Telekomunikacja Polska S.A. (TPSA) results for full year 2007

Wednesday, January 30th, 2008
|

  • Full year revenue above guidance, despite continuous difficult regulatory conditions
  • Fourth quarter 2007 revenue down only 0.8% year-on-year, sustained by strong growth in mobile (+9.5%)
  • Broadband customer base up 25.8% year-on-year significantly outperforming the market, with IPTV subscribers almost doubling in the fourth quarter alone
  • Mobile customer base up 13.1%, despite increasing competition from new entrants
  • GOM rate within guidance despite increase in provisions for claims and litigations, risks and other charges
  • Fourth quarter investments aimed at shortening time-to-market and accelerating integration
  • Objectives for 2008: revenue erosion limited at approximately 1% with GOM margin target maintained between 42% and 44%
  • Proposed shareholder remuneration: PLN 2.75 billion, equivalent to PLN 2.01 per share, including PLN 700 million share buy-back and increase in ordinary dividend per share to PLN 1.50, from PLN 1.40 last year

Review of Fixed Line Segment

TP successfully defended its market share in subscriber additions by implementation of the action plan to stimulate customer acquisition, including among other combined sales of an ADSL subscription with a laptop to be paid by instalments and MS Office at an attractive price. TP broadband customer base therefore increased 26% year-on-year to 2.15 million households, of which 94% are retail; Orange Free-dom, broadband offer of Orange based on BSA agreement with TP, saw a good take off in sales from its launch late in the year.

Broadband average revenue per user (ARPU) was down 21.5% in full year 2007. However, ARPU stabilized throughout the year thanks to TP’s action plan to increase the value sold to customers: this meant including the sale of Voice-over-IP (VoIP), TV-over-DSL and bandwidth upgrades within new bundle offers including triple play offers with premium TV content.

2006 2007
Q3 Q4 Q1 Q2 Q3 Q4
IPTV client base (000’s) 0 3 9 19 23 40

Consequently, Broadband revenue was up 5.1% in 2007, a significant slowdown in comparison with the 20.3% growth rate achieved in 2006. Nonetheless, revenue momentum improved at the end of the year with 7.6% year-on-year growth in the fourth quarter.