Revenues11)

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Key financials

in EUR million

 

2014

2013

Change
in %

Comparative period 2013 was adjusted in accordance with IAS 8 (please refer to Note (1) of the Consolidated Financial Statements).

*

Excluding capital expenditure arising from asset retirement obligations

Revenues

4,018.0

4,183.9

−4.0

EBITDA comparable

1,286.1

1,287.4

−0.1

EBITDA comparable margin

32.0%

30.8%

EBITDA incl. effects from restructuring and impairment tests

850.8

1,182.8

−28.1

Operating income

−3.0

318.2

n.m.

Net result

−185.4

52.1

n.m.

Earnings per share (in EUR)

−0.46

0.07

n.m.

Free cash flow per share (in EUR)

0.34

−1.62

n.m.

Capital expenditure*

757.4

1,779.1

−57.4

Net debt

2,693.3

3,758.7

−28.3

In the 2014 financial year, the Telekom Austria Group continued to focus on counteracting revenue losses resulting from competitive price pressure and regulatory intervention through a clear value focus and strict cost management. In Austria, management followed the restructuring of the mobile tariff portfolio implemented in the previous year with measures aimed at existing mobile and fixed-line customers and a significant reduction in handset subsidies, thereby sustainably improving profitability compared with the previous year. In managing its market, A1 Telekom Austria AG primarily focussed on high-value, convergent offerings, the profitable high-value customer segment and the monetisation of rising data demand. To this end, management has also decided to use about EUR 400 mn from the capital increase that was successfully completed in November 2014 for the expansion of the fibre network in Austria between 2015 and 2018. This plan is subject to the announced government subsidy programme as well as annual budget approvals by the Supervisory Board.

In 2014 the Bulgarian segment suffered from pronounced macroeconomic pressure and an uncertain political situation with an adverse impact on customer behaviour. Changed medium-term macroeconomic expectations and the weak operative performance of Mobiltel in 2014 led to a change in the assessment of the development of the Bulgarian subsidiary Mobiltel. Thus management’s previous expectation of a medium-term recovery of the region is no longer sustainable. Due to a change in the weighted average cost of capital (WACC) of the Bulgarian segment as well as changed expectations of the development of the Bulgarian subsidiary Mobiltel an impairment test had to be carried out in June 2014. This resulted in a reduction of the value in use of the cash-generating unit Bulgaria and led to a corresponding impairment of EUR 400 mn, of which EUR 59.4 mn were recognised in 2013 and EUR 340.6 mn in 2014.12)

Revenues and EBITDA comparable

in EUR million
Revenues and EBITDA comparable (bar chart)

In Croatia, business operations were also negatively affected by the difficult economic environment, intense competition and regulatory intervention since the country’s accession to the EU in July 2013. An increase in frequency usage fees in July 2014 led to tariff adjustments among all operators and additional churn; however, positive fixed-line trends helped to offset some of the losses in the mobile business. Despite the political crisis in Ukraine, velcom in Belarus showed strong operating results as a result of price increases throughout the year and strong demand for smartphone tariffs as well as higher data volume. The high FX risks became visible again when the Belarusian Rouble devalued in January 2015, which however did not affect the 2014 consolidation. The Additional Markets segment continued to develop positively with the exception of Vip operator in the Republic of Macedonia, which suffered from significant reductions in mobile termination rates in November 2013 and September 2014.

There were also a range of structural changes in the Additional Markets segment: The acquisition of blizoo Macedonia, which closed on 30 July 2014, will allow Telekom Austria Group to also offer bundled fixed-line and mobile services in the Macedonian market. Furthermore, the Telekom Austria Group and the Telekom Slovenije Group agreed to merge the Macedonian subsidiaries Vip operator and One in October 2014. The transaction requires approval by competition authorities, and the closing is expected for the first quarter of 2015. 2014 also saw the merger of mobilkom liechtenstein with Telecom Liechtenstein; the transaction closed on 27 August 2014. The Telekom Austria Group has a 24.9% interest in the merged entity. As of the third quarter of 2014 this interest has been reported using the equity method and mobilkom liechtenstein is thus no longer included in the Additional Markets segment.

In mobile communications, the Telekom Austria Group saw a slight downturn of 0.5% to approximately 20.0 million customers in the year under review. The Republic of Serbia enjoyed the strongest growth, with the customer base increasing by around 141,800. In Bulgaria the customer base also increased by 39,500. In contrast, A1 Telekom Austria AG in Austria lost around 290,500 customers due to lower gross additions despite the reduced churn. Vipnet in Croatia also lost 102,800 mobile subscribers. In the fixed-line business the company gained around 86,400 access lines at Group level, corresponding to growth of 3.3% to around 2.7 mn access lines. The growth stemmed primarily from the acquisition of blizoo Macedonia; access lines also rose in Austria and Croatia.

As a result of the developments described above, Telekom Austria Group saw a reduction in revenues of 4.0% to EUR 4,018.0 mn in 2014. Higher revenues in the Belarusian and Additional Markets segments were offset by declines in Austria, Bulgaria and Croatia. Negative regulatory effects amounted to EUR 128.2 mn. Revenues in Austria included negative extraordinary net effects from the second quarter in the amount of EUR 28.2 mn, primarily as a result of changes in revenue accounting estimates relating to the introduction of a new fixed-line billing system interface. Adjusted for these extraordinary and negative FX effects in the amount of EUR 46.0 mn, revenues declined by 2.2% compared with the previous year. The Telekom Austria Group’s international segments accounted for 39.1% of total revenues in 2014 after 37.2% in the previous year (measured as total consolidated revenues of the international segments to total Group revenues not including Corporate & Other, Eliminations).

11) Comparative period 2013 was adjusted in accordance with IAS 8 (please refer to the Notes to the Consolidated Financial Statements (1)).
12) The effects on the items concerned and the related deferred taxes are presented in the Notes to the Consolidated Financial Statements (1).

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