Telekom Austria boosts earnings

Telekom Austria generated net income of €94.9 million in 2009, overturning a loss from 2008 and against an overall 7.1% decline in revenues year-on-year.
The firm’s full-year sales of €4.8 billion were down from €5.1 billion in 2008, but it nearly tripled operating profit to €343.9 million from €120.7 million.
Much of the revenue decline is due to a drop in voice volumes, the firm states, however it notes the 2009 figures don’t include revenues from subsidiaries in Czech Republic, Slovakia, and Poland, which were sold in 2008 but still contributed to that year’s revenue figures.
Mobile revenues were also down, which the firm states is due to unfavourable currency exchange rates, and an overall reduction in prices for mobile services caused by intense competition and lower interconnection and roaming income.
The carrier cut capex 11.9% to €711.4 million year-on-year in 2009, with most savings coming from reduced investment in mobile communications.
Looking ahead, the firm predicts it will generate €4.7 billion in revenues through 2010, with ebitda likely to reach €1.6 billion on the back of cost-cutting measures in its fixed and mobile businesses.
Further cost savings are expected through a merger of Telekom Austria’s fixed and mobile divisions in its domestic market – a plan unveiled by the firm yesterday.
The carrier says the merger is necessary to meet growing customer demand for converged telecoms services and products, while generating extra revenue potential by unlocking more cross-selling opportunities.
CEO Hannes Ametsreiter said the merger meant customers would be able to receive services from one trusted provider. “This step also reflects the evolution of the Austrian market, where customers increasingly demand convergent products.”
The telco expects the benefits of the merged operations to begin to be felt in 2012, and predicts the new organisation will increase cash flow by €100 million from 2014 onwards. However, its 2010 cash flow will take a €80 million hit to cover initial set-up costs.