In the first quarter of 2017, Telekom Austria Group again managed to increase revenues both on a reported and proforma basis. This was achieved via successful cross-and upselling as well as value-based management with a focus on high-value customers and attractive fixed-line propositions. Nevertheless, most of the Group's mobile markets continued to be characterised by intense competition, partly resulting from ongoing macroeconomic headwinds, which however, continued to flatten out a bit in some segments. Also, results in the first quarter were supported by a 12.5% appreciation of the Belarusian Rouble versus the EUR, while regulatory headwinds remained, especially from the stepwise abolition of retail roaming in the EU as of 30 April 2016.
For the remaining months of 2017, most of these business conditions are expected to remain intact. In Austria, strong competition in the mobile market will persist and is anticipated to remain. In the CEE region, a mixed economic forecast is expected to lend only weak support while high competition on the mobile market is anticipated to remain. Moreover, operational improvements continue to be overshadowed by negative impacts from the abolition of roaming, which are expected to amount to approximately EUR 40 mn in Group EBITDA in 2017. On a positive note, demand for fixed-line services is expected to remain supportive across Telekom Austria Group's convergent markets with additional support from acquisitions of fixed-service providers in Croatia and Belarus in February 2017 and December 2016 respectively.
In spite of the illustrated challenges, the Management of Telekom Austria Group remains committed to its growth strategy by concentrating on the following focus areas: Exceling in the core business, expansion of products and services as well as value-accretive mergers and acquisitions.
These activities will be coupled with ongoing efforts to continuously increase operating efficiency.
For the year 2017, the Management of Telekom Austria Group aims to offset the negative roaming impact and achieve modest growth in Group revenues (on a reported basis).
In order to monetise the strong data growth, Telekom Austria Group will further invest in the LTE rollout across its markets as well as the accelerated fibre deployment in Austria. Despite the ongoing intensified investment into these areas, CAPEX before spectrum investments and acquisitions will decrease moderately to approximately EUR 725 mn in 2017.
On 22 July 2016, América Móvil and Österreichische Bundes- und Industriebeteiligungen GmbH (ÖBIB) agreed on a new expected dividend level starting with the financial year 2016. This decision is based on the improved operational and financial performance of the Group. This new dividend expectation entails the payment of EUR 0.20 per share to be maintained or increased on a sustainable basis in line with the operational and financial developments of the Group.
In order to ensure its financial flexibility, Telekom Austria Group remains committed to maintaining its Baa2/BBB ratings from Moody's and Standard & Poor's.
The outlook is based on constant exchange rates, with the exception of the Belarusian Rouble. Whilst the Management of Telekom Austria Group acknowledges the limited predictability of the Belarusian Rouble, it expects the currency to devalue close to inflation by approximately 10% versus the EUR in 2017.
With regards to frequencies, the government of Belarus is expected to sell spectrum in the 2,100 MHz band. Moreover, there might be some tenders in Bulgaria for frequencies in the 800 MHz band and in Slovenia for 3,500 MHz and 10 12 GHz bands. In the Republic of Macedonia, NRA announced that tenders for 2X10MHz on 900 MHz band and 2X10MHz on 1800 MHz band will be published in 2017, but procedure has not yet started.
This document contains forward-looking statements. These forward-looking statements are usually accompanied by words such as “believe”, “intend”, “anticipate”, “plan”, “expect” and similar expressions. Actual events may differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement. Neither Telekom Austria nor any other person accepts any liability for any such forward-looking statements. Telekom Austria will not update these forward-looking statements, whether due to changed factual circumstances, changes in assumptions or expectations. This report does not constitute a recommendation or invitation to purchase or sell securities of Telekom Austria.