Cesky Telecom’s 2001 IAS results, released at noon yesterday, surpassed the forecasts at all profit levels. Net income stood at CZK 6.1 bil., down 4% y-to-y, but above CZK 4.8 bil. anticipated by us and the market consensus. Despite falling throughout the year, EBITDA eventually showed a 1.9% full-year growth. Full-year revenues, which fell 2.3%, were actually below our forecast. Instead of falling, EBITDA margin actually grew to 48.7% (vs. 46.7% in 2000).
The positive earnings surprise was due to a very strong fourth quarter: Q4 EBITDA grew 24% y-to-y in spite of worsened Q4 revenues. Operating costs were reduced due to efficiency gains and falling interconnection costs. The company also reported significant foreign-currency gains. Detailed IAS results will be released on March 27.
Separately, the company said after the market closed that operating costs in 2002 should be flat. Given that our forecasts have implied almost a 5% growth in operating costs in 2002, we find this prediction very encouraging. However, we do not think the stock has much upside until the outcome of the privatization tender is known, which we do not expect until the end of March.
Also, the company will issue a CZK 3.5 bil. bond in June 2002 (maturity 3-5 years). Cesky Telecom called a more expensive CZK 7 bil. bond earlier this month.
(Ondrej Datka)