Belgacom blames 1.4% dip in profit on regulatory pressure

Belgian telecoms incumbent Belgacom has blamed a 1.4% dip in net income for the first three months of the year entirely on the impact of adverse regulation.

The operator managed to maintain revenues at about €1.59 billion ($2.08 billion), the same as in the first three months of 2012, but saw net income slip to €171 million, from €199 a year earlier, due to regulatory measures that included cutting the rates operators can charge one another for call termination (so-called mobile termination rates).

Didier Bellens, Belgacom’s Chief Executive, described the results as “encouraging” given the challenges the operator faces.

“We have put great effort into repositioning our mobile offer since the implementation of the new telecom law in October 2012, which is pushing mobile volatility,” he said. “Our mobile repricing in December 2012, our retention actions and the rebuilding of our image as best mobile network provider clearly showed their benefit, turning our net postpaid customer growth back to positive.”

The new telecoms law to which Belgacom (Brussels, Belgium) refers allows customers to cancel their contracts with two months’ notice, even if they have signed up to long-term deals.

Stripping out the effects of regulation, Belgacom said its revenues would have risen by 1.4%, driven by the strong performance of its International Carrier Services division.

The sale of a technical facility connected with its ongoing network simplification project also helped to relieve the pressure on the operator.

Nevertheless, Belgacom acknowledged that revenues from its main consumer and enterprise business units would have fallen even without regulation.

Both fixed and mobile voice services remain under pressure, although Belgacom managed to offset some of the decline by selling mobile data and TV services.

The operator is sticking to previously issued guidance that full-year revenues will be 1–2% lower than in 2012 and that earnings before interest, taxation, depreciation and amortization will be down by 4–6% compared with last year.

“The guidance for full-year 2013 reflects the challenging environment with lower visibility due to a more volatile competitive landscape and an unfavorable economy,” said the operator in a statement.

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