Telekom Austria : Trading Statement for Q3 2022 and Q1-Q3 2022

Trading Statement for Q3 2022 and Q1-Q3 2022

Key Performance Indicators

Unless otherwise stated, all amounts in EUR million	Q3 2022	Q3 2021		Q1-Q3 2022	Q1-Q3 2021
Total revenues	1,292	1,205	7.2%	3,667	3,507	4.6%
Service revenues	1,069	1,013	5.5%	3,083	2,945	4.7%
Equipment revenues	200	173	15.9%	517	502	3.1%
Other operating income	23	19	19.8%	67	60	12.7%
Wireless revenues	774	726	6.6%	2,181	2,079	4.9%
Service revenues	614	570	7.6%	1,736	1,621	7.1%
Equipment revenues	161	156	2.9%	445	458	- 2.8%
Wireline revenues	495	460	7.6%	1,419	1,368	3.7%
Service revenues	455	443	2.7%	1,346	1,324	1.7%
Equipment revenues	40	17	138.3%	73	44	64.3%
EBITDA before restructuring	526	501	4.9%	1,456	1,369	6.3%
EBITDA margin before restructuring	40.7%	41.6%		39.7%	39.1%
EBITDA	517	480	7.8%	1,406	1,306	7.6%
EBITDA margin	40.0%	39.8%		38.3%	37.3%
EBIT	273	244	11.9%	686	595	15.4%
EBIT margin	21.1%	20.2%		18.7%	17.0%
Net result	205	181	13.4%	503	415	21.2%
Net margin	15.9%	15.0%		13.7%	11.8%
Wireless indicators	Sept 30, 2022	Sept 30, 2021
Subscribers (thousand)	23,776	22,732	4.6%
Postpaid	19,708	18,593	6.0%
Prepaid	4,068	4,139	- 1.7%
	Q3 2022	Q3 2021		Q1-Q3 2022	Q1-Q3 2021
ARPU (in EUR)	8.7	8.4	3.2%	8.3	8.1	2.7%
Mobile churn (%)	1.3%	1.2%		1.3%	1.3%
Wireline indicators	Sept 30, 2022	Sept 30, 2021
RGUs (thousands)	6,154	6,052	1.7%

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 Q3 and Q1-Q3 2022

Q3 2022 Overview

The presentation for the conference call and detailed key figures of A1 Telekom Austria Group in Excel format ('Fact Sheet Q3 2022') are available on the website at www.a1.group/en/investor- relations.

In the third quarter of the 2022 financial year, A1 Telekom Austria Group managed to increase both service revenues (+5.5%) and equipment revenues (+15.9%). The former grew on the basis of strong demand for high-bandwith prod- ucts, successful upselling measures and positive roaming effects due to increased travelling. The latter benefitted from a better supply of devices, from a large project in Austria as well as the first time consolidation of STEMO (Bulgaria). Favorable exchange rate developments supported revenue growth by EUR 14 mn.

This strong result came amid an increasingly challenging macroeconomic environment. Energy costs have been rising strongly driving inflation. A1 Telekom Austria Group cannot escape this development. In particular electricity costs went up strongly in Q3 compared to Q2 (+19.6% to EUR 37 mn). The management expects this trend to continue and also affect other cost items. A focus lies on workforce costs as the collective bargaining process in Austria is expected to be concluded later this year. The situation in the supply chain has improved somewhat, but is still being closely monitored.

Therefore, the management has launched efficiency measures to mitigate the increase in costs. Furthermore, contractual opportunities to increase prices in line with the consumer price index (price indexation) are being seized.

	Mobile Subscribers and Fixed-line RGUs in Q1-Q3 2022
	In mobile communications, the number of subscribers of the A1 Telekom Austria Group rose by 4.6% to a total of 23.8
	million. The growth was mainly driven by a strong increase in M2M subscribers and a solid demand for mobile WiFi
	routers. The trend from prepaid to contract offers continued in the year to date.
	The number of revenue-generating units (RGUs) in the Group's fixed-line business increased by 1.7% year-on-year. In
	Austria, the number of RGUs declined, driven by fewer voice and low-bandwidth broadband RGUs. This could not be
	offset by the continued solid demand for high-bandwidth products. In international markets, the number of RGUs rose
	mainly due to increasing high-bandwidth broadband RGUs, particularly in Bulgaria, while TV RGUs also grew in most
	of the markets.
Internet@home + 5.0%	Overall, the Internet@home customer base increased by 5.0% in the Group, driven by the increase in mobile WiFi
	routers but also broadband RGUs.

Outlook confirmed:

Outlook for the Financial Year 2022

Revenues are still forecasted to increase by around 3%, driven by continued solid service revenues in basically all

Revenues close to +3%

markets and strong results in mobile and solutions & connectivity. This revenue forecast is based on the initial as-

(excl. additional positive

sumption that the Belarusian ruble would depreciate by an average of 5% to 10% against the euro in financial year

FX effect)

2022. Based on the actual exchange rate development in Q1-Q3 and assuming that the exchange rate remains at the

CAPEX +15%

level of September 30, 2022 until the end of the year, a positive impact on revenue of an additional 1-1.5% is ex- pected.

Overall, the EBITDA margin is still expected to slightly increase.

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

A1 Telekom Austria Group

3

Group Results

Revenues and Profitability
Group revenues increased by 7.2% to EUR 1,292 mn, driven by service revenue growth in all markets. Equipment rev-
enues increased by 15.9% mainly due to a sizeable project in Austria. Mobile service revenues increased strongly by
7.6% on a Group level driven by the solid mobile core business performance. Primarily successful upselling, inflation-
linked price adjustments and increased roaming traffic helped. Fixed-line service revenues rose by 2.7% on a Group
level, as continued traction of the solution and connectivity business more than compensated for lower interconnec-
tion revenues. Total revenues were positively impacted by a favorable development of the Belarusian ruble versus the
euro in the amount of EUR 14 mn, while service revenue in the amount of EUR 11 mn.
Group EBITDA before restructuring charges increased by 4.9% to EUR 526 mn as revenue growth compensated for
higher core OPEX. Restructuring charges in Austria dropped to EUR 9 mn in Q3 2022 (Q3 2021: EUR 21 mn), as a higher
interest rate led to a lower present value in the calculation. The stronger Belarusian ruble accounted for a positive
effect of EUR 7 mn. EBITDA surged by 7.8% to EUR 517 million which corresponds to an EBITDA margin of 40.0%. In
Q3 2022, amidst increased traveling, particularly in Austria, the increased roaming result accounted for 1.0% of Group
EBITDA.
In Q3 2022, depreciation and amortization (incl. rights of use) increased slightly (+3.5%) and amounted to EUR 245 mn
compared to EUR 236 mn in Q3 2021. Operating income (EBIT) increased by 11.9% to EUR 273 mn.
Net result improved by 13.4% in Q3 2022, as solid operational performance more than compensated for higher income	Net result + 13.4%
tax expenses.
Consolidated Statement of Financial Position
As at September 30, 2022, the balance sheet total was 2.4% lower than as at December 31, 2021. This was mainly due
to the repayment the EUR 750 mn bond in April 2022, which had a balance sheet-reducing effect.
As a consequence of this repayment, cash and cash equivalents as well as current assets decreased, as did short-term
debt and current liabilities. However, there was a countermovement in the latter due to the reclassification of a
EUR 300 mn bond due in July 2023 from long-term debt to short-term debt. This caused non-current liabilities to de-
crease. Also the long-term lease liabilities decreased compared to the balance sheet date.
KPI: Capital Expenditures (CAPEX)
In the third quarter, capital expenditures increased by 17.4% to EUR 224 mn. Tangible capital expenditures increased
by 29.7% in Q3 2022 mainly driven by increased fiber and 5G investments in Austria. Intangible CAPEX decreased by
22.5%, as the Group acquired frequencies in the same period of the previous year.
Unless otherwise stated, all amounts in EUR
million	Q3 2022	Q3 2021
Total capital expenditures - tangible	189	145	29.7%
Total capital expenditures - intangible	35	45	- 22.5%
Total capital expenditures	224	191	17.4%

4	Results for Q3 and Q1-Q3 2022

KPI: Free Cash Flow

In Q3, free cash flow decreased by 20.0% to EUR 134 mn due to increased CAPEX and higher working capital needs.

Unless otherwise stated, all amounts in EUR million	Q3 2022	Q3 2021
EBITDA	517	480	7.8%
Restructuring charges and cost of labor obligations	8	24	- 65.8%
Lease paid (principal, interest and prepayments)	- 38	- 37	3.7%
Income taxes paid	- 48	- 42	14.8%
Net interest paid	- 14	- 11	34.9%
Change working capital and other changes	- 56	- 38	48.4%
Capital expenditures	- 224	- 191	17.4%
Free Cash Flow (FCF) before social plans	145	186	- 22.1%
Social plans new funded*	- 11	- 18	- 41.2%
FCF after social plans new	134	168	- 20.0%
* Cost for social plans granted in the respective period.
Unless otherwise stated, all amounts in EUR million	Q3 2022	Q3 2021
FCF after social plans new	134	168	- 20.0%
Social plans new funded*	11	18	- 41.2%
Total social plans paid*	- 24	- 24	- 1.2%
FCF - previously reported	121	162	- 25.2%
* Cost for social plans granted.

KPI: Net Debt

Net debt and net debt/EBITDA further decreased after December 31, 2021.

Unless otherwise stated, all amounts in EUR million	Sept 30, 2022	Dec 31, 2021
Net debt (excl. leases)	1,815	2,065	- 12.1%
Net debt (excl. leases) / EBITDA after leases (12 months)	1.1x	1.3x
Unless otherwise stated, all amounts in EUR million	Sept 30, 2022	Dec 31, 2021
Long-term debt	747	1,046	- 28.6%
Lease liability long-term	546	606	- 9.9%
Short-term debt	1,240	1,553	- 20.2%
Lease liability short-term	166	161	2.8%
Cash and cash equivalents	- 172	- 534	- 67.8%
Net debt (incl. leases)	2,526	2,832	- 10.8%
Net debt (incl. leases) / EBITDA (12 months)	1.4x	1.7x

A1 Telekom Austria Group

5

Segment Performance

Austria

Unless otherwise stated, all amounts in EUR
million	Q3 2022	Q3 2021		Q1-Q3 2022	Q1-Q3 2021
Total revenues	702	673	4.5%	2,042	1,996	2.3%
Service revenues	608	601	1.0%	1,799	1,773	1.4%
Equipment revenues	83	60	38.0%	204	186	9.7%
Other operating income	12	11	9.3%	39	37	6.5%
Wireless revenues	319	303	5.4%	923	888	3.9%
Service revenues	264	252	4.8%	769	729	5.4%
Equipment revenues	55	50	8.3%	154	159	- 3.0%
Wireline revenues	371	359	3.5%	1,081	1,072	0.8%
Service revenues	343	349	- 1.7%	1,030	1,044	- 1.3%
Equipment revenues	28	10	192.6%	50	28	82.2%
EBITDA before restructuring	301	300	0.2%	845	820	3.0%
EBITDA margin before restructuring	42.8%	44.6%		41.4%	41.1%
EBITDA	292	279	4.7%	795	757	5.0%
EBITDA margin	41.6%	41.5%		38.9%	37.9%
EBIT	154	144	7.0%	383	347	10.5%
EBIT margin	21.9%	21.4%		18.8%	17.4%
Wireless indicators	Sept 30, 2022	Sept 30, 2021
Subscribers (thousand)	5,148	5,049	2.0%
Wireline indicators	Sept 30, 2022	Sept 30, 2021
RGUs (thousands)	2,971	3,074	- 3.4%

In Q3 2022, competition for gross adds has become more aggressive, especially in the low-value segment. Mobile network operators launched summer promotions focusing on hardware but also on SIM-only tariffs. Also, in the fixed- line business there were some seasonal fall offerings with stronger promotional benefits. A1 Austria's mobile core business performed decently and was supported by better availability of high-value handsets. There was a continued solid development in the SIM-only and the prepaid business. A1 Austria's 5G tariffs are still sold with a premium over LTE tariffs, despite a slightly more competitive environment. The Internet@home business grew due to strong mobile WiFi router demand. This partially compensated for fixed-line RGU losses driven by voice-only and low-bandwidth customers. The solution and connectivity business further developed solidly.

Total revenues in the Austrian segment increased mainly driven by higher equipment revenues due to a sizeable pro- ject. Service revenues increased slightly as mobile core performance and solid solution & connectivity business was able to more than compensate for lower interconnection and declining retail fixed-line service revenues.

Mobile service revenues rose on the back of the solid retail business. Furthermore, customer and visitor roaming improved due to more traveling compared to Q3 2021. There was continued good demand for high- and low-value tariffs, mobile WiFi routers, but revenues were also supported by inflation-linked pricing measures.

Fixed-line service revenues decreased since the ongoing good performance of the connectivity business could not fully compensate for declining retail fixed-line service revenues and lower interconnection revenues. The successful upselling of high-bandwidth products and the indexation measures were only able to temper the continued trend of voice RGU losses and lower usage.

Internet@home driven by mobile WIFI routers