A1 Telekom Austria Group outlook for the full year 2018

(Based on IAS 18 reporting)

In 2017, A1 Telekom Austria Group managed to grow revenues and EBITDA via a clear focus on high-value customers and attractive fixed-line propositions, both on a reported and proforma basis. This was achieved despite the fact that most of the Group's mobile markets continued to be characterised by intense competition and regulatory burdens. The macroeconomic headwinds slowed down further in most segments. Results were negatively impacted by the stepwise abolition of retail roaming in the EU during the last two years. The Belarusian Rouble showed, in contrast to the forgone years, a stable development versus the Euro (+1.0% year-on-year based on period average). Cost efficiencies enabled the translation of the solid revenue growth into an EBITDA increase. Moreover, results profited from acquisitions in the fixed-line business.

In the reporting year, the A1 Telekom Austria Group decided to harmonise its brands throughout the Group and to roll out the 'A1' brand in a gradual manner throughout the Group, depending on local circumstances. This triggered the amortisation of local brand values, which had reached a total of around EUR 350 mn by the end of 2016. The respective companies will amortise the brand values until the phase-out of the old brands, which is expected to have a negative impact on the net result until the financial year 2019, with more than half of the impact in 2017 and Q1 2018. In 2017, the brand value amortisation resulting thereof amounted to EUR 121.8 mn and stemmed primarily from the segment Bulgaria as well as, to a lesser extent, from the segments Belarus, Croatia and Republic of Macedonia. (The total brand amortisation for the full year 2017 amounted to EUR 123.2 mn.)

For the full year 2018, most of the market dynamics mentioned above are expected to remain.

Both in Austria and in the CEE markets, the competitive environment in mobile markets is anticipated to continue, while the demand for fixed-line services is expected to remain a positive driver across all markets. In the CEE segments, operational results are expected to benefit increasingly from measures taken in the past as well as from the macroeconomic improvements, with GDP growth forecasted in all markets.

The negative roaming impact is anticipated to amount to approximately 1.0% to 1.5% of Group EBITDA for the full year 2018. Contrary to the supportive FX development in 2017, the operational performance in Belarus is expected to be negatively affected by a devaluation of the Belarusian Rouble.

In this business environment, the Management of A1 Telekom Austria Group remains committed to its growth strategy and is concentrating on the following focus areas: exceling in the core business, expansion of products and services as well as value-accretive mergers and acquisitions.

As in the previous year, results should gain support from ongoing efforts to continuously increase operating efficiency.

For the year 2018, the Management of A1 Telekom Austria Group expects to achieve modest growth in total revenues on a reported basis.

A1 Telekom Austria Group remains committed to the LTE rollout across its markets as well as the accelerated fibre deployment in Austria. Capital expenditures before spectrum investments and acquisitions are expected to remain stable in 2018.

Whilst the Management of A1 Telekom Austria Group acknowledges the limited predictability of the Belarusian Rouble, it expects the currency to devalue by approximately 10% versus the EUR (period average) in 2018.

Based on the improved operational and financial performance of the Group, a new expected dividend level was agreed upon by América Móvil and Österreichische Bundes- und Industriebeteiligungen GmbH (ÖBIB) in 2016. Starting with the financial year 2016, this dividend expectation entails the payment of EUR 0.20 per share to be maintained or increased on a sustainable basis in line with the operational and financial developments of the Group.

In order to ensure its financial flexibility, A1 Telekom Austria Group remains committed to maintaining its Baa2/BBB ratings from Moody's and Standard & Poor's.

With regards to frequencies, in Austria the NRA announced that an auction on 3.4-3.8 GHz band will be published in 2018.

Please note that this a list of potential spectrum awards procedures. Whether A1 Telekom Austria Group is planning and sees a need to participate and acquire spectrum in the abovementioned procedures, the Group is not permitted to comment on.

Disclaimer for forward-looking statements:

This document contains forward-looking statements. These forward-looking statements are usually accompanied by words such as “believe”, “intend”, “anticipate”, “plan”, “expect” and similar expressions. Actual events may differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement. Neither Telekom Austria nor any other person accepts any liability for any such forward-looking statements. Telekom Austria will not update these forward-looking statements, whether due to changed factual circumstances, changes in assumptions or expectations. This report does not constitute a recommendation or invitation to purchase or sell securities of Telekom Austria.

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Susanne Reindl

Head of Investor Relations
A1 Telekom Austria Group


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