Mobistar Slumps Most Since IPO on Lower Outlook: Brussels Mover
Mobistar SA (MOBB), Belgium’s second-biggest mobile-phone company, plunged the most in more than a decade in Brussels trading after cutting its forecasts and axing its dividend for this year amid heightened competition.
Mobistar slid as much as 4.96 euros, or 31 percent, to 10.82 euros, the biggest drop since the shares began trading in October 1998. The stock closed 30 percent lower at 10.92 euros, its lowest close since its market debut. The shares have declined more than 43 percent so far this year.
Total revenue for 2013 will fall as much as 12 percent after Mobistar lowered prices for mobile-telephone service in the second quarter because of increased competition in Belgium on top of the pressure of regulatory price cuts, the Brussels-based company said today in a statement.
“It remains problematic for Mobistar that it cannot recuperate what is loses in mobile on the fixed side, something which its competitors rely heavily upon,” Thomas Deschepper, an analyst at KBC Securities in Brussels, said today in a note to clients. Deschepper recommends investors hold the stock.
Mobistar cut its outlook for 2013 earnings before interest, taxes, depreciation and amortization and now projects Ebitda of at least 300 million euros ($395 million), compared with an earlier forecast of at least 380 million euros.
Competitors such as Belgacom SA (BELG), the nation’s largest mobile-phone company, and Telenet Group Holding NV (TNET) offer bundled services for fixed telephone, Internet and digital TV. Mobistar is counting on Belgium’s cable network opening up to competition to renew its efforts to re-enter the broadband market.
Belgacom, which releases second-quarter earnings on Friday, dropped as much as 7.9 percent and closed 5.6 percent lower at 16.32 euros. Telenet fell 1.3 percent at 36.50 euros. The Bel20 stock index declined 0.6 percent.
Mobistar’s first-half revenue fell 5.7 percent to 757 million euros and Ebitda slid 28 percent to 180.9 million euros. KBC Securities had estimated Ebitda of 199.7 million euros. Net income for the six months ended June 30 dropped 38 percent to 57.3 million euros, the company said.
The company has no plans to reduce its work force after the earnings decline, Chief Executive Officer Jean Marc Harion told reporters in Brussels. “We won’t have a staff-reduction plan,” Belga news wire quoted Harion as saying.
The CEO also deflected speculation that Mobistar, majority-owned by France’s Orange SA, may become a takeover target. “Many telecom operators are potential targets, but that doesn’t mean they are scooped up,” Harion said, according to Belga.
Mobistar expects to stabilize Ebitda next year at the 2013 level as the company implements its ACE 2 efficiency plan with annual net savings of 50 million euros as of 2014.
The company will scrap its dividend for this year as its gives priority to simplifying its structure, reducing costs and making the necessary investments in its network to secure growth, Mobistar said.
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