual and legal entity subscribers (retail), amid the rising competition coming from cable TV operators.
Romtelecom posted shrinking revenues on the segment of wholesale subscribers as well. OTE specified wholesale revenues went down by 16.2% despite 16 percent higher traffic on this business segment.
At the end of the first half, the company had 12,950 employees, 1% fewer than in December 2005.