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UPDATE 2-TDC sees no early end to pricing pressures in Denmark
November 3, 2015 / 9:21 AM / 2 years ago

UPDATE 2-TDC sees no early end to pricing pressures in Denmark

* Danish revenues and profits fall on price pressure

* New CEO to set out strategy soon, sees no major M&A

* Shares rise after months of falls (Adds CEO on revenues, dividends, trader on share price)

By Alexander Tange

COPENHAGEN, Nov 3 (Reuters) - Telecoms operator TDC on Tuesday provided more evidence of pricing pressures in its home market Denmark, where third-quarter core profit fell 12 percent and the group’s new CEO said it would take time for the situation to improve.

Former state-controlled TDC and its rivals are in the midst of a price war in mobile phone services and have complained that prices in Denmark are now some of the lowest in Europe and cannot go any lower.

The group’s new chief executive, Pernille Erenbjerg, is trying to find a way out of the pricing problems and is expected to present a new strategy in the coming months.

“I can’t put a number on anything, but I can say that our revenues will be under pressure next year as well,” Erenbjerg told Reuters. “Many of the trends we see in the Danish market won’t change significantly in the short term ... We’ll be at the end of 2016, maybe the start of 2017 before things will start to look better.”

But despite the revenue pressure, and, in the absence of large acquisitions, TDC will continue to pay dividends, Erenbjerg said, allaying fears voiced by some analysts that payouts to shareholders could dry up soon.

She said major acquisitions were not on the table in a change of strategy from TDC’s previous CEO Carsten Dilling who oversaw a $2.2 billion buy of Norway’s cable operator Get A/S.

TDC also operates in Norway and Sweden but its Danish consumer and business divisions, which include mobile, landline, internet and television services, account for around 70 percent of overall revenues.

Revenues in the Danish business division fell 8.7 percent in the first nine months of this year while core profit dropped 16.9 percent. In the consumer division, revenues fell 2.2 percent and core profit 4.9 percent.

TDC’s shares have fallen sharply since August, when disappointing financial results led to the ouster of the previous CEO. They fell further when Nordic rivals TeliaSonera and Telenor abandoned their plan to merge businesses in Denmark, a deal investors had believed would have eased competitive pressures.

The shares rose more than 7 percent on Tuesday in response to the overall results coming in in line with expectations.

Danske Bank’s chief trader Mads Zink pointed to the fall of more than 30 percent in TDC shares since August.

“It is quite obvious it (the share price) has been beaten down too much,” he said. “It provides some relief that the third quarter results are relatively stable and pretty much in line with expectations.”

TDC, Demark’s largest telecoms operator, reported a 3.7 percent rise in total gross profit on a 4.5 percent increase in revenues, largely thanks to the Get TV acquisition. Organic revenues and profits were down.

Additional reporting by Ole Mikkelsen; writing by Sabina Zawadzki; Editing by Jane Merriman

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