A brief respite from falling figures

Netia, the second-largest telecoms group in Poland, posted a surprise zł.17.7 million profit in Q3, as compared with zł.22.6 million in Q3 2005. This was welcome news for investors, despite the slip in profits, as most had anticipated a third-quarter loss.

The Q3 profit, however, came from one-off gains, including the cancellation of licensing fee obligations for El-Net, which Netia purchased last year. A second boost came from the acquisition of ProFuturo, one of its rivals, which added zł.11.4 million to the group's figures.

Investors were less pleased by Netia's admission that it anticipated a return of losses in the fourth quarter, sending its share price, already down 10 percent this year, still lower. Factoring in the Q3 results, Netia's nine-month net loss amounts to zł.5.9 million.

The group's losses stem in part from planned investments, but Jon Eastick, its chief financial officer, stated that its strategy envisages double-digit revenue growth in 2007. Part of its strategy is based on its mobile arm, P4, which will begin offering services in Q1, 2007. However, Netia's losses from its investments in the mobile- services firm this year have so far amounted to zł.15 million. P4 is a cooperative venture between Netia, which has a 30-percent stake, and Novator, an Icelandic private equity fund.

Both Netia and TP, Poland's dominant telecom, have suffered this year due to changes in the sector's regulatory environment, following the inception of Poland's new telecoms watchdog and its moves to open up the market and reduce prices. (Reuters)