Telekom Austria Group Reports Stable Results in Third Quarter 2015

• Group revenues declined by 1.2% to EUR 2,950.4 million mainly driven by currency translation effects (clean^* +0,2%)
• EBITDA comparable increased by 1.7% to EUR 1,051.7 million at group level (clean^* +3,1%)
• Profitability rose by 1.0 percentage points to 35.6%
• Both fixed line and mobile business registered customer growth, with broadband showing strong demand
• Austrian subsidiary A1 reported an increase in revenues and EBITDA comparable by 2.2% and 12.3% respectively
• The overall situation in the East-European markets remained challenging despite a strong operating performance in Belarus and improved results in Croatia
• Three successful M&A transactions took place in Bulgaria, the Republic of Macedonia and Slovenia
• Outlook for the full year remained unchanged

Customer Numbers in '000	1-9M 2015	1-9M 2014	+/- in %
Fixed access lines group-wide	2,912.7	2,701.2	+7.8%
- thereof broadband lines	1,924.4	1,765.4	+9.0%
Mobile subscribers	20,191.6	19,903.4	+1.4%
- thereof broadband customers	1,566.5	1,512.3	+3.6%

 

Key Financial Figures in EUR Million Pursuant to IFRS
Group revenues	2,950.4	2,987.7	-1.2%
EBITDA comparable**	1,051.7	1,034.0	+1.7%
EBITDA margin comparable	35.6%	34.6%	+1.0 pp
EBIT	450.0	-36.8	n.m.
Net profit	308.4	-136.5	n.m.
Capital expenditures	445.5	472.5	-5.7%
Employees	16,249	16,350	-0.6%

*) Excluding one-off effects and FX
**) EBITDA excluding effects from restructuring and impairment tests

 

"Our main task is to position Telekom Austria Group for sustainable growth by excelling in our core business, expanding our product portfolio while improving our operational efficiency. The net profit of over EUR 300 million demonstrates that we are on the right track. However, due to the fierce competition on the market, there is still a lot to be done and our main focus is fully concentrated on our customers. We are, therefore, reinvesting our earnings in the market and in developing our infrastructure", emphasizes Alejandro Plater, CEO Telekom Austria Group.

In the first nine months of 2015, Telekom Austria Group's revenues declined by 1.2% (clean* +0.2%) to EUR 2,950.4 million compared to the same period of the previous year. The outlook for the full year was correspondingly adjusted in the interim report for the first half of 2015. This decline in revenues is mainly attributable to strong exchange rate fluctuations resulting in negative currency translation effects totaling EUR 72.2 million as well as to one-off effects. With a plus of 0.2%, operating revenues remained almost stable.

Both the favorable development on the domestic market and process optimization measures had a positive effect on Group's EBITDA comparable, which increased by 1.7% (clean* +3.1%) to EUR 1,051.7 million compared to the same period of the previous year. EBITDA margin comparable, and thereby Telekom Austria Group's earning power, rose by 1.0 percentage points to 35.6% in the period under review despite declining revenues.

In the mobile communications area and, more particularly, in the fixed access line business, the Group reported solid growth, which was supported by the acquisition of local cable operators in the reporting period. Fixed access lines increased to 2,912.7 thousand (+7.8%) at Group level, with mobile subscriber numbers rising to 20,191.6 thousand (+1.4%) in the period under review. Strong demand for future-proof broadband products was underpinned by customer growth of 9.0% and 3.6% in the fixed line and mobile communications area respectively. Investments in a state-of-the-art infrastructure will therefore continue to be a top priority for the Telekom Austria Group also moving forward.

As of the end of Q3 15, Telekom Austria Group posted a net profit of EUR 308.4 million. Both the outlook for the full year and the Group's stable revenue development remained unchanged in the period under review.

The Most Significant Developments in the Single Operating Markets at a Glance

In Austria, A1 succeeded in consolidating its market leadership, while recording revenue growth of 2.2% to EUR 1,862.4 million. Despite a further intensification of competition following the market entry of alternative mobile operators, A1 was able to increase EBITDA comparable by 12.3% to EUR 675.7 million. Higher handset subsidies and consequently cheaper end-devices for customers were compensated by cost and process optimization measures. In the period under review, the mobile communications business almost stabilized, registering a total of 5,408.3 thousand subscribers, while the fixed line business continued on its growth path totaling 2,284.1 thousand customers, mainly driven by strong broadband demand and the newly acquired TV customers.

Overall results in Belarus continued to be affected by strong currency translation effects. While Euro-denominated revenues dropped by 10.8% to EUR 245.6 million, they rose by 19.7% on a local currency basis. EBITDA comparable declined by 6.9%, amounting to EUR 126.9 million, whereas ruble-denominated EBITDA comparable increased by 22.5% in the period under review. The Belarusian mobile market showed a stable customer development, even if total SIM-card penetration decreased by almost one percentage point to 122.6% in Belarus.

In the first nine months of 2015, the Bulgarian subsidiary Mtel reported a mixed set of results. While both revenues and EBITDA comparable dropped by 5.2% to EUR 261.9 million and by 10.8% to EUR 101.2 million respectively, the company was able to achieve strong net customer additions. Mobile subscriber numbers rose by 3.9% to 4,296.7 thousand, with fixed line customers growing by 32.7% to roughly 200,800. Following the acquisition of the second-largest cable operator blizoo, which will be consolidated only in Q4 15, the company will profit from considerable growth potential in the convergence area as well as from cross- and up-selling opportunities moving forward.

In Croatia, the downward trend slowly leveled off, with revenues declining by 2.7% to EUR 274.7 million in the period under review. Despite lower equipment and interconnection costs, EBITDA comparable dropped by 9.2% to EUR 67.2 million due to the decline in revenues and tripling of the spectrum fee. The acquisition of the fixed line operator Amis contributed to an increase in fixed line customers of 28.8% to 273,500 lines, whereas mobile subscriber numbers dropped by 1.0% to 1,804.8 thousand.

In the "Additional Markets" segment revenues decreased by 6.7% and EBITDA comparable dropped by 4,5% year-on-year, but different trends can be observed in each market. With a market potential of roughly two million inhabitants and numerous mobile players, Slovenia continues to be a highly competitive market. In addition, revenues were impacted by regulatory effects, which led to a decline of 10.3% to EUR 137.0 million. In the Republic of Serbia, revenues dropped by 7.0% to EUR 149.2 million, mainly due to accounting adjustments. On the contrary, revenues rose by 12.7% to EUR 50.5 million in the Republic of Macedonia, with the acquisition of the cable operator blizoo showing positive effects. EBITDA comparable grew by 19.8% to EUR 58.1 million in Slovenia, while it dropped by 33.7% to EUR 33.1 million in the Republic of Serbia, with the Macedonian subsidiary recording a growth in EBITDA comparable of 25.4% to EUR 11.6 million. Special emphasis should be placed on the successful closing of the merger between Vip operator and One, which gave rise to a new company under the brand name one.Vip. Therefore, in terms of customer numbers, the Telekom Austria Group will become the market leader in the Republic of Macedonia moving forward. However, the consolidation of one.Vip in the Telekom Austria Group's balance sheet will be evident only at the end of Q4 15.