Telefonica Czech Republic AS, the country’s largest phone operator, said its profit rose 50 percent in the fourth quarter after a one-time gain from a deferred tax income booked in Slovakia.
Net income for the three months ended Dec. 31 rose to 2.87 billion koruna ($151 million) from 1.91 billion koruna a year earlier, the Prague-based company said today in an e-mailed statement. Revenue declined 4 percent to 13.4 billion koruna. The shares soared 7.2 percent.
The Czech unit of Spain’s largest operator, Telefonica SA, has battled a steady decline in earnings, which peaked in 2005, by streamlining operations and dismissing employees. Competitive pressure and additional mobile termination rate cuts continue to dilute revenue.
“I’m very pleased that in still-challenging and competitive market conditions, we have delivered full-year guidance,” Chief Financial Officer Jesus Perez de Uriguen said in a statement. “This is a result of improving trends in the second half of the year.”
The last quarter of 2011 was “positively” affected by a deferred tax income booked in Slovakia worth 709 million koruna, Telefonica said.
The board will propose a dividend of 40 koruna, of which 13 koruna represents a share-capital reduction. It also approved a “potential” share buyback of as much as 10 percent of the company’s shares.
“The dividend is at the top end of the estimates and it’s also good for the shares that they mentioned a buyback,” Komercni Banka AS analyst Josef Nemy said. “The underlying results excluding the one-time gain are also slightly above expectations.”
Nemy recommends investors “hold” the shares, which rose to 392.2 koruna in Prague, the biggest-one day gain since Oct. 2008.
Telefonica is “evaluating” a potential buyback from the free float that the board will propose to the shareholders, officials said on a conference call with analysts today. The company didn’t exclude that it may take leverage for the buyback if the plan goes ahead, the officials said. The company will provide more details throughout the year.
Telefonica’s Oibda, or operating income before depreciation and amortization, rose 1.2 percent to 5.8 billion koruna in the quarter from a year ago, the company said.
The Czech Republic’s telecommunications regulator may auction off unused transmission frequencies before the end of March, creating an opportunity for a fourth telecom provider to enter the market.
Telefonica will “closely” monitor and analyze conditions of the tender for the new frequencies. It will make a bid for the LTE license to deploy a 4G network and boost its competitiveness on the mobile broadband field, the company said.
Telefonica expects “improving trends” in revenue in 2012 and forecast “limited” margin erosion this year. Its capital expenditure should not exceed 6.2 billion koruna in 2012, it said.