Orange Q1 net profit beats expectations

WSE-listed telecom Orange Polska posted an attributable net profit of PLN 39 million in Q1 2017, way ahead a PLN 19.5 million net loss expectations. The result was down by 102,1 percent q/q and 60,2 percent y/y from last year's PLN 98 million profit. EBITDA for Q1 came in at PLN 748 million, down by PLN 120 million or 13.8 percent year-on-year. EBITDA margin stood at 26.5 percent, down by 4.5 pp year-on-year. The year-on-year trend was significantly distorted by PLN 94 million provision release in labor costs booked in 1Q 2016. Excluding this item, fall in EBITDA reflects mainly structural decline of legacy revenues and continued support from indirect costs optimizations, mainly in labor, advertising, promotion and other costs. Orange revenues of PLN 2.82 billion were up 0.5 percent y/y. “The growth resulted from higher share of installment offers sales (reflected in robust growth of mobile equipment), higher revenues from ICT business and fixed broadband, which has returned to a modest growth (since this quarter wireless for fixed is reported in fixed broadband while previously it was part of mobile). These positives offset lower revenues from mobile services and legacy fixed business lines (PSTN and wholesale). Mobile service revenues were down 6.6% year-on-year, slightly more than in the previous quarters, mainly due to bonuses offered to pre-paid customers for SIM cards registration and revenue loss from unregistered pre-paid customers after February 1,” the company said in its market filing.