Adva Optical Networking SE, a maker of fiber networks, fell the most in 18 months after saying revenue and profitability will drop in the current quarter as phone companies cut back spending on fixed-line networks.
Operating profit will decline to 2 percent to 6 percent of sales after 6.8 percent in the third quarter, while sales will slip to 77 million euros ($100 million) to 82 million euros after 82.3 million euros, the Munich-based company said in a statement. The stock declined as much as 15 percent to 4.43 euros, the steepest intraday drop since April 2011, and was trading at 4.48 euros as of 10:30 a.m. in Frankfurt today at five times the three-month average volume.
Adva also cited “temporarily weaker demand in the Americas and the Asia-Pacific regions” as revenue declined in the three months ended Sept. 30. The company’s largest customers are BT Group Plc, Time Warner Cable Inc. and Deutsche Telekom AG, according to data compiled by Bloomberg. Operators are shifting investments to faster wireless transmission technology to satisfy growing demand for data as more people use phones and tablet computers to go online.
“Major mobile broadband upgrades, especially LTE rollouts, are absorbing much of the available capital,” Chief Executive Officer Brian Protiva said in the statement. “Thus, network providers are currently under-investing and delaying project roll-outs in wireline activities based on capital market pressures.”
Deutsche Telekom, Germany’s former phone monopoly, is weighing cheaper alternatives to rolling out fiber connections to homes. Royal KPN NV, the Dutch phone company partly owned by Carlos Slim’s America Movil SAB, reported a drop in third-quarter profit amid increasing German price competition and declining mobile subscription revenue.