Financial Year 2024 Full year Results report A1 Group consolidated

Results Report 2024

A1 Group

contentGROUP MANAGEMENT REPORT

GROUP MANAGEMENT REPORT

Group Management Report

Group overview and market environment

Business environment

Macroeconomic performance recovered slightly in 2024. Inflation rates fell steadily in the US and the eurozone. Interest rate cuts had a positive impact on the business environment and overall economic demand increased. Overall, global economic growth increased and the outlook for 2025 shows stable growth. Our markets reveal a mixed picture, however, with higher year-on-year GDP growth rates in most CEE countries while Austria recorded another year of recession.1

Starting from a high level at the end of 2023, inflation rates fell over the course of 2024 in both the US and Europe. In the US, inflation fell from 3.4% in December 2023 to 2.9% in December 2024.2 In the eurozone, average inflation fell from 5.4% in 2023 to 2.4% in 2024.3

In the year under review, the US Federal Reserve (FED) lowered its key short-term interest rate in three steps from a range of 5.25% to 5.5% to between 4.25% and 4.50%.4

The European Central Bank carried out a total of four interest rate cuts in 2024, reducing the interest rates on main refinancing operations, the marginal lending facility, and the deposit facility from 4.5%, 4.75%, and 4.0% to 3.15%, 3.40%, and 3.0% respectively.5

According to the World Economic Outlook published by the IMF in October 2024, the global growth outlook is stable with expected growth of 3.2% for 2024 and 2025. For the Eurozone, growth projections for 2024 were maintained at 0.8% in October compared to previous projections from April 2024 whereas for 2025 they were slightly decreased to 1.2%. The growth forecasts for the USA project growth of 2.8% for 2024 and 2.2% for 2025. Growth projections for China were slightly adjusted upwards versus previous forecasts due to high demand for semiconductors and electronics.6 7

In the markets of A1 Group, as shown in the table below, most CEE countries are expected to experience higher GDP growth compared to the previous year. In Austria, however, another year of recession is forecasted for 2024.8

Development of real GDP and inflation in the markets of the A1 Group9

1. Source: https://www.wko.at/statistik/jahrbuch/worldgdp.pdf
2. Source: https://tradingeconomics.com/united-states/inflation-cpi
3. Source: https://tradingeconomics.com/euro-area/inflation-cpi
4. Source: https://www.federalreserve.gov/economy-at-a-glance-policy-rate.htm
5. Source: https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.de.html
6. Source: https://www.imf.org/en/Publications/WEO/Issues/2024/04/16/world-economic-outlook-april-2024
7. Source: https://www.imf.org/en/Publications/WEO/Issues/2024/10/22/world-economic-outlook-october-2024
8. Source: https://www.wko.at/statistik/eu/europa-wirtschaftswachstum.pdf
9. Source: https://www.imf.org/en/Publications/WEO/weo-database/2024/October, data on inflation based on average consumer prices

GROUP MANAGEMENT REPORT

Industry trends and competition

The A1 Group identified the following trends in the course of its strategy process:

The continuing rapid development of artificial intelligence (AI) and real-time data analyses is transforming business processes and making real-time decisions the norm. With increasing data traffic driven by digitalization and OTT content and the progress being made in rolling out broadband (fiber and 5G), telecommunications companies are at the center of this digital evolution. They are having to focus on improving the end-to-endcustomer experience in order to differentiate themselves by anticipating needs and offering personalized services. As ecosystems of interconnected companies, services, and technologies are driving future economic growth, telecommunications companies must redefine their role and actively shape their platforms and partnerships. Telecommunications companies are at the center of digitalization, with software playing a crucial role in increasing business efficiency through network design, automation, virtualization, and cloud services. This foundation provided by software is additionally opening up new business opportunities in the field of digital services. Cybersecurity is becoming increasingly important due to strict regulations, such as the EU NIS2 Directive, and the rising number of cyber attacks, which

is posing both a challenge and a business opportunity for telecommunications companies. In addition, the popularity of cloud computing and edge computing is growing thanks to the advantages they offer in the areas of innovation, mobility, flexibility, cost efficiency, and improved data security. Moreover, ESG aspects are now an essential prerequisite for being able to compete in the market, while the competitive landscape is expanding to include OTT providers and satellite-based Internet companies.

Competitive environment

The A1 Group is primarily active in seven regional markets in Central and EasteEurope:

1) Source for inhabitants as well as GDP/capita (PPP, current international USD): https://data.worldbank.org/indicator/SP.POP.TOTL, data for most recent year: 2023, figures rounded

2) Source for GDP/capita (PPP, current international USD): https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD, data for most recent year: 2023, figures rounded

3) Mobile and fixed market positions both based on service revenue market shares

GROUP MANAGEMENT REPORT

Regulation

A1 Group is subject to different legal and regulatory frameworks in its markets. A1 Austria, comprising the largest Group segment by revenue and EBITDA, is classified as a provider with significant market power in the wholesale market for Ethernet and dark fiber in certain regions in Austria. The company is therefore subject to relevant regulatory measures, including network access and price regulations.

The international subsidiaries of the A1 Group are also subject to extensive regulatory provisions in their respective national markets. In addition, the Group companies in EU member states (Austria, Bulgaria, Croatia, Slovenia) are required to comply with European regulations in order to ensure harmonised conditions within the EU. This is especially true for the EU-wide roaming and net neutrality regulations as well as the harmonization of mobile and fixed-line termination rates resulting from the European ElectronicCommunications Code (EECC), which applies equally to all EU member states.

Fixed-line regulation

Market regulation in Austria

The wholesale markets for broadband access have been fully deregulated since October 11, 2022. Previous regulations have been replaced by new, voluntary contracts for virtual unbundling of local access (VULA 2.0) and for very high capacity networks (VHCN). These contracts were given a positive reception by both the Austrian regulatory authority and the European Commission. Wholesale partners numbering in the mid-double digits have since signed contracts of this kind with A1 Austria, including its largest competitors.

This deregulation paves the way for additional investment and will accelerate the large-scale roll-out of broadband and fiber infrastructure throughout Austria. The Austrian regulator and the Federal Competition Authority will continue to monitor the wholesale markets for local and central access very closely. Some smaller Internet service providers have contested the deregulation decision of the national regulator, however, and initiated proceedings before the Federal Administrative Court. These proceedings were opened in 2023, but a result or decision is not expected until 2025 at the earliest.

Following the final decision by the regulator in August 2023, further steps toward deregulation have been implemented in the wholesale market for high-quality access (Ethernet services and dark fiber) in many geographic areas (municipalities). In predominantly rural regions, however, A1 Austria remains regulated in this market and is therefore still subject to relevant regulatory measures, including network access and price regulations.

Fixed-line termination rates1

The European Commission set the fixed-line termination rate for all operators in the European Economic Area (EEA) at a uniform EUR 0.0007 per minute back on January 1, 2022. The Austrian regulator deregulated the fixed-line termination market at the national level following this measure. Nothing has changed in this regulation since then, and no adjustments are expected in the foreseeable future either.

Mobile communication regulation

Roaming

The European Union Roaming Regulation was updated in 2022, but its broad guidelines have been in force since 2016. The EU roaming area is expected to be expanded to EU candidate countries such as Ukraine and Moldova in the coming years. The markets of Belarus, Serbia and North Macedonia are regulated to a varying degree.

1 The term termination rate refers to the amount that a telecommunications provider must pay for the termination (call termination, call completion) of a telephone call to a third-party network or for the acceptance of such a call from a third-party network in the case of network interconnection.

GROUP MANAGEMENT REPORT

Roaming agreements in the WesteBalkans

Retail roaming charges within the region have been reduced following the introduction of a roaming agreement for the WesteBalkans in 2019. In addition, A1 and other mobile operators have signed a voluntary agreement to lower rates between the European Union and the WesteBalkan countries (Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia).

European Union wholesale caps

Mobile termination

The European Commission set mobile termination rates for all operators in the European Economic Area at a uniform EUR 0.002 per minute on January 1, 2024. This value has been achieved by means of a glide path that provided for annual reduction steps. The Austrian regulator has deregulated the mobile termination market at the national level and further reductions are not expected at present.

Mobile termination rates

*) Belarus values: prime time/downtime. MTS: Mobile TeleSystems; BeST: Belarus Telecommunications Network

Net neutrality

The EU regulation on net neutrality has been in force since 2016. It requires providers of Internet access services to treat all data traffic equally. Furthermore, specialized services can also be offered in addition to Internet access services, but these are subject to certain limitations.

The European Commission had to review the EU net neutrality provisions by April 30, 2023. The Body of European Regulators for Electronic Communications (BEREC) had already published an opinion before that date stating that the current regulation was suitable and no amendments were necessary. The European Commission's final evaluation also showed that no amendments to the EU regulation on net neutrality are necessary.

Retail charges for regulated intra-EU communication

As of May 15, 2019, retail charges charged to consumers for regulated intra-EU communication may not exceed EUR 0.19 per minute for calls and EUR 0.06 per SMS text message (excluding VAT in each case). Despite this requirement, it is nevertheless possible to offer consumers a choice of alternative tariffs. The validity of this regulatory EU pricing requirement (Article 5a of EU Regulation 2018/1971) was extended when the Gigabit Infrastructure Act (EU Regulation of May 2024) was approved. A reduction in the charges for intra-EU calls to the national price level is planned for January 1, 2029.

GROUP MANAGEMENT REPORT

Spin-off of the "EuroTeleSites AG" tower business and its impacts in 2023

On September 22, 2023, Telekom Austria AG's former tower business was listed on the Vienna Stock Exchange as the newly founded EuroTeleSites AG. The shareholders of Telekom Austria AG agreed to the spin-off at an extraordinary general meeting held on August 1, 2023. They received one EuroTeleSites share for every four Telekom Austria shares.

The passive infrastructure of the towers that was spun off comprises components that are not directly attributable to the mobile communications network, such as foundations and metal structures, containers, air conditioning units, power supply, and other supporting systems.

A1 Group has secured long-term access to the towers by contract as the anchor tenant by entering into local master lease agreements with the local EuroTeleSites operating companies. The contract has been entered into for an indefinite period, but termination options are available. Inflation protection is provided. The rent and other price elements are adjusted annually by 85% of the annual adjustment of the consumer price index, but by no more than 3% per year. Prices for steel components for modifications that are additionally commissioned must be adjusted in accordance with the steel price index.

5G and the frequencies used with this technology require a densification of towers. The expansion in terms of area is also not yet complete, and new areas are being developed. For the construction of new towers, A1 Group has the freedom to choose any tower company. The majority of the required expansions are to be carried out through collaboration with the preferred tower company, EuroTeleSites.

In the event of significant financial difficulties or the disposal of a significant amount of infrastructure at or by a EuroTeleSites operating company in breach of contract, A1 Group has a right to repurchase the towers at country level.

More detailed information can be found in the Group Management Report 2023.

Since the spin-off took place in September of the comparative year, there are still financial impacts on the year-on-year perfor- mance. An overview can be found on page 12 with the table "A1 Group Comparison of reported vs. pro forma values".

GROUP MANAGEMENT REPORT

Business development and economic situation

Business performance in financial year 2024

Despite a challenging environment, A1 Group were able to prove how robust its business model is and deliver a solid business performance in the financial year 2024. This is the result of a continued focus on driving digitalization, ensuring the relevance to our customers, and providing an excellent customer journey. Despite a persistently competitive environment, A1 Group was able to further expand its customer base in the fixed-line business but also in the mobile customer business.

Inflation fell compared to the previous year, nonetheless a certain price sensitivity remained among customers given the high inflation rates of previous years. A1 Group implemented value protection measures in Austria, Bulgaria, and Croatia to cushion the increase in costs. Rising workforce costs were once again one of the biggest cost drivers in 2024. A clear focus on operational efficiency remained a priority in 2024 and enabled a further increase in margins to be achieved. At the same time, it is important to ensure that the company is fit for the future and to maintain financial flexibility for growth opportunities. To this end, we set

a milestone in our transformation with the establishment of a "competence delivery center", which pursues exactly this goal by reducing indirect costs and enables more investments in the market. Certain activities are therefore carried out only once across the entire group instead of seven times in our individual markets, aiming for a harmonization of tools, systems, and processes.

We also pursued a sustainable approach to investments: the expansion of the fixed-line and mobile broadband networks in Austria and CEE was continued, while at the same time a focus was placed on accelerating the monetization of previous investments. In March 2024, A1 acquired 400 MHz in the 26 GHz spectrum plus additional regional frequencies in the 3.5 GHz spectrum in Austria in a frequency auction for a total of EUR 7.3 mn (incl. interest). In June 2024, the existing frequencies in the 900 MHz and 1800 MHz bands were renewed in Bulgaria for 10 years for a total of EUR 26.8 mn. Also in Bulgaria, an additional 5 MHz in the 1800 MHz band was acquired in June 2024 for a total of EUR 3.8 mn.

In May 2024, S&P again confirmed Telekom Austria AG's "A-" rating with a stable outlook. In addition, Moody's also confirmed the A1 Group's credit rating at A3 with a stable outlook in November 2024. The rating from Fitch remained unchanged at 'A-'. Enjoying an "A-" rating from all three major credit rating agencies, A1 Group is one of the best-rated companies in the industry in Europe.

Operational and financial performance of the A1 Group

As reported results in the full year 2024 were largely impacted by non-operating effects, the following factors should be considered in the analysis of A1 Group's operating results:

• FY 2024: Positive one-off effects of EUR 13 mn in EBITDA, of which positive EUR 9 mn in other operating income, in Austria (EUR 5 mn) and Croatia (EUR 4 mn) and EUR 4 mn in total OPEX thereof EUR 1 mn in Austria (net EUR 5 mn mainly due
  to the reversal of legal provisions overcompensating a negative effect related to the former tower business) and Croatia (EUR 3 mn mainly due to positive effect in bad debts).
• FY 2023: Positive one-off effects of EUR 34 mn in EBITDA in Austria in total OPEX.
• FY 2024: Negative FX effects amounted to EUR 35 mn in total revenues, EUR 25 mn in service revenues, and EUR 15 mn in EBITDA (thereof positive EUR 39 mn in workforce costs and negative EUR 5 mn for legal cases).
• Restructuring charges in Austria amounted to EUR 89 mn (2023: EUR 85 mn).

In the mobile business, the number of subscribers increased by 7.4% to a total of 27.1 mn in the reporting year. The main driver of growth was almost exclusively the robust increase in the M2M business. Excluding M2M customers, the number of subscribers increased slightly (0.3%) thanks to the postpaid subscriber business, while the number of prepaid subscribers continued to decline. The rise in both mobile WiFi routers and subscribers in the mobile core business contributed growth in the number

of subscribers. Overall, the number of mobile subscribers increased in every country except Serbia. The number of postpaid customers increased in all the international markets, except Serbia, while it remained stable at the previous year's level in Austria.

GROUP MANAGEMENT REPORT

In the fixed-line business, the number of revenue generating units (RGUs) increased by 1.3% year-on-year. Growth in international markets, especially in Bulgaria and Belarus, more than compensated for the decline in Austria. RGUs in the other international markets also increased, while remaining stable in Croatia. In Austria, the continued strong demand for higher-bandwidth broadband was unable to offset the losses in broadband RGUs with lower bandwidths and voice RGUs.

Key figures

1. Wireline revenues also include solutions & connectivity revenues
2. Earnings Before Interest, Tax, Depreciation and Amortization
3. EBITDA after Leases: EBITDA - depreciation of lease assets according to IFRS 16 - interest expenses pursuant to IFRS 16
4. Operating income according to IFRS
5. Revenue Generating Unit
6. Average Revenue Per User incl. M2M Subscriber
7. Average Revenue Per Line

In the financial year 2024, A1 Group's total revenues increased by 3.1%, which can be attributed almost entirely to higher service revenues. These revenues increased in all markets except Slovenia. They were kept stable in Belarus despite negative currency effects. The largest contributions came from Bulgaria, Croatia, and Serbia. Equipment revenues remained stable year-on-year at Group level, but fell in Austria, Slovenia, and Serbia.

GROUP MANAGEMENT REPORT

Service revenues increased primarily as a result of higher retail mobile service revenues, higher revenues in the solutions and connectivity business, and an increase in revenues from retail fixed-line services. Overall, the results benefited to a large extent from value protection measures, a solid performance in mobile WiFi routers, and successful upselling. In the fixed-line business, A1 Group recorded solid demand for broadband and TV products in the international segments, while growth in the solutions and connectivity business was driven by strong demand for ICT services especially in Austria and Bulgaria. This enabled A1 Group to more than offset the losses resulting from the regulatory driven decline in interconnection revenues and the decline in the fixed-line voice business.

The increase in costs in the year under review was mainly due to higher workforce costs. These included positive one-off effects of around EUR 39 million in Austria in the previous year but were also the biggest operative cost driver.

The rest of the increase in core OPEX can be attributed to higher costs for network maintenance, product-related costs such as licenses and software for sale, and content costs. On the other hand, savings were made in energy and advertising costs. Restructuring charges increased by EUR 3 mn.

The equipment margin fell among other things as a result of higher subsidies compared to the previous year.

Overall, EBITDA rose by 5.1%. The highest contributions to EBITDA growth came from Bulgaria, Croatia, and Serbia, with all countries except Slovenia generating an increase in EBITDA on the operational level.

Depreciation increased significantly year-on-year, which can largely be attributed to the spin-off of the tower business in the previous year. This also led to a lower operating result (-5.4%). On a pro forma basis, the operating result was 1.8% higher. In 2024, A1 Group reported a financial result of EUR -98 mn (previous year: EUR -90 mn).

Income tax expenses decreased primarily as a result of deferred tax income and amounted to EUR 137 mn in financial year 2024 (previous year: EUR 175 mn).

The profit for the period fell slightly in the financial year 2024 to EUR 627 mn (2023: EUR 646 mn), but rose by 12.5% on a pro forma basis.

Net assets and financial position

As of December 31, 2024, the balance sheet total increased by 3% from EUR 9,557 million to EUR 9,854 million. Current assets increased mainly due to higher cash and cash equivalents and higher accounts receivable. Non-current assets remained stable as additions to property, plant and equipment were offset by a decline in right-of-use assets.

Current liabilities increased due to the rise in lease liabilities short-term related to the shift from lease liabilities long-term. This development also impacted the decline in total non-current liabilities. The increase in equity is due to the period result being higher than the dividend payments in July.