Turk Telekom profits down 32% despite top-line growth

Turk Telekom has reported a fall in profitability for the first quarter of 2013, with rising interconnection and personnel expenses eating into its revenues.

The Turkish incumbent reported a 12.9% fall in operating profit, to TRY1.15 billion ($643 million), compared with the same period last year, and a 31.8% drop in net profit, to TRY526 million, which it blamed on foreign-exchange losses.

The bottom-line setback came despite a 6.2% increase in revenues, to TRY3.14 billion, thanks to the continued growth of the operator’s mobile and broadband businesses.

Turk Telekom has reported a fall in profitability for the first quarter of 2013, with rising interconnection and personnel expenses eating into its revenues.

The Turkish incumbent reported a 12.9% fall in operating profit, to TRY1.15 billion ($643 million), compared with the same period last year, and a 31.8% drop in net profit, to TRY526 million, which it blamed on foreign-exchange losses.

The bottom-line setback came despite a 6.2% increase in revenues, to TRY3.14 billion, thanks to the continued growth of the operator’s mobile and broadband businesses.

Turk Telekom (Ankara, Turkey) served 13.7 million mobile customers at the end of the first quarter, up from 12.9 million a year earlier, and saw monthly average revenue per user (ARPU) rise from TRY19.9 in the first quarter of 2012 to TRY21.9 a year later.

“Our most innovative tariffs in the market enabled us to be the clear leader of mobile number portability in Turkey,” said Hakam Kanafani, Turk Telekom’s chief executive, in a statement. “We continued to invest in our mobile business with a focus on our 3G network.”

The broadband business is also flourishing, growing to 7.1 million customers from 7 million in the first quarter of 2012 and increasing monthly ARPU from TRY36 to TRY39.3 over that period.

The company has been investing in higher-speed fiber-optic infrastructure, and said its fiber-to-the-cabinet network had passed more than 4.7 million homes by the end of the quarter, with its even faster fiber-to-the-home network available to about 2.1 million homes.

The operator does not disclose how many of its broadband customers are using the higher-speed networks, but the increase in ARPU suggests take-up has been good.

According to Hakam Kanafani, the chief executive of Turk Telekom, the operator invested about TRY250 million in capital expenditure in the quarter.

“Moreover, we are leading R&D efforts in the sector especially with our information and communication technologies companies,” said Kanafani. “We continue to leverage our convergence strategy and Group synergies to sustain our growth and leadership position in the Turkish telecoms market.”