During 9M 2023, Telekom Slovenije recorded revenue growth of 7% YoY, an EBITDA increase of 4%, and a net income of EUR 39.9m, a 2% increase YoY.

Starting off with the revenue, it amounted to EUR 518.8m, an increase of 7% YoY. Telekom Slovenije notes that revenues were up in the mobile segment of the end-user market on account of growth in the number of subscribers in both Slovenia and Kosovo, where the number of prepaid users is also growing, and due to higher revenues from mobile merchandise and revenues on the wholesale market. Furthermore, the Company is also recording an increase in the areas of financial services, eHealth, insurance services, and IT services and merchandise. Finally, higher revenues were also achieved on the market by all subsidiaries.

Telekom Slovenije further notes that they recognized an impairment assessment of the infrastructure damaged in the August floods. On the op. profitability level, the recognized net effect is estimated at EUR 5.3m. Furthermore, the estimated impairment of the present value of property, plant, and equipment amounted to EUR 8.1m and has been recognized in other op. expenses. At the same time, the Company notes that this cost should be taken together with estimated other op. revenues, which amounted to EUR 2.8m.

Total expenses amounted to EUR 467.7m, noting a 6% increase YoY. The largest increase came from the aforementioned other op. expenses, which increased by 3.4x, or EUR 10.5m to EUR 13.5m. Costs of services increased by 5% YoY to EUR 159.2m, in line with the higher revenues in the wholesale market. Meanwhile, the cost of material and energy increased by 40% YoY to EUR 6.5m, and finally, labour costs increased by 2% YoY to EUR 84.6m.

As such, the EBITDA amounted to EUR 181.8m, increasing by 4% YoY. Furthermore, the EBITDA margin amounted to 35%, a 0.96 p.p. decline YoY. In terms of the net financial result, it declined by 125% YoY, or EUR 6.8m to EUR 12.2m. This came as a result of slightly lower financial income (EUR 966k, -12% YoY), while financial expenses increased by more than 2x, to EUR 13.2m. Due to these developments, the net income amounted to EUR 39.9m, increasing by 2% YoY. As such, the net income margin declined by 0.34 p.p. to 7.7%.

Telekom Slovenije key financials (9M 2023 vs. 9M 2022, EURm)

Source: Telekom Slovenije, InterCapital Research

Telekom Slovenije also provided an assessment of operations for 2023. They estimate that the Company will exceed the originally planned op. revenues and EBITDA. As such, they estimate the op. revenues at EUR 699m (previously: EUR 680.8m), EBITDA at EUR 226m (previously: EUR 206.2m), and a net profit of EUR 38m (previously: EUR 20.1m).

Furthermore, Telekom Slovenije also commented on its strategic goals for the period 2024-2028. In 2024, they expect the op. revenue at EUR 717.4m, an EBITDA of EUR 233.6m, and a net income of EUR 43.2m. Investments are expected at EUR 235.7m. By 2028, they expect the EBITDA at EUR 280m, and a net income of EUR 83m. Investments in the 2024-2028 period are expected at EUR 951m. In terms of the dividends policy, they expect the payment of dividends in the amount of 30-50% of the Group’s net profit, taking into account the current financial situation and investment needs of the Group.

During October 2023, the total number of tourist arrivals amounted to 1.07m, representing a 14% increase YoY. Total tourist nights meanwhile, amounted to 3.6m, a 12% growth YoY. However, when compared to 2019, both the number of tourist arrivals and nights declined, by 4%, respectively. Finally, on a YTD basis compared to 2019, tourist arrivals and nights also declined, both by 1%, respectively.  

Yesterday, the Croatian Tourism Board, HTZ, published the latest report on the developments recorded in Croatian tourism, for the month of October 2023. According to the report, the total number of tourist arrivals amounted to 1.07m, growing by 14% YoY. Of this, foreign tourist arrivals amounted to 853k, representing 80% of the total, and increasing by 16% YoY. Meanwhile, domestic arrivals amounted to 215k, growing by 4% YoY.

On the flip side, the number of tourist nights amounted to 3.6m, growing by 12% YoY. Foreign tourist nights amounted to 3.1m, representing 86% of the total and increasing by 13% YoY, while domestic tourist nights amounted to 499k, increasing by 4% YoY. Here we can see signs of improvement on a YoY basis, but the increase in October could also be partly attributed to the fact that significant price increases across the board were recorded during the 3-month main summer season. As such, some of the tourists might have decided to postpone their vacation for a later period, possibly contributing to this success. In terms of the average stay per person, it amounted to 3.41 days, decreasing by 1.2% YoY.

Total tourist arrivals and tourist nights in Croatia (January 2019 – October 2023)

Source: HTZ, InterCapital Research

In terms of the types of accommodation, during October 2023, 88% of the tourist nights were registered in commercial accommodation, 4% in non-commercial accommodation, and 8% went to the nautical charter. Inside the commercial accommodation, hotels accounted for 54%, or 1.5m of tourist nights, followed by private accommodation at 24%, or 761k of tourist nights. 13% of nights went to camps, while the remaining 9% went to other types of accommodation.  In terms of the most active markets, Germany recorded 24% of tourist nights, followed by domestic tourists at 14%, Austria at 8%, as well as Slovenia and the UK, both at 7%, respectively.

Meanwhile, the best counties during October 2023 were Splitsko-dalmatinska, at 810k nights, followed by Istra at 753k, Dubrovačko-neretvanska at 538k, Kvarner at 523k, and Zadarska, at 333k of tourist nights. Moving on, when compared to 2019, October recorded 4% fewer tourist arrivals. Foreign tourist arrivals which make up the majority decreased by 8% during this period, which was partly offset by a 15% increase in domestic tourist arrivals. On the other hand, total nights decreased by 4%, with foreign nights increasing by 1%, while domestic nights decreased by 28% YoY. Lastly, on a YTD basis compared to 2019, both the total tourist arrivals and tourist nights decreased by 1%, respectively. Of this, domestic tourist arrivals increased by 16%, while foreign tourist arrivals decreased by 3%. On the flipside, domestic tourist nights decreased by 6%, while foreign nights remained roughly the same.

Due to all of these developments, it would seem that the situation is quite mixed; even though a YoY growth was recorded, the numbers are still behind 2019. As October is considered a “post-season” period, it would seem that some of the arrivals/nights that lagged behind during the season were transferred to October. However, the drop compared to 2019 could also mean that Croatia does not seem as attractive as before (both due to the post-season effect and also due to higher prices witnessed across the industry). As such, this development does not seem to be that positive for the entire Croatian tourism strategy – that of making it sustainable and running for longer periods of time.