Magyar Telekom Telecommunications Plc · BET:MTELEKOM

Magyar Telekom Telecommunications — Magyar Telekom — FY2015 Earnings Presentation

34 slides from Magyar Telekom Telecommunications's earnings presentation, March 2016

  1. Slide 1: Magyar Telekom Group Investor Presentation

    MAGYAR TELEKOM GROUP INVESTOR PRESENTATION MARCH, 2016

  2. Slide 2: Strategy and Market Position

    STRATEGY AND MARKET POSITION

  3. Slide 3: Overview – Magyar Telekom at a Glance

    OVERVIEW – MAGYAR TELEKOM AT A GLANCE International presence Hungary Revenue (FY2015) Czech Republic 18% Slovakia 8% Austria Moldova 4% Hungary Hungary 69% Slovenia Croatia Croatia Romania Romania BiH EBITDA (FY2015) Serbia Serbia 7% Montenegro Kosovo Bulgaria Bulgaria Macedonia 11% Macedonia Albani

  4. Slide 4: Market Position in Hungary

    MARKET POSITION IN HUNGARY Total mobile market* Fixed voice market** Subscribers Vodafone Subscribers Other 12,000,000 3,500,000 -0.1% Telenor Invitel 10,000,000 22.8% 22.7% MT 3,000,000 5.8% 5.8% 3.2% DIGI 12.7% 12.6% 12.8% 2,500,000 UPC 8,000,000 9.5% 10.0% 11.0% 30.9% 30.5% MT 2,000,000 14.3% 15.

  5. Slide 5: Market Leader in IT Services in Hungary

    MARKET LEADER IN IT SERVICES IN HUNGARY DUE TO WIDE RANGE OF IT SOLUTIONS BOTH IN IT PROJECTS AND IT OUTSOURCING Total SI/IT market Revenue based SYSTEM INTEGRATION IT INFRASTRUCTURE SI & IT market shares* Package Custom System IT App. OS & Infra. OS & Infra. proj. Hosting Cloud (2015) application a

  6. Slide 6: Strategy Overview

    STRATEGY OVERVIEW Telekom 2017 strategy and EoY 2015 targets, results 1  Increase the awareness of the Telekom brand to the 52% 1 LEADING INTEGRATED QUALITY BRAND level of our previous brands BEST CUSTOMER EXPERIENCE 2  Cut billable / sellable products by 50% 51 % 2 EFFORTLESS PRODUCTS & SIMPLIFIE

  7. Slide 7: Strategic Highlights - Full Year

    STRATEGIC HIGHLIGHTS - FULL YEAR  Increased revenue, EBITDA and Free Cashflow TURNAROUND  HUF 15 dividend per share GROUP  Stable market positions OPERATION  Sustained focus on cost efficiency through process/product simplification and online  Underlying growth in mobile, fixed line BB and TV 

  8. Slide 8: Turnaround Story of Magyar Telekom

    TURNAROUND STORY OF MAGYAR TELEKOM Major financial and strategic milestones Integrated Telco Multiplay ICT provider Diversified service provider Digital service company and SI/IT operator 2007-2009 2010 2011 2012 2013 2014 2015 2016-2018 Continuous decline Change in strategy Execution of Topline rev

  9. Slide 9: Telekom as the Leading Operator and Brand in Hungary

    TELEKOM AS THE LEADEING OPERATOR AND BRAND IN HUNGARY Our vision Our mission OUR MISSION IS TO MAKE THE DIGITAL FIRST NOW FIRST FOREVER WORLD MORE UNDERSTANDABLE AND ACCESSIBLE FOR EVERYONE. WE ENABLE PEOPLE TO HAVE A MORE EFFORTLESS, COLOURFUL AND SUCCESSFUL LIFE. Brand awareness* and brand values

  10. Slide 10: Hungarian Economic Environment

    HUNGARIAN ECONOMIC ENVIRONMENT Growth strucutre Domestic demand 8%  Domestic demand improved as economy 6% recovers 3,6% 4% 3,0% 2,5% 3,0%  Governmental measures support consumer 1,8% 2% 1,5% spending 0%  Investment levels show strong volatility due to EU fund cycles -2% -1,5%  MT is expected to

  11. Slide 11: Hungarian Mobile Spectrum Situation

    HUNGARIAN MOBILE SPECTRUM SITUATION Current spectrum situation FDD (2x1 MHz) BAND Magyar Telekom 800 MHz 10 10 10 Telenor Vodafone Digi 900 MHz 2 10 1 10 2 10 Available 1800 MHz 15 5 5 5 15 30 2100 MHz 15 15 15 15 2600 MHz 30 20 20 11

  12. Slide 12: Full Year Results and Guidance

    FULL YEAR RESULTS AND GUIDANCE

  13. Slide 13: Financial Highlights and 2015 Targets

    FINANCIAL HIGHLIGHTS AND 2015 TARGETS FY 2015 RESULTS 2015 TARGETS roughly stable REVENUE +4.8% vs. 2014  Group wide mobile data growth due to 4G push offset by Hungarian MTR cuts  Revenue growth in fixed line   Increased SI/IT revenues across all segments  Higher energy sales in Hungarian B2B

  14. Slide 14: 2015 Group Results – Revenues and EBITDA by Segments

    2015 GROUP RESULTS – REVENUES AND EBITDA BY SEGMENTS Group segmental revenues Group segmental EBITDA HUF bn +4.8% HUF bn +3.4% +10.4 +0.2 -2.6 660 +14.6 -2.2 +3.4 656.3 192 -1.8 655 190 -1.7 650 -0.2 188 187.3 645 +15.8 640 186 635 184 630 626.4 182 181.2 625 180 0 0 2014 T-Hungary T-Systems Maced.

  15. Slide 15: 2015 Group Results – CAPEX and FCF Breakdown

    2015 GROUP RESULTS – CAPEX AND FCF BREAKDOWN Group CAPEX Group FCF HUF bn HUF bn +40.5 -74.5 +58.7 -20.5 200 45 +18.1 -13.7 184.4 -58.7 180 40 35 160 -2.1 30 26.7 140 -38.9 25 120 +20.5 +2.6 109.8 100 0 80 -5 -10 0 -15 -13.8 2014 HU spectrum HU annual HU fixed Other 2015 licenses frequency fee netwo

  16. Slide 16: Dividend Policy

    DIVIDEND POLICY Dividend payment and net debt ratio developments Highlights Net debt ratio* Dividend per share (HUF) 50% 70  Aiming to maintain net debt ratio (net 45.7% debt/total capital) target of 30% - 40% 43.8% 42.9% 60  Board of Directors proposed HUF 15 40% 34.1% 34.3% dividend payment on 2

  17. Slide 17: Public Guidance

    PUBLIC GUIDANCE 2015 RESULTS 2016 TARGETS 2017 TARGETS REVENUE HUF 656bn (+4.8%) HUF 580 - 590bn HUF 585 - 595bn EBITDA HUF 187bn (+3.4%) HUF 187 - 191bn HUF 189 - 193bn CAPEX* HUF 110bn ca. 10% yoy decline ca. 10% yoy decline FCF HUF 27bn Surpassing HUF 50bn** DIVIDEND HUF 15 per share Target HUF 2

  18. Slide 18: Q4 2015 Results

    Q4 2015 RESULTS

  19. Slide 19: Financial Summary

    FINANCIAL SUMMARY FY15 vs. FY14 4Q15 vs. 4Q14 Revenue EBITDA Revenue EBITDA Group +5% +3% +11% +4% T-HU +3% +8% +3% +10% T-Systems +13% +2% +57% +2% Macedonia -4% -11% -3% -15% Montenegro -6% -14% -9% -14% 19

  20. Slide 20: Group Segmental Revenue and EBITDA

    GROUP SEGMENTAL REVENUE AND EBITDA Group segmental revenues Group segmental EBITDA HUF bn HUF bn +4.5% +10.7% +3.0 +0.1 -0.9 190 45.0 +17.0 -0.4 -0.7 -1.4 185 182.9 44.5 -0.4 44.0 0.0 43.7 180 43.5 175 43.0 170 +3.1 42.5 165.3 41.9 165 42.0 0 0.0 4Q 2014 T-HU T-Systems Maced. Monten. Elim. 4Q 2015 4

  21. Slide 21: T-Hungary

    T-HUNGARY T-Hungary revenue* T-Hungary EBITDA HUF bn +2.5% HUF bn +10.0% 125 +0.7 124.8 35 +0.1 +0.4 -1.1 +3.9 +3.8 124 34 -0.1 33.3 123 121.7 -3.9 33 122 121 32 +1.0 120 31 +1.1 -0.4 +1.2 30.2 119 -0.6 30 118 1 0 0 4Q Mobile Mobile Mobile Fixed Fixed TV Fixed SI/IT Energy 4Q 4Q 2014 Gross Special t

  22. Slide 22: T-Hungary – Fixed Broadband and TV

    T-HUNGARY – FIXED BROADBAND AND TV Fixed BB RPC Pay TV RPC ‘000 +6.9% ‘000 +3.8% 961 973 985 950 960 1,000 922 940 1,000 925 934 939 8% 7% 6% <10Mbps Sat 8% 8% 800 10Mbps -30Mbps 800 33% 33% 33% 32% 32% Cable >30Mbps IPTV 600 68% 68% 67% 600 17% 16% 69% 69% 19% 19% 18% +53 400 400 +61 48% 49% 50% 50

  23. Slide 23: T-Hungary – Fixed Voice, Multiplay and Energy

    T-HUNGARY – FIXED VOICE, MULTIPLAY AND ENERGY Fixed voice RPC Multiplay development among residential customers ‘000 ‘000 1Play -1.4% 2Play 1,500 1,418 1,408 1,408 1,404 1,398 2,000 -1.3% 3Play PSTN 26% 1,538 1,546 1,529 1,521 1,518 Annual churn rate 36% 31% IP based* 48% 44% 1,500 1,000 38% 38% 37%

  24. Slide 24: T-Hungary – Mobile

    T-HUNGARY – MOBILE Mobile RPC Mobile ARPU (HUF) ‘000 HUF -0.3% 4,964 4,948 4,938 4,935 4,950 5,000 Prepaid 4Q 2014 3,546 Postpaid Blended -4.6% 4Q 2015 4,000 3,383 50.0% 49.6% 49.0% 48.9% 48.5% 3,000 1,295 +66 Prepaid -14.2% 1,111 2,000 50.0% 50.4% 51.0% 51.1% 51.5% 5,824 1,000 Postpaid -5.1% 5,529

  25. Slide 25: T-Systems

    T-SYSTEMS Financials SI/IT revenue and margin Revenues (HUF bn) EBITDA (HUF bn) HUF bn +33.1% +57.1% +2.2% 50 +18.0 46.9 4.5 +100.6% +1.2 -1.2 45 40 35.9 4.0 Revenue 40 3.5 30 Gross margin 35 29.8 -0.2 -0.8 3.0 3.1 17.9 30 3.0 20 25 8.2 10 6.2 0 0.0 0 4Q Mobile Fixed SI/IT 4Q 4Q Gross Other 4Q 4Q 20

  26. Slide 26: Macedonia

    MACEDONIA Financials Mobile KPIs Revenues (HUF bn) EBITDA (HUF bn) Subscribers -3.0% -14.7% -2.1% 2,500,000 One (T. Slovenia)* 14.2 -0.2 14.2 6.0 5.8 -0.7 2,000,000 24.0% 25.5% 24.7% VIP (T. Austria) 14.0 -0.3 1,500,000 T-Mobile 5.5 28.5% 27.8% 28.0% 13.8 +0.1 13.8 -0.1 1,000,000 -17,954 5.0 5.0 500

  27. Slide 27: Montenegro

    MONTENEGRO Financials Mobile KPIs Revenues (HUF bn) EBITDA (HUF bn) Subscribers -14.5% 1,200,000 +0.7% -8.7% Telenor 8.0 2.8 2.7 -0.5 1,000,000 7.8 -0.4 m:tel (T. Serbia) 2.6 800,000 38.2% 37.7% 38.8% T-Mobile 7.5 -0.3 600,000 2.4 +0.1 2.3 26.3% 28.1% 28.5% 0.0 400,000 -16,019 7.1 2.2 200,000 35.5%

  28. Slide 28: Appendix

    APPENDIX

  29. Slide 29: Magyar Telekom – Consolidated Income Statement

    MAGYAR TELEKOM – CONSOLIDATED INCOME STATEMENT HUF million Q4 2014 Q4 2015 Change HUF million Q4 2014 Q4 2015 Change Mobile revenues 84 622 81 117 -4.1% Fixed lineMobile revenues revenues 51622 84 846 56 036 81 117 -4.1% 8.1% System Integration/Information Fixed line revenues Technology revenues 168

  30. Slide 30: Magyar Telekom – Consolidated Balance Sheet

    MAGYAR TELEKOM – CONSOLIDATED BALANCE SHEET HUF million Dec 31, 2014 Dec 31, 2015 Change Current assets 197 897 210 178 6.2% Cash and cash equivalents 14 625 17 558 20.1% Other current financial assets 23 690 11 052 -53.3% Non current assets 992 879 996 846 0.4% Property, plant and equipment - net 4

  31. Slide 31: Magyar Telekom – Consolidated Cash Flow Statement

    MAGYAR TELEKOM – CONSOLIDATED CASH FLOW STATEMENT HUF million Dec 31, 2014 Dec 31, 2015 Change Net cash generated from operating activities 145 495 156 298 7.4% Investments in tangible and intangible assets (184 364) (109 847) 40.4% Adjustments to cash purchases 42 211 12 992 -69.2% Purchase of subs

  32. Slide 32: 2015 Group Results – Revenues by Product Lines

    2015 GROUP RESULTS – REVENUES BY PRODUCT LINES Group revenues HUF bn 690 +4.8% +7.0 -11.8 +21.8 660 656.3 +6.4 +3.4 +3.4 630 626.4 -1.6 -4.7 +6.0 0 2014 Mobile Fixed Mobile data Fixed BB and TV Equipment SI/IT Energy Wholesale 2015 voice retail voice retail (incl. SMS) data retail and other  Retail

  33. Slide 33: 2015 Group Results – EBITDA

    2015 GROUP RESULTS – EBITDA Group EBITDA HUF bn 190 +3.4% +6.9 -0.4 -1.0 +0.6 187.3 185 181.2 0 2014 Direct margin Employee- Net other Opex Taxes* 2015 related expenses  Significant improvement in direct margin driven by higher revenues (incl. GTS acquisition), lower interconnect costs (due to MTR

  34. Slide 34: For further questions please contact the IR department

    For further questions please contact the IR department: Investor Relations Phone: +36 1 458-0424 Fax : +36 1 458-0443 e-mail: investor.relations@telekom.hu DISCLAIMER This investor presentation contains forward-looking statements. Statements that are not historical facts, including statements about

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