According to daily Rzeczpospolita, TPSA's deputy CEO, Alain Carlotti, held a press metting last Friday reiterating the company's previously announced targets and citing some positive developments. Carlotti reportedly reiterated that the company is on target to reach its guidance for 1.6m and 2.5m ADSL subscribers at the end of 2006 and 2007 respectively, following its 1Q06 DSL count of some 1.3m. Carlotti added that they are targeting 25k triple play subscribers at the end of the year, and that homes passed for the triple play service is now some 800k, and should reach some 2m by the end of October. He reiterated plans to launch video on demand by 3Q06, and games on demand by 4Q06. Most importantly, Carolotti reportedly confirmed that 1H06 results will be good.
In our view, comments on a potentially positive trend in 1H06 should be marginally positive for the share price given all the recent pronouncements from the regulator and TPSA's competitors that had negative implications for TPSA. We continue to believe that TPSA will overshoot on some of its KPI targets, especially in the broadband segment, where we see their 1.6m DSL subscriber target for 2006 as underwhelming, given that they recorded over 1.3m at the end of 1Q06. We believe that following several disappointments in 2005, TPSA is keeping targets very realistic for 2006, thereby giving room for positive surprise. We reiterate our Buy recommendation on TPSA.