Upward trend in revenues, profit and cash flow for Telekom Romania

Telekom Romania announced the main performance indicators for the fourth quarter of 2019, ended on the 31st of December 2019, according to the data released by OTE Group.

For the full year 2019 all major financial indicators – Revenue, EBITDA and adjusted Free Cash Flow (FCF) showed a year-on-year growth for the first time in four years. In 2019 the consolidated revenues of Telekom Romania increased by 5%, to 980 mil. EUR. At the same time, adjusted EBITDA before IFRS16 increased by 5% to 144 mil. EUR, thus growing for four quarters in a row. Adjusted Free Cash Flow, corrected for one-off historical payments to OTE Group, also registered relevant growth of over 55 mil. EUR in 2019, becoming positive for the first time in three years.

Revenue growth was fueled mostly by the company’s core business. Fixed revenues increased by 11% to 479 mil. EUR in 2019, supported by strong growth in the ICT segment, exceeding 110%, as well as that of wholesale services with more than 20%. At the same time, broadband & TV services registered a slight growth in revenues of more than 2%. FMC revenues have grown  yoy with approximately 30%. Additionally, the newly launched product Smart WIFI generated high demand.

In mobile revenues, Telekom had 4 consecutive quarters of growth in 2019 reflected in the overall yearly growth, significantly driven by large ICT transactions in Q4.

Costs declined by more than 3%

On the cost side, compared to 2018, total OPEX (Operating Expenses) declined by more than 3% and shows a further improved run rate in Q4. This saving and the better cash flow are a direct effect of the company’s ongoing transformation program ”Cash for Growth”, which has driven a significant number of initiatives to successful completion.

As part of this transformation process, the number of full time employees went down by 21% yoy from 6,356 in 2018 to 5,029 in 2019, through automation, simplification and focus on customer-facing units.

Revenues: 289 mil. EUR

The promising results for the full year 2019 also reflect a good performance of the last quarter of the year. In Q4 2019 the group’s consolidated revenues continued the upward trend from the previous quarters, reaching 289 mil. EUR, a 19% increase against Q4 2018, heavily driven by major ICT related projects.

Adjusted EBITDA before IFRS 16 increased by 109% against Q4 2018, reaching 51.6 mil. euro in Q4 2019. This came as a result of improved top line and cost performance paired with a favourable comparison base

The strategically important FMC segment continued to grow through 2019, recording a 72% yoy increase in revenues in Q4 2019, now totalling over 846,000 users and extending Telekom’s market leadership in this segment.

Revenues from retail fixed services declined by 5% in Q4 2019 against Q4 2018, to 55.4 mil. EUR. This was driven by a declining customer base especially on the traditional fixed line voice and DTH business, which was only partially offset by an increase in Average Revenue per User (ARPU).

1.3 mil. users for Telekom TV

The TV services segment reached 1.3 mil. users in Q4 2019, an 8% decline – mainly on DTH – vs. Q4 2018, which was offset via diversified content packaging and an increase in ARPU, so that revenues stayed stable.

The number of broadband service subscribers had a slight decline compared to Q4 2018, reaching 1.1 million users. Simultaneously, broadband revenues in Q4 2019 recorded an 8% increase against Q4 2018, which was the result of the company’s push towards higher-value customers, resulting in an increase in ARPU.

Mobile services revenues further stabilized in Q4 2019 totalling 75 mil. EUR, with only a slight decrease of less than 1% over 2018, a result which supported the successful completion of a major ICT project. A positive trend can be seen on mobile data revenues, with a continued growth of 11% in Q4 2019 compared to Q4 2018.

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