Cesky Telecom (CT) announced in press release that the number of ADSL subscribers reached 300,000, compare to cable, Wi-Fi or mobile connections is ADSL the most popular. Broadband internet is now available in more than 90% of CT’s lines. ADSL users spend an average 14hrs and dial-up users only 4.5hrs a week. CT also increased the sped of broadband connection up to four times. CT intends to double its fast speed internet customers this year. Number of fixed lines is decreasing every year and we believe that ADSL can soften drop as it represents one of the fixed lines growth area. We see news positively in long term but it should not impact today’s trading.
We reiterate our Sell recommendation on CT. We see no trading impact from the news and reiterate our Sell rating on Cesky Tel based on stretched valuations of 6.7x 2006F EV/EBITDA, which represents some 20% premium to its regional peers.