Mobistar, Belgium’s number-two mobile operator, attributed a sharp fall in H1 sales and profits to the dominance of the country’s two fixed-line operators and a new telecoms law making it easier for customers to switch operators.
According to Mobistar, “the implementation of the new telecom law and the duopolistic situation of the fixed operators [Belgacom and regional cable firm Telenet]” led to a 20 per cent price decrease in mobile voice calls during the last 12 months.
The new telecom law allows customers to switch operators after six months.
Moreover, Mobistar asserts that the fixed-line duopoly – allowing the two firms to maintain high prices – has allowed them to subsidise their mobile services.
Majority-owned by France’s Orange, Mobistar’s service revenues dropped by 9.2 per cent, to €655 million, during the first half of 2013. Net profit slumped 38 per cent, to €57.3 million.
The poor results prompted Mobistar to scrap its dividend and cut full-year revenue and profit forecasts.
Mobistar said turnover would drop by as much as 12 per cent in 2013 and underlying cash profits (EBITDA) would be a minimum of €300 million, a near 40 per cent drop compared with 2012.
On early Monday morning trading, Mobistar shares fell as much as 31.4 per cent to an 11-year low of just under €11.00. Emmanuel Carlier, analyst at ING in Brussels, quoted by Reuters, said Mobistar’s share price fall made it a takeover target.