O2 succeeds in reducing costs, Slovakia remains a key growth region
Telecommunications operator O2 today announced its financial and operating results for the period of January to September 2014.
Throughout the third quarter, the company continued to align its management activities with more efficient and flexibledecision-making. "The streamlining of our organisational structure has enabled us to react more quickly and efficiently. We have gained more freedom to focus fully on the Czech and Slovak markets," said Tomáš Budník, CEO of O2 Czech Republic, evaluating the third quarter of this year.
O2's total consolidated operating revenue decreased by 7 percent to CZK33.1bn. The OIBDA financial indicator decreased by 11 percent year-on-year. "Our financial results are thus in line with the expectations of both the market and financial analysts," Tomáš Budník added.
The sharing of 2G and 3G networks with T-Mobile was launched in September in a pilot mode. It will in future create considerable savings for both mobile operators. The savings will enable increased investment in operated networks and available services. O2 is also continuing to increasingly provide the territory of the Czech Republic with the fastest 4G LTE mobile network coverage. The company plans to provide high-speed mobile internet reception to 93 percent of residents in the Czech Republic by the end of this year.
O2 Slovakia remains a key growth region. Revenues in Slovakia amounted to EUR 161m in the first nine months of the year, representing a year-on-year increase of3.7 percent.
Overview of operating results
As of 30 September 2014, a total of 5.052m customers were using O2mobile services. The number of contract customers rose year-on-year by 2.7 percent to 3.280m, while the number of prepaid customers fell year-on-year by 5.7 percent to 1.772m customers.
The availability of tariffs offering unlimited calls translated into an increase in overall mobile voice traffic. The volume of voice calls increased by 9.1 percent year-on-year to 8.628bn minutes. As a result, the average volume per mobile customer was 190 minutes of voice calls per month over the January to September 2014 period.
The popularity of mobile internet continues to grow. The number of customers using mobile internet access increased by25.6 percent year-on-year, resulting in an increase of mobile data servicesrevenue of more than one-fifth. Smartphone penetration within the O2 network also continues to grow: it increased by another 7.6 percentage points year-on-year to 39.6 percent. O2's strategic partnership with Apple has resulted in a rise in the number of iPhones among O2 customers, despite Android's firm grip on the mobile OS world. The mobile OS distribution within the O2 network is as follows: Android - 64%, iOS - 9.2%, Windows Phone - 5.7%, Blackberry - 1.9%. The proportion of devices running on Symbian decreased year-on-year by 3 percentage points to 18.7 percent.
In September 2013, O2 launched its O2TV digital TV service with new functions. After a year in operation, the number of O2TV customers increased by 21 percent, breaking the 178,000 barrier, and the growth is still advancing. One contributory factor is the availability of the new service O2TV Go. This service delivers TV broadcasts to mobile devices for the enjoyment of the customer at any time of their choosing regardless of where they happen to be. O2TV Go is available for devices running either Android or iOS. The application has been downloaded by more than 138,000 customers so far.
As of 30 September, O2 fixed internet access was being utilised by 915,000 households. The number of customers using the VDSL technology increased to 404,000.
Total consolidated operating revenue for the first nine months of 2014 decreased year-on-year by 7 percent to CZK33.071bn. Operating revenue,excluding lower termination fees which have no direct impact on operating profit, decreased year-on-year by 4.9 percent. The year-on-year rate of falling revenue shrank in the third quarter to -3.2 percent (as opposed to -9.6 percent in Q1 and -8.3 percent in Q2).
OIBDA [Operating Income Before Depreciation and Amortisation] decreased year-on-year by 10.6 percent for the period of January-September 2014. The OIBDA margin reached 35.7 percent, which is 1.4 percentage points lower on a year-on-year comparison.
Thanks to the streamlining efforts, consolidated operating costs were lowered by 5.6 percent in the reporting period to CZK 21.342bn, while wage costs were cut by almost 10 percent.
Consolidated capital expenditure amounted to CZK6.436bn. This figure includes acquisition costs related to the purchase of LTE frequency licences in the Czech Republic and the Slovak Republic. Capital expenditure excluding the LTE acquisition costs was CZK 2.528bn.
O2 Slovakia remains a key region of growth that the company is focusing on. The total number of customers in Slovakia reached 1.638m after a year-on-year increase of11.3 percent. Total operating revenue reached EUR161m.OIBDA rose year-on-year by 4.1 percent to EUR 51m.
KEY FINANCIAL AND OPERATING INDICATORS
Financial indicators for the group
|Financial indicators||Q1-Q3 2014||Q1-Q3 2013||Year-on-year change|
|Operating revenue||CZK 33.071bn||CZK 35.579bn||- 7,0%|
|Operating costs||CZK 21.342bn||CZK 22.614bn||- 5,6%|
|OIBDA||CZK 11.805bn||CZK 13.206bn||- 10,6%|
|OIBDA marže||35,7%||37,1%||- 1,4 p.b.|
|Operating indicators - Czech Republic|
|Number of mobile customers||Q1-Q3 2014||Q1-Q3 2013||Year-on-year change|
|Contract customers||3.280m||3.195m||+ 2,7%|
|Prepaid customers||1.772m||1.880m||- 5,7%|
|Smartphones||Q1-Q3 2014||Q1-Q3 2013||Year-on-year change|
|Share of smartphones within the O2 network||39,6%||32,0%||+ 7,6 p.b.|