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Telekom Austria Reports Q1

VIENNA -- Today the Telekom Austria Group (VSE: TKA, OTC US: TKAGY) announces its results for the first quarter 2013 ending 31 March 2013. Summary
In the first quarter of 2013 Group revenues amounted to EUR 1,049.0 mn, a reduction of 0.6% compared to the first quarter 2012. While Austria and Bulgaria saw a reduction in revenues, Belarus and the Additional Markets segments posted year-on-year revenue growth. Regulatory effects amounted to a negative EUR 20.9mnat Group level in the first quarter of 2013. In Austria the negative effect of customer migration to all-in tariffs on monthly fee and traffic revenues was exacerbated by a positive one-off effect relating to interconnection revenues in the first quarter of 2012. The consolidation of YESSS! as of 1 January 2013 contributed positively to revenues and increased subscribers and market share, while reducing average revenue per user (ARPU). Among the international segments Bulgaria was impacted by a deterioration in pricing as well as the effect of mobile termination and roaming rate cuts in July 2012. In Croatia revenues were largely stable as negative effects from lower mobile prices were offset by higher interconnection revenues and growth in the fixed line subscriber base. Subscriber growth coupled with prior year price increases and higher data usage translated into higher revenues for Belarus, where FX and inflation effects were comparatively benign in the first quarter of 2013. The Additional Markets segment benefited from higher subscriber numbers and higher contract ratios, resulting from the continued focus on the high-value customer segment. The described fall in revenues was aggravated by an increase in Group operating expenses of EUR 18.2 mn, driven primarily by Austria and the Additional Markets segment inter alia due to higher subsidies and higher-value handsets sold. Subsequently, Group EBITDA comparable, which does not include any effects from restructuring and impairment tests, decreased by 6.8% year-on-year to EUR 336.9mn, with Austria causing the biggest drag. Lower operating expenses in Bulgaria could not compensate the impact from negative revenues in the segment. Belarus and the Republic of Serbia saw a continued rise in EBITDA comparable even despite higher costs. With stable revenues and costs the Croatian EBITDA comparable rose due to several one-off effects in the amount of EUR 1.9mn. In the first quarter of 2013 regulatory effects accounted for 46.6%of the Group EBITDA decline. The Group EBITDA comparable margin fell from 34.3% in Q1 2012 to 32.1% in the first quarter of 2013. Moreover, the Group interconnection margin turned negative for the first time. In the first quarter of 2013 restructuring charges in the Austrian segment amounted to EUR 2.7mn compared to an amount of EUR 4.4mn the same period last year. Depreciation and amortisation charges fell by 11.7% versus Q1 2012, as the acquired mobile customer base in Bulgaria was fully amortised by June 2012. Consequently, the operating result improved to EUR 117.8mnin the first quarter of 2013, compared to EUR 112.0mn in the same period of last year. The financial loss decreased to EUR 47.9mn mainly as a result of a reduction in interest expense versus the first quarter of 2012. Group capital expenditures increased by 2.2% to EUR 149.0mn, as a capital expenditure increase in Austria stemming from the acquisition of intellectual property rights and frequencies from Orange Austria was partly mitigated by a 52.2% CAPEX reduction in Bulgaria, resulting from lower mobile and fixed-line access investments as well as lower IT spending. Telekom Austria AG
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