A brutal price-cutting battle for corporate communications contracts has left business carrier Thus Group Plc facing a fall in first-half earnings.
While the Glasgow, UK-based company expects revenue to show an 18% increase in its first half to September 30, it said margins had been hit by predatory pricing for corporate accounts, switched voice and leased line services.
In addition, there has been an increasing substitution of dial-up internet for broadband DSL. Thus has been hit by the decision of Cable & Wireless Plc to focus on its home market, and US-based operator MCI, now released from the debts of its former WorldCom parent, to build up market share.
However, it still expects revenue for the year to March 31, 2005 to show an 8% increase to 360m pounds ($650.2) with continued positive cash flow and earnings at the EBITDA level of not less than 39m pounds ($70.4m).
Thus’s share price has been spiraling downwards for the past year, and a consolidation of alternative European carriers appears inevitable as margins are squeezed by bigger players with larger cash reserves.