Romtelecom Net Profit Up 5.3%

RomTelecom reported revenues of 222.1 million EUR for the first quarter of the current year, roughly unchanged from the prior year level. Lower revenues from traditional telephony services, reflecting the drop in the number of subscriber lines and retail traffic as well as reduced wholesale and payphone revenues, were offset by the increase in monthly rentals along with the growth of new revenue streams such as data and TV services.The combination of mobile substitution and higher competition from fixed-line alternative carriers affected the number of lines, which decreased by 16% compared to Q1"06, and the volume of local traffic, down 27%.

Interconnection revenues declined by 9% in Q1"07, despite the 14% increase in wholesale traffic, as a result of intense competition from alternative and mobile operators using RomTelecom"s network at significantly reduced rates, as mandated by the Regulator.

Data services (ADSL, VPN, other broadband services) recorded significant growth in the quarter, more than quadrupling compared to Q1"06, in line with the company"s objective to increase its non-voice services market share. The total number of billed ADSL customers reached 137,000 at the end of Q1"07, an increase of 110,000 compared to one year earlier.

The recently launched satellite TV service Dolce proved to be a success, winning over 163,000 TV customers four months after launch.

Operating expenses excluding depreciation and amortization for Q1"07 increased by 2.8% to euro131.4mn, mainly reflecting higher redundancy and payroll expenses, increased Cost of Goods Sold (as a result of higher CPE sales), and increased costs for promoting newly launched services. Operating Income before Depreciation & Amortization in Q1"07 decreased by 4.5% compared to Q1"06, while net income increased by 5.3%, from euro18.8mn in Q1"06 to euro19.8mn in Q1"07 due to lower taxes.

Headcount remained stable in Q1"07 compared to the end of 2006, reaching 12,257 employees.