Last Friday, Bulgarian Telecommunication Company [BTC] submitted with the BSE both its unconsolidated and consolidated financial statements for Q1 2007. Unconsolidated 3-month revenues go down 1% YoY to EUR 126.5m, which is in line with world trends in land-line operations, and which is due in this case to increasing competition from the alternative operators and to customer migration to the GSM networks. However, as a result of slight improvements in operational efficiency (mostly in the part of materials and payroll expenditures), EBITDA margin is up to 49% from 48% for Q1 2006. Furthermore, a 43% reduction in interest expenses doubled with a 32% decrease in taxation provision, moves profit margin up 2 percentage points to 30%. Net profit figure is EUR 73.5m, or 7% above the respective quarter of 2006. Consolidated results, on the other hand, tell a different story: revenues are up 2% to 130.4m YoY, while net income is down 5% YoY to EUR 21.8m. The culprit is Vivatel, BTC’s 100% owned mobile arm, which currently operates at a loss. Vivatel, does, of course, add to the top-line, but due to its still negligible market share (9% in terms of client base, according to management indications) this contribution is still quite humble. Yet, if for Q1 2006, Vivatel’s share in the revenues was 5.2%, this last quarter it went up to 11.2% or EUR 28.4m (116% increase YoY). Vivatel’s operating loss got bigger too and equals EUR 34.6m, which is 49% more than the respective figure for Q1 2006. The resulting consolidated margins are all worse off than a year ago with EBITDA margin down to 39% (41%), EBIT margin – 21% (26%), and net profit margin – 17% (18%). In the meantime, BTC announced in a special press release with the Bulgarian Stock Exchange that it expects group revenues to increase by 4-5% in 2007 on robust sales of ADSL packages and mobile subscriber growth. BTC Group posted capital expenditures of BGN 351 mln in 2006 or 35% of sales. Capital costs are seen up in 2007 due to the ongoing expansion of the wireless network and the digitalisation of telecom infrastructure and the winding-up of customer service and billing projects. Recurring capital expenditures are seen at 10-15% of sales.