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Mobistar Declines as Revenue Erosion Worsens: Brussels Mover

July 24 (Bloomberg) -- Mobistar SA, Belgium’s second-biggest mobile-phone company, fell the most in almost three months in Brussels trading after a drop in service revenue worsened as client defections in the fixed-line business added to declining voice traffic and roaming revenue.

Mobistar sank 2.80 euros, or 11 percent, to 23.56 euros at the 5:40 p.m. close of trading on Euronext Brussels, the biggest decline since April 26. The shares handed investors a loss of 46 percent including reinvested dividends in the past year, data compiled by Bloomberg show.

Second-quarter service revenue, which excludes handset sales, fell 4.5 percent to 363.3 million euros ($440.4 million), accelerating from a 3.1 percent drop in the preceding three-month period, the Brussels-based company said today in a statement. Mobistar lost 4,776 ADSL subscribers, 3,272 TV customers and 1,425 fixed telephone lines in the quarter.

“The underlying earnings trend is not improving yet and the convergence strategy is not working at all,” Emmanuel Carlier, an analyst at ING Groep NV in Brussels, wrote in an investor note today. “Fixed service revenues dropped by 8 percent.”

Mobistar said it will restart commercial efforts to add subscribers for its unprofitable TV and broadband offering after suspending sales initiatives earlier this year to fix delays in activation. Mobile earnings are under pressure from regulatory price cuts, subsidized handsets offered by competitors and decreasing voice and roaming revenue.

Cost-Cutting Plan

The mobile operator, majority owned by France Telecom SA, also announced a cost-cutting plan that should produce gross savings of at least 100 million euros in the next three years.

Chief Financial Officer Werner De Laet said on an April 26 conference call that he expected most savings to come from the IT and network domains.

The current three-year plan, dubbed Odyssey and expiring at the end of this year, already exceeded its 100 million-euro target by more than 30 million euros. It has failed to halt a slide in earnings as Mobistar reduced its payout to investors both in 2011 and 2012.

To contact the reporter on this story: John Martens in Brussels at

To contact the editor responsible for this story: Jerrold Colten at

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