ÒEesti Telekom is satisfied with the results,Ó said Hille Vork, the companyÕs financial manager. ÒIt has been in line with managementÕs expectations.Ó
Compared to 1999 the Estonian telecom group revenue increased 11 percent, while operating expenses grew 8 percent.
The companyÕs 1999 results, however, were affected by the companyÕs restructuring and the amendments to the income tax law.
According to Urmas Riiel, an analyst from Hansapank, Eesti Telekom was one of the most profitable telecommunications companies in Eastern Europe.
ÒEesti Telekom is well prepared for the opening of the market. We expect a moderate increase in sales and a small decline in profitability for the coming year. In general the profit should reach the same level thanks to the increasing sales,Ó said Riiel.
According to Vork the revenue growth may stumble a bit this year. She said that the earnings before income tax and depreciation and amortization, which was 52 percent last year, may drop below 50 percent this year.
Analysts from the investment bank Trigon said Eesti TelekomÕs revenues met its expectations but that the companyÕs profit margin was smaller because of increased expenses in the fourth quarter.
Vork said that the costs increased in the fourth quarter more than expected because its subsidiary Eesti Telefon had to pay fees to the Estonian National Communications Board and premiums to the employees of Eesti Telefon and Estonian Mobile Phone in the fourth quarter.
ÒEesti TelekomÕs full-year EBITDA was 2 percent and profits before extraordinary items 5 percent below our estimates in the year 2000,Ó said Kristel Kivinurm, a Trigon Capital analyst. ÒWe have decreased our year-end price target to 130 kroons but maintain an ÔoutperformÕ rating.Ó HansapankÕs target share price for Eesti Telekom is 140 kroons.
In 2001 Trigon Capital expects Eesti TelekomÕs net profits (excluding extraordinary items) to decline by 23 percent to 837 million kroons.
Eesti TelefonÕs net profit last year was 417.1 million kroons on sales of 2.69 billion kroons. The respective figures for Estonian Mobile Telephone were 679.7 million and 1.81 billion kroons.
Eesti TelefonÕs 2000 revenues were less glowing. Revenue from local calls, the companyÕs fastest growing revenue sector, grew by 28 percent mostly due to the Internet dial-up service, which accounted for 40 percent of local call minutes.
At the end of 2000, Estonian Mobile Telephone had 327,000 customers, one-third of whom used pre-paid call cards. Its client base grew by 83,000 in one year and its estimated market share is about 60 percent.
Eesti Telekom invested 1.37 billion kroons in 2000. Eesti Telefon accounted for about 800 million kroons in investments, while Estonian Mobile Telephone accounted for 407 million kroons.
Eesti TelekomÕs total assets were 4.62 billion kroons at the end of last year.
Eesti Telekom is reportedly considering expanding into Russia.
The company has not revealed the size of the dividends paid last year.