Nine months after officially losing the monopoly on the communications market, RomTelecom has seen revenues plunge, but, on the other hand, profit went up 60%. All results were calculated in euros.
In fact, the revenue drop was mainly grounded on the single European currency’s evolution. The main shareholder of RomTelecom, Greek group OTE, says the Romanian telephony operator’s revenues dived 13% in the third quarter as a result of the ROL’s depreciation, as the company was late in shifting tariffs from the local currency to the euro.
Had the company achieved the conversion of tariffs to euros immediately after the telecom market deregulation on January 1, 2003, “the drop in revenues would be significantly lower,” OTE claims. The company blames this situation on the Romanian telecom market watchdog, the National Authority for Communication Regulations (ANRC) which, after “a significant delay” approved the conversion of RomTelecom’s tariffs into euros.
RomTelecom posted revenues worth 201.1 million euros in Q3, 2003, down 13.5% from the 232.5 million euros logged in the year-ago period. In the first nine months of 2003, RomTelecom registered total revenues of 590.8 million euros, down 17.2% as compared to the corresponding period of last year.
Another reason for the decreasing results lies in the significant drop posted by the outgoing and incoming international interconnect traffic. The mobile telephony operators preferred to go looking for partnerships abroad, for the international voice traffic. Part of the revenues “lost” because of the ROL’s depreciation and the drop in the interconnect traffic were however recouped due to an increase in traffic, OTE said.
“The main explanation for the revenue drop can indeed b e found in the period when we calculated tariffs in ROL, a currency which has lost ground to the euro,” James Hubley, RomTelecom general manager, told Ziarul Financiar.
However, Hubley is optimist about next year’s results: “I am certain that we will no longer have such problems in 2004, since all the tariffs for RomTelecom services have been expressed in euros since this fall. In other words, we feel that the revenue decline will be stopped.”
According to the RomTelecom official, “the traffic volume did not post a steep decline, whereas the operating profit rate went up 30%. This growth is chiefly due to the management strategy that was principally aimed at cost cuts.”
Whereas revenues did post a decrease, RomTelecom became more profitable. The company bounced back from the 0.1m euros in losses posted in the third quarter of last year and actually logged 15.8 million euros in profit between July-September 2003.
iuliana.susanu@zf.ro