Restorative process at O2 a success. Financial results have exceeded analysts' expectations

Mobile operator O2 today announced its operating and financial results for the first quarter of 2015. Thanks to a combination of a growing trend in customer usage, rising revenues in the mobile data segment and strong results in Slovakia, the company has reported results that have exceeded the forecasts of analysts.

"All divisions and segments have contributed to our results, which have not only been produced by numerous economies and streamlined processes but also by the introduction of simplified approaches and activities that support growth. I believe that in many areas we have initiated positive trends," said Tomáš Budník, CEO of O2 Czech Republic, in evaluating the first quarter.

O2's total consolidated operating revenues increased year on year by 3.7 percent to CZK 11.2bn. EBITDA grew by 25.6 percent yoy. Net profit reached the height of CZK 1.2bn, representing a 106.1 percent improvement. O2 Slovakia, meanwhile, maintained its growth trend and continued to contribute to the financial results of the group.

Overview of operating results

As of 31 March 2015, the total number of mobile customers stood at 5.013m, of which 3.269m were contract customers, marking a year on year 1 percent increase in their number. O2 customers proved very loyal to the company in the first quarter; the average monthly churn rate was just 1.2 percent. The number of prepaid customers fell by 4.7 percent year on year to 1.744m.

Unlimited tariffs continue to support growth in the volume of voice calls. Total mobile voice traffic generated by O2 customers in the first quarter of the year increased year on year by 2.1 percent to 2.876bn minutes.

Rising numbers of customers continue to show a preference for smartphones, as demonstrated by O2 sales data. Smartphones make up more than three-quarters of new handsets sold. Smartphone penetration within the O2 network has thus increased by another 8 percentage points to 41.6 percent, while one in five devices is LTE-capable.

The ongoing expansion of mobile broadband is driving strengthening demand for mobile internet. By the end of March, the service was being utilised by 1.4m customers after year on year growth of 14.3 percent. Revenues from mobile data services grew 6.1 percent.

In fixed line services, O2 recorded solid operating and financial results. Fixed internet from O2 was provided to 931,000 households, following a year on year gain of 13,000. In the first three months of this year alone, the increase was recorded at 8,000. Half of the customers use VDSL technology. By the end of 2016, the company plans to build more than 900,000 advanced DSLAM (Digital subscriber line access multiplexer) network devices, which will secure a further expansion of mobile internet. It will soon be possible to as much as double maximum transfer speeds near exchanges thanks to "vectoring", which will soon be deployed after completing an O2 test phase.

The number of O2 TV digital television customers hit 188,000 after rising year on year by 15 percent. The O2TV Go service, which thanks to an application of the same name makes it possible to watch television programmes on handheld devices, had by the end of the first quarter been downloaded 300,000 times. The amount of customers who are enjoying their favourite tv programmes outside of standard television viewing is perpetually growing.

Overview of financial results

Total consolidated operating revenues in the first quarter reached CZK 11.160bn, following year on year growth of 3.7 percent. Operating revenues in the fixed line segment grew 3.2 percent to CZK 4.916bn, demonstrating a stable trend in comparison with the preceding period. In the mobile segment, operating revenues increased 0.4 percent to CZK 4.732bn.

EBITDA grew year on year by 26.5 percent to CZK 4.332bn. The EBITDA margin climbed to 38.8 percent, up year on year by 6.8 percentage points.

Consolidated capital expenditure in the first quarter reached CZK 771m.

O2 Slovakia remains one of the key engines of growth for the group. In the first quarter, revenues in Slovakia represented 15 percent of the overall group result. The total number of customers in Slovakia reached 1.702m, with year on year growth recorded at 7.7 percent. Total operating revenues reached the level of EUR 58.2m. EBITDA grew 20.5 percent over the year to reach EUR 19.6m.

KEY FINANCIAL AND OPERATING INDICATORS

Group financial indicators

Operating indicators - Czech Republic