Telekom Austria beats analyst forecasts in Q3, but roaming pressures remain

Telekom Austria's headquarters in Vienna

Telekom Austria beat consensus analyst estimates for group revenue and EBITDA in the third quarter of 2016, but the operator continued to suffer from the negative effects of reduced retail roaming charges.

The Austrian unit of Mexico’s America Movil said group revenue increased 4.7 per cent year on year on a reported basis (or 1.4 per cent on a pro forma basis) to €1.07 billion ($1.17 billion) in the third quarter, while group EBITDA increased by 9.4 per cent to €415.5 million (9.4 per cent increase on a reported basis and 7.5 per cent pro forma). The net result rose by 4.5 per cent to €143.2 million.

Jefferies International analysts said revenue was 2.5 per cent above consensus while EBITDA was 4.3 per cent ahead of expectations.

However, the reduction in roaming charges caused mobile service revenue to decline in the Austrian market. Fortunately for the operator, higher equipment revenues across the group more than outweighed the negative roaming impact.

Alejandro Plater, CEO and COO of Telekom Austria Group, indicated that the loss of retail roaming revenue had been almost fully compensated at group level due to growth in all segments, apart from the Republic of Macedonia.

RELATED: Telekom Austria expects modest revenue growth in 2016

“Still, we see the impact on revenues even though reaching a growth of 4.7 per cent. On EBITDA side a plus of 7.5 per cent shows that our company is well on track and our strategy pays off,” Plater said.

Although the operator referred to the abolition of retail roaming charges in its financial report, roaming charges do still in fact apply across the European Union until June 15, 2017. However, the A1 unit in Austria has chosen to implement “roam like home” benefits within its smartphone tariffs ahead of this date.

Meanwhile A1 continued to face intense competition from low-cost rivals, but Jefferies noted that the operator claims to “remain successful in responding to this competition from the MVNOs using a multi-brand approach with their sub-brands Yesss! and bob.”

The group maintained its outlook for the full year, with revenue expected to increase by 1 per cent and capex forecast at about €750 million.

In a separate announcement, Telekom Austria also said it had appointed Franz Bader as the new head of international business/wholesale.