Telekom Austria Slips into the Red on Restructuring Costs

Published on: 25th February 2009

Telekom Austria Group has reported full year revenues up 5.1% to €5.17 billion (US$6.6 billion), although EBITDA decreased by 30.2% to €1.3 billion (US$1.66 billion) due to restructuring costs in its landline division which cost it €632 million (US$806 million). Excluding the restructuring program EBITDA increased by 3.9% to €1.93 billion (US$2.46 billion).

Operating income declined by 82.2% to €135.5 million (US$172.8 million), and the net loss amounted to €48.8 million (US$62.2 million) compared to a net income of €492.5 million (US$628 million) for FY 2007 primarily impacted by the restructuring program. Capital expenditures for tangible and intangible assets decreased from €851.3 million to €807.6 million as lower capital expenditures in the Fixed Net segment more than offset higher capital expenditures in the Mobile Communication segment.

Net debt decreased by 9.4% to €4 billion at the end of 2008 compared to the end of 2007.

Boris Nemsic, CEO of the Telekom Austria Group, said: "Our results for the full-year 2008 are evidence of a solid operational performance despite strong headwinds from the global economic environment. Both revenue and clean EBITDA exceeded our guidance. However, reported EBITDA and net income were impacted by restructuring expenses in the Fixed Net. Looking forward, these steps were essential in order to secure the long-term performance of the Telekom Austria Group. For the financial year 2009 we expect revenues of EUR 5.1 billion and EBITDA of EUR 1.9 billion. Telekom Austria Group has recently reiterated its priority of maintaining a stable dividend policy and has introduced a dividend-per-share floor of EUR 0.75."

The mobile communication segment continued its growth, both in Austria and in the Telekom Austria Group's international markets. The first full-year consolidation of Velcom (formerly MDC) in Belarus and higher contributions from the subsidiaries in the Republic of Serbia and the Republic of Macedonia, which only started business operations during 2007, strengthened the growth profile of the Telekom Austria Group in 2008. However, the regulation of international roaming tariffs introduced by the European Union in the second half of 2007 had a negative impact, with this tariff reduction applying to all twelve months of 2008.

 

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