Consolidated financial statements for the Crnogorski Telekom group, as well as financial statements for Crnogorski Telekom a.d. can be found on these pages.
Financial results for the first six months of 2010
Revenues of Crnogorski Telekom for the H1 amounted to EUR 56.1 million, which is YOY decrease of EUR 2.2 million (-3.7%). The successful implementation of a cost efficiency program resulted in YOY cost reduction of EUR 2.9 million (-7.5%), excluding special effects.
EBITDA excluding special effects increased by 3.5% YOY, to EUR 20.6 million. Operating income (EBIT) and Net income decreased YoY, by 27% and 32% respectively, mainly due to severance payments paid in 2010.
T-Com revenues decreased by EUR 1,6 million or by 4.7%. Major drivers of this decline are voice revenues, both retail (EUR -0.8 million; -5.7%) and wholesale (EUR -1.2million; -13.7%). Voice retail revenues decrease is caused by decrease of customer figures and usage, while decreased volumes of international incoming traffic was the reason for voice wholesale revenues decrease. Fixed line customer number decreased moderately by 1.6 th (-1.0%).
Strong increase of Broadband and TV revenues continued. ADSL revenues increased YoY by EUR 0.9 million (24.3%) driven by strong customer base growth of 14.7 th (42.3%). IPTV revenues increased by 0.6 milion (46.7%), mainly due to customer increase effect 12.1 YOY (54.3%). T-Com took over PayTV market leadership at the end of May, with 31.3% marketshare.
Mainly due to successful execution of cost efficiency program decrease of EBITDA excluding special effects was limited to 2.3% YoY to EUR 10.9 million.
Revenues of T-Mobile for the H1 2010 amounted to EUR 28.1 million and compared to the same period of 2009 decreased by 7.5%. This trend is primarily the result of the continuing decrease of voice revenues as result of intensive competition and economic slowdown. At the same time, internet revenues increased by EUR 0.3 million (43.1%).
EBITDA excluding special effects for the H1 2010 increased by 11.1% to EUR 9.6 million, due to significant cost savings.
At the same time, in Q2 2010 it was determined that a high number of prepaid mobile fill-up vouchers had been misappropriated at Crnogorski Telekom. Accordingly, previously recognized revenues of EUR 0.8 million were reversed and a provision of EUR 0.4 million was recognized in relation to VAT and other costs associated with the misappropriated vouchers, resulting in a negative EBITDA impact totaling EUR 1.2 million. A criminal investigation is under way in order to identify perpetrators.
At the end of June, 397.2 thousand customers used T-Mobile services, which was on the level of June 2009.
Mr. Daniel Szasz, Chairman of the Board of Directors and Chairman of the Management Committee of Crnogorski Telekom commented: In first half of 2010, Crnogorski Telekom achieved stable business results, in line with our expectations given the market situation and macroeconomic trends in the country.
We are very glad to say we achieved market leadership on the pay TV market in Montenegro, thanks to the 54% growth in the number of Extra TV subscribers. . On our mobile market we maintained our leadership in the post-paid segment with 44% market share where we also recorded 13% customer growth compared to last year. Despite the continuous improvement in our customer mix and the 18% higher usage these could not offset the significant decline in average tariff levels and lower volume of handset sales, resulting in 7.5% lower overall mobile revenues.
At the same time, thanks to the severe cost reduction measures undertaken, especially on the field of successful recovery of receivables, marketing expenses and other administration costs EBITDA grew by 3.5%. Consequently, EBITDA margin, excluding special effects, increased from 34% to 37% year-on-year.
In the future period we will we continue improving operating and cost efficiency and focus on strengthening our market positions, but above all make sure our customers always get high-quality products and services that satisfy their needs for communication and entertainment.
Financial results for the first nine months of 2010
Revenues of Crnogorski Telekom for the first nine months of 2010 amounted to EUR 89.8 million, which is YOY decrease of EUR 3.4 million (-3.7%). The successful implementation of a cost efficiency program resulted in YOY cost reduction of EUR 4.8million (-8.1%), excluding special effects.
EBITDA excluding special effects increased by 4% YOY, to EUR 35.3 million. Operating income (EBIT) and Net income decreased YoY, by 7.0% and 14.7% respectively, mainly due to severance payments and lower interest income in 2010.
T-Com revenues decreased by EUR 2.2 million or by 4.1%, to the level of 52.1 million. Major drivers of this decline are voice revenues, both retail (EUR -1.0 million; -4.8%) and wholesale (EUR -2.1million; -13.7%). Voice retail revenues decrease is caused by decrease of usage and average prices, while decreased volumes of international incoming traffic was the reason for voice wholesale revenues decrease. Fixed line customer number decreased moderately by 0.2 th (-0.1%).
Strong increase of Broadband and TV revenues continued. ADSL revenues increased YoY by EUR 1.3 million (21.4%) driven by strong customer base growth of 14.8 th (39%). TV revenues increased by 1.0 milion (45%), mainly due to customer increase effect of 11.6 th (46%) YoY. T-Com’s Extra TV service holds PayTV market leadership, with 34.1% marketshare.
Mainly due to successful execution of cost efficiency program decrease of EBITDA excluding special effects was limited to 2.2% YoY to EUR 16.9 million.
Revenues of T-Mobile for the 9 months of 2010 amounted to EUR 46.7 million and compared to the same period of 2009 decreased by 6.7%. This trend is primarily the result of the continuing decrease of voice revenues, as result of intensive competition and economic slowdown. At the same time, internet revenues increased by EUR 0.4 million (39%).
EBITDA excluding special effects for the 9 months 2010 increased by 10.3% to EUR 18.4 million, due to significant cost savings.
At the end of September, 452.2 thousand customers used T-Mobile services, which was 4.4% below the level of September 2009.
Mr. Daniel Szasz, Chairman of the Board of Directors and Chairman of the Management Committee of Crnogorski Telekom commented: “Our performance for the first three quarters of 2010 reflects solid execution of our strategy in main business areas, despite the challenging business environment that keeps putting pressure on our revenues.
We are very glad to say that one of our strategic aims - providing broadband services to as many people as possible in Montenegro is showing excellent results; the expansion of our ADSL and IPTV services was continued, with customer base increase of 39% and 46% respectively. We are proud to say we reached an impressive number of more than 50 000 ADSL customers, while with more than 36 000 IPTV customers we remained market leaders on the pay TV market in Montenegro. On the mobile market we maintained our leadership in the post-paid segment with 43.8% of market share where we also recorded 9.5% of customer growth compared to last year.
At the same time, thanks to the ongoing implementation of a cost saving program, we managed to overcompensate for the revenue decrease, which reflected positively on our profitability.
The third quarter of 2010 was marked by introduction of many important products and services – such as Integris, an integrated ICT solution for business customers or iPhone 4, one of the most popular mobile devices, in Montenegro offered exclusively to T-Mobile customers. In the future period, we will continue with innovations in our offer for both business and residential segment, and at the same time, we will keep the focus on improving our cost efficiency.”