As HT’s competitors, A1 and Tele2, published their H1 2019 results, we are bringing you some key takes from them.
The parent companies of HT’s largest competitors, Tele2 and Telekom Austria (A1) published their 9M 2019 results and we are bringing you some key takes regarding their performance on the Croatian market. To make the results are comparable we transferred Tele2’s results into EUR.
A1
According to their report, A1’s management described Croatia’s mobile market as highly competitive with unlimited propositions in the premium segment. In the fixed-line market, highly discounted offers for convergent solutions faded out while the demand for TV content continued to be strong.
As a result, the company’s top line in 9M 2019 remained flattish at EUR 114.9m (+0.4% YoY) with the small uptake in revenues caused by higher service revenues. Costs and expenses were stable (excluding positive one-off effects in Q3 2018 and Q3 2019 both related to frequency fee reimbursements), as higher bad debt in Q3 2019 and increased content costs could be offset by lower frequency usage fees. As a result, EBITDA without the positive one-off effects increased by 1.9% YoY, amounting to EUR 42.7m. Note that after a positive one one-off effect of EUR 3.9m recorded in Q3 2018, A1 also recorded a positive one-off effect of EUR 6.5m in Q3 2019, both in cost of service. These stemmed from reimbursements for frequency fee overpayments in connection with frequency fee cuts.
Meanwhile CAPEX expenditures decreased by 24% YoY, amounting to EUR 15m.
Turning our attention to the entire Group, A1 witnessed yet another quarter of positive performance with stable or growing service revenues in all markets. Therefore, the Group’s EBITDA excluding restructuring charges also continued to grow. As in previous quarters, fixed-line revenues were especially driven by the solutions and connectivity business in Austria as well as TV content, and the growth in mobile business was dominated by mobile WiFi routers.
Tele2
During the quarter the RGU base passed 1m with a net intake of 56k RGUs. Meanwhile, the company’s top line went up by 11% YoY to EUR 146.5m, driven by growth in both volume and ASPU. Underlying EBITDA excluding IFRS 16 soared 71% YoY to EUR 32.5m due to higher end-user service revenue and lower spectrum fees. CAPEX wise Tele2 Croatia spent EUR 9m excluding spectrum and leases, which represented a 40% YoY increase.
As a reminder, on May 31, 2019 Tele2 announced the agreement to sell their Croatian business to United Group, a provider of telecommunication services and international media content, which already in Croatia owns Nova TV, N1 and Sport klub. The transaction is valued at an enterprise value of EUR 220m. However, note that regulatory approval is still required. According to Tele2’s report, closing is expected before the end of 2019.
