O2 CR's ups profit to Kc1.3bn in Q1, affected by epidemic

Prague, May 15 (CTK) - Telecommunication operator O2 Czech Republic saw its net profit rise annually by 2.6 percent to Kc1.27bn in Q1, and its consolidated operating revenues increased by 3.7 percent to Kc9.6bn, the company said in a press release today.

In the last two weeks of Q1, the coronavirus pandemic significantly affected the business, trading and operational activities of O2 CR. There was a significant slowdown in the trade channels activity in connection with restrictions on the movement of the population in the state of emergency declared in March, CEO Jindrich Fremuth said.

These, along with the roaming revenue loss, are the main reasons why O2 achieved only modest growth in key indicators, he said.

"Our successful strategy was confirmed by almost 12 percent year-on-year growth in EBITDA for the first two months of 2020. After the Czech government declared a state of emergency and adopted a number of extraordinary measures, EBITDA declined by 3.2 percent year-on-year in March 2020," CFO Tomas Kouril said.

It is impossible to make a reliable estimate of the impact of the epidemic on further development of the company's financials, he added.

The total number of mobile clients reached 5.86 million at the end of March. The number of contract clients reached 3.26 million.

The number of clients of any O2 TV tariff, provided over O2 fixed line as well as over Internet connection from any provider, reached 459,000.The 15-percent annual increase in new clients in March contrasts with the 65-percent annual growth in the previous two months.

The number of broadband Internet clients served via cable as well as via wireless technology reached 840,000. While the number of new clients grew by 11 percent yr/yr in January and February, it dropped by 5 percent annually in March.

In Slovakia, the total number of active clients of subsidiary O2 Slovakia reached 2.15 million.

O2 has joined its clients, the state and non-profit organizations in the fight against the spread of the coronavirus epidemic by providing several services free of charge. The value of provided services reached Kc384m.

According to J&T banka analyst Milan Vanicek, the results were in line with market expectations.

The strong start of the year was followed by the coronavirus pandemic in the second half of March which resulted mainly in lower revenues from roaming and hardware sales, Vanicek said.

Growth was, on the other hand, driven mainly by domestic fixed lines, where revenues rose by 12 percent to Kc2.95bn against the expected Kc2.62bn, he noted.

A contribution to higher profit also came from write-offs that were Kc150m lower, he added.

A majority stake of more than 80 percent in O2 is held by investment group PPF of the richest Czech Petr Kellner.

Rival T-Mobile raised sales by 3.1 percent to Kc6.8bn in Q1, its operating profit EBITDA rising by 2.2 percent to Kc2.8bn. The number of its mobile clients increased by 81,000 to 6.267 million. High-speed fixed connection was used by 350,000 clients, 28 percent more on the year. The number of television service users grew by 69 percent to 171,000.

Operator Vodafone does not disclose its results.

tam/er