* Chunk of 100 mln euro savings to go on handset subsidies
* Potential KPN synergies could strain Vodafone relationship
* Shares fall 0.5 percent
VIENNA, Jan 15 Telekom Austria plans
to save 100 million euros ($134 million) in operating costs this
year, said analysts who attended a company meeting with
investors on Tuesday.
A large part of the savings are likely to be spent on more
generous handset subsidies for customers as the group seeks to
attract and keep subscribers in its highly competitive domestic
market, the analysts told Reuters.
Despite a recently completed 1.3 billion euro takeover of
Orange Austria by Hutchison Whampoa that reduced the
number of mobile operators in Austria to three from four,
Telekom Austria is expecting little let-up in competition.
Austria's biggest telecoms company, now 26 percent owned by
Carlos Slim's America Movil, warned last week of a
further fall in revenue this year and said that tough conditions
would continue to weigh on margins.
In a change of policy, it gave no forecast for earnings
before interest, tax, depreciation and amortisation (EBITDA).
Espirito Santo telecoms analyst Andrew Hogley, who attended
Tuesday's capital markets day - which was closed to journalists
- said that all of the cost savings are likely to be used for
higher handset subsidies.
"At the group level the company remains unwilling to give
any targets on EBITDA, which is concerning. They say that they
do not want to be limited by being held to a target," Hogley
Telekom Austria shares slipped 0.5 percent to 5.60 euros by
1327 GMT, outperforming the European telecoms index,
which fell 1.2 percent.
Austria's telecoms market remains relatively crowded, with
three mobile operators competing for a population of only 8.4
million. All-inclusive deals are available for as little at 7
euros a month.
A major institutional shareholder who attended the meeting,
but did not want to be named because he is not authorised to
speak to the press, confirmed the 100 million euro savings
target and said that half of that figure might remain after
Telekom Austria was not immediately reachable for comment.
Analysts said that a search for synergies between Telekom
Austria and Dutch KPN, in which Slim also built up a
major stake last year, was complicated by an existing
relationship with Vodafone that could be jeopardised.
Telekom Austria has a roaming agreement with Vodafone,
allowing the operators to connect to each other's networks at
reduced cost, which might be worth more than any synergies with
KPN, analysts reported Telekom Austria as saying.