Telekom Srbija's H1 2012 profit down by as much as 90 percent

Telekom Srbija's profit in the first half of 2012 dropped about 90 percent to RSD 1.16 billion due to lower revenues, larger expenditures and an abrupt weakening of Dinar, said people at that company.

As they explained, business revenues in H1 2012 fell 0.6 percent from the same period last year, whereas expenditures grew 8.5 percent.

All that, coupled with high financial costs as a result of an abrupt change in the Dinar exchange rate during the first six months of this year, led to a 90 percent lower net profit in H1 2012 than in the same period in 2011, when it amounted to RSD 14.3 billion.

As people at Telekom noted, such poor business results are also a consequence of the fact that the company has been much too focused on the current financial result and not enough on a long-term sustainability over the previous years.

Telekom faces serious challenges on how to improve operations, ensure liquidity that is endangered by the company's borrowings and the repurchase of 20 percent of Telekom's own shares from Greece's OTE, increase investments in its core activity and infrastructure, and restrain the growth of expenses.

As people at Telekom explained, creation of a more stable business environment will represent a significant support to the company's efforts.

Based on current parameters, Telekom Srbija expects business results at the end of the year to be better than in the first half, but people at this company did not dare to forecast the level of profit because it also depends on the Dinar exchange rate to a significant extent.

According to the data provided by the Business Registry Agency, Telekom Srbija's profit in 2011 amounted to RSD 22.3 billion.