Wednesday, 22 November 2017

Telekom Austria reports Q3 results

Telekom Austria Group
Thursday 15 November 12

In the first nine months of 2012, the Telekom Austria Group was able to considerably increase net profit to EUR 180.1 million compared to EUR 68.7 million in the same period of the previous year. The operating result (EBIT) also showed a favorable development rising to EUR 388.1 million in the first three quarters of 2012 compared to EUR 208.8 million in the same period of 2011. This increase in earnings is mainly attributable to cost savings and the reduction of restructuring expenses. “We have worked hard to improve our internal efficiency“, said Hannes Ametsreiter, CEO Telekom Austria Group, commenting on group results for the first nine months. “We are moving forward on the right track. However, the impact from intense competition combined with an overall challenging economic environment has overshadowed our efforts. We will therefore continue to implement cost efficiency measures going forward and further strengthen our focus on our core customer segments. Thanks to our internationally successful convergence strategy, we have a good starting position to meet the challenges ahead.” In the period under review, the market environment continued to be affected by the same negative developments that had marked the first half of the reporting year…

In the first nine months of 2012, the Telekom Austria Group was able to considerably increase net profit to EUR 180.1 million compared to EUR 68.7 million in the same period of the previous year. The operating result (EBIT) also showed a favorable development rising to EUR 388.1 million in the first three quarters of 2012 compared to EUR 208.8 million in the same period of 2011. This increase in earnings is mainly attributable to cost savings and the reduction of restructuring expenses.

“We have worked hard to improve our internal efficiency“, said Hannes Ametsreiter, CEO Telekom Austria Group, commenting on group results for the first nine months. “We are moving forward on the right track. However, the impact from intense competition combined with an overall challenging economic environment has overshadowed our efforts. We will therefore continue to implement cost efficiency measures going forward and further strengthen our focus on our core customer segments. Thanks to our internationally successful convergence strategy, we have a good starting position to meet the challenges ahead.”

In the period under review, the market environment continued to be affected by the same negative developments that had marked the first half of the reporting year, but with stronger implications. The challenging macroeconomic background had a negative impact on consumption of communications services, especially in Croatia and Bulgaria. Strong mobile competition, which continued to intensify in the course of the year, led to considerable price pressure particularly in Austria, Bulgaria and Croatia. As in previous reporting periods, intrusive regulatory measures resulted in additional declines in revenues and earnings.

The Management of the Telekom Austria Group has sought to counteract these negative effects on the market by focusing on convergent broadband offerings as well as on customers subscribing to high-value services and product bundles. Additionally, the group has accelerated cost reduction and efficiency improvements. However, these countermeasures were not able to fully offset the market pressure. As a result, group revenues declined by 3.8% to EUR 3,212.0 million year-on-year, while EBITDA comparable fell by 4.5% to EUR 1,136.6 million. Excluding currency translation effects across all segments and the impact from inflation accounting in Belarus, both group revenues and EBITDA comparable would have increased by 1.4% and 1.7% respectively.

Outlook Remains Unchanged
The Management of the Telekom Austria Group expects strong competition in Austria, Bulgaria and Croatia to persist or to even further intensify going forward. This will lead to price erosion and persisting fixed-to-mobile substitution patterns in Austria. In addition, regulatory measures will have a negative impact on both revenues and earnings across all markets, but most of all in Bulgaria. The overall challenging economic environment will also continue to negatively affect consumption of communications services and pricing structures in general.

Against this backdrop, the Management confirms the outlook for the full year 2012:
By year-end 2012, group revenues are expected to amount to EUR 4.2 billion and EBITDA comparable to range between EUR 1.40 billion and EUR 1.45 billion. Both capital expenditures and free cash flow are anticipated to range between EUR 700 million and EUR 750 million. Furthermore, the Telekom Austria Group reiterates its intention to distribute a dividend of 5 eurocents per eligible share for 2012.

Hans Tschuden, CFO of the Telekom Austria Group, commented on the development of results for the first nine months 2012: “We have succeeded in strengthening our equity basis by more than EUR 30 million. Our consistent cost management measures, which have resulted in a considerably higher net result, in conjunction with positive currency translation effects have together been able to overcompensate for dividend payments, thus leading to a stronger equity basis.“



Operational Highlights in the Single Markets of the Telekom Austria Group

A1, Austria
The first nine months of 2012 were characterized by persisting strong competition in the mobile business, while the fixed net business showed an upward trend, especially in Q3 2012. Thanks to demand for convergent product bundles, the number of fixed net broadband lines increased by 4.1% to 1,298,600 between July and September 2012, while the number of access lines dropped slightly by 1.8% to approximately 2.3 million compared to the same period in the previous year. The total number of product bundles exceeded the one million mark and the A1TV customer base grew by 14.6% to over 213,100 subscribers. For the first time in many years, average revenue per lines (ARPL) rose by 1.3% to EUR 32.2 as of September 30, 2012. This ARPL increase is mainly attributable to the consistent implementation of the Group’s convergence strategy in the period under review.

In the mobile business, A1 has concentrated its marketing activities on creating an innovative tariff portfolio with a view to safeguarding its existing customer base. Mobile customer numbers increased by 1.9% to more than 5.3 million in the period under review, while ARPU (average revenue per user) dropped by EUR 1.8 EUR or 9.1%.
As a result, revenues in Austria declined by 5.7% to EUR 2,066.1 million in the first nine months of 2012. In addition to price pressure in the mobile business, this decline is mainly attributable to fixed-to-mobile substitution and the regulation-induced reduction of roaming tariffs. EBITDA comparable fell by 5.8% to EUR 703.1 million.

Mobiltel, Bulgaria
In Bulgaria, revenues declined by 9.3% to EUR 358.3 million in the first nine months of the reporting year and EBITDA comparable by 19.3% to EUR 164.5 million. Interconnection charges were cut by between 50% and 70% as of July 1, 2012. Furthermore, the unfavorable economic environment led to a lower consumption of communication services and strong competition exerted downward pressure on prices. Cost saving measures could therefore not fully compensate for the negative effects of market pressure on revenues.

Despite this tense economic environment, Mobiltel succeeded in increasing both mobile subscribers and fixed net access lines by 4.6% to over 5.5 million and by 30.4% to over 142,800 respectively.

Vipnet, Croatia
In the first nine months of 2012, the positive effects of the Group’s convergent strategy became evident in the Croatian market as well. Revenues remained almost stable at EUR 313.9 million
(-0.2%), with EBITDA comparable increasing by 9.5% to EUR 114.1 million.

While Vipnet’s revenues and earnings were negatively affected by the challenging competitive environment in the mobile market, the cable operator B.net - acquired in the previous year - was able to increase its market penetration and achieve considerable success based on convergent offerings.

Mobile customers dropped by 3.9% to just above 2 million, whereas the number of fixed access lines and broadband lines increased by 19.6% to 158,500 lines and by 28.8% to 81,200 lines respectively.

velcom, Belarus
In Belarus, revenues denominated in euro declined by 0.8% to EUR 217.9 million. On a local currency basis, revenues increased by 70.5%. This growth was not only driven by inflation-related price increases but also by customer growth and higher demand for mobile broadband solutions. EBITDA comparable denominated in euro dropped by 10.1% to EUR 89.6 million. On a local currency basis, EBITDA comparable increased by 59.0% in the period under review.

The mobile customer base grew by 4.8% to roughly 4.8 million, with the number of mobile broadband subscriptions doubling to 713,700, an increase of 104.2% year-on-year.

Additional Markets

Si.mobil, Slovenia
In Slovenia, Si.mobil continued to successfully focus on the high-value customer segment in the period under review. This is also reflected in the increase by 5.0% of both average revenue per user (ARPU) and company revenues, which totaled EUR 148.9 million. The customer base grew by 3.6% to 653,500 subscribers and EBITDA comparable by 13.1% to EUR 44.2 million.

Vip mobile, Republic of Serbia
In the Republic of Serbia, Vip mobile continued to show the same growth dynamics as in previous reporting periods, with both customer numbers and consumption of communication services per user showing double-digit increases.
In the first nine months of 2012, Vip mobile was able to increase revenues by 12.4% to EUR 117.1 million and EBITDA comparable by 62.6% to EUR 35.1 million. The customer base grew by 14.5% to over 1.8 million subscribers and average revenue per user (ARPU) increased by 10.5% on a local currency basis in Q3.

Vip operator, Republic of Macedonia
In the period under review, Vip operator was able to further consolidate its number two position on the Macedonian market. Revenues increased by 13.6% to EUR 44.7 million in the first nine months of 2012, with EBITDA comparable growing approximately seven-fold to EUR 9.3 million compared to the same period of the previous year. Market share increased by 27.2% and the number of mobile subscribers grew by 14.2% to 626,300.

Full release at http://www.telekomaustria.com/ir/news/14.11.2012_Results_Q3_en.php


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