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A1 Telekom Austria's core profit gains on new fixed-line services

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VIENNA (Reuters) – A1 Telekom Austria reported a 1.9 percent increase in its first-quarter core profit on Monday, thanks to higher income from its fixed-line services, entertainment offers and mobile WiFi routers.

Earnings before interest, tax, depreciation and amortisation (EBITDA), adjusted for restructuring costs, came in at 395 million euros (341.5 million pounds) after 388 million euros in the same period in the previous year.

The group, which is controlled by Mexico’s America Movil and the Austrian state, said in its home market Austria, EBITDA fell 11.4 percent, largely due to planned provisions of 21 million euros for social plans for staff who have worked at the company since it was fully state owned.

A1 Group has previously said that it plans to reduce the number of these staff, who have special employment contracts, and spend 80 million euros annually over the next few years to support them.

The group said margins were lower on its equipment and it had higher workforce costs in Austria, where it generates around 60 percent of group revenue.

A1 Group also operates in Bulgaria, Belarus, Croatia, Slovenia, Serbia and Macedonia.

Group revenue rose 1.5 percent to 1.09 billion euros in the three months to end March, helped by new TV and cloud service offers for fixed-line customers and new mobile contract subscribers in nearly all its markets. Only in Bulgaria, the number of customers with a mobile contract fell due to a cleaning of inactive SIM-cards, A1 Group said.

Capital expenditure rose by 8.6 percent to 158 million euros as it invested in the fibre roll-out and in IT customer projects in Austria and bought a 2.1 Gigahertz spectrum in Croatia.

A1 Group also agreed to buy spectrum in the 3.5 Ghz band in Austria’s first 5G auction and acquired 2.1 GHz spectrum in Belarus in the first quarter. But the cost of these purchases were not included in its first-quarter results as approvals were received in April, it said.

(Reporting by Kirsti Knolle. Editing by Jane Merriman)

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