Netia: Strong results for 2Q12

Netia posted a strong set of results for 2Q12 this morning. Net income came in at PLN 21m for 2Q12. The presented results are not comparable y/y due to the full consolidation of Dialog and CDP in 2Q12.

The outcome was far above the market’s expectation of a loss of PLN 19m on the bottom line and was boosted by a one-off PLN 21m gain on tax. Despite the reported one-off costs of PLN 17.5m related to HR provisions and PLN 10.2m of integration costs, the company reported EBITDA of PLN 134.9m in 2Q12 with a strong 25.1% margin on a reported basis and a
29.1% margin adjusted for one-off costs. EBITDA came in 17% above the consensus, mainly on the back of the optimization of costs structure and executed synergies after the Dialog and CDP acquisitions.

As expected, Netia presented weak KPIs with RGU at 2.79m (up 2k q/q) in 2Q12. A falling number of voice subscribers (down 13.7k q/q) was offset by a growing number of TV subscribers (up 9.4k q/q) and growth in the mobile subscribers base (up 8.2k q/q). In the broadband subscriber base, despite the gain of 1.4k users from acquired ETTH networks, Netia
presented a net client drop of 8.5k to reach a total of 903.9k users at the end of 2Q12.

Netia’s management revised its forecast for RGU from 2.9m to 2.75m in 2012. The firm’s expectation for revenues has been revised from PLN 2.185bn to PLN 2.125bn in full-year 2012. Netia reiterated its full-year guidance for EBITDA adjusted for restructuring costs at PLN 600m in 2012. The forecast for operating cash flows was revised up from PLN 300m to PLN 330m in 2012.