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 while the decline of minutes from the Fixed net continues to lead to a loss of revenues. Against this background the Fixed Net segment continues to focus on the protection of cash flows by means of a market-oriented product portfolio and attractive pricing schemes as well as a comprehensive cost-cutting program.
The Mobile Communication segment continued to show subscriber growth both in Austria and in its international markets. Austria is regarded as a highly developed mobile communications market characterized by fierce competition and persistent price pressure. The international operations of the Telekom Austria Group still offer untapped potential in terms of contract customers and innovative data products but due to the economic downturn the growth initially expected has not materialized. Furthermore fierce competition and the current difficult climate in these markets led to price cuts and declining average revenues per user (ARPU).
Regulation remains an important external factor affecting the conditions in nearly all markets primarily impacting roaming tariffs and termination charges. On July 1, 2009, the second round of roaming regulation took effect mandating a significant reduction of roaming prices. Furthermore lower usage due to the current economic environment also impacts roaming revenues.
Velcom in Belarus continues to be impacted by an ongoing devaluation of the Belarusian Ruble. Since the beginning of the year the Belarusian Ruble has devaluated by 31% against the Euro. The counter-measures adopted to mitigate the negative impact include a tariff increase effective as of mid-February 2009 as well as rebalancing of costs based on the local currency.
The Management does not expect a near term recovery of the macro-economic environment in Eastern and South-Eastern Europe and consequently expects the difficult market environment to prevail also in 2010.
Outlook for Operating Free Cash Flow Reiterated, Shift from Constant Currency to Actual Currency Basis
Including the impact from declining currencies in Telekom Austria Group's foreign operations, the management expects full-year figures for 2009 on actual currency basis to reach a level of EUR 4.8 billion in revenues and EUR 1.8 billion in EBITDA compared to previously expected revenues slightly weaker than EUR 5.1 billion and an EBITDA of about EUR 1.9 billion on constant currency basis. In order to offset the impact of a decline in EBITDA on the free cash flow, capital expenditures might decrease to a level of up to EUR 700 million. Therefore, the Telekom Austria Group remains committed to an operating free cash flow (EBITDA less capital expenditures) for 2009 of EUR 1.1 billion on actual currency basis and a distribution of 65% of net income in form of dividends at a minimum floor of 75 cents per share.
The main reasons for the weaker outlook include foreign exchange losses, lower roaming revenues, declining prices and the impact from weaker economies in Telekom Austria Group's main foreign operations. The management expects the difficult market environment to prevail also in 2010.
Outlook 09 Outlook 09
Outlook 09 as of May 13 as of Jan. 29
as of Nov. 12 and August 19 and Feb. 25
Telekom Austria Actual currency Constant currency Constant
Group basis basis* currency basis*
Revenues EUR 4.8 bn Slightly weaker EUR 5.1 bn
than originally
expected
EBITDA EUR 1.8 bn EUR 1.9 bn EUR 1.9 bn
Capital
expenditures EUR 0.7 bn EUR 0.8 bn EUR 0.8 bn
Operating Free EUR 1.1 bn EUR 1.1 bn EUR 1.1 bn
Cash Flow
Dividend 65% of net 65% of net 65% of net
income, income, income,
DPS of 75 cent DPS of 75 cent DPS of 75 cent
minimum minimum minimum
* as announced on the Capital Market Day in January 2009
Further Information
For more detailed information about the first nine months 2009 please refer to the corresponding report on Telekom Austria Group's website at http://www.telekomaustria.com/interim_re...
Contacts:
Elisabeth Mattes
Group Spokeswoman
Tel.: +43-664-331-2730
E-Mail: elisabeth.mattes@telekom.at
Peter Zydek
Head of Investor Relations
Tel.: +43(0)59059-1-19000
E-Mail: peter.zydek@telekom.at
Contacts: Elisabeth Mattes, Group Spokeswoman, Tel.: +43-664-331-2730, E-Mail: elisabeth.mattes@telekom.at . Peter Zydek, Head of Investor Relations, Tel.: +43(0)59059-1-19000, E-Mail: peter.zydek@telekom.at.
