Deutsche Telekom’s business in Romania declines after rebranding

Telekom Romania, the country’s largest communications group, which is part of Deutsche Telekom, posted a 7.5% drop in revenues in the fourth quarter of 2014 compared to the same period of 2013, to EUR 264 million. Overall, last year, Telekom Romania’s revenues went down by 1.8%, to EUR 1.05 billion. Deutsche Telekom performed the largest rebranding in the Romanian telecom sector, in September 2014, bringing two local companies and two different brands, Romtelecom and Cosmote Romania, under its “T” brand. The German group not only changed the two companies’ names, but also integrated their offers in unique service packages. Before September 2014, Romtelecom and Cosmote sold their services separately. In terms of business and financials, Telekom Romania still functions as two separate entities, Telekom Romania Communications (the former Romtelecom) and Telekom Romania Mobile Communications (the former Cosmote). Telekom Romania Communications is 54%-owned by Deutsche Telekom via Greek group OTE while 46% of its shares are held by the Romanian Ministry of Informational Society. Telekom Romania Mobile Communications is 70%-owned by OTE with the remaining 30% held by Telekom Romania Communications. Telekom Romania Communications covers the fixed line operations, which include fixed voice lines, fixed broadband internet and TV (cable, direct to home and IPTV). The company registered a 6.9% drop in revenues in the fourth quarter of 2014 compared to the same period of 2013 (from EUR 163 million to EUR 151 million). According to the group’s representatives, this decline chiefly reflected lower fixed termination rates imposed by regulatory authorities. The operating profit EBITDA also dropped by 25%, to EUR 34.6 million. For the whole year, the company’s revenues remained similar to those in 2013, at EUR 609 million, as the first three-quarters were better in terms of sales. Its yearly EBITDA went up by 0.4%, to EUR 160 million. In terms of clients, the company lost 3.2% of its fixed voice lines last year, ending 2014 with 2.18 million subscribers. The number of broadband internet clients also declined by 1.4%, to 1.23 million. The TV segment was the only one that registered an increase of 4.5% compared to end-2013, to 1.41 million subscribers. Telekom Romania Mobile Communications had an 8% drop in revenues in the fourth quarter, to EUR 112.6 million. Its EBITDA went down by 13% to EUR 27.5 million. For the whole year, the company posted 4.2% lower revenues (EUR 439 million), and 11% lower EBITDA (EUR 105.6 million). The number of mobile clients went down by 2.3% compared to end-2013, to EUR 5.95 million. However, the group said the number of business customers grew by 5% compared to 2013, reflecting the company’s targeted offers for professional users and synergies created following the rebranding with Romtelecom. Andrei Chirileasa, andrei@romania-insider.com