In the first six months of 2021, A1 Telekom Austria Group’s total revenues and EBITDA excl. restructuring increased by 3.6 % and 6.9 % in a year-on-year comparison, respectively, mainly driven by solid operative trends which are expected to remain intact for the rest of the year.
The Group continues to benefit from the ongoing needs for connectivity and accelerated digitalization triggered by the Covid-19 pandemic which fueled upgrades to higher bandwidth products as well as the sale of corresponding products and services. Furthermore, the strong demand for mobile WiFi routers continues to drive Internet@home subscriber numbers and positively contribute to service revenue growth. While the first quarter was still shaped by severe lockdowns, governments started to ease their Covid-19 measures and travel restrictions during the second quarter of 2021, which additionally helped both equipment sales and roaming picking up again after heavy hits in the previous year due to lockdown measures.
The previously anticipated signs of an economic recovery in the financial year 2021 were confirmed during the first half of the year: After severe slumps in GDP growth rates in 2020, a fast rebound was forecasted for 2021and lifted even further after the strong start into the year. Nonetheless, it should be noted that the recovery could be slowed due to mutations of the Covid-19 virus that emerged since late 2020.
As expected, the market developments in 2020 mostly continued in the first half of the year 2021 and are expected to resume in the second half of the financial year 2021. Developments in Austria will continue to be dominated by convergent offers and intense competition on the mobile market. Following the 5G auction in fall 2020 and the advancing expansion of the new mobile generation, attention in the high-value customer segment is shifting to the 5G product portfolio. In the CEE countries as well, like last year, the focus is on the high-value customer segment, and management again expects strong demand for mobile broadband solutions. In 2021, the Group’s fixed-line business should again benefit from demand for higher bandwidths, the rising significance of TV content and fast-growing solutions and connectivity business.
In this business environment, the management of A1 Telekom Austria Group is committed to its growth strategy. The focus here continues to be on growth in the core business, leveraging earnings and efficiency potential from platform solutions and selective growth through acquisitions. As in previous years, results are expected to be supported by ongoing measures to continuously enhance operating efficiency.
A1 Telekom Austria Group announced with the publication of its Q3 2020 quarterly report that it is currently working on the development of alternatives that would allow to reap more benefits from its tower assets through a targeted management focus on internal efficiencies and higher tenancy ratios.
For the financial year 2021, the management of A1 Telekom Austria Group is confident that the strong operative performance of the first half of the year will mostly prevail also in the second half of 2021. The management’s expectation of growth in Group revenues is thus increased to 2-3 % on the back of solid trends in most markets, especially on the back of strong demand for higher speeds, mobile WiFi routers and a strong solutions and connectivity business. Uncertainties continue to be centered around the development of the Covid-19 pandemic which could slow down the pace of the roaming traffic rebound as well as around the semiconductor markets and the macroeconomic situation in Belarus.
The development in Belarus could be negatively affected by the depreciation of the Belarusian ruble in 2021. The management of A1 Telekom Austria Group expects the currency to depreciate by around 10-15 % (period average) against the euro in 2021, though it should be noted that the predictability of the Belarusian ruble is limited.
A1 Telekom Austria Group is also committed to the fiber rollout in Austria and to the ongoing development of its mobile infrastructure in 2021, especially in terms of the roll-out of 5G. This will gather momentum in 2021 following the launch of the 5G network in January 2020 in Austria.
Capital expenditures before spectrum investments and acquisitions are still expected to come in at around EUR 800 mn in 2021.
Frequencies have already been acquired in Bulgaria (2.1 GHz, 2.6 GHz, 3.6 GHz) and in Slovenia (700 MHz, 1.4 GHz, 2.1 GHz, 2.3 GHz, 3.6 GHz, 26 GHz) in early 2021. The regulator in Croatia has launched its multi-band auction recently in mid-2021 (700 MHz, 3.6 GHz, 26 GHz). There were no further updates from regulators in other markets: The tenders in Serbia (700 MHz/3.6 GHz) and North Macedonia (700 MHz, 3.5 GHz) are still pending. Whether the regulators will launch the tenders still in 2021 remains unclear given the current COVID-19 pandemic. Please note that this is a list of spectrum award procedures. Whether A1 Telekom Austria Group is planning to participate and sees a need to acquire spectrum the company does not comment on.To ensure its financial flexibility, A1 Telekom Austria Group is still committed to maintain a solid investment grade rating of Baa2 from Moody’s and BBB from Standard & Poor’s (currently Baa1 from Moody’s and BBB+ from Standard & Poor’s).
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.