• EBITDA comparable stabilises at the group level totalling EUR 1.286 million after a decline of 11.6% in the same period of the previous year
  • EBITDA margin comparable increases by 1.2 percentage points to 32% compared to the previous year
  • The Group achieves EBITDA-turnaround in Austria meeting full-year target, plus 1.4%
  • Strong results in Belarus and in the "Additional Markets" segment
  • Bulgaria and Croatia still characterised by a challenging market environment
  • Significant cost optimisation leads to a reduction of operating expenses by 4.5% to EUR 2,850.9 million
  • Net debt reduced by 28.3% and net debt/EBITDA ratio brought in line with industry average
  • Free cashflow raised to EUR 156.1 million after EUR -716.7 million in the previous year
  • Better-than-expected net result of EUR -185.4 million; excluding one-off effects, net profit amounts to approximately EUR 190 million
  • Positive outlook for the full-year 2015 with an expected increase in revenues of roughly 2%
Customer Numbers in '000
2014
2013
+/- in %
Fixed access lines group-wide
2,723.3
2,636.9
+3.3
- Thereof broadband lines
1,750.3
1,654.4
+5.8
Mobile subscribers
20,008.4
20,117.4
-0.5
- Thereof broadband customers
1,505.7
1,530.9
-1.6
Key Financial Figures in EUR Million Pursuant to IFRS
2014
2013
+/- in %
Group revenues
4,018.0
4,183.9
-4.0
EBITDA comparable*)
1,286.1
1,287.4
-0.1
EBITDA margin comparable
32.0%
30.8%
+1.2p
EBIT
-3.0
318.2
n.m.
Net profit/loss (incl. one-off effects)
-185.4
52.1
n.m.
Free cashflow
156.1
-716.7
n.m.
Capital expenditures
757.4
1,779.1
-57.4
Employees
16,240
16,045
+1.2**)

*) EBITDA excluding effects from restructuring and impairment tests
**) Acquisition of blizoo in the Republic of Macedonia

The Telekom Austria Group saw increased earnings stabilisation in the year under review. Following the impairment charge in Bulgaria, results were better than expected and, after a long dry spell, the company showed an upward trend again.

Hannes Ametsreiter

CEO Telekom Austria Group

"The Telekom Austria Group saw increased earnings stabilisation in the year under review. Following the impairment charge in Bulgaria, results were better than expected and, after a long dry spell, the company showed an upward trend again. After a decrease of almost 12% in 2013, we were able to stabilise EBITDA comparable, while increasing EBITDA margin by 1.2 percentage points. Our particular thanks goes to our employees in the Austrian market. Thanks to their performance, we were able to meet our full-year target and achieve an EBITDA-turnaround despite harsh market conditions. I'm convinced that, based on solid figures, new business fields and innovative products as well as favourable synergies with our international partners, the 2015 business year will be very successful for the Telekom Austria Group. The trend is finally turning upward again," said Hannes Ametsreiter, CEO, Telekom Austria Group and A1.

In 2014, Telekom Austria Group's revenues declined by 4.0% from EUR 4,183.9 million to EUR 4,018.0 million. This decline is mainly attributable to European regulatory effects in the roaming and interconnection areas totalling EUR 128.2 million.

After a decline in EBITDA comparable of 11.6% in the same period of the previous year, the 2014 business year saw increased stabilisation at the group level, with EBITDA comparable reporting a slight decrease of 0.1% to EUR 1,286.1 million. In particular, the turnaround achieved in Austria with an increase of 1.4% to EUR 755.4 million and the strong performance in Belarus with a plus of 10.6% to EUR 172.4 million contributed to this favourable development. EBITDA margin comparable rose from 30.8% to 32%.

In order to offer its customers the best network quality in future, the Telekom Austria Group invested a total of approximately EUR 757.4 million in 2014. The decline in capital expenditures of 57.4% compared to the previous year is mainly attributable to the exceptionally high costs incurred for the frequency auctions in Austria.

Thanks to the successful completion of a capital increase of roughly EUR 1 billion, net debt could be reduced by 28.3% to EUR 2,693.3 million and the net debt/EBITDA ratio brought in line with the EU industry average. A further contribution to the financial stabilisation of the Group was made with regard to cost optimisation. Compared to the previous year, total expenses were reduced by 4.5% to EUR 2,850.9 million.

In the year under review, the net result amounted to a loss of EUR 185.4 million but still exceeded overall expectations, especially considering the negative impact from the impairment charge in Bulgaria. Excluding these one-off effects, the net result would have amounted to approximately EUR 190 million.

"The 2014 business year not only brought about a new ownership structure, but also a solid financial basis. We are now well equipped to master the challenges lying ahead in the telecommunications market. By reducing net debt by almost one third, we were able to achieve a net debt/EBITDA ratio which is in line with the industry average. After a year of consolidation and based on a growth forecast of 2% for the full-year 2015, we are looking to the future with optimism," said Siegfried Mayrhofer, CFO Telekom Austria Group.

The Most Significant Developments in The Single Operating Markets at a Glance

In Austria, A1 was able to meet its full-year target and achieve an EBITDA turnaround. The increase in EBITDA comparable by 1.4% to EUR 755.4 million led to a trend reversal, ushering in a new phase of growth. Revenues fell by 7.0% year-on-year. This decline is attributable, among other things, to lower traffic revenues, lower subsidies for end-devices and regulatory effects totalling EUR 77.0 million. Declines in fixed net voice revenues could be partially compensated for by higher revenues from the TV and broadband business segments. Thanks to total cost reductions of roughly EUR 197.7 million, a considerable contribution was made to the financial stability of the Group. With a view to improving its network infrastructure, the Telekom Austria Group invested approximately EUR 400 million in its domestic market in the year under review, providing a strong basis for the planned broadband offensive. This is set to start as of 2015 thanks to the support of the Austrian government, which confirmed the implementation of a 1 billion broadband infrastructure plan.

The Belarusian subsidiary also showed strong development in 2014. EBITDA comparable improved by 10.6% to EUR 172.4 million, with revenues increasing by 7.0% to EUR 355.0 million despite negative currency effects. On a local currency basis, EBITDA comparable rose by 23.5% and revenues by 19.8%, thanks to rising data traffic and up-selling effects.

The "Additional Markets" segment also made a significant contribution to stable group results. While EBITDA comparable grew by 1.2% to EUR 63.6 million in Slovenia, the Serbian subsidiary remained stable at EUR 64.0 million, with the Macedonian operating market reporting a decrease in EBITDA comparable of 14.6% to EUR 12.6 million. Declines in revenues of 4.4% to EUR 62 million in the Republic of Macedonia were more than compensated for by increases of 16.8% to EUR 213.2 million in the Republic of Serbia and of 0.4% to EUR 199.6 million in Slovenia.

The Bulgarian and Croatian markets continued to be characterised by a challenging environment, although this was counteracted by the favourable performance at the group level. Despite comprehensive cost optimisation, a decrease in EBITDA comparable of 9.8% to EUR 143.1 million could not be prevented due to the poor economic conditions in Bulgaria, with revenues declining by 7.1% to EUR 371.1 million. In Croatia, EBITDA comparable fell by 28.3% to EUR 84.3 million and revenues by 2.8% to EUR 378.2 million. These declines are mainly attributable to regulatory effects, which accounted for a total negative impact of EUR 18.9 million in the year under review, following the threefold rise in spectrum usage fees.

In 2014, two strategically relevant milestones could be reached within the framework of the Group's convergent strategy. Thanks to the acquisition of the fixed net operator blizoo, the Skopje-based subsidiary Vip operator will be able to offer Macedonian customers mobile, broadband and fixed net products from one single source moving forward. The same applies to the merger of the mobile subsidiary mobilkom liechtenstein with Telecom Liechtenstein. As a result, the Telekom Austria Group can now position itself as a convergent multimedia provider in five of its eight operating markets.

Technology

In the year under review, the Telekom Austria Group was once again able to demonstrate its innovation leadership. Among other things, the company became the first telecom provider in the world to connect a customer to its network infrastructure via G.fast. This new technology enables data transmission rates that are 10 to 20 times faster based on existing copper lines in urban areas and is therefore an important addition to the company's fibre-optic rollout plan. In addition, the company's Austrian mobile network ranked first in all network tests carried out in 2014, further demonstrating its outstanding quality. Furthermore, the Telekom Austria Group became the first telecom provider within the EU to migrate its entire fixed net voice telephony service to a voice over IP (VoIP) platform in 2014.

Thanks to the Telekom Austria Group's global wholesale partnership with América Móvil, the 2014 business year also saw the realisation of one of the largest fibre-optic network in the world. Based on a joint network infrastructure across 47 countries, both companies can now offer their customers even better data services moving forward. Last but not least, important steps were also taken in future-oriented areas such as M2M communications, as impressively demonstrated by the cooperation with Porsche Holding in the field of "Connected Car".

Outlook

The 2014 business year marked several important milestones for the continued development of the Telekom Austria Group. The backing of the new majority shareholder América Móvil and the successful completion of a capital increase in November 2014, which provided the company with additional room for maneuver, have strengthened the management's confidence that the company will be able to further consolidate the trend towards greater stabilisation initiated in 2014 and return to its growth path moving forward. For the full-year 2015, the company expects to achieve revenue growth of 2%.

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