Telekom Austria Earnings Miss Estimates as Call Prices Fall

Telekom Austria AG, the phone company majority-owned by Carlos Slim’s America Movil SAB, cut its sales forecast after second-quarter earnings missed estimates as competition and regulation weighed on call and data prices.

Earnings before interest, taxes, depreciation and amortization dropped 9.3 percent to 299.4 million euros ($400 million) as revenue declined 7.7 percent to 963 million euros, the Vienna-based company said in a statement today. Analysts projected Ebitda of 320.3 million euros on sales of 989.1 million euros, the average of estimates compiled by Bloomberg.

“Fierce competition presents an issue in almost all markets, exerting downward pressure on mobile prices,” Telekom Austria said in the statement. “In addition, regulatory provisions in the form of interconnection and roaming rate reductions cause added drag on revenues.”

Revenue will fall about 3.5 percent this year, compared with a previous prediction of about 3 percent, amid “economic headwinds, regulatory cuts and severe price pressure,” Telekom Austria said today. The company, in which America Movil increased its stake to 51 percent last month, said average revenue per user in its home market, where it competes with units of Deutsche Telekom AG and Hutchison Whampoa Ltd., will continue to fall.

Telekom Austria was little changed at 7.14 euros at 9:12 a.m. in Vienna. The stock has risen about 30 percent this year and have traded close to America Movil’s offer price of 7.15 euros a share since it was announced in April. Under Austrian law, current owners can sell their shares to America Movil at this price until mid-October.

Capital Expenditure

America Movil agreed to support a 1 billion-euro capital increase in Telekom Austria after the Austrian company’s debt surged last year as it bought half of the spectrum offered in the country’s biggest ever airwave auction. Owners are due to vote on the share sale and new supervisory board members at a meeting tomorrow.

The company still plans a dividend of 5 cents a share.

The second-quarter net loss was 364.9 million euros after a previously announced 400 million-euro writedown on the company’s Bulgarian unit. Changes in exchange rates and one-time costs in the company’s Austrian unit also hurt profit.

The weak economy in Bulgaria continued to hurt consumer demand and mobile subscribers in the country fell by 2.9 percent to 4.1 million in the second quarter.

The company also revised its forecast for capital expenditure, excluding acquisitions and investment in spectrum, to 650 million euros to 700 million euros, compared with its previous prediction of about 700 million euros.

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