TELEKOM AUSTRIA AG 
Earnings Update: Q3 2023 and Q1-Q3 2023
Highlights of Q3 2023
- Spin-offand listing of Telekom Austria's tower business, EuroTeleSites.
- EUR 1 bn reduction of financial debt; net debt excl. leases / EBITDAaL: 0.4x
- Strong FX impact from BYN/EUR:
- Revenues: EUR -33 mn
- EBITDA: EUR -14 mn
- Q3 revenues up by 3%, driven by service revenues (+4%).
- Revenues up 5% in constant currencies.
- EBITDA growth of 0.6% despite one-time factors (EUR -7 mn in total), adverse FX developments (EUR -14 mn) and higher restructuring expenses (EUR -6 mn).
- The underlying EBITDA increased by 6%.
- Telekom Austria was included in the ATX, the leading index of the Vienna Stock Exchange, on September 18, 2023.
- Ambitions 2024-2026:
- Revenue growth of 3-4% per year
- EBITDA growth of 4-5% per year
- CAPEX of EUR 2.8 bn plus frequencies
- Dividend policy confirmed with increased base to EUR 0.32 per share (previously: EUR 0.20)
In this Earnings Update, rounding differences may occur in the summing of rounded amounts due to the use of automatic calculation tools.
The spin-off of EuroTeleSites AG took place a few days before the end of the third reporting quarter of Telekom Austria AG. As the de- consolidation process takes a longer period of time, Telekom Austria AG has decided to publish the results of the third quarter in an abbreviated form. The approach chosen is to present the condensed consolidated statement of comprehensive income as if the tower business were part of the Telekom Austria Group as of the reporting date September 30, 2023. The publication of the consolidated statement of financial position and statement of cash flows as well as the segment reporting is exceptionally waived.
2 | Results for Q3 and Q1-Q3 2023 |
Key financial data
Q1-Q3 | Q1-Q3 | |||||
in EUR million | Q3 2023 | Q3 2022 | 2023 | 2022 | ||
Total revenues | 1,326 | 1,292 | 2.6% | 3,883 | 3,667 | 5.9% |
Service revenues | 1,116 | 1,069 | 4.5% | 3,237 | 3,083 | 5.0% |
Equipment revenues | 189 | 200 | - 5.8% | 578 | 517 | 11.7% |
Other operating income | 21 | 23 | - 10.0% | 68 | 67 | 1.1% |
EBITDA | 521 | 517 | 0.6% | 1,442 | 1,406 | 2.6% |
EBITDA margin | 39.3% | 40.0% | - 0.8pp | 37.1% | 38.3% | - 1.2pp |
EBIT | 278 | 273 | 1.7% | 713 | 686 | 3.9% |
EBIT margin | 20.9% | 21.1% | - 0.2pp | 18.4% | 18.7% | - 0.3pp |
Net result | 201 | 205 | - 2.1% | 502 | 503 | - 0.2% |
Net margin | 15.1% | 15.9% | - 0.7pp | 12.9% | 13.7% | - 0.8pp |
Sept 30, | Dec 31, | |||||
2023 | 2022 | |||||
Net debt (excl. leases) / EBITDA after leases (12 M) | 0.4x | 1.0x | ||||
(2023: excl. the net debt spun off with EuroTeleSites) | ||||||
Sept 30, | Sept 30, | |||||
Customer indicators (thousand) | 2023 | 2022 | ||||
Mobile subscribers | 25,131 | 23,776 | 5.7% | |||
Postpaid | 21,121 | 19,708 | 7.2% | |||
Prepaid | 4,010 | 4,068 | - 1.4% | |||
RGUs | 6,250 | 6,153 | 1.6% | |||
Q1-Q3 | Q1-Q3 | |||||
Q3 2023 | Q3 2022 | 2023 | 2022 | |||
ARPL - Average Revenue Per Line | 26.5 | 25.8 | 2.9% | 26.2 | 25.7 | 1.7% |
ARPU - Average Revenue Per User | 8.5 | 8.7 | -2.5% | 8.3 | 8.3 | -0.5% |
Mobile churn | 1.2% | 1.3% | - 0.1pp | 1.3% | 1.3% | 0.0pp |
Sept 30, | Sept 30, | |||||
2023 | 2022 | |||||
Employees (full-time equivalent) | 17,779 | 17,825 | - 0.3% |
pp = percentage points
A1 Group | 3 |
Q3 2023 in a nutshell
The third quarter was dominated by the spin-off and listing of EuroTeleSites on September 22, 2023. As the deconsolidation process takes some time, the condensed financial results are preliminary. However, the impact of the spin-off on the profitability of Q3 is rather limited, especially in terms of revenues and
EBITDA.
Total revenues increased by 2.6% to EUR 1,326 million, with service revenues up 4.5%. The Belarusian ruble depreciated strongly against the euro, negatively impacting revenues by EUR 33 million.
The EBITDA increased by 0.6%. However, the underlying performance was much stronger as one-time factors, such as the stamp tax for the Austrian master lease agreement with EuroTeleSites, had a negative impact. Furthermore, the Belarusian ruble had a strong negative overall impact. In addition, restructuring expenses in Austria were higher than in the third quarter of the previous year. At that time, they were exceptionally low due to the sharp rise in interest rates. Despite these factors adding up to EUR -27 million, A1 reached a net result of EUR 201 million, i.e., only 4 million lower than in the third quarter of the previous year.
A major effect of the EuroTeleSites spin-off was the reduction of financial debt by around EUR 1 billion to EUR 725 million. This corresponds to a net debt excluding leases/EBITDAaL ratio of 0.4x.
Telekom Austria became a member of Austria's main stock index, ATX, on September 18, 2023.
On a capital market day, Telekom Austria published the ambitions 2024-2026:
-
Revenues to increase by 3-4% per year
(Based on current inflation and exchange rate expectations) - EBITDA to increase by 4-5% per year
(Based on current inflation and exchange rate expectations) - CAPEX should amount to about EUR 2.8 billion (total over the period) plus frequencies
-
The dividend baseline was increased from EUR 0.20 to EUR 0.32 per share.
Based on the Group's operational and financial development, the dividend level will be maintained or sustainably increased.
As from September 2023, the following changes to the A1 Group management became effective:
- Alejandro Plater took over as the new CEO (former COO)
- Thomas Arnoldner, former CEO, became Deputy CEO
- CFO Siegfried Mayrhofer left the Group on his own wish
- Sonja Wallner, CFO of A1 in Austria, additionally took over Group CFO function
4 | Results for Q3 and Q1-Q3 2023 |
Mobile subscribers and fixed-line RGUs | |
In mobile communications, the number of subscribers rose by 5.7% to a total of about 25.1 million. | |
Growth was largely driven by the strong increase in M2M business. Excluding M2M customers, the num- | |
ber of subscribers remained stable. As of September 30, 2023, the share of contract customers was | |
84.0% (September 30, 2022: 83.1%). | |
Internet@home | In the fixed-line business, the number of revenue generating units (RGUs) increased by 1.6% year-on- |
+4.2% | year. While the number of voice RGUs decreased, the number of broadband RGUs and TV at home RGUs |
increased. | |
Internet@home customer base increased by 4.2% to 3.8 million in the Group, driven by the increase in | |
mobile WiFi routers and broadband RGUs. |
Spin-off of the tower business "EuroTeleSites"
On September 22, 2023, Telekom Austria AG spun off the Group's mobile tower business under the name of EuroTeleSites. On the same day, the new company was listed on the prime market segment of the Vienna Stock Exchange.
A1 Group has contractually secured long-term access to the towers. The spin-off allows A1 Group to focus more on its core business, which does not include the management of towers. In addition, the transaction allows for a more efficient budget allocation.
As of June 30, 2023 the tower portfolio comprised 13,225 macro sites in Austria, Bulgaria, Croatia, Ser- bia, Slovenia and North Macedonia. On a pro forma basis, the tower business would have generated revenues from leases of about EUR 230 million and EBITDAaL of EUR 127 million in 2022.
The annualized impact of the spin-off on A1 Group's revenues are expected to be negligible (-0.2%) based on the pro forma figures in 2022. As EuroTeleSites has taken over approximately EUR 1 billion of financial liabilities, these were reduced by the same amount at A1 Group. Net debt excluding leases to EBITDAaL more than halved to 0.4x. On the other hand, free cash flow will decrease by approximately EUR 60 million per year on average as a result of this transaction.
Outlook for financial year 2023 and mid-term ambitions
A1 confirms the existing guidance for 2023. Revenue growth is expected to be around 5%. CAPEX (ex- cluding spectrum investments) should amount to around EUR 950 million.
For the period 2024-2026, A1 has the ambition to increase revenues by 3-4% and EBITDA by 4-5% per year (both ambitions are based on current inflation and exchange rate expectations). CAPEX should amount to about EUR 2.8 billion (total over the period) plus frequencies. The dividend baseline was increased from EUR 0.20 to EUR 0.32 per share, with the dividend policy being confirmed. This means that based on the Group's operational and financial development, the dividend level will be maintained or sustainably increased.
A1 Group | 5 |
Group results (Q3 and Q1-Q3 2023)
In Q3, total revenues grew 2.6%. Service revenues were up 4.5% year-on-year, benefiting from upselling and value-protecting pricing measures. Equipment revenues declined by 5.8% as some large projects were completed. The Belarusian ruble depreciation accelerated in the third quarter, reducing revenues by EUR 33 mn.
In Q1-Q3 2023, total revenues increased by 5.9% to EUR 3,883 mn. Service revenues increased by 5.0% and equipment revenues by 11.7%. STEMO in Bulgaria has been consolidated since August 2022. From January to July 2023 (i.e., the period in which STEMO is not included in the comparable results), this company generated total revenues of EUR 26 mn. The depreciation of the Belarusian ruble had a negative impact of EUR 40 mn.
In Q3, EBITDA increased by 0.6% to EUR 521 mn. This positive development was achieved despite onetime factors totaling EUR -7 mn and the depreciation of the Belarusian ruble which accounted for EUR -14 mn. Restructuring charges in Austria amounted to EUR 15 mn (Q3 2022: EUR 9 mn). The increase was due to exceptionally low restructuring charges in the prior year, as higher interest rates had reduced the present value of long-term restructuring provisions.
In Q1-Q3 2023, EBITDA increased by 2.6% to EUR 1,442 mn. Restructuring charges amounted to EUR 53 mn (Q1-Q3 2022: EUR 50 mn). The development of the Belarusian ruble had a negative impact on the EBITDA of EUR 18 mn.
In Q3, operating income (EBIT) increased by 1.7% to EUR 278 mn.
In Q1-Q3 2023, the EBIT reached EUR 713 mn, an increase of 3.9%.
In Q3, the financial result amounted to EUR -19 mn (previous year: EUR -9 mn). This development reflects a significant portion of interest and lease costs in connection with the tower business and the master lease agreement.
In Q1-Q3 2023, the financial result deteriorated to EUR -67 mn (previous year: EUR -39 mn).
In Q3, the net result decreased by EUR 4 mn or 2.1% to EUR 201 mn.
In Q1-Q3 2023, the net result decreased by EUR 1 mn to EUR 502 mn.
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Telekom Austria AG published this content on 17 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 October 2023 17:16:29 UTC.
