Results for the six months of 2014

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| Source: TEO LT, AB
multilang-release

On 16 July 2014, the Board of TEO LT, AB (hereinafter – “TEO” or “the Company”) approved unaudited TEO LT, AB Consolidated Interim Financial Statements, prepared according to International Financial Reporting Standards as adopted by the European Union, and Consolidated Interim Report for the six months period ended 30 June 2014.

The total consolidated TEO Group’s revenue for the second quarter of 2014 was LTL 174 million (EUR 50 million), which is by 2.6 per cent higher than the total revenue of LTL 169 million (EUR 49 million) for the first quarter of 2014, but by 2.3 per cent lower than revenue of LTL 178 million (EUR 52 million) for the second quarter of 2013. 

The total revenue for the first six months of 2014 decreased by 4.8 per cent to LTL 343 million (EUR 99 million) while the total revenue for the first six months of 2013 amounted to LTL 361 million (EUR 105 million), but excluding revenue from continuously declining voice telephony revenue grew by 1.1 per cent.

EBITDA for the second quarter of 2014 went down by 9.4 per cent to LTL 68 million (EUR 20 million) over LTL 75 million (EUR 22 million) in the second quarter of 2013, but was up by 3.6 per cent over EBITDA of LTL 66 million (EUR 19 million) for the first quarter of 2014. EBITDA margin for the second quarter of 2014 amounted to 39.2 per cent (42.2 per cent in 2013). 

EBITDA for the first half of 2014 decreased by 10.5 per cent to LTL 134 million (EUR 39 million) over LTL 150 million (EUR 43 million) for the same period year ago. EBITDA margin declined and amounted to 39 per cent (41.5 per cent in 2013). Over the year EBITDA excluding non-recurring items went down by 4.2 per cent while EBITDA margin excluding non-recurring items stood at 42.8 per cent.

Profit before income tax in the second quarter of 2014, compared with the second quarter of 2013, went down by 12.8 per cent and amounted to LTL 37 million (EUR 11 million). It was LTL 42 million (EUR 12 million) a year ago. Profit before income tax in the first half of 2014 was down by 14.7 per cent and amounted to LTL 72 million (EUR 21 million). It was LTL 84 million (EUR 24 million) a year ago. Profit before income tax excluding non-recurring items was by 3.4 per cent lower than during the first half of 2013.

Profit for the period in April-June 2014 amounted to LTL 32 million (EUR 9 million), while a year ago it was LTL 37 million (EUR 11 million), a decrease by 14.4 per cent, and it was almost the same as in January-March 2014. The profit margin for the second quarter of 2014 was 18.4 per cent (21 per cent a year ago). Profit for the period in January-June 2014 amounted to LTL 64 million (EUR 19 million), a decrease by 15.8 per cent over the profit of LTL 76 million (EUR 22 million) for the same period year ago. The profit margin was 18.6 per cent (21.0 per cent a year ago). Profit for the period excluding non-recurring items was by 3.3 per cent lower than in January-June 2013 and profit margin excluding non-recurring items was 22.4 per cent.

 

Management’s comment on financial results for the six months period of 2014:

“In the second quarter of 2014 we finalized our reorganization. From June 1, TEO Group has a new organization in place, with two main units in B2C and B2B, supported by Technology & IT and staff units. This will improve our possibilities to respond faster to the customers’ needs and to create solutions and services that are easier to use.

During the first half of the year we also consolidated the Company’s brand into one TEO brand, and the next step is now to transfer business and employees from subsidiary UAB Baltic Data Center (BDC) into TEO LT AB, in the new B2B unit.

Our EBITDA margin (excl. non-recurring items) improved compared to last year, and the EBITDA margin for the first six months of 2014 reached 42.8 per cent. Operating free cash flow (operating cash flow excluding capital investments) in January-June 2014 was by 4.7 per cent less than a year ago.

In second quarter of 2014 the demand for our IPTV service continued, and the quarter is showing the best IPTV net increase during the last two years. Compared y-o-y, IPTV customer base increased by 16.6 per cent. We also offered Internet TV service “Interneto.tv” for Omnitel mobile customers. 

Over the year broadband fiber business grew by 10.9 per cent (active connected households), and the number of TEO Wi-Fi connections more than doubled (y-o-y) and amounted to 103 thousand at the end of second quarter of 2014. Internet connection over the fiber-optic access network amounted to 40 per cent of all TEO broadband Internet connections (including Wi-Fi connections).

Share of revenue from non-voice services (IP & IT services) continued to grow and for the first six months of 2014 the share of non-voice revenue reached 59.6 per cent.

In terms of revenue, the decline was by 4.8 per cent during the first six months, and for the second quarter of 2014 – 2.3 per cent, where residential customers’ segment landed by 3.6 per cent, business customers’ segment declined by 4.2 per cent and Business to Operators increased by 6.9 per cent, due to higher interconnect volumes. 

Major negative impact on revenue in the second quarter of 2014 was still the decrease in fixed voice. Disconnection of telephone lines continues. During the last twelve months voice subscription base decreased by 7.2 per cent, outgoing voice traffic declined by 15.3 per cent, and revenue in the second quarter of 2014 declined by 6.9 per cent, though far better than in previous quarter due to the fact of increased international transit during the period.

Our efficiency improvement program and the setup of our new organization, gave that total operating expenses for the first half of 2014 were by 0.5 per cent lower than total operating expenses a year ago, in spite of non-recurring redundancy charge in January-June 2014. If excluding non-recurring redundancy, the operating expenses were by 5 per cent down.“

 

ENCL.:

- TEO LT, AB Consolidated Interim Financial Statements and Consolidated Interim Report for the six months period ended 30 June 2014.
- Presentation of TEO LT, AB Group results for the 6 months of 2014

 

         Darius Džiaugys,
         Head of Investor Relations,
         tel. + 370 5 236 7878