March 14, 2013 / 7:20 AM / in 5 years

UPDATE 1-Spain's Jazztel expects boost from fibre optic network

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By Fiona Ortiz

MADRID, March 14 (Reuters) - Spanish broadband provider Jazztel said on Thursday it expected revenue to jump to as much as 1.6 billion euros by 2017 from 909 million last year through investment in a fibre optic network and a focus on mobile telephone clients.

In a strategic plan it forecast a rise in net profit to between 180 million and 220 million euros in five years from 62 million last year.

Jazztel said it would invest as much as 500 million euros in 2013 and 2014 to extend its fibre optic network.

The move is part of a joint network deal announced last year with former monopoly Telefonica that aims to reach 3 million homes with superfast broadband by 2015.

The company reported a 21 percent increase in revenues in 2012 after its mobile customer base more than doubled and a 20 percent increase in ADSL customers.

Jazztel’s share price dropped 4.5 percent on Wednesday, to 5.74 euros, after rivals France Telecom and Vodafone announced they would invest up to 1 billion euros in a joint fibre optic network in Spain.

The company’s shares are still up 20 percent over the last year.

Jazztel forecast its number of broadband clients would increase to up to 2 million by 2017 from 1.3 million last year. It expects its number of mobile clients to rise as high as 2.5 million from 343,000 last year.

Spain’s mobile market has become increasingly competitive in recent months as cash-strapped customers ditch their phones and some switch to cheaper virtual operators such as Jazztel, which do not have their own mobile network.

Incumbent Telefonica lost more than 3 million mobile clients last year but has gained ground with a bundled “quadplay” package offering Internet, fixed line, mobile and television service.

Jazztel sources said in January the company would offer its Internet customers up to 200 euros to cover penalty fees if they switch mobile contracts to the telecoms firm, fuelling an escalating price war.

Jazztel cannot pay shareholders dividends until 2016, as this was stipulated in an agreement it signed with ZTE for the Chinese company to provide a financing facility for Jazztel’s fibre deployment with Telefonica. (Additional reporting by Clare Kane and Tomas Cobos)

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