A1 Telekom Austria Group

Croatia

A1 Croatia

Logo A1

In 2019, the market in Croatia was shaped by highly discounted offers for convergence solutions, as well as intense competition in the mobile segment. In April 2019, A1 Croatia launched an unlimited data offer on the market to attract new customers and increase satisfaction within the existing customer base. In May 2019, Hrvatski Telekom introduced an unlimited mobile proposition in the premium segment. Fixedline business was driven by strong demand for exclusive TV options featuring content such as UEFA Champions League, the most important factor in the proposition. In May 2019, Tele2 announced the sale of its Croatian business to United Group, a SEE-based telecom services provider. The regulatory approval for the acquisition is still pending and is expected in February 2020.

On the regulatory side, in 2019 the Croatia segment benefited from reduced frequency usage fees and the reimbursement of the excess frequency usage fees of EUR 6.5 mn (2018: EUR 3.9 mn) in connection with previously announced frequency fee cuts by the government.

The number of mobile subscribers increased in the year under review, owing to an increased contract customer base and solid growth of mobile Wi-Fi routers. The total number of fixed-line revenue generating units (RGUs) increased, driven by strong demand for TV solutions.

Total revenues increased by 0.7 % year-on-year. Solid service revenue growth of 2.3 %, driven by the increase in both the mobile and the fixed-line segments, was partially offset by lower equipment revenues. Mobile service revenues grew despite the EU international call regulation. The increase was due to continued strong demand for mobile Wi-Fi routers, up-selling activities and higher visitor roaming revenues triggered by higher data traffic during the peak tourist season. Fixed-line service revenues rose due to TV RGU growth as well as a price increase in September 2019. In addition, solutions and connectivity revenues also increased. Equipment revenues declined, as a result of lower quantities sold and a shift towards a cheaper handset mix.

On the cost side, Croatia saw a decrease, mainly due the aforementioned one-off effect of EUR 6.5 mn (2018: EUR 3.9 mn) related to the frequency fee reimbursement and frequency fee cuts. Advertising and equipment costs also declined after being impacted by rebranding activities in 2018. Content costs increased as a result of investment in UEFA Champions League rights and the increase in the TV subscriber base.

Increased revenues coupled with the reduction in total costs led to EBITDA growth of 9.3 % year-on-year, while EBITDA excluding one-off effects increased by 7.5 % compared to the previous year. Depreciation and amortization expenses declined from EUR 119.9 mn in 2018 to EUR 104.0 mn in 2019, primarily as a result of brand amortization expenses of EUR 19.7 mn in the comparison period. Operating income therefore increased from EUR 12.9 mn to EUR 41.1 mn.