During 9M 2022, Telekom Slovenije’s revenue remained roughly flat, decreasing by 0.3% YoY, EBITDA increased by 0.5%, while the net profit increased by 8.5% YoY, and amounted to EUR 39m.
In the 9M 2022, the sales revenue of Telekom Slovenije amounted to EUR 485.5m, which is a decrease of 0.3% YoY. Breaking the revenue by segments, mobile service revenue increased by 0.6% to EUR 188.8m, primarily due to a higher number of subscribers and prepaid users in Kosovo as a result of activities to attract new users. Revenues on the wholesale market were also up, primarily on the account of higher revenues from international voice services in Kosovo and higher revenues from domestic wholesale services in Slovenia. Telekom Slovenije recorded growth in revenues from financial, eHealth, and insurance services. On the other hand, Fixed-line telephone service revenues were down primarily due to the declining number of traditional telephony connections. Finally, Telekom Slovenije halted the sale of electricity to end users, effective 1 January 2022, which is also reflected in sales revenue.
In terms of the operating expenses, they amounted to EUR 439.2m, a decrease of 1% YoY. Of this, COGS decreased by 3.7% YoY and amounted to EUR 62m. The cost of services decreased by 4.2% and amounted to EUR 151.5m. On the other hand, Labour costs increased by 6.3%, and amounted to EUR 82.6m, while the cost of materials and energy increased by 40.5%, and amounted to EUR 16.3m. EBITDA remained roughly the same, at EUR 174.8m, an increase of 0.5%. However, as noted by the Company, if the energy prices remained the same as in 2021, the EBITDA would be up 3% YoY. EBITDA margin increased slightly, by 0.3 p.p. to 36%. Finally, the net income amounted to EUR 39m, an increase of 8.5% YoY.
Telekom Slovenije key financials (9M 2021 vs. 9M 2022, EURm)
Source: Telekom Slovenije, InterCapital Research
Telekom Slovenije also commented on the impact of the war in Ukraine on its operations, as well as its Strategic Business Plan for the 2022 – 2026 period.
Starting off with the impact of the war, Telekom Slovenije said that the Group’s operations are not directly linked to the Russian and Ukrainian markets. Because of this, they assess that the war will not have any significant direct impact on the Group’s cash flows and financial sources. There are, however, affected by indirect effects such as rising energy prices. Furthermore, they are exposed to specific risks in the supply chain, as there may be shortages of certain materials for the manufacture of devices and other technical products, which may also result in delivery delays or higher prices.
Regarding their Strategic Business Plan, Telekom Slovenije outlined 8 key objectives for the period. These include the following: to be the leader in user experience, digitalization of operations, growth in ICT services, stabilization of the level of revenues from the core activity in Slovenia, consolidation on individual markets, optimal employee structure, financial stability, and the optimization of all types of costs, and finally, creating a sustainable future.
If you would like to read more, please refer to the full report here.
At the end of September 2022, the loans of Croatian financial institutions increased by 8.83% YoY, marking the highest growth since September 2009. This would mean that by the end of the month, they amounted to HRK 303.1bn.
The Croatian National Bank (HNB) has published its latest monthly report on the changes recorded by the Croatian financial institutions, for the month of September 2022. Within the report, we can see that the total loans of Croatian financial institutions grew by 8.83% YoY, which is also the highest growth since September 2009. On a monthly basis, they grew by 0.84%, and in total, they amounted to HRK 303.1bn by the end of the month. The growth in loans is quite encouraging, especially when considering the current macroeconomic situation in Europe and of course, the high inflation rates. This would mean that despite these challenges, the loans issued are not only slowing down or stagnating but actually accelerating, which by itself is quite noteworthy as they can support both households and corporate consumers alike.
In terms of the drivers of this growth, both corporate and household loans continued growing, albeit the household loan growth did slow down somewhat, while the corporate loan growth accelerated significantly. Starting with the household loans first, they increased by 5.1% YoY, which is a slight slowdown compared to the previous month, when they grew by 5.3%. In total, by the end of September, they amounted to HRK 148.3bn. Of this, household loans issued in HRK amounted to HRK 74.1bn, which is a decrease of 2.3% MoM and 4.8% YoY. On the other hand, household loans issued in EUR amounted to HRK 74.2bn, an increase of 2.9% MoM, and 17.3% YoY.
Meanwhile, corporate loans increased by 21.2% YoY and amounted to HRK 101.6bn. Of this, corporate loans issued in HRK amounted to HRK 38.1bn, a decrease of 2.6% MoM, but an increase of 22.4% YoY. Corporate loans issued in EUR amounted to HRK 63.5bn, an increase of 6.5% MoM, and 20.6% YoY.
Corporate and household loans growth rate (January 2015 – September 2022, YoY, %)
Source: HNB, InterCapital Research
What the data for both household and corporate loans can tell us is, that both citizens and corporate entities are increasing the loans that they are taking in foreign currency, especially EUR, which is to be expected, due to the fact that the switch to Euro will happen in January 2023. At the same time, the increase on a yearly basis of corporate loans can be attributed to all categories; meaning that loans for investments grew, loans for working capital grew, and loans for other purposes grew as well. This is supported if we divide the corporate loans by purpose. On a yearly basis, loans for investments, which amounted to HRK 40.3bn (or 39.7% of the total) increased by 17% or HRK 5.9bn YoY. Working capital loans, which amounted to HRK 33.1bn (or 32.6% of the total), increased by 23% or HRK 6.08bn YoY. Finally, other loans, which amounted to HRK 28.2bn (or 27.7% of the total), increased by 25% or 5.72bn YoY. On a monthly basis, however, the main driver of growth was the other loans, which increased by 11.6%, or HRK 2.93bn, while other loan categories remained roughly the same.
Moving back to household loans, housing loans still remain the largest category, at HRK 73.3bn, or 49.4% of the total. They increased by 9.7% YoY, or HRK 6.46bn, while on an MoM basis, they grew by 0.8%, or HRK 578.6m. Following them, we have consumer loans, which amounted to HRK 54.2bn, or 37.7% of the total, representing an increase of 1.9% YoY, but a decrease of 0.5% MoM.
Composition of Croatian loans to households (October 2011 – September 2022, HRKm)
Source: HNB, InterCapital Research
In terms of the effective interest rates, they have increased for both corporate clients and households alike. In terms of households, the most common housing loans are taken in EUR, and the effective interest rates for newly issued loans in this category increased by 0.11 p.p. YoY, 0.15 p.p. MoM, and amounted to 3.15%. Consumer loans in EUR had an effective interest rate of 6.36%, an increase of 1.49 p.p. YoY, and 1.15 p.p. MoM. For corporate clients, loans issued in euros that amounted to HRK 7.5m or less, had an effective interest rate of 1.64%, which is an increase of 0.5 p.p. YoY, and 0.3 p.p. MoM. Meanwhile, loans issued in euros that were larger than HRK 7.5m had an effective interest rate of 1.99%, which is an increase of 0.52 p.p. YoY, and 0.14 p.p. MoM. Furthermore, the loans issued in HRK, with a size up to HRK 7.5m, had an effective interest rate of 3.62%, an increase of 0.83 p.p. YoY, and 0.28 p.p., MoM. Loans that were larger than HRK 7.5m, had an effective interest rate of 3.99%, an increase of 1.61 p.p. YoY, and 1.64 p.p. MoM.
Foreign currency corporate and housing loans effective interest rates (January 2012 – September 2022, %)
Source: HNB, InterCapital Research
This can tell us several things: First of all, the loans issued in EUR have lower interest rates, which is due to the switch to the euro in January 2023, and higher strength of the currency overall is expected. However, both the loans issued to households and corporate clients, both in HRK and EUR, are increasing their effective interest rates, which given the rising interest rate environment we are witnessing, and the expectations of further interest rate hikes by the ECB is expected.