Vladimír Urbánek (Kurzy.cz)
Czech markets  |  February 28, 2013 10:18:33

TO2 - key will auction results and any frequency (not) PPF entry to the market

Telefónica Czech Republic yesterday presented its results for 4Q12, which did basically no major surprises, which led to a stagnation or slight growth in the shares of the market. The very fact that there has been some negative surprises in the current atmosphere in the European telecommunications sector have been a success. Predictability of results for companies of this kind of approach from the perspective of investors, a very important factor.
Some disappointment could bring a decision on the amount of dividends, if proposed CZK 30 per share is at the bottom end of the range of estimates. Gross dividend yield at slightly below 10% from the current price is still very high in the PSE and the whole sector.

According to the Very Sutedji Brokerjet brokerage firm in yesterday's conference call, the results indicated that faces many uncertainties, mainly due to the unknown outcome of the auction of frequencies in the country. This is reflected in vague outlook for this year. According to the management looks dividend of CZK 30 per share sustainably despite the costs per frequency. Telefónica Czech Republic is prepared to fund the purchase frequency increased leverage. The company did not provide sales outlook because it is not clear whether the PPF will enter the market when the auction of frequencies is not over yet. Expected slight decrease in OIBDA margin because TCR expected cost reduction. Strong growth in fees for management and brand in 4Q12 was mainly due to the fact that for the first nine months, it was just an estimate. Revenues from voice traffic in the quarter fell by 9.8% due to competitive pressures.

The reports from the auction of frequencies for 4G networks in other European countries, it seems that operators in most cases are willing to pay for a new license exorbitant sums, as was the case in past sales frequencies for 3G networks. From the available reports from home during the auction so far it seems that the willingness to pay more local operators will be slightly higher, mainly due to heightened competitive market situation. In mid-January the domestic press speculated that the opening price at 7.4 billion by then already roughly doubled. Much is speculated that high prices for licenses have announced efforts especially difficult PPF enter the domestic telecommunications market. Negative impact of input 4 mobile operator in the market, the existing operators already trying to deal with the creation of alternative operators under its auspices.TO2 announced collaboration with retail chain Tesco, T-Mobile again with GTS.

Although the high price of frequencies is generally good news, Telefónica Czech Republic has a strong balance sheet and plans to finance the costs of the auction through debt / surplus cash and therefore should not have an impact on dividends in 2013. In the event that the TCR was able to prevent the entry of PPF, we evaluated the longer term as a clearly positive, reported in January, analysts Brokerjet.

Related news:
Press speculation regarding the auction of frequencies - the price of 7.4 billion, duel ...
cz/336459-ctu-do-aukce-kmitoctu-se-prihlasili-stavajici-operatori-a-ppf / " - To auction frequencies signed up existing operators and PPF

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TO2 - klíčové budou výsledky aukce frekvencí a případný (ne)vstup PPF na trh

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