Telekom Austria Reports First Profit in 5 Years
Telekom Austria reported its first full-year profit in about five years in 2015, on revenues up only about 0.2 percent.
Operational improvements, and better performance especially in its home Austrian market, drove the change. Results in its other markets either were negative or flat.
Telekom Austria’s experience illustrates industry challenges: growth has gotten very difficult, meaning incremental gains in operating efficiency are crucial for growing earnings. Average revenue per account remains under pressure, for competitive reasons.
Organic subscriber additions likewise were flat, with account growth largely coming from acquisitions. That move “outside the core region” remains a principal method for service providers to keep adding accounts and gross revenue.
Sooner or later, the tactic stops working so well, as capital to fuel acquisitions becomes unavailable or as acquisition targets become scarce.
Strategically, uncovering or creating big new sources of revenue remains imperative.