Telekom Austria records H1 net loss on Bulgarian impairment

13 Aug 2014

Telekom Austria Group recorded a net loss of EUR317.8 million (USD435 million) in the first half of 2014, with the company attributing this to an impairment charge of EUR400 million for Mobiltel in Bulgaria. Citing ‘macro effects and fierce competition’ as having driven customer and revenue declines in both the fixed and mobile markets in Bulgaria, the company said the impairment was due to adjustment of weighted average cost of capital (WACC) and altered medium-term macroeconomic expectations for the country.

Group revenue for the six months ended 30 June 2014 meanwhile fell by 7.3% year-on-year, to EUR1.939 billion, with EBITDA comparable falling by 7.2%; both declines were said to have been driven mainly by regulation, macroeconomic effects in Central and Eastern Europe (CEE). Telekom Austria also recorded an operating loss for the period under review of EUR222.6 million, compared with operating income of EUR223.3 million a year earlier, while the company posted a net loss of EUR317.8 million in H1 2014, against a net profit of EUR108.0 million in the first half of 2013.

In the wake of the results Telekom Austria has revised its guidance for the full year period, confirming that it now expects revenues to decline by approximately 3.5%, against a previous forecast of a 3.0% decline. Meanwhile, the outlook for group capital expenditures has been refined from approximately EUR700 million in 2014, to between EUR650 million and EUR700 million.

In operational terms, at the end of June 2014 Telekom Austria reported a total mobile subscriber base of 19.878 million across all of its group units, down from 20.033 million a year earlier. Half of the group’s subsidiaries – in Austria, Bulgaria, Croatia and Macedonia – registered customer losses in the year to 30 June 2014, while in Belarus, Slovenia, Serbia and Liechtenstein subscriber numbers increased. Meanwhile, at the end of the reporting period Telekom Austria counted 2.636 million group fixed line accesses, up marginally from 2.617 million a year earlier, of which 1.695 million were broadband connections, representing a 5.7% y-o-y increase.

Commenting on the group’s performance over the six-month period, Telekom Austria Group CEO Hannes Ametsreiter noted: ‘The persisting negative effects of the global economic and financial crisis hit the real economy in the CEE markets particularly hard during the first half of 2014 … As one of the leading communications providers in Eastern Europe, Telekom Austria Group has not been immune to such negative developments. This set of results should not come as a surprise, as the general public was informed about the impairment charge in Bulgaria several weeks ago. At the same time, we are looking towards the future of our company with optimism: thanks to the strong partnership with America Movil, we will be able to take important steps in the months to come to further develop Telekom Austria Group.’

Austria,Telekom Austria Group,

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