Telekom Austria swings to 2014 net loss, sees growth in 2015

Telekom Austria swung to a net loss and reported a 4 per cent decline in revenue for 2014, but the operator also said it saw a stabilisation of earnings over the year and expects to see a return to revenue growth in 2015.

"I'm convinced that, based on solid figures, new business fields and innovative products as well as favourable synergies with our international partners, the 2015 business year will be very successful for the Telekom Austria Group. The trend is finally turning upward again," said Hannes Ametsreiter, CEO of Telekom Austria Group and A1.

Jefferies analysts welcomed the company's guidance of 2 per cent revenue growth in 2015, noting that momentum has been sustained in Austria with mobile service revenue "on the cusp of a return to growth", although warning that revenue from fixed services was "lacklustre".

In 2014, Telekom Austria group posted a net loss of €185.4 million ($210 million) compared to a net profit of €52.1 million in 2013, although it said that this still exceeded overall expectations considering the negative impact from a €400 million impairment charge in Bulgaria. Excluding one-off effects, the company said the net result would have amounted to about €190 million.

Ametsreiter was also bullish on the development in EBITDA in 2014, noting that the company was able to stabilise "EBITDA comparable" after a decrease of almost 12 per cent in 2013, and increased the EBITDA margin by 1.2 percentage points to 32 per cent. Overall, comparable EBITDA  declined only slightly by 0.1 per cent to €1.27 billion. However, it should also be noted that including the effects of impairment charges and restructuring costs, EBITDA dropped 28.1 per cent to €850.8 million.

The company attributed the improvement in comparable EBITDA to a turnaround in Austria, where comparable EBITDA grew by 1.4 per cent to €755.4 million, and a strong performance in Belarus where the figure rose 10.6 per cent to €172.4 million. However, conditions remained challenging in Bulgaria and Croatia.

Meanwhile group revenue declined by 4 per cent to €4 billion in 2014. The company said this decline was mainly attributable to European regulatory effects in the roaming and interconnection areas totalling €128.2 million.

Overall, the company was in optimistic mood, also noting that it planned to keep the dividend steady at €0.05 cents per share and would spend around €700 million-€750 million on capex, down from €757 million in 2014.

"The 2014 business year not only brought about a new ownership structure [with America Movil gaining an almost 60 per equity share], but also a solid financial basis. We are now well equipped to master the challenges lying ahead in the telecommunications market. By reducing net debt by almost one third, we were able to achieve a net debt/EBITDA ratio, which is in line with the industry average. After a year of consolidation and based on a growth forecast of 2 per cent for the full-year 2015, we are looking to the future with optimism," said Siegfried Mayrhofer, CFO of the Telekom Austria Group.

For more:
- see the Telekom Austria results statement

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