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As in the Q1, Q2 EBITDA before restructuring was significantly better than expected, up by 5.5% yoy. Telekom Austria is one of the few telcos whose stock price has not recovered to its pre-war level (it is actually 15% lower). The Belarus which represents 9% of the group’s global activities continues to concern the market. We maintain our buy opinion on the stock.
Telekom Austria AG Telekom Austria AG
Q1 EBITDA before restructuring was significantly better than expected, up by 7.9% yoy. Telekom Austria is one of the few telcos whose stock price has not recovered to its pre-war level. The Belarus activities continue to concern the market despite a fairly good Q1 performance and a cautious outlook from the management which includes a depreciation of the BYN versus the € of 5-10% in 2022. On our part we maintain our buy opinion on the stock.
A good performance for Telekom Austria for the whole year 2021 with an outlook for 2022 which remains solid as revenues should grow by 3% yoy. However, capex should increase by 15% in 2022, mainly from higher investments in Austria dedicated to fibre build. So, the group should not increase its dividend for 2021 and 2022 significantly and therefore the current yield offers limited upside. We remain at Add on the stock with a 14% upside.
Telekom Austria released yesterday evening its Q3 results which were, like in Q2, solid and clearly better than consensus. The stock is stable this morning. We maintain, however, our Buy opinion on the stock. As a reminder, the group distributes currently a dividend of €0.25, corresponding to a 3.3% yield. The group could offer more but the two main shareholders do not seem, indeed, too demanding in terms of dividends, so that the minorities are left expecting on that front.
Telekom Austria released yesterday its Q2 results which were solid and clearly better than consensus. The stock was, however, up by only 0.5% yesterday. We maintain our Buy opinion on the stock. As a reminder, the group will distribute a dividend of €0.25 for 2020, corresponding to 3.4% yield. The group could offer more but the two main shareholders do not seem, indeed, too demanding in terms of dividends, so that the minorities are left expecting on that front.
A solid Q1 for A1 with revenues up by 0.8% yoy but which include a 2% negative FX effect from Belarus. Excluding FX, EBITDA rose by quite a solid and impressive 8.5% yoy. Note that there is no real catching-up effect compared to 2020 as one year ago Q1 EBITDA was flat yoy. We remain at Strong Buy on the stock.
Q4 EBITDA was very solid and better than expected as it increased by 5% yoy and lfl, roaming losses being more than outweighed by a well-managed restructuring. The stock is still 15% below its pre-COVID-19 prices, an undeserved performance as the group suffers indeed from its low dividend (the two main shareholders do not seem, indeed, too demanding). But net debt was down by 10% yoy at end 2020. We remain at Strong Buy with a 30% upside.
Telekom Austria AG
Q3 EBITDA was very solid and better than expected (like in Q2) as, before restructuring charges, it increased by 4.3% yoy at constant change since roaming losses were more than outweighed by cost savings. A1’s cash flow minus capex covers five times the current dividend (and even six times in 2020 given the capex cuts): a real increase of the dividend for 2020 would greatly help the stock to return to €8.
Q2 EBITDA was very solid as, before restructuring charges, it increased by 3.9% yoy and lfl since roaming losses (due to the pandemic) were more than outweighed by cost savings. Telekom Austria is a slow-growth story but, sadly, trades rather at a discount to its peers… except in terms of dividend (the two main shareholders do not seem, indeed, too demanding in this regard). We maintain our Buy opinion on the stock which is still 15% below its February prices.
ValuEngine Rating and Forecast Report for TKAGY
Q3 revenues were up by 3.4% yoy, while EBITDA (excluding restructuring charges in Austria) grew by 5.1% (adjusted for IFRS16): this is better than in Q1 and Q2 and above the outlook given by management for the whole year. We maintain our opinion at Add on the stock.
Q2 revenues were up by 2.6% yoy, while EBITDA (excluding restructuring charges in Austria) grew by 2.7% (adjusted for IFRS16) : it is slightly better than in Q1 and slightly above the outlook given by management for the whole year. We maintain our opinion at Add on the stock.
Quite a good set of results for Telekom Austria in Q4: revenues grew by 3.1% yoy (they grew by only 1.4% during the first 9m), while EBITDA (excluding restructuring charges) was better than expected, up by 8.3% yoy (it was flat during the first 9m). The strong EBITDA was, however, additionally supported by the completion of large corporate projects in solutions & connectivity in Q4 18. The Board plans to propose a dividend of €0.21 per share for the financial years 2018 and 2019.
Q3 revenues grew by 1.4% yoy, an expected number and quite similar at first sight to the 1.3% growth recorded in H1. But the relatively good news was that service revenues were up by 1.6% yoy as they were up by only 0.4% in Q2 and had declined by 0.2% in Q1. Q3 EBITDA was up slightly by 0.3% (it declined by nearly 5% if we include the restructuring) as higher service revenues more than outweighed higher advertising and content costs as well as investments in A1 Digital. The EBITDA margin excluding restructuring was 35.3% vs 35.7% a year ago. In the first 9m of 2018, capex was almost stable (+1.8% yoy) at c.€507m and represented 15.3% of total revenues.
Telekom Austria reported its Q2 figures, which were roughly in line with expectations.
Revenues increased 1.3% (1.2% on a pro forma basis) driven by the Equipment Business Equipment revenues increased 49.5% to €153.7m whereas Service revenues declined by 3.8% to €919.4m Wireless subscribers remained unchanged at 20.64m, however, prepaid subscribers delined by 11% EBITDA increased 2.8% to €349m and the EBITDA margin improved from 32.1% to 32.5% EBIT including impairments dropped 53.2% to €59.2m (adjusted increase of 30.2%)
Thomas Arnoldner (40) will become the new CEO of A1 Telekom Austria. He will join the present management board of Alejandro Plater (COO) and Siegfried Mayrhofer (CFO) and will start his new job on 1 September. Arnoldner, born in Austria, was responsible for T-Systems Austria (Vice President Delivery Sales&Services), a subsidiary of T-Systems. Before he joined T-Systems Austria in May 2017, he had been CEO of Alcatel-Lucent Austria AG since 2013. He was with T-Systems for a pretty short time, nearly a year.
Revenues increased 4.1% in 2017 and 1.7% in Q4 17. EBIT droppped 8.8% to €444m and turned into a loss of €20.1m in Q4 17 mainly due to brand amortisation of €103.5m. Rebranding of the group will have a negative impact on the operating performance up to the financial year 2019. Dividend of €0.20 for 2017 and 2018 will remain unchanged. Outlook for the current year not really inspiring.
Telekom Austria, now rebranded A1 Telekom Austria Group, has announced the call and redemption of the €600m hybrid bonds issued in 2013. According to the company, the hybrid bonds will be redeemed at their nominal value plus all interest on February 1st, 2018. This is also the first call date. The hybrid bonds had a coupon of 5.625% and reached a peak price of 109.344% on 2nd March 2015. Since February 2017, the price has steadily declined to 100%.
The company reported Q3 17 results. Revenues increased 3.5% to €1.1bn. EBIT, however, declined by 5.7% to €191.1m. The EBIT margin reached 17.2% compared to 18.9% in Q3 17. The EBIT decline was due to lower extraordinary income. Net income increased 4.3% to €141.7m. In the first nine months, revenues grew 4.5% to €3.25bn and EBIT 6.8% to €464m. Service revenues grew 3.8% to €2.9bn and equipment revenues 11% to €342.8m. The gross margin declined from 56.8% to 55.9% but the EBIT margin increased from 14% to 14.3%.
Today Telekom Austria released a trading statement for the second quarter results. On 10 July, management published a preliminary trading statement. And final Q2 17 results will be released on 25 July together with the Q2 17 results of the major shareholder América Móvil. In Q2 17, revenues increased 5.1% to €1.08bn based on unadjusted figures. EBITDA increased 9.1% to €359.3m and the EBITDA margin improved from 31.9% to 33.2%. EBIT jumped 27.9% to €146.5m and the EBIT margin improved from 11.1% to 13.5%. The number of mobile customers increased marginally by 1% to 20,677k and the average revenue per user (ARPU) remained flat at €8.70. The churn rate increased from 1.8% to 1.9%.
On 10 July, Telekom Austria released some indications about its Q2 17 results. Revenue growth will be comparable to growth in the first quarter (+4.9%). EBITDA growth, however, is expected to be higher than in the first quarter (+1.5%). The operating performance is mainly driven by positive earnings momentum in Bulgaria and Belarus (accounting for inflation).
In Q1 17, revenues increased 4.9% to €1.06bn and excluding one-off effects revenues increased 2.5%. Gross profit improved 9% to €468.8m and the gross margin increased from 42.6% to 44.3%. EBITDA improved 1.5% to €339.5m and the EBITDA margin increased from 19.5% to 19.7%. EBIT increased 7.8% to €126.4m and the EBIT margin increased from 11.6% to 11.9%. The total number of subscribers increased by only 0.5% to 20.62m. The number of postpaid subscribers, which is the most interesting group to follow, increased 1.8% to 15.07m. ARPU of the group improved from €8.4 to €8.5 per month. In Austria, the number of postpaid customers declined by 0.4% to 3.7m and the wireless ARPU 1.6% to €15.6, which was entirely linked to the losses in roaming revenues. The fixed-line ARPL, however, rose from €28.1 to €28.3 due to strong upselling measures.
The company reported final 2016 results. In Q4 16, revenues declined 0.7% to €1,098m. The gross margin declined from 53.6% to 52.2% and the EBIT margin plummeted from 11.2% to 4.8%. EBIT dropped 57.7% to €2.4m mainly due to higher selling, general & administrative expenses. Net profit, however, increased 28.7% to €100.5m due to a tax benefit of €90m. This tax benefit was mainly related to the recognition of higher deferred tax assets on tax losses. Management is expecting higher tax results in the future within the Austrian tax group. In the financial year 2016, revenues increased 2.1% to €4.2bn. The increase was mainly driven by higher equipment revenues which jumped 15.2% to €450.2m. EBIT declined 14.9% to €486.7m and the EBIT margin from 13.9% to 11.6%. EBITDA declined 1.2% to €1.35bn. The negative roaming effect impacted EBITDA by €38m in 2016. The net income as reported increased 5.2% to €413.2m (including interest expenses for hybrid owners 5.5%). The increase was driven by a total tax benefit of €53.5m. Earnings before taxes dropped 13.7% to €359.7m.
In Q3 16, revenues increased 4.7% to €1.07bn. The increase was mainly driven by the strong equipment business. Equipment revenues grew 21.4% to €111.6m. Service revenues increased 3% to €961.6m although the retail roaming tariffs in the EU were abolished as of April 2016. EBITDA excluding extraordinary income of €34.8m remained stable at around €380.4m. The EBITDA margin declined from 37.4% to 35.4%. EBIT excluding extraordinaries also declined by 12.7% to €167.7m. The EBIT margin dropped from 18.7% to 15.6%.
The company reported Q2 16 results. Revenues increased 3.5% to €1.03bn and EBIT declined 4% to €114.5m (estimate: €133.6m). Excluding the currency impact, revenues increased 2.6% and EBIT 4.7%. Based on pro-forma results which include M&A activities, total revenues declined marginally by 0.2% and EBITDA increased 0.7% to €329.3m (excluding the M&A impact +2.9%). The company faced ongoing challenges in the Austrian mobile market (price competition) and Eastern Europe. In addition, the abolishment of retail roaming in the EU as of 30 April, which mainly impacted Austria, overshadowed the operational improvements.
Telekom Austria reported Q1 16 results. Revenues declined 2.2% to €1bn. EBIT plummeted by 15.6% to €117.2m and the EBIT margin declined from 13.4% to 11.6% due to negative currency effects mainly in Slowenia (€26m). Net income declined 12.6% from €92.7m to €81m excluding minorities. Including minorities and interest payments to hybrid bond holders, net income dropped 13.6% to €74.7m.
The company reported Q4 15 results. Revenues increased 4.5% to €1,076m and EBIT turned from a loss of €39.8m to a profit of €124m. EBITDA including effects from restructuring and impairment tests jumped 99% from €169.5m to €337.4m. Net income reached €84.3m compared to a loss of €48.9m in Q4 14. Average monthly revenue per user declined from €16.5 to €15.8 in Q4 15. In the financial year 2015, revenues remained stable at around €4.0bn (estimate: €4.07bn). The total number of mobile subscribers increased 3.5% to €20.7m. Operating income turned from a loss of €3m to a profit of €574m (estimate: €581m). Net income improved from a loss of €185.4m to a profit of €392.8m. This figure however still includes the interest expenses of around €33.8m to be paid to the hybrid bond holders. In 2014, the company booked impairment charges of around €340.6m in Bulgaria.
In Q3 15 ending in September, revenues declined 3.5% to €1.01bn. The decline was mainly driven by the international markets where revenues declined 10.3% to €392m. EBITDA dropped 7.5% to €378.7m and EBIT only 5.5% to €189.1m. The EBITDA margin declined from 39% to 37.4% and the EBIT margin from 19.1% to 18.7%. Net income however improved by 7.3% to €137.1m. Revenues in the first nine months declined marginally by 1.2% to €2.95bn. Foreign currency contributed €72.2m negatively to growth. The gross margin dropped from 67.6% to 67%. EBITDA however improved 51.8% to €1.03bn and the EBITDA margin increased from 22.8% to a more normal rate of 35.1%. In the second quarter of 2015, the company faced impairment charges of around €340.5m. The number of subscribers in mobile increased 1.4% (mainly in Bulgaria and the Republic of Serbia) to 20.2m and 10.4% to 2.9m in the fixed-line business mainly driven by the acquisition of Amis in Slovenia. Net income turned from a loss of €155.4m to a profit of €283.1m.
The Serbian government is planning to privatise its 58.11% stake in Telekom Serbia. This is another attempt to go public. In 2011, the government had already tried to offer a stake of 51%. Telekom Austria was the last bidder with around €1.1bn which was too low according to the government. The price should have reached at least €1.4bn. Deutsche Telekom sold its stake of 20% via its Greek subsidiary OTE for a total of €400m valuing the company at €2bn.
The company reported stable Q2 15 results. Revenues increased 2.1% to €982.8m compared to an adjusted €963m. Growth was driven by monthly fees and traffic (+8.8%) and Data & ICT solutions (+18.6% to €54.2m). Wholesale revenues including roaming dropped 29% and interconnection fees by 5.5% to €44.7m. Mobile service revenues however declined 4.6% to €257.9m. The gross margin improved from 66.3% to 66.6%. EBITDA jumped from a loss of €40.1m to a profit of €321.5m. The EBITDA margin reached now a more realistic level of around 32.7%. Adjusted EBIT also turned from a loss of €260.5m due to €340.5m of impairment charges to an operating profit of €121m. The EBIT margin reached 12.3%. The results exceeded analysts' expectations. We estimated however an EBITDA of €358.5m and an EBIT of €153.5m. Net income reached €72.3m. The company is highlighting a net income of €78.6m which is before interest payments of €6.3m to hybrid bond holders.
The CEO of Telekom Austria, Hannes Ametsreiter, has resigned. He had been in charge as CEO since 2009. During his tenure, he performed extremely poorly. The accumulated net profit over six years reached only €16.9m. The majority shareholder, América Móvil with a stake of 59.7%, was also not very pleased. According to the latest news, Ametsreiter was no longer responsible for marketing and sales. In 2007, he became a member of the management board and was responsible for marketing and sales. In Q1 15, the strong operating performance was mainly driven by cost savings of around €10.9m in marketing and sales. In addition,the acquisition of yesss! for a total of €390m and the licence bidding (still impairments to be expected) was too expensive.
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