William Malcolm

O2 First Half Net Profit Up 12%

In the first half of this year, O2’s telecommunications company increased its net profit by 11.5 percent year-on-year to 2.98 billion crowns. Consolidated operating revenues increased by 3.9 percent to approximately 20.09 billion. This follows from the data that the company published on its website today. According to the company, the main sources of growth were again revenues from O2 TV, mobile data or ICT (information and communication technologies) as well as revenue growth in Slovakia. O2 is one of the largest providers of telecommunications services in the Czech Republic. The majority owner of O2 is the PPF investment group with a share of about 90%.

“The acceleration of our fixed Internet, the development of 5G, the expansion of the O2 TV offer, investments in new IT technologies, the digitization of distribution and service channels – all this contributed to stable performance in the first half, which was otherwise further affected by pandemic and reduced mobility restrictions. Jindřich Fremuth, the CEO of O2 Czech Republic, said that the lower interest in traveling in connection with the covid-19 pandemic further negatively affected roaming revenues, but the O2 network was more than the long-term average during the spring wave than doubly loaded.

According to O2 data, the number of roaming users increased in the first half of this year compared to last year, but they are still about a third lower than in 2019, ie before the covidu-19 pandemic. According to O2, roaming losses compensate for profits from mobile data services. For example, in the Czech Republic, O2 revenues from mobile internet and data rose by 11.6 percent year on year to 4.14 billion crowns. On the contrary, revenues from mobile voice services and SMS and MMS decreased. Overall, operating revenues in the mobile segment in the Czech Republic increased by 2.2 percent year on year to 10.03 billion crowns and in the fixed segment increased by 4.8 percent to 6.25 billion.

In Slovakia, O2’s total operating revenues increased by 6.9 percent year-on-year to CZK 3.87 billion in the first half of this year. Of this, mobile revenues rose 5.6 percent to 3.65 billion.

The number of services provided by one of the O2 TV pay-TV tariffs increased significantly in the first half of the year. As of June 30, it increased by more than a fifth year-on-year to 572,000, including customers who use the monthly O2 TV Sport Pack and O2 TV HBO and Sport Pack packages. The number of fixed high-speed Internet services via cable and wireless technology also grew slightly, by 2.8 percent to 869,000.

On the contrary, the number of fixed voice lines decreased, which decreased by 13.7 percent to 375,000 in the first half of the year. On the other hand, the number of registered mobile SIM cards in the Czech Republic rose by 1.3 percent to around 5.99 million at the end of June this year. In Slovakia, growth was more pronounced, as the number of active SIM cards rose by 3.6 percent to 2.24 million in the first half of the year.

The total number of O2 employees, including subsidiaries, decreased by 3.8 percent to 4,788 in the first half of this year.

Tomáš Pfeiler from Cyrrus assessed O2’s results as positive, according to which both net and operating profit exceeded analysts’ estimates. “Positive growth catalysts include, for example, the acceleration of the Internet or the development of 5G networks. The current management for the analyst of the investment company Porto Vratislav Zámiš was not a surprise. In terms of income and profit, analysts’ expectations were slightly exceeded, but due to the planned crowding out of minority shareholders, the impact on the share price is negligible. It is expected that PPF will announce the displacement price, “he said. He estimates the displacement price at around CZK 264 per share, ie the amount received by qualified investors as part of an accelerated repurchase. “From this anchor, with the deduction of a smaller discount for the risk, the current price would not detach significantly, regardless of the form of the results,” added Zámiš.