Telekom Austria : Results PDF (0.63 MB)

Results for the First Quarter 2022

Vienna, April 26, 2022 - Today, A1 Telekom Austria Group (VSE: TKA, OTC US: TKAGY) announces its results for the first quarter of 2022, ending March 31, 2022.

Key performance indicators

in EUR million	Q1 2022	Q1 2021	% change
Total revenues	1,166.4	1,135.5	2.7
Service revenues	988.2	955.7	3.4
Equipment revenues	155.3	162.1	- 4.2
Other operating income	23.0	17.8	29.4
Wireless revenues	689.5	668.5	3.1
Service revenues	547.4	518.9	5.5
Equipment revenues	142.0	149.5	- 5.0
Fixed-line revenues	454.0	449.3	1.0
Service revenues	440.7	436.8	0.9
Equipment revenues	13.2	12.5	5.7
EBITDA before restructuring	452.7	419.3	7.9
% of total revenues	38.8%	36.9%
EBITDA	431.6	398.3	8.4
% of total revenues	37.0%	35.1%
EBIT	194.2	163.3	18.9
% of total revenues	16.7%	14.4%
Net result	130.7	108.9	20.0
% of total revenues	11.2%	9.6%
Wireless indicators	Q1 2022	Q1 2021	% change
Wireless subscribers (thousands)	22,921.2	21,931.7	4.5
Postpaid	19,092.0	18,013.7	6.0
Prepaid	3,829.1	3,918.0	- 2.3
ARPU (in EUR)	8.0	7.9	1.2
Mobile churn (%)	1.3%	1.4%
Wireline indicators	Q1 2022	Q1 2021	% change
RGUs (thousands)	6,073.9	6,082.1	- 0.1

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 First Quarter of 2022
Table of Contents1
Group Summary	3
Outlook	4
Mobile subscribers and fixed-line RGUs	4
Comments on operating segments for Q1 2022 -
Revenues and EBITDA	5
Austria	5
International operations	6
Group profit and loss - below EBITDA	9
Balance Sheet	9
Net debt	9
Cash flow	10
Capital expenditures	10
Detailed figures	11
Condensed Consolidated Financial Statements	17
Additional information	20

1Alternative performance measures are included in this report. For details, please refer to the section 'Detailed fig-ures'.

Q1 2022 Analysis

Group Summary

For the most of Q1 2022, the positive trends of the last quarters continued and resulted in solid set of quarterly results. A1 Telekom Austria Group again achieved revenue and EBITDA growth across the entire footprint. Service revenues increased in all markets, capitalizing on continued favorable trends and suc-cessful strategy execution. There was an uphold strong demand for high-bandwidth products, success-ful upselling measures, solid momentum with mobile WiFi routers as well as in the solutions and connec-tivity business. Due to eased COVID measures versus the comparison period, travelling returned and roaming traffic was higher compared to last year's first quarter, benefitting the results in the quarter un-der review.

Inflationary pressure stemming primarily from rising energy prices as well as macroeconomic instability due to the conflict between Ukraine and Russia were on the top of the agenda in the first quarter of 2022. A1 continues to concentrate on further cost discipline in order to mitigate certain parts of the inflation-driven increases.

•  Group total revenues increased by 2.7% year-on-year, driven by service revenue growth in all mar-kets.

•  Equipment revenues decreased by 4.2%, as the market environment continued to be unchanged amidst a certain lack of high-value handset availability. A volume-driven decline in Bulgaria, Aus-tria, and Belarus was only partly mitigated by the increase in Serbia.

•  Mobile service revenues increased by 5.5% on a Group level, due to the solid performance of the mobile core business, mobile WiFi routers, as well as further recovery of roaming results.

•  Fixed-line service revenues rose by 0.9% on a Group level, as solid growth of 9.5% in the interna-tional markets more than compensated for the decline in Austria. Continued traction of solution and connectivity business added to this, while EU IC regulation negatively weighed on revenues.

•  The number of mobile subscribers rose by 4.5%, driven by the higher number of M2M subscrib-ers as well as the higher number of mobile WiFi routers in all markets.

•  The increase in mobile WiFi routers was also driving Internet@home higher, which grew by 4.5%.

•  Group total RGUs remained stable as the increase in broadband and TV subscribers offset the voice decline.

•  Roaming benefited results in Q1 2022 (positive impact yoy: ~ 1% of revenues; ~ 2 % of EBITDA versus ~negative 3% on EBITDA in Q1 2021) due to returning travelling across the footprint, es-pecially in Austria.

•  Group EBITDA before restructuring charges grew by 7.9% (reported: 8.4%) driven by service rev-enue growth and the better equipment margin despite higher core OPEX.

  •  In Austria, EBITDA before restructuring charges increased by 6.3% since higher service reve-nues and improved equipment margin offset higher core OPEX.

  •  EBITDA in international operations increased by +8.9%. Growth throughout the footprint, with a particularly strong contribution from Belarus, Bulgaria and Serbia.

•  Net result improved by 20.0% year-on-year in the first quarter of 2022, as solid operational per-formance could more than compensate for higher income tax expenses.

•  Free cash flow increased in the quarter under review mainly due to the improved operational per-formance.

•  EUR 750 mn bond was repaid from existing cash and proceeds from bank loans on April 4, 2022.

The presentation for the conference call and key figures of A1 Telekom Austria Group in Excel format ('Fact Sheet Q1 2022') are available on the website atwww.a1.group.

Results for the Fourth Quarter and the Full Year 2021

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

•  FX effects were minor. They amounted to EUR -0.2 mn in total revenues, EUR -0.1 mn in service revenues and EUR -0.1 mn in EBITDA in Q1 2022, as depreciation of Belarusian Ruble by -0.5% (period average) was not offset by positive currency trends in Croatia.

•  There were neither in the reporting period, nor in the comparison period one-off effects in total revenues and EBITDA.

•  Restructuring charges in Austria amounted to EUR 21.1 mn in Q1 2022 (Q1 2021: EUR 21.0 mn).

Outlook

Outlook confirmed

The Management of A1 Telekom Austria Group confirms the outlook for the financial year 2022 with total revenue growth of close to 3%. Under current circumstances, it arises an additional risk that the Belarus-ian ruble might be hit by negative trends. The initial outlook for 2022 includes a depreciation versus the Euro of 5-10% in 2022 (period average). After a sharp drop of the BYN in February and March, the cur-rency appreciated again in April to pre-war level. Should the currency worsen again, this might have an impact on the expected revenues in 2022, i.e. in a scenario in which the currency depreciates by approx-imately 15% in 2022 (period average), the negative impact amounts to less than 1% on total Group rev-enues. Though, it should be noted that the predictability of the Belarusian ruble is very limited, especially under current circumstances and this is just an example for one scenario and the corresponding impact. Furthermore, equipment revenues might be stressed by supply chain challenges. Overall, EBITDA margin is still expected to slightly increase.

Capital expenditures, before spectrum investments and acquisitions are expected to increase by approx-imately 15% in 2022. The increase versus last year's CAPEX results mainly from higher investments in Austria dedicated to more fiber build, and to a small extent to more IT CAPEX and the 5G roll-out.

Mobile Subscribers and Fixed-line RGUs

Internet@home continued to grow: + 4.5% year-on-year in Q1 2022

In mobile communications, the number of subscribers of the A1 Telekom Austria Group rose by 4.5% to a total of 22.9 million in the first quarter of 2022. The growth was mainly driven by a strong increase in M2M subscribers. Also, the growth in contract customers (ex M2M) was driven by the mobile core busi-ness and the continued shift from prepaid to contract offers as well as solid demand for mobile WiFi routers. The number of A1 Digital M2M customers continued to increase in Q1 2022. Despite of the grow-ing M2M subscriber base, Group ARPU (which is diluted by low-ARPU M2M subscribers) grew by 1.2% in the reviewed period.

The number of revenue-generating units (RGUs) in the Group's fixed-line business remained flat (-0.1%) year-on-year. In Austria, the number of RGUs declined, driven by fewer voice RGUs and low-bandwidth broadband, which could not be offset by the continued solid demand for high-bandwidth products in Q1 2022. In the international markets, the number of RGUs rose mainly due to increasing high-bandwidth broadband RGUs, particularly in Belarus and Croatia, while TV RGUs also grew in most of the markets.

Overall, the Internet@home customer base increased by 4.5% in the Group, driven by the increase in mobile WiFi router numbers in all markets. Bulgaria, Croatia and Belarus contributed to that growth in particular.

Comments on Operating Segments for Q1 2022 - Revenues and EBITDA

Austria

Key performance indicators Financials

Equipment revenues	7.6	7.8	- 2.6

in EUR million	Q1 2022	Q1 2021	% change
Total revenues	663.7	657.4	1.0
Total Service revenues	588.5	581.1	1.3
Total Equipment revenues	60.2	65.2	- 7.7
Other operating income	15.1	11.2	35.2
Wireless revenues	301.7	293.9	2.6
Service revenues	249.1	236.6	5.3
Equipment revenues	52.6	57.4	- 8.4
Fixed-line revenues	347.0	352.3	- 1.5
Service revenues	339.4	344.5	- 1.5
EBITDA before restructuring	265.6	250.0	6.3
% of total revenues	40.0%	38.0%
EBITDA	244.6	228.9	6.8
% of total revenues	36.8%	34.8%
EBIT	106.6	94.2	13.2
% of total revenues	16.1%	14.3%
Wireless indicators	Q1 2022	Q1 2021	% change
Wireless subscribers (thousands)	5,095.1	5,025.4	1.4
Mobile churn (%)	1.0%	1.8%
Wireline indicators	Q1 2022	Q1 2021	% change
RGUs (thousands)	3,019.0	3,123.4	- 3.3

In Q1 2022, trends remained mostly unchanged in Austria. In the mobile market, dynamics continued to be comparably low which resulted in lower gross additions and churn. High-value handset availability continued to be limited to a certain extent. In this context, subsidies were well-below last year's level.

For A1, all in all, this also benefitted the equipment margin. After the Christmas promotion campaign, A1 5G tariffs are sold with a premium over LTE tariffs and the overall share of these tariffs in the portfolio continued to rise solidly. Demand for mobile WiFi routers remained solid, as was the appeal for higher-bandwidth products, also in the fixed-line business while RGU loss continued to be driven by voice and low-bandwidth customers. A1's broadband campaign is gaining a good traction for the planned ampli-fied fiber roll-out. Growth momentum as in previous quarters also continued in the solution and connec-tivity business albeit Q1 2021 profited from the restart of projects which resulted in a very strong perfor-mance in the comparison period.

New Internet@home portfolio instrumental in customers' upselling

Total revenues in the Austrian segment increased in the reporting period as the growth in service reve-nues and other operating income prevailed lower equipment revenues. Due to the unchanged market environment equipment sales decreased along with subsidies provided.

Mobile service revenues rose on the back of the solid retail business as well as recovering customer and visitor roaming due to more travelling and returning winter tourism compared to the same period last year. Continued good demand for high and low-value tariffs, mobile WiFi routers, as well as inflation-