+40.5% Q3 EBITDA - Our momentum continues

Q3 2020 was another successful quarter for Telekom Romania, in which we kept our revenues on a stable level and managed to grow our EBITDA significantly yoy, for the fourth quarter in a row. I am very happy that we were able to achieve this despite the enduring COVID 19 pandemic and its related economic fallout over the past months.

While our consolidated revenues reached €244.1 mln., in line with the previous year, EBITDA After Lease grew by 40.5% to € 50.3 mln. compared to Q3 2019, helped by one-time effects. Excluding these one-time effects, the yoy EBITDA growth still amounted to well over 30%, mainly driven through a significant improvement in our cost base, which was achieved through the strategic cost saving program “Cash for Growth”, running since Q2 2018.

Mobile service revenues were negatively affected by a regulated decrease of termination rates and significantly lower visitors and roaming users, due to the pandemic, however total mobile revenues nonetheless increased by 2.8% compared to Q3 2019 to a total of € 109.2 mln. The number of mobile contract subscribers grew for the second consecutive quarter yoy to 1.69 mln – an increase of 9.8% compared to the previous year. Similarly, the growth trend in Fixed-Mobile-Convergence (FMC) customers continued with a 10.1% increase over Q3 2019, landing at 909k subscribers.

Total Fixed revenues grew 1.5% yoy up to € 117.0 mln., thanks to significant growth in the Wholesale business (+6.6%), mitigating a reduction in Fixed Retail Revenues. The decline in the traditional voice business further slowed, showing signs of stabilization, despite the negative impact of COVID 19 on the market. Similarly, the number of TV subscribers have started to stabilize, with the QoQ reduction slowing compared to previous quarters, while the customer base for the company’s innovative Smart TV Stick more than doubled compared to the previous quarter. Finally, Broadband Revenues grew for the 4th consecutive quarter.

The key ingredient to the continued EBITDA growth in difficult economic circumstances lies in the relentless and continued focus on structural cost improvement. In Q3 2020, we managed to reduce our indirect cost base by over 12% compared to the previous year. This achievement is the result of the Cash for Growth program, which we started in the second half of 2018, in order to fundamentally analyze and optimize every cost category in our business, bringing more than 100 improvement initiatives to a successful conclusion. The latest building block of our transformation is the IT outsourcing process, which we completed at the end of Q3 2020, transferring our IT operations to a strategic external partner for more flexibility and increased digital capabilities. On top of these efforts, we have implemented additional cost saving measures in Q2 and Q3 2020, to counter any unforeseen negative effects of the emerging COVID 19 pandemic.

In an effort to support the health and safety of our employees and customers, we also accelerated our digital transformation, significantly expanding the self-service options in our mobile app and simplifying the customer’s access to digital contact channels, with visible results. Active users of the Telekom Romania mobile app more than doubled compared to Q3 2019, while the share of customers receiving a digital invoice grew by 70%. Internally, the exponential growth of our process digitization continues, with the number of active processes handled by robots doubling every 12 months - for the third time in a row.

I am very happy that we can report another quarter with yoy EBITDA growth, despite the difficult market environment. The development of our financial results clearly shows that we have chosen the right strategy and that our financial turnaround is sustainable, even in a global crisis. Not only are we able to mitigate the top line impacts of the pandemic through our focused cost reduction, but we are also seeing growth in the strategically important mobile customer segments. The way forward is clear: we will continue our focus on cost optimization, digitization and customer satisfaction.

https://www.telekom.ro/financial-results/