In 9M of 2020, the company noted a decrease in sales of 3.8% YoY, a decrease in EBITDA of 0.8% and a decrease in net profit of 6.5%.
In the first nine months of 2019, Telekom Slovenije noted net sales revenue of EUR 440m, representing a decrease of 3.8% YoY. If we were to exclude IPKO and Planet TV the Group generated EUR 450.5m in operating revenues, or a decrease of 2% YoY. However, we note that the company has announced earlier this week that the Group stopped the sales procedure of Kosovo based IPKO, which will remain a part of the Telekom Slovenije Group. To read more about it click here.
Coming back to sales revenue, revenues from the mobile segment of the end-user market is down by 3.4%, primarily due to the impact of the Covid-19, which resulted in lower revenues from roaming services abroad. Besides that, sales were impacted by the optimisation of subscribers whose basic subscription fee includes an increasing number of services, which is driving down revenues from services not included in the subscription fee. Furthermore, revenues from the fixed segment of the end-user market is down (-1.2%) primarily due to lower revenues from traditional telephony, while revenues on the wholesale market is down 9% due to reduced international voice traffic and lower revenues from roaming by non-residents.
Moving on to operating expenses, they amounted to EUR 410.35m, representing a decrease of 3% YoY. Of that, the largest item was cost of services which stood at EUR 157.1m (-7% YoY). Such a decrease could be attributed to the to the reduced volume of international traffic and roaming as and lower costs of multimedia content.
As a result of all of the above EBITDA amounted to EUR 144.6m, representing a slight decrease of 0.8% YoY. Meanwhile EBITDA margin showed an improvement of 1 p.p. and stood at 32.9%. As a reminder, according to the Group’s key objectives for 2020, EBITDA is estimated at EUR 210.6m. However, the Group assesses that the pandemic and measures adopted at the national level due to the two waves of the declared epidemic will have an adverse impact on the Group’s EBITDA of around 4% relative to planned EBITDA for 2020.
Operating profit amounted to EUR 40.12m, which is an increase of EUR 2.97m or 7.5% YoY.
Going further down the P&L, net profit from continuing operations stood at 36.85m, which marks an increase of EUR 5.6m or 18.2% YoY. However, the company reported a decrease in net profit of 6.5% to EUR 27.44m. Such a decrease could be attributed to the loss from discontinued operations of EUR 9.4m. Of that, Loss from the sale (recognized upon the measurement of fair value) of Planet TV amounted to EUR -5.6m, while loss of the period for Planet TV amounted to EUR -3.58m.
As a reminder, in July of 2020 Telekom Slovenije and the Hungarian company TV2 signed an agreement on the sale of all of the Company’s participating interests in Planet TV for the value of EUR 5m.
We note that the above stated results could be seen as positive given the Covid-19 situation, which we find supportive for the share price.
