EARNINGS POLL-Telefonica O2 Czech profit seen rising

    * 
    * Telefonica O2 2006 earnings. 
    * Feb. 22 around 1500 GMT. 
    * Net profit seen rising 33 percent to 8.29 billion crowns. 
     
    By Jan Korselt and Jan Lopatka 
    Telefonica O2 Czech Republic 
 is seen posting a 33 percent rise in net profit for 
2006 on falling depreciation and one-off costs while mobile and 
data growth offset declines in the fixed-line business. 
    A Reuters poll of 10 analysts showed an average market 
expectation of 8.29 billion crowns ($384.9 million) net profit 
on sales 0.1 percent higher at 61.11 billion. 
    The company, with a market capitalisation of $8.2 billion, 
is majority-owned by Spain's Telefonica . 
    The firm is expected to have halted a revenue slide as 
mobile and data sales offset a fall in fixed-line voice 
business.  
    The profit rise is expected to come on the back of growing 
margins and the lack of one-off costs related to layoffs and 
privatisation, which burdened the 2005 accounts. 
    However, some analysts see a 1 billion impairment charge 
related to the merger of the firm's fixed and mobile units. 
    Further costs are related to rebranding from Cesky Telecom 
to O2, although the company said it would finance the switchover 
from its regular budget. 
    The firm also launched a television channel over its 
fixed-line network and analysts said they would be keen to hear 
outlook for that business. 
    The polled showed the market would focus on the firm's 
development in Slovakia, where it rolled out mobile operations 
earlier this month and has already won 110,000 clients. 
    The company had said investment in Slovakia would hurt 
operating results this year. 
    "We believe the good results the outlook for the Slovak 
business, together with the possibility of a solid dividend 
policy, could further boos appetite for Telefonica O2 the 
shares," said Milan Vanicek, analyst at Atlantik FT. 
    He said the Slovak project would cost up to 9 billion crowns 
this year. 
    The capital structure remains an issue at Telefonica. The 
company has said it would look for acquisitions to improve the 
capital structure, or return cash to shareholders. 
    The company said it would release its dividend proposal on 
Thursday along with the results. It paid a 45 crown dividend 
last year. 
    Telefonica O2 also plans to sell its real estate holdings in 
the coming months, a move that will raise further cash. 
    Analysts forecast on average 28.18 billion operating income 
before depreciation and amortisation (OIBDA), up 3.2 percent 
year-on-year. 
    The company itself had forecast a 2 percent OIBDA rise this 
year. 
    Telefonica O2 trades at a 2007 price/earnings ratio of 16.8, 
according to Reuters Estimates, a slight premium to the DJ Euro 
Stoxx Telecoms Index , which shows a multiple of 14.8. 
  
                      Average    Median    2005        Range 
REVENUE               61.11      61.18    61.03      60.71-61.40 
CORE PROFIT (OIBDA)   28.18      28.18    27.30      27.18-29.00 
OPER.PROFIT (EBIT)    11.51      11.30     9.46      10.95-12.66 
NET PROFIT             8.29       8.13     6.25       7.85- 9.18 
     
    NOTE - The following equity houses took part in the poll: 
Atlantik FT, BH Securities, CA-IB, Cyrrus, Deutsche Bank, Erste 
Bank/Ceska Sporitelna, HSBC, ING, Komercni Banka, Wood & 
Company. 
 ((editing by  ; prague.newsroom@reuters.com; Reuters Messaging: 
jan.lopatka.reuters.com@reuters.net; +420-224 190 474)) 
 
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