Telekom Romania consolidated revenues in Q1 2020 reached EUR 237 million, up by 9.5 percent

Aurel Constantin 14/05/2020 | 12:17

Telekom Romania group announces key performance indicators in the first quarter of 2020, ended March 31, 2020, as reported today by OTE Group. With a year-on-year growth on the major financial KPIs – Revenue & EBITDA – the company managed to improve the results in Q1 2020, compared to the same period in the previous year. Consolidated revenues increased to EUR 237.1 million, a growth of 9.5 percent over the result of Q1 2019. At the same time, Adjusted EBITDA after Lease grew by 31.5 percent to EUR 33.8 million.

Total Fixed Revenues amounted to EUR 125.8 million in Q1 2020, an YoY increase of 23.9 percent, especially driven by strong growth in the company’s ICT segment with a growth of more than 100 percent and the Wholesale business, which grew by 31 percent. Retail Fixed Revenues showed a slight decline of 2.2 percent, due to the ongoing decline in the traditional voice telephony business and only partly offset by the growth in broadband revenues.

Broadband revenues grew by 11.8 percent YoY, reaching EUR 18 million in Q1 2020, thanks to a focus on higher-value customers and resulting increase in Average Revenue per User (ARPU), which was able to overcompensate a reduction in the customer base. Revenues from TV Services remained stable, with a customer base of 1.3 million subscribers, declining compared to Q1 2019, mostly on DTH, in the course of the ongoing transformation towards new TV technology, such as IPTV. As part of this orientation to modern TV technologies, Telekom Romania introduced a new Smart TV Stick product at the end of Q1 2020, offering customers the ability to turn their old devices into a Smart TV plus enjoying premium Telekom content, without the need for any technical upgrades. Thus it is easy to use, as clients can access TV content via the use of a TV stick and without the need of additional cables or a technical installation – “plug & play”.

The FMC customer base continued to grow the eighth consecutive quarter in a row, to 857,000 users, further strengthening the company’s market position for convergent fixed-mobile service offers.

Mobile service revenues declined by 3.8 percent compared Q1 2019 to EUR 73.3 million. This was driven by a reduction in interconnection in mobile networks, and partially due to lower traffic from international visitors during the COVID-19 related travel restrictions in Q1 2020. The mobile contract customer base, including FMS grew with 1.6 percent compared to the previous year, to reach 1.6 million subscribers.

In Q1 2020, the effects of the company’s ongoing cost transformation were further visible, with significant decreases on major cost categories across the firm. With the outsourcing of TV production activities, Telekom Romania successfully implemented a further step in the structural cost improvement and organizational transformation, with further optimizations planned for the rest of the year in other areas. The number of internal employees decreased by 17 percent YoY and reached 4,923 at the end of Q1 2020.

“Despite the current challenging economic situation, we have achieved a good result for the first quarter of 2020, with an increase in Revenue and EBITDA. We are continuing on the growth path we have initiated and are seeing the results of our continuous transformation of the company. With the first impacts of the COVID-19 crisis visible and further impacts on our revenues expected, we will intensify our efforts to cut our expenditures, in order to meet our targets on EBITDA and FCF for 2020,” said Nicolas Mahler, Chief Financial Officer, Telekom Romania.

“The results of the first three months of the year confirm the correct approach we had so far. The effects of the economic lockdown imposed following the Covid-19 pandemic started to show at the end of Q1. Telekom Romania has adapted to the new context, but we, as all businesses, need to brace for impact in the coming months, since we are an integrant part of the Romanian economy. We are doing and will do everything is in our powers to prevail,”  said Miroslav Majoros, CEO Telekom Romania.

Nicolas Mahler continued: “The current COVID-19 pandemic in Romania, Europe and across the world has confronted us with many challenges, just like the rest of the economy. Our first imperative in this situation was, of course, the safety and wellbeing of our employees. We managed to react to the shifting situation quickly and adapted to the new circumstances. Within just a few days, 64 percent of our employees, which equals 3,200 FTE, started to work from home and we took all precautions to ensure the safety of those colleagues, whose position did not allow for remote work.”

“We can clearly see the turnaround and we can be proud of the improvements we have already achieved. At the same time, we are not where we want to be yet. Our EBITDA margin of 11.9 percent in Q1 2019 was unsustainable and even though we managed to grow this margin to 14 percent in the current quarter, it is still short of our ambition. In order to reside on a healthy financial basis and to finance our investment needs, we need to aim for an EBITDA margin beyond 20% in the midterm. To achieve this ambition, we need to continue our growth, while further driving our structural cost transformation,” added Nicolas Mahler.

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