* To withdraw 85 pct of carrier voice contracts
* Expects a charge of about 30 mln euros in second half of
* Sees full-year core earnings 5-10 pct below consensus
* Stock falls as much as 14 pct; biggest percentage loser on
(Adds CEO comments, details, updates share movement)
April 22 Telecoms provider Colt Group SA
said it would withdraw about 85 percent of its voice
contracts over the next few months as part of a strategic
review, wiping out about 175 million euros ($242 million) in
Colt's shares fell as much as 14 percent on Tuesday, after
the company also warned its 2014 profit would miss market
Luxembourg-domiciled Colt, which runs fibre-optic networks
and data centres for large and mid-sized companies, said its
plans would involve job cuts and charges of about 30 million
euros in the second half of this year.
"There will be certain job cuts but we are going through the
details of planning and will let the market know," Chief
Executive Rakesh Bhasin said on a conference call.
The company, whose clients include Fidelity, McAfee and
Swiss International Airlines, expects about half the reduction
in revenue to take place this year.
Colt's voice business, which accounted for a little over a
third of its 2013 revenue, has been under pressure over the past
year due to pricing cuts by EU regulators.
The company warned that 2014 EBITDA (before restructuring
charges) would be 5-10 percent below the consensus estimate of
325 million euros.
"Given that Colt's record of cash generation is poor, we
believe further execution will have to be shown before the
potential of Colt's plans is reflected in share price
performance," J.P. Morgan Cazenove analyst Carl Murdock-Smith
said in a note.
"Today's warning is unlikely to help in this building of
confidence over time."
Colt's first-quarter revenue rose 2 percent to 399.8 million
euros, but adjusted EBITDA fell about 8 percent to 74.1 million
euros in the period due to lower margins, continued churn and
pricing pressures in bandwidth products.
Colt said it expected the pressure on margins to continue in
the current year.
On a constant currency basis, voice services revenue grew
0.8 percent. However, enterprise voice revenue fell 11.4
percent, a slightly smaller fall than the 12 percent decline a
Colt's total data centre revenue grew 0.5 percent, while IT
services revenue grew 15 percent.
The company said it was seeing pockets of recovery across
Europe, with UK becoming its biggest growth driver. However, it
was experiencing a decline in revenue from legacy data products
in Spain and Italy.
Shares in the company were down 11.68 percent at 127.8 pence
at 1202 GMT. The stock was the top percentage loser on the
London Stock Exchange.
($1 = 0.7244 Euros)
(Reporting by Noor Zainab Hussain in Bangalore; Editing by
Gopakumar Warrier and Saumyadeb Chakrabarty)