T-Slovak Telekom

Financial results of Slovak Telekom Group for the first nine months of the year 2009 

In the reported period, the Slovak Telekom Group primarily focused on expanding the broadband services in both fixed and mobile segments and on the stabilization in the field of voice services. The Group’s total revenues reached EUR 734.1 mil.  

Financial Results of Slovak Telekom Group Overview for 9M 2009
(YOY comparison)  

• Revenues: EUR 734.1 million (-4.6%)
• EBITDA: EUR 346.7 million (-2.0%)
• Operating income: EUR 151.7 million (+5.3%)
• Net income: EUR 123.8 million (+2.1%)
• Operating free cash flow: EUR 210.7 million (-7.1%) 

Revenues of the Slovak Telekom Group for the first nine months of the year 2009 decreased on YOY comparison by 4.6% to EUR 734.1 million. Revenues of Fixed line services business decreased YOY by 6.2%, and revenues of Mobile services business decreased by 4.6%.

EBITDA in total slightly decreased by 2.0% YOY to EUR 346.7 million. The decline in fixed line business reached 5.6%. On the other hand EBITDA in mobile services increased by 0.5%. 

EBIT of EUR 151.7 million was achieved, up 5.3% YOY.  

Net income increased on Group level by 2.1% YOY to EUR 123.8 million.  

Operating free cash flow decreased by 7.1% and reached EUR 210.7 million.  

Miroslav Majoroš, Chairman of the Board of Directors and President/CEO of Slovak Telekom: "Revenues of the Slovak Telekom Group are affected by the fact that it operates in as market characterized by the gradual decrease of customer demand in the fixed voice services, the high level of saturation in the mobile voice services and the continuing interest of the customers in broadband services. Due to the strong pressure on prices in the telecommunications business and the regulatory policy of the European Commission, average revenues per customer have decreased too. Nevertheless, we managed to increase the Group’s operating income and net income, namely due to the ongoing multi-year company’s programme aimed at increasing efficiency which we intensified last year. The Group has remained focused on the provision of high-quality broadband fixed and mobile services and despite the current economic situation, we have recorded the customer base growth in this field“. 

Fixed Line Services Business Overview for 9M 2009
(YOY comparison) 

• Revenues: EUR 335.9 million (-6.2%)
• EBITDA: EUR 138.8 million (-5.6%)
• Operating income: EUR 43.9 million (+14.6%)
• Net income: EUR 138.7 million (+290.7%)
• Operating free cash flow: EUR 65.1 million (-5.6%) 

Total fixed line revenues amounted to EUR 335.9 million, a decrease of 6.2% YOY. The decline in traditional fixed voice services revenues was partially compensated by growth in broadband services revenues and IT services revenues. 

The general decreasing trend of traditional fixed voice services revenues is ongoing also in Slovak Telekom’s fixed line services business. At the end of September 2009, Slovak Telekom operated 1.104 million fixed network accesses, 1.9% less compared to previous year. The fixed Family line has strengthened its position of the most convenient way of communication for long calls; in addition, it offers free calls to Slovak fixed networks for 24 hours a day. 

Broadband/Internet revenues continued to increase by 2.6% YOY to EUR 69.0 million. The main driver of this growth was the increase of the broadband customer base by 57,500 (18.3%) to 372,600 accesses. This increase was caused also by further broadband rollout and increase of broadband coverage Slovakia wide. To make customers familiar with the offer and the growing number of Magio functionalities, we enabled customers to order the service for two months free of charge. The company also reduced the initial costs upon service installation, as since August 2009 customers do not have to buy the set-top boxes, they can lease them. 

Data communications revenues decreased on YOY comparison by 3.1% and amounted to EUR 44.0 million. This drop was successfully covered by increasing IT services revenues. 

Increasing cost efficiency as a result of cost saving program launched by the end of the previous year was the driver for a 6.6% YOY drop of operational expenditures. This decline could only partially compensate the revenue decline, therefore EBITDA decreased YOY by 5.6% to EUR 138.8 million. 

Operating income (EBIT) was positively influenced by YOY decrease of depreciation of 12.7%. This drop is caused by decreasing trend of capital expenditures and extraordinary write off of assets in previous years. Based on this development EBIT increased by 14.6% on YOY comparison and amounted to EUR 43.9 million. 

Net income increased extraordinarily on YOY basis to EUR 138.7 million. This extraordinary increase is generally a result of received dividends from T-Mobile Slovensko. This impact is not evident in Group net income, since intercompany dividend payment is subject to consolidation adjustments. 

Revenues of Zoznam and Zoznam Mobile decreased by 29.5% to EUR 3,627 thousand.  

Miroslav Majoroš, Chairman of the Board of Directors and President/CEO of Slovak Telekom: “The focus on the expanding of broadband services in the fixed network segment with respect to both content and coverage has been proven by the almost 20%-growth in the number of accesses in this segment. At the same time, the number of the Magio digital television customers increased by more than 66% and significantly exceeded the level of 50,000. Another 75,000 households can gain access to the modern services thanks to special miniDSLAM equipment that enables the using of the Magio Internet and Magio TV also in distant villages in Slovakia. We have recently started with the first satellite broadcasting tests that will bring Magio TV to the whole territory of Slovakia. Our company becomes the first Slovak multimedia operator that will offer the interactive digital television not only in the fixed (metallic and optical) network, but also through satellite technology. Naturally, we have continued in expanding the optical infrastructure that is available for more than 270, 000 households. 
I am glad that the achieved results have also been reflected in the customer satisfaction level indicated by the TRI*M Index. Slovak Telekom has affirmed the high customer satisfaction level in both residential and business segments also in the third quarter of the year and with the achieved results it ranks among the top companies within the Deutsche Telekom Group.“ 

Mobile Communication Business Overview for the first nine months of 2009 

• Revenues: EUR 421.0 mil. (-4.6%)
• EBITDA: EUR 208.0 mil. (+0.5%)
• Post-paid customers: 1,380 thousand (+7.2%)
• Average revenues per user (ARPU): EUR 18.8 (-4.1%) 

Revenues of T-Mobile Slovensko as at 30 September 2009 amounted to EUR 421.0 mil., and compared to the same period of 2008 decreased by 4.6%. This trend is primarily the result of the continuing decrease in call prices and other services and the number of regulatory measures adopted in the telecommunications industry. However, the revenue development is in contrast with the significant increase in the total traffic, as well as the average traffic in minutes per customer as it increased YoY by 12%.  

EBITDA for the first nine months of the year increased by 0.5% YOY to EUR 208.0 million. T-Mobile thus managed to compensate the decreasing revenues by cost saving and maintained a high efficiency level. In addition, this year T-Mobile has also continued in significant investments in both new and existing post-paid customers, which is reflected in the gradually increasing share of these customers in the total customer base. 

2.301 million customers used T-Mobile services at the end of September 2009. In this period, the company achieved an important target in the customer base structure –60% of them already belong to the post-paid customer segment and compared to the same period of the last year, their proportion has grown by 4%. 

Trend in the first three quarters of 2009 was the gradual reduction of prices of calls and services. Customers could enjoy more call minutes, messages or data, which was demonstrated in the significant traffic growth. It resulted in the stable Average Revenues per User (ARPU), which, compared to the last year, have remained on approximately the same level of EUR 19, while the proportion of the non-voice services has considerably increased. Text messages, data services, broadband internet and mobile content services, i.e. total non-voice services already constitute 20% of the ARPU, while last year it was 2% less.  

“Our company has gone through three quarters of the year in difficult economic situation, during which we have continued the strengthening and increasing the quality of our customer base structure. Currently 60% of the base already belongs to the post-paid customer segment and in the third quarter of this year alone we concluded nearly 150,000 customer contracts. The loyalty of our customers is confirmed by the total number of renewed contracts, which is higher - in the YoY comparison - than the one in the same period of the last year.  We are elaborating our segmented offer of flexible services also in this period – there has been an extremely positive response to the new type of plans “Pod¾a seba” or to week and weekend packages. In addition, the ever-decreasing prices of calls and services are available for all customers – the average per-minute price of outgoing calls has decreased YoY by 15%. This is reflected in the increasing total traffic, since the average monthly volume of T-Mobile customers’ calls reached 125 minutes. I believe that we will provide our customers with an attractive offer and plenty of interesting benefits also during the Christmas season and we will close the difficult year 2009 successfully,“ stated General Manager of T-Mobile Slovensko, Milan Vašina. 

Annex n. 1

9M 2009 in figures (data stated as at 30 September 2009, unaudited) 

Slovak Telekom Group
Development of key financial indicators on comparable basis

Fixed Line Services Business
Development of key financial indicators on comparable basis

Fixed Line Services Business
Development of non-financial indicators

1)  ARPA PSTN - MTL and ISDN

Mobile Services Business
Development of key financial indicators 

Note: the figure of 2.301 million Customers takes into account those Customers that have been active in the course of the last 12 months. The total number of active customers that used the services of T-Mobile over the last three months is 2.138 million customers.

Annex n. 2

9M 2009 in figures (in SKK for readers’ convenience) 

Slovak Telekom Group
Development of key financial indicators on comparable basis

Fixed Line Services Business
Development of key financial indicators on comparable basis

Mobile Services Business
Development of key financial indicators