Telekom Austria reports 3.8% 3Q sales drop; 3G uptake offsets slump

10 Nov 2010

Telekom Austria has reported group revenues of EUR1.19 billion (USD1.65 billion) for the three months ended 30 September 2010. This figure represents a decrease of 3.8% compared to the EUR1.23 billion generated during the same period one year earlier. The company blames the slump on a ‘challenging macro-economic environment, fierce competition and regulatory pressure’. However, Telekom Austria’s operating income increased – from a loss of EUR126.4 million in 3Q09 to a profit of EUR176 million; 3Q09 saw the company hit with a EUR352 million impairment charge in Belarus. Net income also grew year-on-year, from a loss of EUR136.3 million to EUR96.5 million. Meanwhile EBITDA dropped 8.3% to EUR449.1 million year-on-year, with the company blaming ‘restructuring and impairment charges’ whilst capital expenditure (CAPEX) fell 5% to EUR146.8 million due to ‘lower access investments in Croatia and additional markets’.

In operational terms, Telekom Austria’s mobile subscriber base increased by 6.3% to 5.02 million, with mobile broadband customers increasing 32.5% to 616,541 during the third quarter. Due to an ongoing demand for product bundles, fixed line losses were stabilised, with just 1,200 lines lost by the end of the third quarter, compared to 7,000 lost during the same period a year earlier. Telekom’s fixed broadband subscriber base increased by 13.9% to 1.12 million, also as a result of the healthy demand for bundled ‘Kombi’ packages. In Bulgaria Mobiltel’s subscriber base remained almost stable (down 0.1%) at 5.2 million customers; 3G exhibited a strong performance during the quarter with the subscriber base growing 92.9% to 97,792. During the same period, Velcom, Belarus’s number two operator by users, increased its mobile subscriber base by 6.1% to 4.2 million, supported by strong growth of mobile broadband customers, to 86,222. Vipnet, the second largest mobile operator in Croatia increased its subscriber base by 3.7% to 2.7 million customers, while its 3G subscriber base increased by 42.9% to more than 178,742. Si.mobil, the second largest operator in Slovenia, increased its subscriber base 4.3% to more than 605,000 customers, with mobile broadband users up 25.7% to 14,544 during the corresponding period. VIP Mobile, the third largest mobile operator in Serbia continued to grow its mobile subscriber base reaching 1.28 million customers at the end of the third quarter 2010, a rise of 19.7% year-on-year. Finally, Macedonia’s number three player VIP Mobile, almost doubled its subscriber base to 388,200 customers in the third quarter of 2010.

A Telekom Austria Group press statement read: ‘Several negative external effects and the impact of weak economies shape the market environment for the Telekom Austria Group. These effects include the unabated fixed-to-mobile substitution and the continued price pressure in the Telekom Austria Group’s major markets. In addition, regulatory induced lower roaming prices as well as fixed and mobile termination rates will continue to impact the group’s results for the full year 2010. Taxes levied on mobile communication services in Croatia and the Republic of Serbia pose an additional burden. For the foreseeable future, management expects the challenging market environment to continue to persist. However, the current outlook reflects the group’s confidence to be able to successfully address these challenges through clear customer focus, intensified marketing of innovative products and strict cost management’.

Austria, A1 Telekom Austria Group