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Telekom Romania's adjusted 9-mo EBITDA falls 17.5% y/y

Telekom Romania's adjusted 9-mo EBITDA falls 17.5% y/y Romania

BUCHAREST (Romania), November 8 (SeeNews) - Telekom Romania's adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 17.5% year-on-year in the first nine months of 2019 to 92.1 million euro ($100.2 million), its parent company, Greece's OTE, said.

"In the Romanian market, we are starting to see early results of our efforts, as retail revenues are gradually stabilizing, and profitability is showing signs of improvement. We are working on reducing our cost base in Romania, with further initiatives ahead, while cash flow generation improves," OTE CEO and chairman, Michael Tsamaz, said in a statement on Thursday.

Telekom Romania's total revenues in the first nine months of 2019 were flat year-on-year at 691.3 million euro. 

Revenues from retail fixed services in Romania fell by 7.9% to 173.5 million euro in the period under review, mainly as a result of lower revenues from fixed voice services, reflecting an unfavorable trend in both voice ARPU and customer base.

Mobile service revenues decreased by an annual 4.6% to 234.8 million euro in the first nine months, due to the impact of the transition in IT platforms accounted for in the last quarter of 2018, which led to a number of disconnections and bad debt provision.

Wholesale services revenues jumped by an annual 44.3% to 104.3 million euro during January-September, primarily reflecting the increase in international transit traffic business.

Telekom Romania's mobile customer base totaled 4.22 million at the end of the third quarter, down 9% eyar-on-year.

"Performance in Romania is stabilizing, and the turnaround plan being implemented is starting to yield promising results. The group systematically explores cost-reduction measures to support growth and is carrying out all necessary investments across its businesses," OTE said in the statement.

In the third quarter alone, Telekom Romania's EBITDA fell by 12.5% on the year to 36.1 million euro, while revenues rose by 7.4% to 243.5 million euro, driven by a sharp increase in wholesale revenue.

At the end of July, Telekom Romania announced it will lay off 692 of all 5,831 people it employs, as part of a reorganisation programme which began over two years ago.

The group will dismiss 438 employees of Telekom Romania Communications and 254 people at Telekom Romania Mobile Communications, Telekom Romania said at the time.

Also in July, local media reported that Deutsche Telekom could sell its Romanian subsidiary’s business lines separately to speed up the divestment process.

Negotiations are being held with local telecommunications group RCS&RDS to buy Telekom Romania’s cable TV business, with Orange for the mobile telecommunications business, and with a Russian investment fund represented by Bulgarian investor Spas Roussev for the fixed and Internet networks, local news portal reported at the time. According to the media report, the negotiations for the sale were in an advanced stage and the company wishes to exit the Romanian market in the following months.

OTE is present in Romania since 2014 through Telekom. OTE's units in Romania - fixed-line operator RomTelecom and mobile operator Cosmote - were rebranded as Telekom Communications Romania and Telekom Mobile Romania, respectively, in September 2014.  

Telekom Communications Romania is owned by OTE with 54% and by the Romanian communications ministry with 45.99%, while Telekom Mobile Romania is owned by OTE Group member Cosmote Mobile Communications with 69.9%, Telekom Romania Communications with 30% and minority shareholders.

In May, OTE Group completed the sale of its entire stake of 99.757% in Telekom Albania to Bulgaria-registered Albania Telecom Invest company for a total gross equity consideration of 50 million euro.

($ = 0.902 euro)