Poland’s leading telecom provider plans harsh measures to hold its market share
February 13, 2013
TPSA CEO Maciej Witucki
After announcing weak Q4 financial results and pessimistic forecast for 2013 Telekomunikacja Polska (TPSA), Poland's (and EU’s) biggest fixed line telecoms operator, also known by its trading name as Orange Poland, said it plans to cut 1,700 jobs this year to reduce the costs as well as sell some of its business in order to keep its leading position on the increasingly competitive telecom market.
TPSA suffered a massive 86% decline in Q4 net profits to a PLN 51.0 million Q4 attributable net, well below PLN 132.7 million expected. The company simultaneously slashed its dividend for the second time and will now offer a mere PLN 0.50 per share from 2012 profits, TPSA said separately.
Group revenues are down a heady 6.4% year on year, the highest rate of annual decline since Q1 2010. TPSA's mobile unit Centertel suffered a 6.3% decline in Q4 revenues to PLN 1.82 billion, a 2.1% decline from the Q3 take, TPSA's Q4 financial report showed.
The company’s CFO Jacques de Galzain said in comments to Q4 earnings that TPSA is facing "deep declines" in 2013 group revenues as a mobile price war rages on and regulated cuts in mobile termination rates take their toll.
TPSA will accelerate cost savings, including possible outsourcing and asset sales, he said.
The 2013 top line decline will stem from a PLN 2.7 billion market decline likely coming on MTR & F2M regulated price changes and "several hundred million" in market erosion due to a mobile price war on unlimited & convergent offers, CEO Maciej Witucki said.
He declined to name a TPSA group top line target beyond that general market forecast as "I don't need to give anyone a heart attack."
The market will continue to decline in 2014 as lingering effects of the MTR cuts take another PLN 800 million from the market. A return to growth is no earlier than 2015, Witucki said.
To counter the effect, TPSA plans to accelerate cost savings to "create a more effective and efficient organizational structure" in moves that could include outsourcing and sales of select assets, he said.
In a presumably related move, TPSA said in a statement that it will merge with its mobile unit Centertel.
Headcount should come down by 1,700 in 2013 on a voluntary leave program and further cuts are likely in following years, Witucki told reporters.
He also said that TPSA has launched the sale of its internet portal Wirtualna Polska. "Wirtualna Polska is not considered a core asset, thus the ‘disposal process’ has been initiated”.