TDC Earnings Miss Estimates on Danish Price Competition

TDC A/S (TDC), Denmark’s biggest phone company, reported fourth-quarter earnings that missed analyst estimates on price erosion in the country’s mobile market.

Profit from continuing operations gained 12 percent to 704 million kroner ($124 million), Copenhagen-based TDC said today in a statement. That trailed the average estimate of 737 million kroner from eight analysts surveyed by Bloomberg. Sales declined 1 percent to 6.69 billion kroner, compared with 6.63 billion kroner predicted by analysts.

Apax Partners LLP, Blackstone Group LP, KKR & Co., Permira Advisers LLP and Providence Equity Partners Inc. are free to sell their combined 59.1 percent stake after the expiration of a lockup period following a 2010 share sale. Competitors are loading more minutes and megabytes into their service offerings for the same price, and TDC is choosing to enhance services rather than match promotions, Chief Executive Officer Henrik Poulsen said in an interview.

Competitive Market

“The Danish market remains quite competitive,” Poulsen said. “It is still questionable whether the total profit pool is big enough in this market to allow for four parallel networks to be built out going forward.”

The company forecast flat to declining earnings as customers cut their use of voice minutes and continue to shop for better deals. TDC expects 2012 revenue of 26 billion kroner to 26.5 billion kroner, compared with 26.3 billion kroner last year. Earnings before interest, taxes, depreciation, amortization and pension income are predicted to be 10.3 billion kroner to 10.5 billion kroner, compared with 10.5 billion kroner in 2011.

The private equity owners sold about 29 percent of the company to the public in December 2010.

Poulsen said he didn’t know the private equity owners’ plans.

“That’s entirely a decision for them to make and we are not and should not be part of the process,” he said.

TDC shares were little changed at 45.18 kroner at 1:15 p.m. in Copenhagen. The stock has dropped 4.6 percent in the last six months.

The Danish company also said it’s initiating a share buyback program in 2012 for as much as 750 million 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. Rivals Telenor ASA (TEL) and TeliaSonera AB (TLSN) announced a network-sharing agreement soon afterward.

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

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