COPENHAGEN: Danish telecoms group TDC , which rejected a takeover offer last month, reported better than expected second-quarter results on Wednesday and an increase in market share for its mobile business, sending its share price sharply higher.
The shares were up 7.1 percent at 37.40 Danish crowns by 1205 GMT and back at the best levels reached last month when the company said it had rejected a takeover approach from what appeared to be private equity firm Apollo Global Management .
The company, which declined to comment on Wednesday on whether it remains a takeover target, said earnings before interest, tax, depreciation and amortization (EBITDA) fell 9.7 percent to 2.12 billion crowns ($319 million) in the second quarter, ahead of the average market forecast of 2.08 billion crowns.
It also said the mobile business grew organically for the first time in five years with the addition of 26,000 new customers and suggested the price war has abated.
The Danish market has been struggling with fierce competition between four rival mobile network operators – TDC, Telenor, CK Hutchison’s “3” and Telia .
“In the last part of 2015 we increased prices. Our average revenue per customer is actually flat now, instead of falling as previously,” Chief Financial Officer Stig Pastwa told Reuters.
In January the company cut its dividends and initiated a three-year cost-cutting plan to save between 600-700 million crowns by 2018.
“It is an important message to send to the market, saying that it has stabilised a negative trend, which has put a lot of pressure on TDC and its earnings for years now,” said Sydbank analyst Morten Imsgard.
When rivals Telia and Telenor failed to win approval for a merger of their Danish businesses last year because the European Commission feared that it would lead to price increases shares in TDC dropped(reut.rs/2aVavPk).
Prices have since increased but Pastwa said it was still seen as a problem in having four rivals competing.
“Four is a lot compared to many other markets. It is a business where a lot of money is invested,” Pastwa told Reuters.
Imsgard said four network operators in Denmark with 5.7 million inhabitants was far too many.
“For TDC it is great, that the industry is willing to raise prices. But it is a matter of time before it goes the other way around,” Imsgard said.
As part of the cost-cutting strategy TDC aims to make production more cost-effective and reduce the amount of customer systems.
“We have had too many systems and too big a complexity internally. If we simplify, it means cheaper production and more agile customer services,” Pastwa said.
TDC also announced the sale for $350 million of its TDC Sweden subsidiary to Tele2 in June, with the proceeds going towards reducing debt and strengthening its core businesses in Denmark and Norway. ($1 = 6.6573 Danish crowns).
