COPENHAGEN (Reuters) - TDC said on Tuesday its earnings in Denmark are under pressure due to extremely low prices after the telecoms operator reported a 12 percent drop in third-quarter core profit in its home market.
Formerly state-controlled TDC has been hit by a price war in mobile phone services and it and other telecom operators complain prices in Denmark are some of the lowest in Europe and they say cannot go any lower. This has forced TDC to offer bundled services for the same price.
TDC’s new chief executive Pernille Erenbjerg, appointed in August, is trying to find a way out of the pricing problems.
“The competitive Danish mobile market, among the cheapest in Europe, is constricting earnings and challenging our strategic ambition to continue to invest in telecom infrastructure,” Erenbjerg said in a statement.
Shares in TDC, Denmark’s largest telecoms operator, have fallen 11 percent since Nordic rivals TeliaSonera and Telenor abandoned their plan to merge businesses in the country, a deal investors had believed would have eased competitive pressures.
TDC’s shares rose more than 7 percent on Tuesday as the group’s overall results, including markets outside Denmark, were in line with expectations and did not contain any negative surprises.
TDC’s Danish consumer and business divisions, which include mobile, landline, internet and television services, account for around 70 percent of the company’s 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.
“It was very apparent with the new CEO that new acquisitions like Get (TV services in Norway) are not on the table,” Alm. Brand analyst Michael Friis Jorgensen said.
“They’d rather look at how to improve results in their current operations and this is where customer loyalty is very much in focus.”
Reporting by Sabina Zawadzki and Alexnder Tange. Editing by Jane Merriman