The telecommunications sector has not remained immune to the recession, and revenue growth in the sector was close to zero, writes Vera Sutedja, an analyst at Erste Group, in the latest analysis of the telecommunications sector in Central and Eastern Europe.
For the stock of Hrvatski Telekom, Erste analysts have assigned a ‘hold’ recommendation with a target price of 280 kuna. – The leading telecommunications companies we cover have managed to maintain or even increase their dividend levels during the economic crisis, providing a return on investment of around 76%. In some cases, such as Magyar Telekom, T-Hrvatski Telekom, and Telekom Slovenije, the stock price has performed poorly, and the return from dividends has been diluted – the analysis states. It adds that traditional segments of fixed and mobile voice telephony were the most affected, recording a decline of 6.3% and 1.8% year-on-year in 2009. Pay TV, mobile data services, and fixed internet were growth drivers, but their 33% share of total revenue was not large enough to offset the decline in revenue from the voice segment. – In the second quarter of 2010, we saw some signs of recovery, such as a slowdown in revenue growth and a decline in EBITDA.
TPSA has shown the strongest signs of recovery, particularly in the mobile telephony segment, and even improved its outlook for 2010. On the other hand, Magyar Telekom continued to suffer under macroeconomic and regulatory measures, reducing its outlook for fiscal 2010. The rest of the large companies we cover confirmed their outlook for 2010. Overall, the targeted values for 2010 still include a decline in revenue and EBITDA. We expect that the large telecommunications companies we cover will only resume growth in 2011 or 2012 – predicts Sutedja. (M.N.)
