UPDATE 1 - Croatian Telco T-HT 9-mo Net Profit Falls 7.5% to 1.747 Bln Kuna (241 Mln Euro) - Table

The company issued the following details in a statement on its website:

Operating cash flow remains healthy at 1.659 billion kuna, the statement added.

WIRELESS UNIT RESULTS SHOW RESILIENCE OF POSTPAID SEGMENT

The revenue the company’s wireless unit, T-Mobile, fell by 3.5% to 3.232 billion kuna through September. The main component of the decline was a 12.2% fall in prepaid revenue as consumers tightened personal spending. By contrast, postpaid revenue fell by just 1.9%, demonstrating the greater resilience of spending by postpaid customers, the parent company said.

The number of T-Mobile subscribers rose by 10.1% to 2.88 million in the first nine months of the year, representing an estimated market share of 47.4% by subscribers, and an estimated 49.4% market share by revenue.

T-Mobile continued to increase its postpaid subscriber base over the review period, reaching nearly 900,000. The postpaid share of the total subscriber base rose by 1.6 percentage points from 29.5% in 2008 to 31.1% in 2009, the statement said.

T-Mobile’s subscriber churn rate is 1.7%, slightly higher than the 1.3% achieved in the first nine months of 2008 (1.3%). Postpaid churn remains unchanged at 0.7%, demonstrating customer loyalty to T-Mobile despite the competitive environment.

T-COM UNIT LEADS FIXED SEGMENT AS LINES, VOICE MINUTES DECLINE

T-HT said its T-Com unit, which provides fixed telephony, wholesale services, Internet and data services, continues to lead all segments of the fixed-line market as competition remains strong, with eight other providers in a market characterised by steadily declining lines and voice minutes, fixed-to-mobile migration, increased use of VoIP technology to make calls, and local loop unbundling.

Internet services continued to grow strongly to 847 million kuna through September from 651 million kuna a year ago and now contribute 22.2% of T-Com revenue and 12.9% of Group revenue.

The continuing strong increases in internet revenue helped T-Com offset the expected decline its fixed-telephony business, with divisional revenue falling just 2.4% to 3.808 billion.

Total mainlines were 4.1% lower at 1.5 million, compared with 1.57 million at the end of September 2008. Fixed telephony revenue was 9.5% lower at 1.915 billion. Total traffic fell by 9.2% to 2.59 billion minutes, most of which were calls to numbers within Croatia.

T-Com's ADSL mainlines continued their strong increase, rising 22.7% to 526,722 connections.

As at 30 September 2009, T-Com MAXtv, T-HT’s IPTV service, has nearly 190,000 subscribers, making it the largest pay-TV service in Croatia, a position it has achieved two years after its launch.

T-HT, T-MOBILE START MERGER PROCESS

T-HT said it signed on Thursday a merger agreement with T-Mobile, formally beginning a merger process, which is expected to become effective on January 1, 2010.

"The merger is intended to improve both customer service and internal efficiency by creating a single organisation with separate customer facing units for residential and business segments," the statement said.

Last month, Deutsche Telekom's fixed-line and mobile units in Macedonia said they will decide on a possible merger or reorganisaton by the end of year.

T-HT shares were traded at 270.22 kuna by 1115 GMT on Friday on the Zagreb Stock Exchange, up from 269 kuna at Thursday’s close.

(1 euro=7.2335 Croatian kuna)