A1 Telekom Austria Experiences Faster Growth in Fixed-Line Services than Mobile

A1 Telekom Austria, a regional telecommunications group operating across seven European countries, reported a notable increase in revenue in 2024, demonstrating stronger growth in its fixed-line services compared to its mobile segment.

According to the annual financial results released on Tuesday, A1's overall revenue rose by 3.1% to reach EUR5.4 billion. Of this total, EUR3.2 billion (up 2.3%) was attributed to mobile services, while fixed-line services contributed EUR2.1 billion, reflecting a 4% growth.

The company, which has been primarily owned by Mexico's América Móvil since 2014, successfully increased its mobile customer base, boasting 27.1 million mobile connections by the end of 2024, a rise of 7.4%. However, the growth in mobile services was largely driven by machine-to-machine (M2M) connections rather than individual consumers, as the number of prepaid connections declined.

In contrast, fixed-line services saw a slight increase in connections, with revenue-generating units (RGUs) rising by 1.3% to 6.4 million. The uptick in fixed-line revenue is particularly noteworthy, as it outpaced mobile revenue growth.

Despite these gains, A1 faced challenges related to the separation of its mobile tower business in late 2023, which complicated year-over-year comparisons. The spinoff resulted in higher depreciation costs due to leasing agreements established with EuroTeleSites AG, where a portion of A1's passive mobile infrastructure was transferred. This adjustment contributed to a 5.4% decrease in operating profit to EUR861 million, although the EBITDA (earnings before interest, taxes, depreciation, and amortization) increased by 5.1% to EUR2 billion, alongside a 5.7% rise in operational cash flow to EUR1.8 billion.

The net profit for 2024 experienced a slight decline of 3%, totaling EUR627 million, but the management proposed an increase in dividends per share by one-ninth to EUR0.40, despite a drop in A1's stock price by over 1% on the day of the announcement.

In its home market of Austria, A1 implemented an inflation clause in customer contracts that led to price increases, which spurred some customers to switch providers but ultimately supported revenue growth. The revenue from Austrian operations grew by 0.6% to EUR2.7 billion, with the contribution from Austria now accounting for less than half (49%) of the total group revenue.

However, A1 reported a net loss of connections in its fixed-line sector, with a 4.2% decline in subscriptions in 2024, a slight increase from the previous year's 3.4% dip. This trend primarily affects traditional phone services and lower bandwidth internet connections, as many customers are opting for cheaper mobile router solutions. Conversely, A1 is experiencing increased demand for high-bandwidth fixed-line contracts.

In international markets, A1 reported growth in five out of six countries outside of Austria, with Slovenia being the only market to show negative trends in both revenue and EBITDA. Overall, revenue from these international operations reached EUR2.6 billion, marking a 5.6% increase, while EBITDA surged by 11% to EUR1 billion.