Some of the decline was compensated by higher equipment revenues and the strong demand for mobile Wi-Fi routers.
In Croatia, there were positive one-off effects of EUR 6.5 mn in Q3 2019 and of EUR 2.6 mn in Q3
2020 in costs of service, both stemming from the reimbursement of frequency fee overpayments in connection with frequency fee cuts.
In Q3 2020, economic activity in Croatia improved compared to the previous quarter driven by lower Covid-19 case numbers. The Croatian government had decided to open borders of the country as of July, which resulted in better than initially estimated results in the tourist sector. However, as the number of Covid-19 cases started to grow rapidly in the middle of August, foreign governments announced travel warnings, which led to an earlier than expected end of the tourist season. Being heavily dependent on tourism, the Croatian economy is one of the countries hardest hit by Covid-19.
The number of Covid-19 cases has fluctuated since the end of September. Wearing protective masks is mandatory throughout the country in public transportation, medical facilities, shops, malls, salons, and businesses where face-to-face contact is required (e.g. banks and post offices). The number of people in social gatherings has been limited. Despite the currently worsening trend in the country, the situation is under control and the government changes response measures adequately. No lockdown measures are expected at this point. The medical system is prepared to respond to the situation and additional health facilities are prepared.
Competition in Croatia focused on convergent offers with high data allowances and TV content. In the mobile business, demand for mobile WiFi routers continued to be strong. During the summer, all operators launched special mobile data offers through self-care apps. On August 24, 2020, A1 launched a new portfolio for mobile and fixed-line customers with increased Internet speeds, a new TV proposition as well as new mobile tariffs with unlimited voice, SMS, and data. That portfolio was well received by customers.
The Croatian Kuna depreciated by 1.7% (period average) against the Euro in Q3 2020, which led to a negative FX impact of EUR 1.8 mn on total revenues and EUR 0.7 mn on EBITDA.
In Q3 2020, total revenues in the Croatian segment declined by 2.7% driven by roaming losses due to less travel. It was possible to compensate some of the decline by higher equipment revenues and the strong demand for mobile WiFi routers.
The fixed-line business benefited from the price increase in September 2019. There were positive one-off effects of EUR 6.5 mn in Q3 2019 and of EUR 2.6 mn in Q3 2020, both stemming from the reimbursement of frequency fee overpayments in connection with frequency fee cuts.
Costs and expenses excluding these one-off effects were lower year-on-year, as reduced sales and marketing expenses were more than able to compensate for higher bad debts. EBITDA excluding one-off and FX effects decreased by 1.5%
A1 Group revenues decreased 0.9% due to roaming losses and negative currency effects, which were partially offset by higher device sales. Without these currency effects, mainly related to Belarus, sales increased by 1.7%.
Mobile service revenues declined by 3.8% on a Group level, solely driven by the above-mentioned roaming losses and negative FX effects.
Fixed-line service revenues were stable (0.0%) as the growth in Bulgaria and Slovenia was able to compensate for the decline in Austria and other CEE markets. a1 hrvatska
Equipment revenues rose by 7.2%, mainly driven by Austria and Bulgaria.
Mobile contract subscriber numbers rose by 4.1%, with growth in almost all markets.
