On 16 October 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, for the nine months period ended 30 September 2014.
The total consolidated TEO Group’s revenue for the third quarter of 2014 was LTL 171 million (EUR 49 million), a decrease by 5.8 per cent over the total revenue of LTL 181 million (EUR 56 million) for the third quarter of 2013. The total revenue for the nine months of 2014 was LTL 513 million (EUR 149 million), a decrease by 5.1 per cent over the total revenue of LTL 541 million (EUR 157 million) for the nine months of 2013.
EBITDA for the third quarter of 2014 went down by 9.6 per cent to LTL 71 million (EUR 20 million) over LTL 78 million (EUR 23 million) in the third quarter of 2013. EBITDA margin amounted to 41.4 per cent (43.1 per cent in 2013).
EBITDA for the nine months of 2014 decreased by 10.2 per cent to LTL 204 million (EUR 59 million) over LTL 228 million (EUR 66 million) for the same period year ago. EBITDA margin declined and amounted 39.8 per cent (42 per cent in 2013). Over the year EBITDA excluding non-recurring items went down by 5.7 per cent while EBITDA margin excluding non-recurring items stood at 42.6 per cent.
Profit before income tax for the third quarter of 2014 went down by 16.4 per cent and amounted to LTL 39 million (EUR 11 million). It was LTL 47 million (EUR 14 million) a year ago. Profit before income tax for the nine months of 2014 was down by 15.3 per cent and amounted to LTL 111 million (EUR 32 million). It was LTL 131 million (EUR 38 million) a year ago. Profit before income tax excluding non-recurring items was by 7.4 per cent lower than during the nine months of 2013.
Profit for the period in July-September 2014 amounted to LTL 36 million (EUR 10 million), while a year ago it was LTL 43 million (EUR 12 million), a decrease by 16.3 per cent. The profit margin was 20.9 per cent (23.5 per cent a year ago). Profit for the period in January-September 2014 amounted to LTL 99 million (EUR 29 million), a decrease by 15.9 per cent over the profit of LTL 118 million (EUR 34 million) for the same period year ago. The profit margin was 19.3 per cent (21.8 per cent a year ago). Profit for the period excluding non-recurring items was by 7.2 per cent lower than in January-September 2013 and profit margin excluding non-recurring items was 22.2 per cent.
Management’s comment on financial results for the nine months period of 2014:
“From 1 June 2014 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 easy to use. The third quarter of 2014 was the first whole quarter with this new organization in place, and we can already see effects of new ways of working, with historic high sales of IPTV and broadband Internet customers, and improved markets shares.
Our EBITDA margin was almost in line with last year, and for the first nine months of 2014 EBITDA margin (excluding non-recurring items) reached 42.6 per cent (42.9 a year ago). Operating free cash flow (operating cash flow excluding capital investments) in January-September 2014 was by 6 per cent less than a year ago.
In third quarter of 2014, the growth of sales in IPTV service accelerated and the third quarter showed the best IPTV net increase during the last two years, with an increase of 7.5 thousands new IPTV customers. Compared y-o-y our IPTV customer base increased by 20.7 per cent. We also offered Internet TV service “Interneto.tv” for Omnitel mobile customers and in July introduced for our IPTV customers a possibility to view their photos, video and audio recordings directly on a TV screen.
Over the year broadband fiber business grow by 11.5 per cent (the number of active connected households), and the number of TEO Wi-Fi connections increased by 91 per cent and reached 126 thousand at the end of the third quarter. Internet connection over the fiber-optic access network increased by 20 thousand customers and amounted to 39.5 per cent of all TEO broadband Internet connections (including Wi-Fi connections) or 53.1 per cent if excluding Wi-Fi connections.
In the third quarter revenue from Internet and TV services continued to grow by 3.1 and 3.0 per cent, respectively, as well as recorded high growth in equipment sales during July-September. Share of revenue from non-voice services (IP & IT services) is increasing, and for the nine months of 2014 the share of non-voice revenue reached 60.2 per cent.
In terms of total revenue, the decline was 5.1 per cent during the nine months of 2014, and for the third quarter of 2014 the decline was 5.8 per cent, where residential customers’ segment declined by 2.2 per cent, business customers’ segment by 10.7 per cent and Business to Operators by 3.5 per cent.
Negative impact on revenue during the third quarter of 2014 was still the decrease in revenue from fixed voice as disconnection of telephone lines continues. During the last twelve months voice subscription base decreased by 7.4 per cent, outgoing voice traffic declined by 14.8 per cent, and revenue from voice telephony services in the third quarter declined by 11.3 per cent. Positive though was that the third quarter in terms of number of decreased voice subscriptions was the quarter with lowest drop of subscriptions so far this year.
Our efficiency improvement program and the setup of our new organization resulted that total operating expenses for the nine months of 2014 were by 1.4 per cent lower than total operating expenses a year ago, in spite of non-recurring redundancy charge in January-September 2014. If excluding non-recurring items, the total operating expenses were by 4.6 per cent down.“
ENCL.:
- TEO LT, AB Consolidated Interim Financial Statements for the nine months period ended 30 September 2014.
- Presentation of TEO LT, AB Group results for the nine months of 2014.
Darius Džiaugys,
Head of Investor Relations,
tel. +370 5 236 7878
