"In the first half, we have been focusing on proposition of favourable packages bundling mobile services, fixed internet and our digital television. Moreover, we improved this offer for the future by acquisition of the most attractive sport content - the first Czech football league (Fortuna League) and the UEFA Champions football League. We will broadcast the content in a unique multi-dimension, which provides customers with an ability to select from multiple matches, up to 7 days' time shift, and pause or replay key moments. In addition to watching on a TV set, we offer the whole O2 TV content also on PCs, handset or tablets," comments Jindřich Fremuth, Chief Executive Officer and the Chairman of the Board of Directors of O2 Czech Republic on the results, and adds: "In line with our customers' needs, we introduced a new portfolio of O2 Data tariffs with substantially higher data volumes, and quintupled data volumes for students and youth without price increase. For prepaid customers, we revived GO proposition."
"Despite a continuous pressureon revenue from our traditional services, in the first half, we have been able to stabilise top line year on year thanks to the successful new proposition," explains Tomáš Kouřil, company's Chief Financial Officer and Vice-Chairman of the Board of Directors, and adds: "In line with our plans from the beginning of the year, in the second half, we will intensify our investments in the Czech Republic. These are directed mainly into already communicated exclusive sport content acquisition and transformation of information systems. In Slovakia, we will keep investing into further improvement of our network," continues Tomáš Kouřil and closes: "At the beginning of July, we paid out over CZK 6 billion to our shareholders in distribution of dividends for 2017 and of a part of the share premium."
Operating overview
Mobile segment
O2 continues recording customers' demand for O2 Spolu packages, which bring families, group of friends and small entrepreneurs flexible bundles of up to 4 SIMs with unlimited voice and SMS, mobile data (3GB to 10 GB per SIM card), digital television O2 TV and/or Internet HD in one package. This has helped to increase the number of mobile contracts as well as O2 TV customers. In May, O2 added new O2 Data tariffs with 4 GB to 20 GB data volumes to its proposition. These tariffs are designed not only for browsing on small screens, but also on tablets and notebooks. These tariffs, together with O2 Spolu packages, continuous customers' upsell to rich data tariffs and growing number of mobile home broadband internet customers contributed to over 120% year-on-year mobile data consumption growth.
In O2 network, smartphones represent already two thirds of handsets and 51% of smartphones support LTE technology. 91% of customers with LTE handset have already replaced their SIM card with a new one supporting the technology.
Fixed segment
The number of O2 TV customers provided over O2 fixed line (IPTV) as well as over internet connection from any provider (OTT) reached 250 thousand as at 30 June 2018. A complementary MULTIservice, which enables customers to watch TV on multiple TV sets at once has become very popular. Over 37 thousand customers have already subscribed for this service, and thus O2 already registers 287 thousand active set top boxes.
In the course of the first half, O2 announced acquisition of several exclusive broadcasting rights for the most popular sports. The prestigious UEFA Champions League will be exclusively broadcasted in O2 TV from 2018 till 2021. From 2018/2019 season till 2023, only O2 TV subscribers will be able to watch all matches of the ice-hockey Tisport League, including play off and finals. O2 TV Sport holds the rights for three matches per week, while two ice hockey league matches per week will be broadcasted by ČT Sport (Czech TV) channel, which is included in all O2 TV tariffs. Thanks to the new contract, in next four seasons, for the first time ever O2 TV will be offering all matches of the football Fortuna League exclusively.
Slovakia
O2 Slovakia keeps recording increasing demand for its smartphone portfolio. As of 30 June 2018, the LTE smartphone penetration reached 52.5%. Thanks to the 4G LTE network expansion, growing LTE smartphone penetration and continuous customers' demand for tariffs with higher data volumes mobile data consumption went up 89% year-on-year in the first half 2018.
Financial overview
Total consolidated operating revenuereached CZK 18,599 million in the first half of 2018, up 0.6% year-on-year. Operating revenue in the Czech Republic were flat at CZK 15,114 million. Mobile operating revenue reported a 1.9% growth to CZK 9,968 million despite a negative impact of the European roaming regulation and continuous decline in voice, SMS and MMS revenue. These were more than compensated by growing mobile data and hardware sales revenue. Fixed business operating revenue declined by 3.8% year-on-year to CZK 5,146 million, as lower revenue from traditional voice and data services was not fully compensated by growing O2 TV revenue.
In Slovakia, total operating revenueimproved by 9% to EUR 141 million. The year-on-year growth in Czech koruna (CZK) has been negatively impacted by strengthening CZK against EUR. Thus denominated in Czech koruna the operating revenue reached CZK 3,597 million, up 3.8% year-on-year. Similarly to the Czech Republic, higher data and hardware sales revenue were the key growth drivers.
Consolidated earnings before depreciation and amortisation EBITDA improved by 5.6% year-on-year to CZK5,378 million in the first half of 2018thanks to the savings in majority of cost categories. In the Czech Republic, EBITDA grew by 3.3% to CZK 4,091 million, while Slovakia reported a 13.6% increase to CZK 1,285 million (+19.3% to EUR 50.4 million). Consolidated net profit in the first six months of 2018 improved by 5.4% year-on-year reaching CZK 2,776 million.
KEY FINANCIAL INDICATORS OF THE GROUP
| Financial indicators | 1H 2018 | 1H 2017 | Year-on-year change |
Operating revenue - CZ mobile revenue - CZ fixed revenue - SK revenue | CZK 18,599 mil. CZK 9,968 mil. CZK 5,146 mil. CZK 3,597 mil. | CZK 18,487 mil. CZK 9,785 mil. CZK 5,350 mil. CZK 3,466 mil. | + 0.6 % + 1.9 % - 3.8 % + 3.8 % |
Total costs -of which operating costs | CZK 13,254 mil. CZK 4,042 mil. | CZK 13,420 mil. CZK 4,166 mil. | - 1.2 %
- 3.0 % |
| EBITDA | CZK 5,378 mil. | CZK 5,093 mil. | + 5.6 % |
| EBITDA margin | 28.9 % | 27.5 % | + 1.4 p. p. |
| Net profit | CZK 2,776 mil. | CZK 2,632 mil. | + 5.4 % |
Contacts
Lucie Jungmannová
lucie.jungmannova@o2.cz
tel: 800 163 342 (800 1 media)
O2 is the largest integrated telecommunications provider in the Czech market. At present we operate close to eight million mobile and fixed accesses, which ranks us among the market leaders in fully converged services in Europe. To users of mobile services in the Czech Republic we offer state-of-the-art HSPA+ and LTE technology. We have the most comprehensive proposition of voice and data services in the Czech Republic, and we actively exploit the growth potential of the various business lines, especially ICT. Our data centres, with total floor area of 7,300 square metres, rank us among the leaders in hosting, cloud and managed services. O2 data centres belong to the few commercial ones in Central Europe to have TIER III certification. With our O2 TV we are also the largest IPTV service provider in the Czech Republic. In January 2014, O2 became a member of the Czech investment group PPF.
