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Significant EBITDA Growth for Telekom Romania in Q2 2021

  • Adj. EBITDA (AL) up 14.5% YoY as continued disciplined cost initiatives mitigated pandemic and seasonality effects on revenues;

  • Continued improvement on Net Margin;

  • Sustained subscriber growth in key mobile business segments.

 

Telekom Romania group announces key performance indicators for the second quarter of 2021, ended June 30, 2021.

 

Despite lasting effects of the COVID-19 pandemic on the Romanian economy, the financial results show continuous growth. The Company’s EBITDA After Lease grew by 14.5% YoY, reaching €41.4 mln. in Q2 2021 comparing the same period last year, continuing the bottom line growth trajectory, visible over the past quarters. In line with it, Adjusted Free Cash Flow remained positive in Q2 2021, for the 9th consecutive quarter in a row, as a result of strict cash discipline and cost control. The revenues, amounting to €216.8 mln., decreased slightly compared to Q2 2020, due to the slower recovery of the Romanian economy from the negative impact of the pandemic.

 

Revenues from the fixed voice business represents €11.3 mln. in Q2 2021, slightly behind the previous quarter. Fixed broadband revenues amount to €16.7 mln., representing a slight decline, compared to pre-pandemic levels. The overarching transformative trend in the use of legacy TV technologies led to a decline in TV subscribers to 1.07 mln. On the other hand, the Smart TV Stick product customer base marked continued significant growth in Q2 and increased by 24% compared to Q1 2021.

 

On the mobile business, the company continues the growth in subscribers. Q2 ended with 1.7 mln. postpaid subscribers, representing a growth of 7.8% year on year in this strategically vital customer segment, being the 5th quarter of base growth in a row. In line with it, the Fixed-Mobile-Convergence (FMC) segment continues its subscriber growth, reaching 916,000 customers and increasing 4% YoY. Revenues in mobile for Q2 stands at 97,8 mln., which is a reduction of 4,9% YoY, due to slightly lower system solutions and interconnection revenues driven by decrease in incoming traffic, whereas strategic shift from prepaid to postpaid mitigated the negative impact on revenues. The total mobile customers’ base was 3.54 mln. at the end of Q2 2021. 

 

Since the second half of 2018, Telekom Romania’s cost base continues to benefit from its long-running cost transformation program that successfully generates significant operational improvements. It is an important driver of the company’s sustained EBITDA and Cash Flow growth, through the YoY reduction of 4% in indirect cost compared to Q2 2020.

 

As part of Telekom strategic transformation over the past years, we have worked to create a sound financial base for the company and to make ourselves more resilient in the face of external market pressures. The Q2 financial results show that we adopted the right strategic direction and is paying off, as we managed to further grow our EBITDA year over year, despite the difficult market environment, after a year with a pandemic and even compensating seasonal one-off effects from the past”, said Nicolas MAHLER, Chief Financial Officer of Telekom Romania.

 

A key ingredient to Telekom’s financial success lies in the company’s rigorous focus on Cash Flow management and concerted efforts to structurally overhaul the cost base. Through the Cash for Growth program, numerous initiatives were implemented since 2018 and continue to drive optimizations, to overcompensate any effects of the pandemic on our bottom line.“

 

Digitalization and simplification of internal processes and customer interaction continue to be some of the most important pillars of the company's development. Internally, at the end of June, we have reached an important milestone; we have surpassed the 200+ robots threshold. Compared to Q2 2020, we have implemented 100 more robots in our internal processes, standing currently at more than 220 automated processes. Externally, the number of customers receiving their invoice in digital format increased by 39% and the share active customers in the MyAccount application increased by 24%, compared to the same period last year.”

 

Everything we develop is with a focus on the client. Thus, following the survey conducted throughout the beginning of this year, through which we researched to understand what customers appreciate about their telecommunications service provider, where they would see improvements and how we can help them, we launched new digital features, thus automating all the processes that customers can perform on the company's website. These days, they access online all the information they need and can digitally perform, from the comfort and safety of their own home, all the operations of purchasing products and services from the company's portfolio.”

 

We are also very proud to see that our efforts energy efficiency are paying off, as we thriving for becoming more sustainable each and every day. Therefore, we continue to invest in alternative energy sources such as solar panels, currently reaching over 100 sites equipped with photovoltaic panels or intelligent solutions to reduce our consumption, i.e. in our stores. All these initiatives of using renewable energy are part of a bigger mission, to transform Telekom Romania into a green company. By this, we reduce CO2 emissions, together with minimizing fuels consumption and the clean waste management”, added MAHLER.

 

Our innovative products, subscriber growth in key business segments and the drive to digitize the services, coupled with the ongoing cost transformation program, enable us to further solidify the financial turnaround, even in the face of significant external challenges, such as the continued COVID-19 pandemic. Our business strategy remains in force and we will continue to execute on it, to ensure both our fixed and mobile businesses obtain the solid financial performance, while continuing to offer customers the same services as before,” Nicolas MAHLER concluded.

 

On July 28, 2021 the European Commission (EC) approved conditionally, the agreement announced on November 9, 2020 between OTE and Orange Romania for the sale of the 54% stake OTE holds in Telekom Romania Communications S.A. (“TKR”) (the “Approval”). Specifically, the Approval is conditional on TKR divesting its 30% stake in Telekom Romania Mobile Communications S.A. (TKRM). Currently OTE holds 70% and TKR holds 30%. OTE intends to acquire this 30% stake from TKR, which will lead to OTE controlling near 100% of TKRM subject to required approvals.

 

Following the Approval, completion of the 54% TKR sale to Orange Romania is expected within the next few months, once the execution of the EC remedy has been completed and the remaining conditions precedent have been met.

 

*According to the Study which measures the market shares of mobile service providers for individuals, conducted by the Mia Marketing Institute, on a nationally representative sample, in January - February 2021 (6.000 respondents), respectively July - August 2019 (3.500 respondents), Telekom Group has the fastest growth rate of subscribers.

*

About Telekom Romania

 

Telekom Romania is a dynamic brand, offering fixed and mobile innovative communication services to a broad customer community. Our solutions open a world of infinite opportunities to share the beauty of life together with our families, friends, partners, colleagues and citizens around us. Our mission is to enrich people’s lives, by offering them fixed and mobile integrated services, latest technologies like 4G, optical fiber, as well as Internet TV which brings users a new entertainment experience, with access to exclusive and quality content, on all screens, and advanced interactive features. Telekom Romania is the trusted partner for companies, providing them with complete communications and IT&C solutions. Our network is bringing together people, machines and content, connecting them for a better, safer, simpler future.

 

Telekom Romania is present in the Romanian market since 2014, after the joint rebranding of Romtelecom and COSMOTE Romania.

 

Telekom is a brand pertaining to Deutsche Telekom, one of the world’s leading integrated telecommunications companies.

 

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