Telekom Austria Ag

Welcome to the summary of our A1 Group's results for the second quarter and the first half of 2024. With our clear dedication on customer orientation and our steady focus on operational efficiency, we delivered another set of solid results. Our total revenues increased by 1.3% in Q2 and by 1% in the first half of 2024. Revenue wise, most important for us, we are well on track with service revenue growth. On group level, they grew by 3.9% in Q2. This was driven by value protecting measures and the strong performance in the fixed line business in Central and Eastern Europe. That helped us to offset the decline in equipment revenues, which were 13% lower versus last year.

The outstanding growth from our CEE countries was complemented by our good performance in Austria. In our Eastern European markets, our growth was based on value protecting measures Successful upselling, strong demand for high-speed broadband solutions, and the growing B2B digital services. In Bulgaria, service revenues increased by 9.8%. In Croatia, by 14%. In Belarus, by 7.9% in local currency. In Serbia, by 13.6%. And in North Macedonia, by 8.4%. In Slovenia, service revenues decreased by 3.1% due to high competition. Transforming the organization from a product-oriented to a customer-journey-driven one has improved the quality of the engagement with our customers, resulting in an increase in our customer base. The total number of mobile subscribers rose by 6% to a total of 26 million. Also, customers in the fixed-line business increased by 0.5%. The development of the broadband and TV customers more than compensated the decline in the fixed voice customers.

Looking at the cost side, operationally the increase in core objects resulted to a large extent from higher total workforce cost amidst high inflation in the last years. Besides that, cost items related to revenue growth like licenses rose. On a positive note, we saw a decline in our electricity costs. Overall, this resulted in an EBITDA increase of 3.8% to 504 million euros in the second quarter and 4% in the first half of 2024. In Q2, the EBITDA margin improved to 38.3%, which is an increase of 0.9 percentage points. Excluding restructuring, negative one-off and currency effects operationally, EBITDA even rose by 8.3%.

Following our strategy to stay relevant for our customers and strive for the best networks, we prolonged the spectrum in Bulgaria in the 19 and 1800 MHz frequency bands. In this quarter, as well as in the first half of the year, capex decreased due to a lower in spectrum investment. Overall, this resulted in an increased free cash flow of 42% versus previous year, to €175 million in the first half of 2024.

Another highlight was our annual general meeting, held end of June, which approved the dividend of €0.36 per share, thus reflecting a yearly increase of 13%. Also in May, S&P confirmed the credit rating for Telekom Austria with an A- rating, one of the best ratings in the European telco sector.

From this position of strength, we will further excel in our core business and expand our portfolio in B2B digital services. All driven by the ambition to stay relevant for our customers. Therefore, we confirm our guidance in 2024. Revenues to increase between 3 and 4% and CapEx, excluding investments in Spectrum, around 800%.