Telekom Austria 1Q 20 - Continued strong business trends in CEE
1Q 20 wrap up: Telekom Austria reported solid 1Q 20 results about in line with RCB estimates and consensus expectations. Group sales were up 3.4% yoy and EBITDA adj. was about flat yoy (+0.4%). Covid-19 had a limited effect on roaming revenues in the period under review (esp. Austria, winter tourism; we estimate about a mid-single digit EUR mn figure). Flat EBITDA adj. of EUR 397 mn (vs. RCB est. of EUR 388 mn and consensus of EUR 393 mn) was driven by a continued very good performance of CEE markets with sales and EBITDA up by 7% yoy. Austrian EBITDA was down by 3% yoy, mainly as a consequence of higher bad debt provisioning in light of the weakening economic environment and higher opex for the 5G rollout. Restructuring provisions for Austrian workforce reductions amounted to EUR 16 mn (RCB est. EUR 20 mn, 1Q 19 EUR 21 mn). The financial result included negative FX effects of EUR 16 mn (mainly valuations of intercompany loans in HRK and BYR) which were compensated by a lower tax rate due to the release of accruals regarding a decided tax case in Bulgaria. Free cash flow was strong and increased to EUR105 mn in 1Q 20 from EUR 34 mn in 1Q 19 driven by lower working capital needs.Telekom Austria is engaged as full service telecommunications providers of long distance, local and wireless services, corporate data communications services as well as internet services and television broadcasting. Co. generates revenues from fixed line services and mobile communication services to individuals, commercial and noncommercial organizations and other national and foreign carriers. To a lesser extent, Co. generates revenue from the sale of mobile communications handsets. Co. also supplies telephones and technical equipment for telephone communications. These activities are conducted primarily in Austria, Croatia, Slovenia, Bulgaria, Serbia, Macedonia and Belarus.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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