ECONOMY

TIM Hellas expects flat profits, worries about interconnection fee hikes

Greece’s third-largest mobile operator TIM Hellas expects 2005 net profit to remain flat at last year’s level, its chief executive said yesterday, warning that further interconnection rate cuts could hurt. «This year’s profit will remain stable at last year’s level. We will be very satisfied if the company stabilizes and starts an upward course,» CEO Socrates Kominakis told reporters. TIM Hellas, which competes with CosmOTE and Vodafone Greece in the local market, saw net profits drop 14 percent to 78.8 million euros ($96.03 million) last year, hurt by rising competition. Net profit fell 8.2 percent to 7.8 million euros in the first quarter of this year, as tariff cuts and a decline in the number of users weighed. Kominakis said further interconnection rate cuts could hurt the TIM Hellas bottom line. «Any further cuts will have a significant impact on profit. We do not see any cuts in the future but this does not depend on us,» he said. Last year, the head of telecoms watchdog EETT told Reuters he might force the country’s mobile phone companies to cut charges for calls to their networks by two-fifths over the next three years, bringing them in line with European averages. Kominakis said the operator will expand its second- and third-generation networks in the next two years and also increase its stores from 180 to more than 200. «TIM Hellas will invest 400 million euros in 2005-07 to expand its 3G and 2G network,» he said. The operator’s 3G services now cover 31 percent of the population. He declined to say whether the provider was interested in acquiring the fourth mobile operator Q-Telecom, part of IT and telecoms group Infoquest. Analysts said TIM Hellas appeared to be losing subscribers to Q-Telecom, which targets the prepay market. «I cannot answer this. Any move has to do with price, quality of users and other issues. I have not entered into this process,» he said. Last week Troy GAC Telecommunications, owned by private equity firms Apax Partners and Texas Pacific Group, closed a deal to buy an 80.87 percent stake in TIM Hellas for about 1.1 billion euros from Italy’s Telecom Italia Mobile. (Reuters)