Foreign currency exchange rate and massive network investments affected operator profits in 2007

Orange, Romania’s largest mobile phone company, posted an 11.23 percent drop in profit, while Vodafone’s profit decreased by 18.48 percent. RCS&RDS’s profit dropped 46.8 percent, while Zapp and Cosmote lost €9.3 million and €118 mln, respectively.

“The main factor that influenced our profit in 2007 was the depreciation of the US dollar to the national leu currency. From January to September 2007, fees were calculated in US dollars, and the US currency suffered negative fluctuations to the euro and leu,” said Vodafone officials.

Vodafone’s operational costs were reported against the euro and leu in 2007, and investments in network and technology continued to be high.

The Romtelecom landline phone operator lost clients in 2007. This, coupled with costs generated by fiscal control, higher operational expenditures, and investments in advertising led to a drop in earnings before interest, taxes, depreciations and amortization (EBITDA) to less than €300 million.

“The impact of amortization due to major investments and national currency appreciation, combined with the consolidation of a large part of Cosmote’s losses, led to a net loss of over €21 million in 2007,” said Romtelecom representatives.

Cosmote invested €201 million to expand its network, which increased losses. “This year, the constant increase of our client base and the aggressive strategy will put a halt to losses and contribute to operational profit. Also, we will launch several convergent products by the end of the year, in collaboration with Romtelecom, which will increase the income of both companies,” said Corporate Affairs Manager of Cosmote Romania, Tereza Valcan.