T-Hrvatski Telekom First-Quarter Profit Falls Amid Recession

T-Hrvatski Telekom d.d., the Croatian unit of Deutsche Telekom AG (DTE), said first-quarter net income fell 17 percent from a year earlier as the European Union’s newest member battles recession for a sixth year.

Net income dropped to 199 million kuna ($36 million), while revenue declined 6.2 percent to 1.6 billion kuna from the same period a year ago, the Zagreb-based company said today in a regulatory statement. Earnings before interest, taxes, depreciation and amortization margin before exceptional items, was flat from a year earlier at 39.2 percent, it said.

“The economic crisis and regulatory changes continue to have a strong impact on the company’s performance,” Chief Executive Officer Davor Tomaskovic said in the statement. “With a view to further strengthening its leading position and achieving good results” the company started this year “its internal transformation” to make its operation “more flexible and efficient.”

The Adriatic Sea nation, which joined the EU ten months ago, hasn’t recovered from a six-year recession. The country’s $60 billion economy is now 12 percent smaller than it was before the global crisis, the second-biggest contraction in the EU after Greece. Foreign direct investment in 2013 dropped 55% from a year earlier. Unemployment in March was 22.3 percent, while retail trade in February was flat from a year-ago.

The phone company, in which Deutsche Telekom AG holds a 51 percent stake, is expanding its Internet, mobile-phone and pay-TV services to keep its leading position in Croatia.

T-Hrvatski Telekom is eyeing “potential opportunities” for regional business expansion, Tomaskovic said.

Croatia plans to raise radio frequency fees for telecommunications operators, Finance Minister Slavko Linic said earlier this month.

To contact the reporter on this story: Jasmina Kuzmanovic in Zagreb at jkuzmanovic@bloomberg.net

To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net; Michael Winfrey at mwinfrey@bloomberg.net; Pawel Kozlowski at pkozlowski@bloomberg.net Elizabeth Konstantinova, Pawel Kozlowski

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