Republic of Macedonia

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Key financials (in EUR million)

2014

2013

Change
in %

Revenues

62.0

64.9

−4.4

EBITDA comparable

12.6

14.7

−14.6

EBITDA comparable margin

20.3%

22.7%

EBITDA incl. effects from restructuring and impairment tests

7.5

14.7

−49.2

Operating income

−2.6

6.3

n.m.

Capital expenditure

9.4

16.1

−41.6

 

 

 

 

Mobile communication

 

 

 

ARPU (in EUR)

6.9

7.9

−13.6

Mobile communication subscribers (in ̒000)

622.0

629.7

−1.2

Share of contract customers

52.4%

47.5%

Market share

28.2%

28.0%

Penetration

107.4%

109.2%

 

 

 

 

Employees (full-time equivalents as of 31 Dec)

535

214

149.8

In a mobile market characterised by intense competition, Vip operator in the Republic of Macedonia maintained its focus on the growth of premium segments in the year under review. The acquisition of blizoo Macedonia, which closed on 30 July 2014, represents a significant step in the execution of the Telekom Austria Group’s convergence strategy and means that Telekom Austria Group can now also offer bundled fixed-line and mobile services in the Macedonian market.

Furthermore, the Telekom Austria Group and the Telekom Slovenije Group agreed the merger of their subsidiaries Vip operator and the third-largest mobile operator One in October 2014. Telekom Austria Group will have a 55% equity interest in and thus sole control over the newly created joint company; Telekom Slovenije Group will have an equity interest of 45%. The agreement includes options for the exit of the Telekom Slovenije Group within three years of the transaction closing date. The transaction requires approval by the Macedonian anti-trust authorities, which is expected for the first quarter of 2015.

The significant growth in the number of contract customers was not quite sufficient to mitigate the fall in prepaid customers resulting from the migration to bundled products in the year under review. Accordingly, the total number of mobile communications customers fell by 1.2% year-on-year to 622,000. The share of contract customers thus increased from 47.5% in 2013 to 52.4% in the year under review. Vip operator’s mobile market share also increase to 28.2% (2013: 28.0%). Following the acquisition of blizoo Macedonia, the Telekom Austria Group also reported 62,600 fixed access lines in the Republic of Macedonia at year-end 2014.

Despite this, Vip operator’s revenues fell by 4.4% year-on-year to EUR 62.0 mn. This was due to the lower level of interconnection revenues as a result of the cuts to national termination rates in November 2013 and September 2014. Operationally, earnings were also impacted by price pressure and lower prepaid revenues. The figures include revenues generated by blizoo Macedonia in the amount of EUR 4.4 mn, which explains the substantial rise in monthly fee and traffic revenues. Average monthly revenue per mobile user (ARPU) fell to EUR 6.9 (2013: EUR 7.9) as a result of the price pressure in the contract and prepaid segments.

On the cost side, the increase in material expenses due to higher equipment sales to contract customers was more than offset by the considerable reduction in interconnection expenses. In contrast, Vip operator saw higher costs for service, rental, maintenance and repair as well as transport. All in all, operating expenses however declined by 1.7% to EUR 49.7 mn.

Despite reduced operating expenses lower revenues led to a 14.6% reduction in EBITDA comparable to EUR 12.6 mn, of which EUR 1.4 mn were generated by blizoo Macedonia. The EBITDA comparable margin fell from 22.7% in the previous year to 20.3% in the year under review. In addition, in the Republic of Macedonia Telekom Austria Group booked an impairment of EUR 5.1 mn in the fourth quarter of 2014 as a result of changes in the weighted average cost of capital (WACC) for Vip operator. Increased depreciation and amortisation due to the acquisition of blizoo Macedonia exacerbated the effect on operating income, which declined to a negative EUR 2.6 mn in the year under review.

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