A1 Telekom Austria grows faster in fixed network than with mobile communications

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The A1 Telekom Austria Group, which operates in seven European countries, was able to significantly increase the number of its mobile customers and slightly increase the number of fixed-network lines in 2024. However, the Group, which has been majority-owned by Mexico's América Móvil since 2014, generated more revenue growth in the fixed network than in the mobile segment.

This is evident from the A1 annual figures published on Tuesday. The company operates both mobile and fixed networks in Austria, Bulgaria, Croatia, North Macedonia, Slovenia, Belarus and Serbia. In the latter country, however, A1 fixed network services have only been available since the beginning of 2025. In autumn 2023, A1 spun off its radio tower business in Austria, which complicates the comparison of annual figures. Unless otherwise stated, the following figures are taken from the reporting required by financial law.

The annual revenue of the A1 Telekom Austria Group climbed by 3.1% to EUR 5.4 billion in 2024. Of this, EUR 3.2 billion (+2.3%) came from the mobile business and EUR 2.1 billion from the fixed network (+4%). EBITDA (earnings before interest, taxes, depreciation and amortization), a key financial indicator traditionally used in the telecommunications industry, rose by 5.1% to EUR 2 billion. The operating cash flow grew by 5.7% to 1.8 billion euros. However, the operating result fell by 5.4 percent to 861 million euros.

Effects of the radio tower spin-off

This divergence is due in particular to higher depreciation on usage rights, which in turn is due to the spin-off of the Austrian radio towers. With the transfer of parts of the passive infrastructure of the mobile communications stations to EuroTeleSites AG (ETS), leasing agreements were concluded between A1 and ETS, as A1 wants to continue to use the facilities for its mobile communications network. In A1's balance sheet, these leasing agreements lead to liabilities (leasing installments to be paid) on the one hand and to an asset (rights of use) on the other. These rights of use have to be depreciated over the term of the leasing contracts, so there is higher depreciation.

The bottom line is that the spin-off of the Austrian radio towers will lead to lower profits in absolute terms, but in the long term the debt burden should fall and higher profits per euro invested will flow. The shares of EuroTeleSites AG were distributed to the former A1 shareholders in the fall of 2023. The new shares plummeted immediately, but the ETS share price has now almost recovered to the issue level.

As the A1 Telekom Austria Group had to pay less tax in 2024, the net result did not fall quite as sharply as the operating result. A decline of three percent means an annual profit of EUR 627 million. Nevertheless, the management proposes to increase the dividend by one ninth to 40 cents per share. Nevertheless, A1 shares fell by more than one percent on Tuesday. Incidentally, if the radio tower effects were excluded from the A1 annual figures for 2023, the net result for 2024 would be a plus of 12.5 percent instead of a minus of three percent.

More customers

At the end of 2024, the A1 Telekom Austria Group had 27.1 million mobile lines, an increase of 7.4%. The number of connections that are paid for in advance (prepaid) is shrinking, while most of the growth is not attributable to people but to machines (M2M): More and more machines are getting mobile connectivity.

The number of revenue generating units, untechnically referred to as fixed network connections, rose by 1.3% to 6.4 million. As already mentioned, however, fixed-line revenues increased more strongly (+4%) than mobile revenues (+2.3%).

Austria remains stable

In its home market of Austria, A1 used an inflation clause in its end customer contracts in April to raise prices for existing customers. Although this motivated some customers to switch providers, overall it supported sales. For the year as a whole, A1 Telekom Austria can report an increase in turnover of six per thousand to EUR 2.7 billion. At 49 percent, the Austrian contribution to Group sales is below half for the first time.

For accounting purposes, EUR 151 million in revenues (-3%) from the transit and interconnection business with third countries were added to the Austrian division. In total, this results in an increase in annual turnover of three per thousand to 2.8 billion euros. EBITDA fell by 2.3% to one billion euros, while the operating result even slumped by 21.5% to 387 million euros. This reflects the effects of the Funkturm spin-off discussed above.

The number of Austrian mobile lines has remained stable, climbing by one per thousand to 5.1 million. In 2023, there was still a small decline of six per thousand. Not least thanks to the price increase, mobile revenues grew by half a percent to EUR 1.3 billion in 2024.

A1 has to report accelerated customer loss for the Austrian fixed network. In 2023, a net 3.4 percent of connections went offline; in 2024, the figure was 4.2 percent. This decline is not limited to pure telephone connections, but also affects internet connections with lower bandwidths. These customers are often cheaper online with mobile routers. With higher bandwidths, A1 can conclude more fixed-line contracts, which means that the decline in fixed-line revenue has remained limited to eight per thousand (now EUR 1.4 billion). Accordingly, A1 management intends to continue investing in fiber optic connections in 2025, albeit to a lesser extent.

Slovenia is shrinking, other countries are growing

A1 Telekom Austria reports growth in both revenue and EBITDA in five of the other six markets. Only in Slovenia are both key figures developing negatively. There, competitors with flat-rate mobile tariffs are giving A1 a hard time.

Overall, the network operator generated revenue of EUR 2.6 billion in the six countries outside Austria, an increase of 5.6 percent. EBITDA even jumped by eleven percent to one billion euros. Of this, 513 million euros remained as operating profit, an increase of 7.3 percent.

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