Telekom Austria : Report PDF (0.52 MB)

Trading Statement Third Quarter and First Nine Months 2021

Vienna, October 19, 2021 - Today, A1 Telekom Austria Group (VSE: TKA, OTC US: TKAGY) announces its results for the third quarter and the first nine months of 2021, ending September 30, 2021.

Key performance indicators
in EUR million	Q3 2021	Q3 2020	% change	1-9 M 2021	1-9 M 2020	% change
Total revenues	1,205.2	1,142.1	5.5	3,506.5	3,363.8	4.2
Service revenues	1,012.9	953.8	6.2	2,945.1	2,843.1	3.6
thereof mobile service revenues	570.0	524.0	8.8	1,621.2	1,554.3	4.3
thereof fixed-line service revenues	442.9	429.8	3.0	1,323.9	1,288.9	2.7
Equipment revenues	172.9	168.9	2.4	501.7	463.6	8.2
Other operating income	19.4	19.4	- 0.2	59.7	57.0	4.6
EBITDA before restructuring	501.3	462.5	8.4	1,369.3	1,274.3	7.5
% of total revenues	41.6%	40.5%		39.1%	37.9%
EBITDA	480.2	441.6	8.7	1,306.3	1,212.3	7.7
% of total revenues	39.8%	38.7%		37.3%	36.0%
EBIT	243.8	210.7	15.7	594.6	509.6	16.7
% of total revenues	20.2%	18.4%		17.0%	15.2%
Net result	181.0	142.6	26.9	414.8	345.6	20.0
% of total revenues	15.0%	12.5%		11.8%	10.3%
Wireless indicators	Q3 2021	Q3 2020	% change	1-9 M 2021	1-9 M 2020	% change
Wireless subscribers (thousands)	22,731.6	21,609.4	5.2	22,731.6	21,609.4	5.2
Postpaid	18,592.5	17,505.1	6.2	18,592.5	17,505.1	6.2
Prepaid	4,139.0	4,104.3	0.8	4,139.0	4,104.3	0.8
MoU (per Ø subscriber)	404.7	410.0	- 1.3	421.0	415.7	1.3
ARPU (in EUR)	8.4	8.1	3.5	8.1	8.1	0.2
Mobile churn (%)	1.2%	1.2%		1.3%	1.4%
Wireline indicators	Q3 2021	Q3 2020	% change	1-9 M 2021	1-9 M 2020	% change
RGUs (thousands)	6,055.1	6,066.2	- 0.2	6,055.1	6,066.2	- 0.2

All comparisons are given year-on-year. EBITDA is defined as net income excluding financial result, income taxes, depreciation and amortization and impairment charges.

2	Results for the Third Quarter and First Nine Months 2021

Table of Contents

Group Summary Q3 2021	3
Mobile subscribers and fixed-line RGUs	4
Comments on operating segments for Q3 2021 -
Revenues and EBITDA	5
Austria	5
International operations	6
Year-to-Date Highlights	8
Group profit and loss - below EBITDA	9
Balance Sheet	9
Net debt	9
Cashflow	10
Capital expenditures	10
Outlook	10
Detailed figures	11
Additional information	14
Condensed Consolidated Financial Statements	15
Condensed Consolidated Statements of Comprehensive Income	15
Condensed Consolidated Statements of Financial Position	16
Condensed Consolidated Statements of Cash Flows	17

Alternative performance measures are included in this report. For details, please refer to the section 'Detailed figures'.

A1 Telekom Austria Group

3

Q3 2021 Analysis

Group Summary

A1 Telekom Austria Group closed the third quarter of 2021 with another strong performance, demonstrated in growing service revenues across all the segments. Solid trends from prior quarters continued, with still- present great demand for mobile WiFi routers and high-bandwidth products, as well as solution and connectivity services.

Steady vaccination rates and eased travel restrictions allowed for more travelling in the footprint during summer months and resulted in another rebound of roaming revenues compared to the previous year, while further FX stabilization in Belarus has been seen as a supportive factor. With solid top-line trends, costs and expenses also went up driven by higher product related costs in the reporting period, and partly also resulting from a low Q3 2020 baseline due to COVID-19 related savings.

• Group total revenues increased by 5.5 % almost entirely driven by service revenue growth in all mar- kets, both in the mobile and the fixed-line businesses.
• Equipment revenues were higher, as volume-driven declines in Austria were more than compen- sated by the increase in equipment sales in other markets.
• Mobile service revenues increased by 8.8 % on a Group level, driven by growth in all segments, and in particular continued strong performance of mobile core business in Austria, Croatia, Serbia and Bulgaria.
• Fixed-lineservice revenues grew by 3.0 %, mainly driven by the Austrian, Bulgarian and Belarusian segment with all the other countries also contributing to the growth. In particular, solid traction of solution and connectivity business added to the growth.
• Growth in Internet@home subscriber base of 5.4 % driven by mobile WiFi routers in all markets, es- pecially in Bulgaria and Croatia.
• The number of mobile contract subscribers rose by 6.2 % due to a higher number of M2M subscrib- ers, higher number of mobile core subscribers as well as growth in mobile WiFi routers.
• Fixed-lineRGUs stable (-0.2 %), as growth in high-bandwidth broadband RGUs compensated for a decline of low-bandwidth broadband and fixed voice RGUs.
• Roaming revenues continued to grow in Q3 year-on-year (positive impact yoy: ~ 1 % of revenues; ~ 2 % of EBITDA versus approx. 1 % in Q2 2021) due to more travelling in the summer season across the footprint, especially in Croatia, while staying substantially below pre-COVID levels.
• Higher service revenues translated into solid Group EBITDA before restructuring charges growth of 8.4 % (reported: 8.7 %), outweighing increased costs and expenses. Excluding one-off and FX ef- fects as well as restructuring charges, Group EBITDA increased by 9.0 %.

• • In Austria, EBITDA before restructuring charges increased by 5.0 % (reported: 5.4 %), due to successful translation of service revenues and improved equipment margin.
  • EBITDA in the international operations increased by 11.3 %, with strong growth in all markets except for a slight decline in Slovenia.
• Net result increased by 26.9 % in the third quarter of 2021, driven by strong operational perfor- mance.
• Free cash flow decreased slightly from EUR 172.5 mn to EUR 167.6 mn in the quarter under review, as improved operational performance and lower working capital needs could not fully offset higher capital expenditures.
• Spectrum acquired in Q3 2021: 700 MHz, 3.6 GHz and 26 GHz for EUR 14.0 mn in Croatia.
• Outlook 2021 raised: 3-4 % Group total revenue growth; CAPEX excluding spectrum investments and acquisitions of ~ EUR 800 mn (unchanged).

The presentation for the conference call and key figures of A1 Telekom Austria Group in Excel format ('Fact Sheet Q3 2021') are available on the website at www.a1.group.

4	Results for the Third Quarter and First Nine Months 2021

The following factors should be considered in the analysis of A1 Telekom Austria Group's quarterly operating results:

 Negative FX effects amounted to EUR 1.1 mn in total revenues, EUR 0.2 mn in service revenues and

	EUR 0.1 mn in EBITDA in Q3 2021, stemming entirely from Belarus.
	 There were no one-off effects in total revenues and EBITDA in the reporting period, while there was
	a positive one-off effect in Q3 2020 in EBITDA (+2.6 mn in Croatia).
	 Restructuring charges in Austria amounted to EUR 21.1 mn in Q3 2021 (Q3 2020: EUR 20.9 mn).
	Mobile Subscribers and Fixed-line RGUs
Internet@home continued to	In mobile communications, the number of subscribers of the A1 Telekom Austria Group rose by 5.2 % to a
grow: + 5.4 % year-on-year in	total of 22.7 million in the third quarter of 2021. The number of contract customers rose in almost all mar-
Q3 2021	kets driven by strong growth in M2M subscribers, particularly in Austria and Belarus. Otherwise, the
	growth was also driven by solid mobile core business and the continued shift from prepaid to contract of-
	fers as well as ongoing strong demand for mobile WiFi routers. The number of A1 Digital M2M customers
	continued to increase in Q3 2021.
	The number of revenue-generating units (RGUs) in the Group's fixed-line business were stable (-0.2 %)
	year-on-year. In Austria, the number of RGUs declined, driven by fewer low-bandwidth broadband and
	voice RGUs, which was partially offset by the continued strong demand for high-bandwidth products in Q3
	2021. In the international markets, the number of RGUs rose mainly due to increasing high-bandwidth
	broadband RGUs, particularly in Belarus, Bulgaria and Croatia, while TV RGUs also grew in almost all mar-
	kets.
	Overall, the Internet@home customer base increased by 5.4 % in the Group, driven by the increase in mo-
	bile WiFi router numbers. Especially Austria, Bulgaria, Croatia and Serbia contributed to that growth.

A1 Telekom Austria Group

5

Comments on Operating Segments for Q3 2021 - Revenues and EBITDA

Austria

Key performance indicators
Financials
in EUR million	Q3 2021	Q3 2020	% change	1-9 M 2021	1-9 M 2020	% change
Total revenues	672.5	657.1	2.3	1,996.1	1,940.5	2.9
thereof service revenues	601.4	577.9	4.1	1,773.1	1,729.5	2.5
EBITDA before restructuring	300.2	285.8	5.0	820.3	783.5	4.7
% of total revenues	44.6%	43.5%		41.1%	40.4%
EBITDA	279.1	264.9	5.4	757.2	721.6	4.9
% of total revenues	41.5%	40.3%		37.9%	37.2%
EBIT	143.6	135.2	6.2	346.8	330.8	4.8
% of total revenues	21.4%	20.6%		17.4%	17.0%

In the third quarter of 2021, the market environment in Austria remained broadly unchanged compared to the previous quarters. A1 continued to benefit from a steady demand for mobile WiFi routers and high-bandwidth products, while the solution and connectivity business continued to see encouraging traction since the beginning of the year. A1 launched a new Internet@Home portfolio, focusing on the best technology at the customers' location while flattening the pricing curve and increasing the entry-level tariff with a more- for-more approach. In the mobile business, demand for the high-value and 5G tariffs with premium contin- ued, increasing the overall share of these tariffs in the portfolio.

In the Austrian segment, total revenues increased by 2.3 % year-on-year, as solid service revenue growth more than compensated for lower equipment revenues. While service revenue growth was driven both by the mobile and the fixed-line business, equipment revenues declined due to lower quantities sold.

Mobile service revenues came in higher, driven by solid performance of high value tariffs and continued strong demand for mobile WiFi routers. Results were also supported by inflation-linked pricing measures from April 2021 and a further partial rebound of roaming revenues. As a consequence, ARPU trended upwards also in third quarter of 2021.

Fixed-line service revenues rose, owing to a solid traction of the solution and connectivity business which was partly offset by lower retail fixed-line revenues. The latter declined as the ongoing erosion in voice RGUs, coupled with the lower traffic volumes compared to the previous year, and lower number of low-bandwidth RGUs could not be compensated by broadband speed upgrades and certain pricing measures. ARPL increased mainly due to successful upselling effects and above-mentioned pricing effects.

EBITDA before restructuring increased by 5.0 % (reported: +5.4 %), as higher service revenues and the slightly higher equipment margin more than outweighed increased core OPEX. While equipment margin im- proved, OPEX was up following higher product related costs in the reporting period as well as elevated maintenance and advertising costs after a low 2020 comparable amidst COVID-19 related savings.

A1 launched new Internet@Home portfolio

EBITDA before restructuring increased by 5.0 % driven by encouraging service revenue trends