Telekom Austria Q1 revenues, income slump in the face of ‘challenging economic environment’

11 May 2011

Telekom Austria has reported group revenues of EUR1.12 billion (USD1.6 billion) for the three months ended 31 March 2011. This figure represents a decrease of 0.7% compared to the EUR1.13 billion generated during the same period one year earlier. The company blames the slump on ‘a challenging economic environment, fierce competition and regulatory cuts’. As announced on 23 February 2011, a restructuring charge of EUR184.1 million was recorded in the Austrian segment, leading to a group operating loss of EUR42.3 million for the quarter, compared to an operating income of EUR166.3 million one year earlier. Net income for the quarter dropped from EUR91.2 million to a loss of EUR79.2 million in 1Q11. Meanwhile, EBITDA dropped 7.1% to EUR396.7 million year-on-year ¬– not including restructuring and impairment charges – whilst CAPEX fell 11.7% to EUR120.4 million due to ‘lower investments in the Belarusian and Croatian segments’.

In operational terms, Telekom Austria’s domestic mobile subscriber base increased by 5.2% to 5.15 million, with mobile broadband customers increasing 23.8% to 687,500 during the first quarter. The growth in fixed access lines demonstrated further momentum during Q1, with an increasing demand for fixed broadband boosting product bundles and leading fixed access lines to increase by 7,300 lines, compared to a loss of 3,200 lines in the first quarter of 2010. Telekom’s fixed broadband subscriber base increased by 12.7% to 1.2 million, also as a result of the healthy demand for bundled ‘Kombi’ packages. In addition, ‘aonTV’ grew its subscriber base by 50%, to more than 165,000 subscribers at end-March. In Bulgaria Mobiltel’s subscriber base remained stable (up 0.3%) at 5.28 million customers; 3G exhibited a strong performance during the quarter with the subscriber base growing 112.7% to 141,800. During the same period, Velcom, Belarus’s number two operator by users, increased its mobile subscriber base by 7.3% to 4.2 million, supported by strong growth of mobile broadband customers, to 197,500. Vipnet, the second largest mobile operator in Croatia, increased its subscriber base by 1.8% to 2.68 million customers, while its 3G subscriber base increased by 22.9% to 179,100. Si.mobil, the second largest operator in Slovenia, increased its subscriber base 6.5% to 629,900 customers, with mobile broadband users up 21.8% to 15,200 during the corresponding period. VIP Mobile, the third largest mobile operator in Serbia continued to grow its mobile subscriber base, reaching 1.43 million customers at the end of the first quarter of 2011, a rise of 22.7% year-on-year. Finally, Macedonia’s number three player VIP Mobile, saw its subscriber base increase 47.2% to 490,500.

A Telekom Austria Group press statement read: ‘In the first quarter of 2011 the slowdown in the revenue decline continued and resulted in a reduction of group revenues by 0.7% to EUR1.12 billion. Whilst the demand for fixed and mobile broadband solutions – as well as for smartphones – continued to increase, a challenging economic environment, fierce competition and regulatory cuts put further pressure on revenues. Revenue growth in the Belarusian and ‘additional markets’ segments mitigated the revenue declines in the Austrian and Croatian segments. Revenues in the Bulgarian segment remained almost stable. Lower results from the Austrian, Bulgarian and Croatian segments could only partly be compensated by growth in the Belarusian and ‘additional markets’ segments. Due to the increasing demand for smartphones, equipment revenues and material expenses rose in almost all segments’.

Austria, A1 Telekom Austria Group