Telekom: revenues down 7.1%; merger of operations planned

24 Feb 2010

Telekom Austria has announced its financial results for the full-year 2009, posting net profit of EUR94.9 million (USD128.8 million) for the twelve-month period, up from a net loss of EUR48.8 million a year earlier. Revenues declined from EUR5.17 billion in 2008 to EUR4.8 billion a year later as the company’s fixed line operation continued to decline. Despite witnessing a rise in access lines in operation in the fourth quarter of 2009, up to 2.314 million at year-end, additions generally came as part of lower revenues service bundles. Earnings before interest, taxes, depreciation and amortisation (EBITDA) jumped 40.1% year-on-year, up to EUR1.79 billion. Hannes Ametsreiter, CEO at Telekom Austria Group, said: ‘Throughout the year we focussed on effective cost management in both segments and reduced operative expenses. This enabled us to soften the impact of lower revenues on EBITDA. Given that we expect a sustained difficult environment in the markets we operate in during 2010, we will continue to improve our offering in order to strengthen our competitive advantage.’

The company has also unveiled plans to merge its fixed line division with mobile arm Mobilkom, cutting operating costs and overheads while facilitating the further integration of services. Ametsreiter said regarding the move: ‘With the merger of the fixed and mobile segments we are creating considerable advantages for our customers, who in the future will be able to receive all communications services from one trusted provider. This step also reflects the evolution of the Austrian market, where customers increasingly demand convergent products and, at the same time, it enables us to combine the innovative strengths of both business segments.’ Based on preliminary forecasts, Telekom Austria expects the merger to generate a positive contribution to earnings by 2012 and subsequently an annual increase in cash flow of approximately EUR100 million after a further two-three years. Initial costs will impact results over the next few years and a negative cash flow effect of approximately EUR80 million is expected for the 2010 financial year.

Austria, A1 Telekom Austria, A1 Telekom Austria Group