Telekom Slovenije published their 9M 2021 results, showing a 1.5% YoY increase in sales, a 5% YoY increase in EBITDA and net profit increase of EUR 8.5 m (31% YoY).
In the first nine months of 2021, Telekom Slovenije recorded sales in the amount of EUR 486m, representing a 1.5% YoY increase, mostly due to growth in revenues from international voice services and the sale of mobile merchandise. Revenues in the mobile segment of the end-user market were up 6.2% YoY to EUR 188m, primarily on account of higher revenues from mobile merchandise at Telekom Slovenije. Revenues from services are also declining at Telekom Slovenije due to the optimisation of subscribers who have an increasing number of services included in their monthly subscription fee. Revenues were also up relative to the same period last year at the subsidiary IPKO.
Revenues in the fixed segment of the end-user market were down 7.5% YoY, primarily due to lower sales of IT licences, which simultaneously reduces costs, and due to a decline in revenues from traditional voice telephony, as the result of the falling number of traditional connections and their replacement with mobile and IP telephony. Fixed telephony, as expected, reported a decline in units from 521k to 508k (-2.5% YTD). Revenues from financial services, energy, eHealth services and insurance are recorded in additional services, which were down 3.4% YoY to EUR 5.2m. Revenues from eHealth services were up in 2021, while revenues from other services were down.
Revenues on the wholesale market were up 7.3% YoY to EUR 116m, primarily due to higher revenues from international voice services. Other operating income and merchandise were up relative to the same period in 2020 due to higher revenues generated by subsidiaries on the market, as the result of less stringent measures in connection with the COVID19 pandemic. Despite slower tourist movement than in pre-pandemic, Q3 turned to be a solid quarter as operating revenues reached EUR 170.2m and were up 6% YoY.
Moving to expenses, OPEX decreased by EUR 4.4m, representing a decrease of 1.4% YoY. Highest impact on decreasing OPEX was achieved through decreasing cost of services by EUR 10.0m (-6% YoY). Labour costs rose 0.45% YoY, while the number of employees pretty much did not change and amounted to roughly 3.4k employees.
EBITDA increased 5% YoY, amounting EUR 174m. The increase in EBITDA was both due to an increase in sales and a decrease in OPEX. IPKO – Kosovo EBITDA amounted to EUR 30m, representing 17.24% of total EBITDA. Looking only at Q3, EBITDA reached EUR 60.3m, and was down 1% YoY.
Finally, net profit increased from EUR 27.4m to 35.9m in first nine months of 2021 (+31% YoY), as no negative effect from discontinued operations was evidenced in this period. As a reminder, in 9M 2020 the loss from discontinued operations in the comparable period comprises the operating results and effect of the sale of Planet TV, which was excluded from the Telekom Slovenije Group on 30 September 2020. Net profit was up also due to a slight improvement in net financial result of Group by EUR 0.5m. IPKO – Kosovo net income amounted to EUR 10m, representing 28% of total net profit of the Group.
An important factor to consider, solvency-wise, is debt that is relatively low at the level of the Group and Company. The financial liabilities of the Group and the Company as at 30 September 2021 relate to long-term syndicated loans and bilateral bank loans in the amount of EUR 340m, a short-term bank loan in the amount of EUR 26m, and lease liabilities in the amount of EUR 67m. The Group and Company
regularly repay their liabilities from financing. Long-term loans and borrowing increased from EUR 184m to 301m (63.6% YoY). Debt equity ratio stands at 70.8% at the end of 30 Sep 2021. Therefore, net financial debt increased from EUR 378m to 423m. Net debt/EBITDA ratio after taking into account 9M 2021 results stands at 1.8x, which is acceptable.
CAPEX-wise, Telekom Slovenije invested EUR 148m in Q3 2021, which represents an increase of 16.5% YoY. Most of the investment was used for the acquisition of a 5G radio frequency spectrum, which should increase expected revenues in upcoming years by an increase in margins.
Telekom Slovenije 9M 2021 Results (EUR m)
In 9M 2021, Dalekovod recorded an increase in sales of 18.6%, an increase of EBITDA of 12.8%, and a net income to majority of HRK 32.4m (vs. a loss of HRK 19.7m in 9M 2020).
In the first 9M of 2021, total sales of Dalekovod Group amounted to HRK 1.1bn, representing an increase of 18.6% YoY. The increase of the operating income is primarily the result of the high rate of projects contracted during 2019 and 2020. In relation to the members of the Group, the total increase of operating income mostly came from the subsidiary Dalekovod Ljubljana and it was related to the implementation of the project for the construction of the 400 kV transmission line Cirkovce-Pince in Slovenia, which was contracted in 2020. An increase in EBITDA of HRK 8m also comes mainly from the operation of the subsidiary Dalekovod Ljubljana and the Group’s production segment, i.e., the companies Proizvodnja MK and Proizvodnja OSO.
During the 9M 2021, the business of Dalekovod was influenced by several factors outside its control; the ongoing COVID-19 pandemic, the rise of prices of raw materials as well as hampered supply chains. Besides these (but also partly because of it), the company had issues paying its financial liabilities. Due to cash restrainments, the company was able to attain only HRK 400m in new business arrangements, which presents a 40% decrease YoY.
The Group operates with limited financial abilities and in 3Q there was an increase in due liabilities to financial creditors based on the pre-bankruptcy settlement, which, as of 30 September amount to over HRK 106m in principal and interest. In the context of the aforementioned and taking into account the amount of accumulated losses and the low level of capitalisation of the Company, on 30 June 2021 the General Assembly of the company Dalekovod issued a decision on the decrease and increase of the share capital. A recapitalization program in the sum of HRK 410m took place in June 2021, which implied issuing 41m new shares. Process of increasing the share capital will be concluded after the implementation of all actions determined by the Companies Act of the Republic of Croatia related to the part of increasing the share capital. By completing the process of increasing share capital and raising funds by repaying the total debt from the pre-bankruptcy settlement, Dalekovod plans to successfully complete the pre-bankruptcy settlement and to ensure the viability of business operations.
Operating expenses, which amounted to HRK 1.06bn, increased 18% YoY. This is mostly due to higher material costs, representing a 29% or HRK 156m increase. On the other hand, employee expenses were down nominally HRK 8m or 3.5% YoY to HRK 224m. The number of employees stood at 1,217 at the end of reporting period, which is 95 employees less YoY. All other expenses were up, thereof, other expenses increased HRK 4.3m. value adjustments to short-term assets increased for HRK 4.2m. The aforementioned EBITDA increase (HRK 8m) is mostly due to the increase in sales. As EBITDA growth(+12.8%) was lower than growth of sales (+18.6%) , operating profitability decreased and EBITDA margin was down 30 basis points to 6.3%.
Net financial result deteriorated for HRK 4.0m, or 61% YoY, due to increase in interest expenses of HRK 5.5m despite decrease in FX losses of HRK 2.1m.
In the first 9M of 2021, Dalekovod recorded a net profit to majority of HRK 32.4m, representing an improvement comparing to the 9M 2020 results, in which the Company observed a net loss to majority of HRK -19.7m. The result from discontinued operations in 9M 2021 stood at HRK +74k which shows that the Group has successfully discontinued its galvanizing segment (the main contributor to the 9M 2020 decrease with HRK -51.3m).
According to the Croatian National Tourist Board, in the first 10 months of 2021, Croatia has witnessed 13.3m tourist arrivals and 82.7m tourist nights.
In the first ten months 2021, Croatia recorded 13.3m tourist arrivals, which represents an increase of 74.9% YoY. Such a result stands at 66.7% of pre-pandemic period (Jan – Oct 2019). Meanwhile, tourist nights amounted to 82.7m, which represents a 54.26% increase YoY. Compared to 2019, tourist nights stand at 66.74% (Jan – Oct). We note that 84.28% of nights realized come from foreign tourists. Of that, tourists from Germany lead with 25.49% (or 21m) of total nights realized, followed by tourists from Slovenia (10.66%).
The largest number of tourist nights (23.3m) was registered in Istria County, ahead of Split-Dalmatia County (15.3m) and Kvarner (15m). The most popular destinations by number of nights were Rovinj (607k), Poreč (437k), Dubrovnik (380k) and Medulin (332k).
When observing the type of accommodation, the largest portion of nights realized was recorded in private accommodation (38.41%), followed by camps (20.92%) and hotels (18.12%). To be specific, hotels noted an increase in nights spent by 120% and an increase in arrivals by 105%. The average nights spent in hotels in the first 10 months stood at 2.88 compared to 2.4 in the same period of the previous year.