O2 Czech Republic increased its 2015 profit by 45% and met its targets

• revenue reached CZK 37,385 million, same as in 2014, while telecommunication revenue across Europe continue falling
• mobile data, O2 TV and Slovakia were the key growth drivers
• operating expenses were reduced by 19%
• EBITDA went up 25% to CZK 10,142 million and net profit up by 45% to CZK 5,077 million
• O2 successfully and under favourable conditions refinanced its debt
• the Board of Directors intends to propose dividend for 2015 of CZK 16 per share

O2 today announced its operating and financial results for the full 2015 year. Consolidated figures include the results of subsidiaries, including O2 Slovakia. The results for the whole reporting period exclude the results of Česká telekomunikační infrastruktura (CETIN). In addition the company presented its financial outlook and targets.

“The 2015 was breakthrough for our company. We were the first globally to voluntary spin off fixed and mobile infrastructure. And seven months of independent operation confirmed correctness of assumptions and benefits we identified in our analyses”, says Tomáš Budník, Chief Executive Officer and the Chairman of the Board of Directors of O2 Czech Republic “We significantly improved and simplified our digital television O2 TV, launched brand new sport channel and offered this service to all households in the Czech Republic”, he adds.

“Our strategy works, after seven years we stopped revenue decline and increased our profitability by more than 40%. We continue transforming new O2, which requires higher capex in 2015 and 2016. Yet, we generated by 31% more free cash flow in 2015”, adds Tomáš Kouřil, company’s Chief Financial Officer and Vice-Chairman of the Board of Directors and continues “We plan to distribute attractive dividend, for 2015 we intend to propose a dividend of CZK 16 per share. In January we will restart the share buy-back as an alternative form of the shareholder remuneration”.

Company’s total consolidated operating revenue for 2015 stabilised year-on-year at CZK 37.385 billion. EBITDA increased by 24.7% year-on-year to CZK 10.142 billion. Net profit reached CZK 5.077 billion, marking a 44.5% increase. Yet, the company met its targets for EBITDA and net profit. Mobile data, O2 TV and
O2 Slovakia continue to remain the key growth areas.

Operating overview

As of the end of 2015, mobile services provided by O2 were used by a total of 4.896 million customers. The number of contract customers reached
3.237 million, representing two thirds of the mobile customer base. The segment of prepaid services recorded a 6.5 % decrease to 1.659 million customers. The average revenue per customer reached CZK 287 in 2015, while it increased to
CZK 290 in the fourth quarter.  Growing quality of the customer base was the key driver for this growth.  

Also number of smartphones continued to grow year-on-year. At the end of the year the proportion of smartphones within the O2 network rose year-on-year to 48.5%. In 2015, O2 sold over 300 thousand smartphones supported
LTE technology and at the end of 2015 LTE devices represented almost 40% of smartphones base. LTE smartphones with USIM card, which supports the new technology, currently uses more than half million of O2 customers.  

Along with growing accessibility of broadband mobile internet and growing interest in new technologies demand for the mobile internet continues to grow. At the end of the December, number of small screens reached already
1.6 million, up by 17% year-on-year. Mobile data traffic increased by 64 % year-on-year.

The 2015 was breakthrough largely for digital television O2 TV. The company launched its own sport channel O2 Sport, introduced new tariff portfolio, including option to use O2 TV on up to four mobile devises for free and brought the customers so called multidimension. Thanks to O2 Sport channel and features like choice from any of simultaneously played matches, the choice of camera angles, or the opportunity to watch any program or a movie up to
30 hours after they were broadcast, the O2 TV subscription level reached
202 thousand, up by 10 % year-on-year. Since December, O2 has been offering new set-top-box which enables O2 TV service for all households in the Czech Republic on internet from any provider. The O2 TV mobile application, which enables the watching of TV channels on portable devices, has been downloaded as many as close to 600,000 times.

The number of fixed internet customers reached 795,000 at the end of 2015.
Of the total number of customers 55%, in total 438,000, already use VDSL technology. During the whole 2015, O2 continued improving its fixed broadband services. Up to 500,000 households were enabled to get VDSL internet service with the speed 20 Mbit/s or higher. Installation of new remote DSLAMs and other technological modifications done in autumn helped to expand the accessibility of VDSL technology.     

Financial overview

Total consolidated operating revenue reached CZK 37.385 billion in 2015, flat compared to 2014. Fixed business operating revenue decreased by 4.0% year-on-year to CZK 11.670 billion, while in the third quarter revenue improved by 4.5% year-on-year. O2 TV and ICT remain the main growth area. Mobile operating revenue increased by 0.2% to CZK 19.216 billion in 2015, of which mobile data revenue improved by 9.5% year-on-year. While mobile revenue in corporate segment continued to decline due to competitive pressures, revenue in contract residential segment grew through the whole year. Higher quality of customer base (higher average spend) and substantial data revenue growth were the key drivers.  

EBITDA increased year-on-year by 24.8% to CZK 10.142 billion. The EBITDA margin reached a solid 27.1%, posting a year-on-year increase of 5.4 percentage points.

O2 Slovakia continues to deliver positive financial performance and remains one of the growth areas of the group. Revenues in O2 Slovakia reached EUR 245.0 million in 2015, marking a year-on-year increase of 9.3%. EBITDA increased year-on-year by 22.7% to EUR 86.6 million. The total number of customers in Slovakia reached 1.809 million, representing a year-on-year increase of 7.4%.

2015 dividend

The Board of Directors of O2 Czech Republic considers submitting a proposal to shareholders at the General Meeting for 2015 dividend of CZK 16 per share.

KEY FINANCIAL AND OPERATING INDICATORS

Financial indicators for the Group

Operating indicators – Czech Republic