TDC Profit Declines as Mobile Phone Competition Squeezes Prices

TDC A/S, Denmark’s biggest phone company, reported second-quarter profit that fell more than analysts expected after competition for local wireless users trimmed prices.

Net income fell to 561 million kroner ($107 million) from 657 million kroner a year earlier, Copenhagen-based TDC said in a statement. Analysts had expected net income of 617 million kroner, according to the average of 14 estimates compiled by Bloomberg. Sales were little changed at 6.54 billion kroner

TDC bought Onfone ApS in May for 313 million kroner, removing a competitor that drove down monthly bills on the cheapest contracts by as much as 50 percent. Earnings before interest, taxes, depreciation and amortization in TDC’s consumer wireless unit declined 8.3 percent in the second quarter, TDC said today.

“The intensified price competition in residential mobility services remains a drain on average revenue per user,” Chief Executive Officer Henrik Poulsen said in the statement. The Onfone acquisition together with a restructured smartphone offering “should improve earnings in residential mobility services towards the end of 2011.”

TDC fell as much as 2.1 percent to 46.52 kroner in Copenhagen trading. The shares declined 1 percent, or 0.48 krone, to 47.02 kroner at 10:12 a.m. local time, compared with at 0.9 percent advance in the OMX Copenhagen 20 index. (KFX)

The company retained its 2011 forecast for revenue to increase as much as 1 percent and Ebitda to advance about 2 percent.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.