VIENNA, Austria, May 12, 2010 /PRNewswire/ --
- Stabilization of Fixed Net subscriber base with just 0.8% lines lost
- Mobile Communication continues to grow its subscriber base with a 6.0%
increase to 19.0 million customers
- Revenues decline by 5.9% to EUR 1,126.0 million primarily driven by
lower revenues in domestic operations and Bulgaria
- Cost reductions absorb half of the revenue pressure and limit EBITDA
decline to 6.4%
- Free cash flow increases by almost 26% to EUR 165.7 million
- Outlook 2010 reiterated, excluding effects from merger of domestic
businesses
- Dividend per share floor of 75 cents reiterated for 2010-2012
in EUR million 1Q 10 1Q 09 % change
Revenues 1,126.0 1,197.1 -5.9%
EBITDA 425.9 454.8 -6.4%
Operating income 166.3 180.1 -7.7%
Net income 91.2 85.3 6.9%
Earnings per share (in EUR) 0.21 0.19 6.7%
Free cash flow per share
(in EUR) 0.37 0.30 25.8%
Capital expenditures 136.4 116.0 17.6%
in EUR million March 31, 10 Dec. 31, 09
Net debt 3,450.2 3,614.8 -4.6%
Net debt/EBITDA (12 months) 2.0x 2.0x
All financial figures are based on IFRS; if not stated otherwise, all comparisons are given year-on-year. EBITDA is defined as net income excluding financial result, income tax expense, depreciation and amortization. This equals operating income before depreciation, amortization and impairment charges.
Group Review
Vienna, May 12, 2010 - The Telekom Austria Group (VSE: TKA, OTC US: TKAGY) today announced its results for the first quarter ending March 31, 2010.
Commenting on the Company's performance, Dr. Hannes Ametsreiter, Telekom Austria Group CEO, said: "This quarter's results demonstrate that direct actions taken in both Fixed Net segment and Mobile Communications have delivered tangible results, countering competitive pressures and the challenging economic environment. Fixed Net trends are improving. In the Mobile Communication segment the subscriber base has grown to 19 million customers. Furthermore I am pleased that our plan to build A1 TA into a convergent player is progressing well. Throughout the Group we have demonstrated our ability to control costs hence our EBITDA margin has remained stable. All of this gives us confidence to reiterate our outlook including the DPS floor of EUR 0.75 until 2012".
Summary
In the first quarter of 2010 revenues decreased by 5.9% to EUR 1,126.0 million driven by lower revenues from domestic operations and Bulgaria. Cost reductions in the Mobile Communication segment absorbed half of the pressure on revenues and limited EBITDA declined to 6.4%. EBITDA was EUR 425.9 million in 1Q 10. Operating income fell by 7.7% to EUR 166.3 million. Net income increased from EUR 85.3 million by 6.9% to EUR 91.2 million mainly due to lower depreciation and amortization as well as lower interest expenses. While the ongoing reduction of line losses allowed a stabilization of operating trends in the Fixed Net segment, Mobile Communication continues to be impacted by a fierce competitive environment combined with regulative interventions.
Total capital expenditures increased to EUR 136.4 million in 1Q 10 compared to a particular low amount of EUR 116.0 million in 1Q 09. The increase was mainly driven by investments in the core net of the Fixed Net segment. Net debt declined by 4.6% to EUR 3,450.2 million at the end of March 2010 compared to 3,614.8 million at year-end 2009. Net debt to EBITDA (last 12 months) was 2.0x.
Market Environment
Telekom Austria Group operates in highly competitive environments both in the fixed net and mobile communications markets. The resulting negative impact on pricing levels is further intensified by regulatory measures in both segments. Continuous assessments of cost structures and improvements to productivity and operating efficiency are therefore essential to the success of Telekom Austria Group.
While the sustained migration of Fixed Net voice customers to the Mobile Communication segment has been the main challenge for several years, mobile broadband continues to make steady inroads into the market for internet access. However, following the introduction of attractive product bundles, line loss decelerated significantly during recent quarters. The Fixed Net segment continues to focus on the protection of cash flows by offering a market-oriented product portfolio and attractive pricing schemes as well as a comprehensive cost-cutting program. Innovative products like aonTV and attractive product bundles such as aonKombi and aonSuperKombi continued to be successful.
The Mobile Communication segment continued to show subscriber growth. Austria is regarded as a highly developed mobile communications market characterized by fierce competition and persistent price pressure. With respect to international activities the greenfield operations VIP operator and Vip mobile were able to improve their EBITDA and increase ARPU in 1Q 2010 compared to 1Q 2009 despite the difficult market environment in Eastern Europe. However, fierce competition and the economic slowdown in the markets led to price cuts and declining ARPUs on a segment level.
In summary, the above mentioned challenging and competitive economic environment persists in all markets in which the Telekom Austria Group operates. Regulation remains an important external disrupting factor in all markets primarily due to its impact on roaming tariffs and termination charges.
Outlook 2010: 75 Cents DPS Floor Reiterated until 2012
Telekom Austria Group expects the challenging environment to persist in 2010. This environment is characterized by the concurrence of several negative external effects with the impact of weak economies. The negative external effects mainly encompass ongoing fixed-to-mobile substitution in Austria, continued price pressure in Telekom Austria Group's major markets and the effect from regulatory-induced lower roaming prices as well as reduced mobile termination rates in Austria, Bulgaria, Croatia and Slovenia. Furthermore, the introduction of taxes levied on mobile communication services in Croatia and the Republic of Serbia poses an additional burden.
For the financial year 2010, revenues are expected to amount to approximately EUR 4.7 billion. The company has already initiated significant cost reduction programs in both segments addressing both staff and non-staff related expenses to mitigate the impact from lower revenues. Including the expected cost savings, EBITDA should reach about EUR 1.6 billion. Depending on investments for the migration to an All-IP based voice network in the Fixed Net segment, capital expenditures of the Telekom Austria Group are forecasted to reach approximately EUR 800 million. This amount does not reflect a material roll-out of glass fiber which is not expected to start in 2010.
(CONTINUA)
