Project Telecom dives on warning
Friday 25 April 2003
Shares in Project Telecom plunged 40 per cent yesterday after warning this year's profits would be at a similar level to last year's after business customers reigned in spending and mobile phone operators cut costs.
Project Telecom provides mobile and fixed-line telecoms services to the business market although more than 90 per cent of its profits come from reselling mobile services, mainly Vodafone's.
Blaming "increasingly difficult trading conditions", the company warned it had seen slower-than-expected growth during the first three months of the year.
It now reckons profits for 2003 from continuing operations will be "broadly in line" with last year's £10.2m. Analysts slashed their forecasts by about 34 per cent to that level. The shares slumped 27.5p to 42p.
Tough competition in the business market from mobile phone operators such as T-Mobile and Orange has meant Project Telecom's customer base has grown more slowly than expected while customers are also spending less, meaning that average revenue per use has fallen.
In addition, the company has been hurt by cuts in the connection commissions it gets from the operators. The mobile phone companies have cut the bonuses they pay resellers in an effort to recoup some of the income they will lose from recent telecoms regulation. Worse still, Project Telecom said it thought the mobile phone operators might look to implement further reductions in commissions later in the year.
One analyst who did not want to be named said: "The operators are basically cutting costs and Project is coming off much worse than everyone had thought. Meanwhile corporate spending is also much weaker."
Project Telecom also said yesterday that the fixed-line telecoms market remained tough thanks to a "significant supply and demand imbalance". It added: "Since the beginning of the year, the economic environment has become increasingly challenging for businesses in general and the telecommunications industry in particular."
Separately, Colt Telecom also warned yesterday that there were no signs of improvement in the market for telecoms provision to corporate customers.
Nevertheless, Colt produced first-quarter results that beat most forecasts. Sales were in line with expectations at £271.7m but an underlying, or Ebitda, profit of £34m exceeded forecasts.
- 1 What if 35 Palestinians had died, and 800 Israelis?
- 2 Disney heiress Abigail disowns her share of family profits in West Bank company
- 3 The secret report that helps Israel hide facts
- 4 'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
- 5 Ross Burden dead: MasterChef and Ready Steady Cook star dies at age 45 after suffering from cancer
Disney heiress Abigail disowns her share of family profits in West Bank company
Richard Norris: Man who had whole face transplant after being shot becomes GQ star
'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Ross Burden dead: MasterChef and Ready Steady Cook star dies at age 45 after suffering from cancer
The secret report that helps Israel hide facts
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
A day in the life of Vladimir Putin: The dictator in his labyrinth
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Boozy, ignorant, intolerant, but very polite – Britain as others see us
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
- < Previous
- Next >
iJobs Money & Business
Negotiable: Harrington Starr: Client Services Associate (Microsoft Office, Ana...
Negotiable: Harrington Starr: Graduate Data Operations Analyst (Graduate, Anal...
£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: Dynamics...
£4000 - £30000 per annum + benefits+bonus+package: Harrington Starr: Front-end...