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NewsGlobe: Financial
Can Belgacom TV Reverse Incumbent’s Fortunes?
IPTV Service Beats Expectations But Core Business Suffers
by Iain Morris
The modest success of the IPTV business was one of the few
positive highlights in Belgacom’s 2006 annual report issued
today.
The Belgian incumbent beat its target of 100,000 IPTV
customers by almost 40 percent, reporting that 139,665
consumers had now switched on to Belgacom TV.
But core fixed-line revenue dipped by 1.3 percent to €2.91 bn (US$3.83 Billion)
and mobile was down by two percent to €2.13 (US$2.80 Billion) since last year.
Overall revenue rose by 7.1 percent to €6.1 bn (US$8.0 Billion) thanks largely
to the €702 m (US$924 Million) contribution of Telindus, the systems integrator
acquired by Belgacom for €594 m (US$782 Million) in January last year.
Profits were up too, rising from €959 m (US$1.26 Billion) in 2005 to €973 m (US$1.28 Billion)
and topping analysts’ forecasts (as polled by Reuters) of
€909 m (US$1.19 Billion).
Belgacom is investing heavily in IPTV to compensate for the
declines in its traditional business, but customers may be
watching Belgacom TV for several years before the operator
sees an ROI. Revenues in 2006 were just €15 m (US$19.7 Million), against an
investment of €103 m (US$135.7 Million) in the VDSL infrastructure being rolled
out to support the service.
What’s more, Belgacom is clearly not expecting a surge in
enthusiasm for IPTV during 2007. The operator has set itself
subscriber targets that reflect acquisitions in 2006, although it
does foresee an increase in monthly ARPU of 25 percent to
€15 (US$19).
In other parts of the business the outlook is gloomy.
Belgacom is forecasting a similar decline in core fixed-line
revenue of between one and two percent in 2007 and believes
that revenues from mobile will slide by five to seven percent
over the same period.
“The outlook for mobile is quite negative,” said Rob Govens,
an analyst with financial services firm Dexia, according to
Reuters.
Belgacom is blaming competition and regulatory pressure for
its prediction. It also expects decreases to its mobile
termination rate to lop around €77 m (US$101.4 Million) off 2007 revenues.
Reuters reports that Belgacom has confirmed it will slash staff
numbers by 1,500 by 2011 – around eight percent of the total
workforce – as it works to converge its fixed, mobile, internet
and other business interests.
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