Jazztel Has Potential to Beat Targets, Garcia Says
Jazztel Plc (JAZ), a Spanish wireless and broadband carrier taking on larger rivals, will meet subscriber and earnings targets and may even beat them as the economy recovers, its chief executive officer said.
“Regardless of how the industry and the economy perform, we’re very comfortable and confident that we will be able to meet our targets,” CEO Jose Miguel Garcia said in an interview in Madrid yesterday. “Any potential improvement in the economy will translate into an upside in our business plan.”
Jazztel is trying to lure users to contracts that combine mobile-phone service with fixed-broadband Internet access, vying with Telefonica SA (TEF) and Orange SA (ORA) as demand for wireless data and online video increases. The company is also betting on a deal with Telefonica, Spain’s largest phone company, to expand its faster fiber-optic service to 3 million homes and companies.
Shares of Jazztel climbed as much as 1 percent, erasing earlier losses, and were little changed at 7.77 euros at 12:23 p.m. in Madrid. The stock has gained 48 percent this year, heading for their fifth straight annual increase.
Jazztel is experiencing “surprising” growth in its wireless business, Garcia said. The company, which previously focused on offering mobile service only to its own fixed-line subscribers, started a push last year to expand it to other potential customers, too. Garcia said user response to fiber offerings has been “very positive,” declining to provide specific figures.
Spain’s gross domestic product grew 0.1 percent last quarter, the first expansion in the euro region’s fourth-largest economy since the first quarter of 2011. Spain’s GDP will shrink 1.2 percent this year before growing 0.8 percent in 2014 and about 1.2 percent in 2015 on the back of robust exports, Standard & Poor’s said last week as it raised its outlook to stable from negative.
Jazztel, which has been cited by Banco de Sabadell and Swisscanto Asset Management as a potential takeover target for companies such as Orange or Vodafone Group Plc (VOD), is focused on executing its business plan, the CEO said.
“The issue of consolidation has been around for a long time but our mindset is focused on creating value for our shareholders through our business plan,” Garcia said. In July, Garcia said European consolidation among phone operators is needed to reach scale to remain competitive.
In its five-year business plan published in March, Jazztel predicted that its broadband market share will grow to as much as 16 percent by 2017, while mobile users will top 2.3 million and profit will more than triple to at least 180 million euros.
Fourth-quarter earnings and customer growth are so far in line with third-quarter growth and the company’s business plan, Garcia said. Third-quarter sales expanded 14 percent and profit beat analysts’ estimates.
Mobile-phone customers more than quadrupled over the past year to about 993,000 at the end of the third quarter, beating the full-year target of as many as 850,000. The company had 1.42 million broadband subscribers.
“We are always looking for initiatives to improve our guidance,” Garcia said. “If you look at the past five years, we have always beat our predictions. It’s part of our DNA.”
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