Belgacom reported year-end results that were slightly below expectations, but the firm provided guidance for 2013 that was quite a bit worse than projected. The firm’s reported revenue grew 0.9% year over year versus the consensus estimate of 1%. Revenue growth was primarily driven by continued gains in its broadband and television customer bases, by a strong year at BICS–its international carrier business–and by acquisitions.
During 2012, Belgacom grew its broadband subscriber base by 3% to 1.24 million, its TV base by 14.5% to 1.39 million and multiplay packs by 13.6% to 1.24 million. However, this improvement was partially offset by declines of 3.7% to 3.09 million in fixed-line customers and 1.1% to 5.42 million in wireless subscribers. Fortunately, BICS had an excellent year with revenue growth of 5.3%. However, many analysts don’t think that growth rate is sustainable as the mix was particularly good in 2012 and it benefited from currency moves.
BICS also has much lower margins, so its success pressures the firm’s EBITDA margin. For the year, Belgacom’s EBITDA margin was 27.9% versus our projection of 28.1%. One of the firm’s big issues is its costs keep growing faster than its revenue, and this doesn’t look to change anytime soon.
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