Intense Competition Affects Vipnet’s Business

In the first nine months of 2012, Vipnet’s business was strongly influenced by negative macroeconomic trends as well as fierce competition in the mobile market.

Despite this, revenues in the first nine months remain stable at 313.9 million euros, and without the negative impact of exchange rate differences, revenues would have been higher by 4.2 million euros, Vipnet reports.

Consolidated EBITDA increased by 9.5 percent in the first nine months, amounting to 114.1 million euros due to contributions from fixed and television services and lower operating costs. Consolidated operating profit rose by 16.1 percent in the first three quarters, totaling 63.7 million euros while maintaining a stable market value share. Vipnet invested 40.9 million euros in the first nine months, an increase of as much as 58 percent compared to the same period last year, primarily due to increased investments in fixed broadband technologies and a modern business-technology facility.

-I consider this a very good result in the current economic environment. We continue on the set path of providing complete communication solutions with the recent introduction of fixed television services at the national level. In addition to good financial indicators, I am particularly pleased with the support from users expressed through the Best Buy Award survey, according to which Vipnet offers a convincingly best price-quality ratio for its business customers – said Mladen Pejković, CEO of Vipnet.

The average monthly revenue per user (ARPU) in the third quarter of 2012 decreased by 4.7 percent compared to the same period last year, amounting to 12.8 euros, which is a result of a whole range of additional benefits for users reflected through recession-adjusted tariffs and due to reduced call termination prices. At the same time, the average revenue per line (ARPL), which includes fixed voice services, internet, and TV services, increased by 10.6 percent in the third quarter of this year compared to the same period last year, amounting to 23.8 euros due to an increasing number of users taking multiple fixed services through packages.

The consolidated financial results of Vipnet were also announced today by the Telekom Austria Group in Vienna.

The Austrian telecommunications company Telekom Austria reported on Wednesday that its core profit in the third quarter remained almost unchanged compared to the same period last year, thanks to reduced operating costs and good results from the fixed telephony department.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to 410 million euros, compared to last year’s comparable 413 million. Revenues, on the other hand, decreased by 1.3 percent to 1.1 billion euros. The fierce competition among four mobile operators in the small Austrian market and regulatory price cuts in Bulgaria have taken their toll.

-Tightened competition in the main markets of the Telekom Austria Group, such as Austria, Bulgaria, and Croatia, has led to further price erosion, and it is expected to continue in the foreseeable future-, the company stated in a press release.

The group notes that higher revenues in Belarus and some smaller markets partially neutralized the decline in Austria, Croatia, and Bulgaria, where their results were affected by regulatory reductions in access fees to networks.

Operating costs were reduced in the observed period by 18.1 million euros, mainly in Austria, where the December decision of the European Union on whether the industry can consolidate to three operators is eagerly awaited.

The company confirmed its forecast for this year, which it lowered this August, as well as its intention to pay a dividend to shareholders of five euro cents per share for this and next year.