Telekom Austria : Report PDF (0.87 MB)

Results for the Second Quarter and First Half 2021

Vienna, July 22, 2021 - Today, A1 Telekom Austria Group (VSE: TKA, OTC US: TKAGY) announces its half year report including the results for the second quarter and the first half of 2021, ending June 30, 2021 as well as the condensed consolidated financial statements.

Key performance indicators
in EUR million	Q2 2021	Q2 2020	% change	1-6 M 2021	1-6 M 2020	% change
Total revenues	1,165.8	1,095.7	6.4	2,301.3	2,221.7	3.6
Service revenues	976.4	939.5	3.9	1,932.1	1,889.3	2.3
thereof mobile service revenues	532.2	509.5	4.5	1,051.2	1,030.3	2.0
thereof fixed-line service revenues	444.2	430.0	3.3	881.0	859.0	2.6
Equipment revenues	166.8	136.7	22.0	328.9	294.8	11.6
Other operating income	22.6	19.5	15.9	40.3	37.6	7.1
EBITDA before restructuring	448.6	415.1	8.1	868.0	811.7	6.9
% of total revenues	38.5%	37.9%		37.7%	36.5%
EBITDA	427.7	390.1	9.6	826.0	770.7	7.2
% of total revenues	36.7%	35.6%		35.9%	34.7%
EBIT	187.4	151.6	23.6	350.7	299.0	17.3
% of total revenues	16.1%	13.8%		15.2%	13.5%
Net result	125.0	113.8	9.8	233.8	203.1	15.1
% of total revenues	10.7%	10.4%		10.2%	9.1%
Wireless indicators	Q2 2021	Q2 2020	% change	1-6 M 2021	1-6 M 2020	% change
Wireless subscribers (thousands)	22,324.6	21,207.5	5.3	22,324.6	21,207.5	5.3
Postpaid	18,368.5	17,194.7	6.8	18,368.5	17,194.7	6.8
Prepaid	3,956.1	4,012.9	- 1.4	3,956.1	4,012.9	- 1.4
MoU (per Ø subscriber)	428.8	440.3	- 2.6	429.3	418.5	2.6
ARPU (in EUR)	8.0	8.0	0.0	8.0	8.1	- 1.6
Mobile churn (%)	1.2%	1.4%		1.3%	1.4%
Wireline indicators	Q2 2021	Q2 2020	% change	1-6 M 2021	1-6 M 2020	% change
RGUs (thousands)	6,071.6	6,104.7	- 0.5	6,071.6	6,104.7	- 0.5

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 Second Quarter and First Half 2021

Table of Contents

Q2 2021 Analysis	3
Half-year Analysis	9
Outlook	13
Detailed figures	15
Additional information	22
Condensed Consolidated Financial Statements	23
Condensed Consolidated Statements of Comprehensive Income	23
Condensed Consolidated Statements of Financial Position	24
Condensed Consolidated Statements of Cash Flows	25
Capital Expenditures	26
Condensed Consolidated Statements of Changes in Stockholders' Equity	26
Net Debt	27
Condensed Operating Segments	28
Selected Explanatory Notes (unaudited)	29
Statement of all Legal Representatives	34

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

A1 Telekom Austria Group

3

Q2 2021 Analysis

Group Summary

In the second quarter of 2021, rising revenue and EBITDA numbers in basically all of A1 Telekom Austria Group's markets underpin the continuation of solid operational trends. The Group again benefited from successful strategy execution in terms of the monetization of its attractive portfolio of products and services in the course of the digital transformation and its acceleration amidst the COVID-19 crisis as well as ongoing efficiency improvements. Demand continued to be strong for high-bandwidth products, the mobile WiFi router as well as in the solutions and connectivity business.

While the first quarter of the year was still marked by severe lockdowns throughout the footprint, governments started to ease their COVID-19 measures during Q2 2021 amidst lower infection rates and a steady vaccination progress. That was accompanied by easing travel restrictions, leading to roaming slowly picking up again with increases in a year-on-year comparison. At the same time, equipment sales were higher year-on-year across the Group, especially in Q2 2021 after a weak comparable due to strict lockdowns in Q2 2020.

• Group total revenues rose by 6.4 %; Service revenues in local currency terms increased in all mar- kets, except for slight decrease in Slovenia, while all segments contributed to equipment revenue growth apart from an FX driven decline in Belarus.
• • Mobile service revenues increased by 4.5 % on a Group level due to strong growth in Austria, Bulgaria, Croatia and Serbia. The growth was driven by mobile core business but also by the strong performance of mobile WiFi routers.
  • Fixed-lineservice revenues rose by 3.3 %, driven by growth in all segments, above all in Austria and Bulgaria. Especially, the strong solutions & connectivity business contributed to this trend.
  • Equipment revenues grew by 22.0 % on the back of strong increases in Austria and Bulgaria, mostly due to returning handset sales after a COVID-related decline in the comparison period.
• Growth in Internet@home subscriber base of 5.2 % driven by mobile WiFi routers.
• The number of mobile contract subscribers rose by 6.8% due to a higher number of M2M subscrib- ers but also due to growth in mobile WiFi routers and a shift from prepaid to postpaid.
• Fixed-lineRGUs decreased slightly by 0.5 %, as the growth in high-bandwidth broadband and TV RGUs was outweighed by declining numbers of low-bandwidth broadband and fixed voice RGUs.
• Roaming revenues returned to growth in Q2 (positive impact yoy: <1 % of revenues; approx. 1 % of EBITDA versus approx. -3 % in Q1 2021) amidst the eased travel restrictions in the whole footprint.
• Group EBITDA before restructuring charges increased by 8.1 % (reported: 9.6 %) due to higher ser- vice revenues outweighing an increased cost base. Excluding one-off and FX effects as well as re- structuring charges, Group EBITDA increased by 9.5 %.
• • In Austria EBITDA before restructuring charges increased by 4.5 % (reported: 6.8 %), driven by both higher services revenues and an improved equipment margin offsetting increased costs and expenses.
  • EBITDA in the international operations increased by 11.0 %, with strong growth in all markets while EBITDA in Belarus was flat due to negative FX effects.
• Net result increased by 9.8 % in the second quarter of 2021, driven by the improved operational performance.
• Free cash flow decreased from EUR 140.3 mn to EUR 123.8 mn in the quarter under review, as the strong operating result and lower working capital needs were more than offset by higher CAPEX which grew on the back of increased network investments and acquired frequencies. CAPEX in the comparison period were reduced as a precautionary measure given the COVID-19 outbreak.

The presentation for the conference call and key figures of A1 Telekom Austria Group in Excel format ('Fact Sheet Q2 2021') are available on the website at www.a1.group.

4	Results for the Second Quarter and First Half 2021

 Spectrum acquired in April 2021: 3.6 Ghz for EUR 2.4 mn in Bulgaria and 700 MHz, 1.4 GHz, 2.1 GHz, 3.6 GHz, 26 GHz for EUR 43.6 mn (incl. acquisition related costs) in Slovenia; no further spectrum acquired since Q1 results.

 Following the rebranding of Vip mobile to A1in Serbia in April 2021, A1 Telekom Austria Group completed the Group-wideroll-out of the A1 brand.

 Outlook 2021 raised: 2-3 % Group total revenue growth (before: approx. +1%); CAPEX excluding spectrum investments and acquisitions of approx. EUR 800 mn unchanged.

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

 Negative FX effects amounted to EUR 13.2 mn in total revenues, EUR 9.7 mn in service revenues

	and EUR 6.4 mn in EBITDA in Q2 2021, stemming entirely from Belarus, offsetting a small positive
	effect in Croatia.
	 There were no one-off effects in total revenues and EBITDA in the comparison period, while there
	was a minor one-off in Q2 2021 in EBITDA (+0.6 mn in Serbia).
	 Restructuring charges in Austria amounted to EUR 20.9 mn in Q2 2021 (Q2 2020: EUR 25.0 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 5.3 % to a
grow: +5.2 % year-on-year in	total of 22.3 million in the second quarter of 2021. The number of contract customers rose in almost all
Q2 2021	markets driven by strong growth in M2M subscribers. Otherwise, the growth was also driven by the ongo-
	ing strong demand for mobile WiFi routers as well as the continued shift from prepaid to contract offers.
	The number of A1 Digital M2M customers further increased in Q2 2021.
	The number of revenue-generating units (RGUs) in the Group's fixed-line business declined slightly by
	0.5 % year-on-year. The declining number of RGUs in Austria was driven by reduced low-bandwidth broad-
	band and voice RGUs and was partially offset by the ongoing strong demand for high-bandwidth products
	also in Q2 2021. In the international markets, the number of RGUs rose due to increasing TV and broad-
	band RGUs.
	Overall, Internet@home customer base increased by 5.2 % in the Group, driven by a 19.6 % increase in
	mobile WiFi router numbers.

A1 Telekom Austria Group

5

Comments on Operating Segments for Q2 2021 - Revenues and EBITDA

Austria

Key performance indicators
Financials
in EUR million	Q2 2021	Q2 2020	% change 1-6 M 2021 1-6 M 2020	% change
Total revenues	666.2	635.9	4.8	1,323.6	1,283.4	3.1
Service revenues	590.6	574.1	2.9	1,171.7	1,151.6	1.7
thereof mobile service revenues	240.3	232.4	3.4	476.9	469.8	1.5
thereof fixed-line service revenues	350.3	341.7	2.5	694.8	681.8	1.9
Equipment revenues	61.2	51.0	20.0	126.3	109.8	15.1
Other operating income	14.4	10.9	32.9	25.6	22.1	15.9
EBITDA before restructuring	270.1	258.3	4.5	520.0	497.7	4.5
% of total revenues	40.5%	40.6%		39.3%	38.8%
EBITDA	249.2	233.3	6.8	478.1	456.7	4.7
% of total revenues	37.4%	36.7%		36.1%	35.6%
EBIT	109.0	100.8	8.1	203.2	195.6	3.9
% of total revenues	16.4%	15.9%		15.3%	15.2%
Wireless indicators	Q2 2021	Q2 2020	% change 1-6 M 2021 1-6 M 2020	% change
Wireless subscribers (thousands)	5,023.1	5,003.7	0.4	5,023.1	5,003.7	0.4
Mobile churn (%)	1.3%	1.3%		1.5%	1.4%
Wireline indicators	Q2 2021	Q2 2020	% change 1-6 M 2021 1-6 M 2020	% change
RGUs (thousands)	3,086.0	3,193.7	- 3.4	3,086.0	3,193.7	- 3.4

In Austria, the market environment remained pretty unchanged versus previous quarters. On the back of a general push towards digitization as a consequence of the COVID-19 crisis, the broadband market continued to see strong demand for higher bandwidth products albeit at a slower pace than in previous quarters. Mobile WIFI routers continued to be the driving force for the ongoing growth in the Internet@home subscriber numbers (1.0 % year-on-year) which include pure fixed-line broadband RGUs, hybrid modems and mobile WiFi routers. In the mobile market, the focus continued to be on high-end tariffs and 5G tariffs coming with a premium. At the same time, roaming is picking up again after Q1 2021 still registered losses, since eased lockdown measures and relaxed travelling restrictions resulted in increased in- and outbound tourism. The solution and connectivity business continued to profit from re-started projects that had been stopped last year as well as from new projects.

Total revenues in the Austrian segment increased by 4.8 %, driven by growth in service and equipment revenues as well as by a higher other operating income as parameter changes positively impacted the valuation of asset retirement obligations. Equipment revenues recovered from a lower number of equipment sold in the comparison period driven by the imposed COVID-19 lockdowns. The growth in service revenues was driven by the solutions and connectivity business as well as the mobile business.

The increase in mobile service revenues in a year-on-year comparison was driven by continued strong demand for mobile WiFi routers and some pricing adjustments for mobile customers, especially inflation- linked price measures implemented in April 2021. That together with roaming slightly returning drove also ARPU higher.

Fixed-line service revenues increased by 2.5 % in Q2 2021, entirely due to the solutions and connectivity as a result of the above-mentioned continuation of its strong start into the year. Retail fixed-line revenues declined in the reporting period due to the decrease in voice revenues after a COVID-19 related strong Q2 2020, while the impact from the decline in low-bandwidth RGUs could be offset by solid upselling and

Roaming revenues return to growth on the back of eased travel restrictions