Telekom Austria : Remains on Growth Path

Pro-forma figures include effects of M&A transactions executed during the last twelve months.
Revenue Generating Units (Fixed Voice, Fixed Broadband, Fixed TV).

'The abolition of retail roaming has been almost fully compensated due to strong performance of Telekom Austria Group. Still, we see the impact on revenues even though reaching a growth of 4.7 percent. On EBITDA side a plus of 7.5 percent shows that our company is well on track and our strategy pays off. By implementing a modern way of leadership, a learning and development platform for our employees and our new Business Unit Digital we lay the fundament for the ongoing transformation process and future growth potential. Our goal is the empowerment of digital life for our customers', says Alejandro Plater, CEO & COO Telekom Austria Group.

The results of the third quarter 2016 reflect, in addition to operational developments, one-off effects and the impact of the following, most recent M&A activities to strengthen the market position in the countries the Telekom Austria Group operates in:

• The acquisition of the fixed-line reseller Amis in Slovenia and in Croatia, consolidated as of 1 September 2015.
• The acquisition of the fixed-line operator Blizoo in Bulgaria, consolidated as of 1 October 2015.
• The merger of Vip operator in the Republic of Macedonia and the 3operator in the country, ONE, consolidated as of 1 October 2015.

Total negative FX effects amounted to EUR 17.6 mn for total revenues and EUR 8.2 mn for EBITDA in Q3 2016.

In the third quarter of 2016, Telekom Austria Group saw a slight decrease in its mobile subscriber base of 0.3% in a year-on-year comparison (reported: +2.7%). In general, CEE markets saw a shift from prepaid to postpaid offers while Austria registered an increase in the prepaid share of the customer base. The number of revenue generating units (RGUs) rose by 1.7% year-on-year (reported: +19.9%).

Group total revenues grew by 1.4% year-on-year on a pro-forma-basis (reported: +4.7%). All segments, apart from the Republic of Macedonia, contributed to that increase. Negative effects stemming from the abolition of retail roaming in the EU as of 30 April 2016 came in as expected and stem mostly from Austria, while the amount of the negative impact has been largely negligible so far in Bulgaria, Croatia and Slovenia. Higher equipment sales in almost all markets mitigated these negative effects.

Reported total revenues in the Austrian segment remained stable (+0.2% year-on-year) in the third quarter of 2016, as higher equipment sales and fixed-line service revenues offset the losses in airtime revenues due to the abolition of retail roaming per 30 April 2016.

In the Bulgarian segment, total revenues increased by 4.5% in a year-on-year comparison (reported: +18.5%), mostly due to higher equipment revenues. Total revenues in the Croatian segment rose by 8.5% year-on-year (reported: +10.0%) and were driven by better trends in the mobile and ongoing growth in the fixed-line business. Reported total revenues in the Belarusian segment came in stable at +0.1% year-on-year, as the substantial FX devaluation offset the operational growth.

In the Slovenian segment, total revenues rose by 0.5% year-on-year (reported: +11.3%). Reported total revenues in the Serbian segment rose by 5.2% year-on-year and were driven by higher equipment revenues. In the Republic of Macedonia, total revenues were 7.0% lower year-on-year (reported: +68.4%).

Group total costs and expenses declined by 2.2% year-on-year to EUR 657.7 mn in the third quarter of 2016 (reported: +1.9%) driven by the above mentioned positive one-off and restructuring effect in Austria. Excluding these effects, Group total costs and expenses rose due to higher costs of equipment in almost all markets.

Group EBITDA rose by 7.5% year-on-year to EUR 415.5 mn in the third quarter of 2016 (reported: +9.4%). Excluding the one-off and restructuring effects as well as the FX impact Group EBITDA decreased by 1.0%.