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UPDATE 2-Cyfrowy Q2 net misses estimates, shares fall

Published 08/20/2009, 03:16 AM
VIV
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KBC
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* Q2 net at PLN 56 million vs 63 million seen in poll

* Sales up 17 percent to PLN 323 million, in line with poll

* H1 operating costs up by half to PLN 506 million

* Shares fall 2.9 percent (Adds analyst comment, details)

WARSAW, Aug 20 (Reuters) - Quarterly profit at Poland's top pay-TV provider Cyfrowy Polsat suffered from a bruising battle for customers and a weaker zloty, and the result fell short of market expectations, sending its shares down.

Operating costs grew by half in the first six months of the year to 506 million zlotys due to hefty marketing expenditures to attract new customers and programming spending, which is denominated in dollars and thus susceptible to the weaker zloty.

The group earned a net profit of 56 million zlotys ($19 million) versus 63 million seen by analysts even as revenue came in line with expectations, sending its shares down 2.9 percent at 16.60 zlotys by 0707 GMT.

Cyfrowy, controlled by Poland's richest man and media magnate Zygmunt Solorz-Zak, has powered ahead of competition thanks to focusing on cost-conscious clients, who are increasingly opting for the cheapest programming options.

Analysts said they were concerned by the number of cancellations, with many customers choosing to switch to Cyfrowy's rivals owned by France's Vivendi and eastern Europe's largest media group, TVN.

"One can see the influence of stiff competition on the market, which at the same time is becoming saturated," said Leszek Iwaszko, analyst at KBC Securities in Warsaw.

"The results are poor."

Cyfrowy and its rivals are forced to spend heavily to attract new customers, but Iwaszko said some 90 percent of Cyfrowy's new clients in the quarter opted for its lowest programming package.

Shares in Cyfrowy have gained 47 percent since March to value the company at $1.8 billion. (Reporting by Adrian Krajewski; Editing by Jon Loades-Carter and Gilbert Kreijger) ($1=2.969 Zloty)

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