Telekom Austria AG · VIE:TKA
Telekom Austria — Q3 2013 Earnings Presentation
50 slides from Telekom Austria's earnings presentation, November 2013
Slide 1: Roadshow Presentation Q3 2013
Roadshow Presentation Q3 2013 1
Slide 2: Cautionary Statement
Cautionary Statement “This presentation contains forward-looking statements. These forward-looking statements are usually accompanied by words such as “believe”, “intend”, “anticipate”, “plan”, “expect” and similar expressions. Actual events may differ materially from those anticipated in these forw
Slide 3: The leading regional communications player providing convergent telecommunication services
The leading regional communications player providing convergent telecommunication services as of 30 September 2013 (in ‘000, in %) Austria* Slovenia Belarus Mobile: Mobile: Mobile: > Market share: 42.7% (Q3 2012: 38.2%) > Market share: 29.9% (Q3 2012 30.0%) > Market share: 42.9% (Q3 2012: 43.9%) > S
Slide 4: Telekom Austria Group Strategy
Telekom Austria Group Strategy Results for the First Nine Months and the Third Quarter 2013 4
Slide 5: Cash Use Policy
Cash Use Policy 1st Priority BBB (stable) Target Rating is Priority Current rating: Baa2 (stable) by Moody’s and BBB- (stable) by S&P 2nd Priority Financial Flexibility 3rd Priority Distribution Policy Dividend 2013: EUR 0.05* * * Intended proposal to the Annual General Meeting 2014 Results for the
Slide 6: Operational and Financial Highlights for the First Nine Months of 2013
Operational and Financial Highlights for the First Nine Months of 2013 Results for the First Nine Months and the Third Quarter 2013 6
Slide 7: 1-9M 2013: Operational Developments in Line With Expectations
1-9M 2013: Operational Developments in Line With Expectations > Group revenues down 2.6% year-on-year as growth in the Belarus and in the Additional Markets segment partly mitigates decline in Austria, Bulgaria and Croatia > While overall revenues still decline by 3.6% in Austria, high-value focus a
Slide 8: Key Financial Developments in the Third Quarter 2013
Key Financial Developments in the Third Quarter 2013 Results for the First Nine Months and the Third Quarter 2013 8
Slide 9: Q3 2013: OPEX Savings Partly Mitigate Revenue Decline
Q3 2013: OPEX Savings Partly Mitigate Revenue Decline (in EUR million) Q3 2013 Q3 2012 % change > Operational trends remain unchanged, but Revenues 1,036.0 1,093.7 -5.3% regulatory effects following Croatia’s EU EBITDA comparable* 357.9 410.4 -12.8% accession plus 6.5% BYR devaluation put EBITDA com
Slide 10: Additional Restructuring Efforts Contribute to Cost Savings
Additional Restructuring Efforts Contribute to Cost Savings Overview Restructuring Charges (in EUR million) Q1 2013 Q2 2013 Q3 2013 > Total restructuring charge of EUR 27.7 mn in Q3 2013 FTE effect 2.7 25.5 27.4 > 98 FTEs addressed in Q3 2013 after 68 FTEs in Q2 2013 servicekom 0.0 -20.6* 0.3 and 20
Slide 11: Price Pressure & Regulatory Effects Remain Biggest Revenue Burdens
Price Pressure & Regulatory Effects Remain Biggest Revenue Burdens; Softer BYR Adds to Strain Quarterly Revenue Development (in EUR million) -5.3% 1,093.7 -39.4 -14.0 -16.2 6.5 1,036.0 0.2 5.3 Revenues Austria Bulgaria Croatia Belarus Additional Others* Revenues Q3 2012 Markets Q3 2013 Segment Austr
Slide 12: EUR 37.4 mn Gross Cost Savings Help Mitigate Revenue Pressure on EBITDA Comparable
EUR 37.4 mn Gross Cost Savings Help Mitigate Revenue Pressure on EBITDA Comparable Quarterly EBITDA Comparable Development (in EUR million) -12.8% 410.4 -35.4 -10.1 -18.1 7.1 0.3 357.9 3.8 EBITDA comp. Austria Bulgaria Croatia Belarus Additional Others* EBITDA comp. Q3 2012 Markets Q3 2013 Segment A
Slide 13: Decline in Gross Cash Flow Partly Offset by Lower Working Capital Needs
Decline in Gross Cash Flow Partly Offset by Lower Working Capital Needs (in EUR million) Q3 2013 Q3 2012 % change 1-9 M 2013 1-9 M 2012 % change Gross cash flow 313.0 377.1 -17.0% 909.5 1,008.1 -9.8% Change in working capital -17.5 -55.0 n.m. -120.0 -210.7 n.m. Ordinary capital expenditures -167.6 -
Slide 14: Focus Points
Focus Points Results for the First Nine Months and the Third Quarter 2013 14
Slide 15: Significant Increase in Spectrum Holdings After the Multiband Auction
Telekom Austria Group Sees Significant Increase in Spectrum Holdings After the Multiband Auction Before After Band abs. abs. in % of total 800 MHz - 2 x 20 67% 2 x 20.2 Auctioned 900 MHz 2 x 15 43% (until 2015/2017) 2 x 15 1800 MHz 2 x 35 46% (until 2015) 2100 MHz 2 x 19.6 2 x 19.6 33% Not Auctioned
Slide 16: New 800-MHz Spectrum - Nationwide LTE Service
New 800-MHz Spectrum - Nationwide LTE Service and Potential for Advanced Technologies in Future Next steps: > Fulfil 800-MHz coverage obligations, especially in rural areas: > 180 communities in 1.5 years, 360 communities in 3 years > Complement existing LTE coverage in urban areas by utilising new
Slide 17: Leadership in All Mobile Technologies Across Urban and Rural Areas
Leadership in All Mobile Technologies Across Urban and Rural Areas Spectrum portfolio and usage after multiband auction Technology in use/allowed Possibilities for the future Intended spectrum usage New high-speed services, especially 4G in rural areas and inside buildings Continue existing voice tr
Slide 18: New YESSS! Tariffs – 'More for More' Strategy in Austria
New YESSS! Tariffs – ‘More for More’ Strategy in Austria Fully Implemented Unlimited voice and SMS Data monetarisation Go! April 2013 ‘More for 50% more content More’ Strategy 50% more content January 2013 September 2013 All Austrian brands of Telekom Austria have now launched new tariffs wi
Slide 19: Outlook for the Full Year 2013
Outlook for the Full Year 2013 Results for the First Nine Months and the Third Quarter 2013 19
Slide 20: Telekom Austria Group Outlook for Full Year 2013 Results Unchanged
Telekom Austria Group Outlook for Full Year 2013 Results Unchanged Financial Outlook for 2013 On a constant currency basis for all markets as well as before any effects of hyperinflation accounting for the Belarusian segment As of 14 November 2013 Previous Guidance Revenues approx. EUR 4.1 bn approx
Slide 21: Appendix 1
Appendix 1 Results for the First Nine Months and the Third Quarter 2013 21
Slide 22: Telekom Austria Group – Revenue Breakdown
Telekom Austria Group – Revenue Breakdown Revenue Split - Segment Austria (in EUR million) Q3 2013 Q3 2012 % change Monthly fee and traffic 459.6 480.9 -4.4% Data and ICT solutions 54.6 49.1 11.3% Wholesale (incl. Roaming) 28.9 42.3 -31.7% Interconnection 65.5 77.6 -15.6% Equipment 33.8 31.0 9.0% Ot
Slide 23: Telekom Austria Group – Expense Breakdown
Telekom Austria Group – Expense Breakdown Operating Expense - Segment Austria (in EUR million) Q3 2013 Q3 2012 % change Material expense 73.4 64.3 14.3% Employee costs 153.9 157.0 -2.0% Interconnection 59.4 70.3 -15.5% Maintenance and repairs 28.0 28.1 -0.1% Services received 27.3 34.8 -21.5% Other
Slide 24: Telekom Austria Group – Headcount Development
Telekom Austria Group – Headcount Development FTE (Average period) Q3 2013 Q3 2012 % change Austria 9,190 9,287 -1.0% International 6,929 7,276 -4.8% Telekom Austria Group* 16,274 16,724 -2.7% FTE (End of period) Q3 2013 Q3 2012 % change Austria 9,136 9,287 -1.6% International 6,948 7,213 -3.7% Tele
Slide 25: Telekom Austria Group – Capital Expenditures Split
Telekom Austria Group – Capital Expenditures Split Capital Expenditures (in EUR million) Q3 2013 Q3 2012 % change Segment Austria 107.4 106.6 0.8% Segment Bulgaria 10.4 9.6 8.2% Segment Croatia 12.0 10.7 11.4% Segment Belarus 6.1 5.8 6.2% Segment Additional Markets 31.7 25.7 23.3% Slovenia 5.4 3.5 5
Slide 26: Telekom Austria Group – Net Debt
Telekom Austria Group – Net Debt Net debt (in EUR million) 30 September 2013 31 December 2012 % change Long-term debt 3,080.5 2,832.0 8.8% Short-term borrowings 296.2 1,078.6 -72.5% Cash and cash equivalents, short-term and long term investments, finance lease receivables -667.9 -715.3 n.m. Cash and
Slide 27: Telekom Austria Group – Debt Maturity Profile
Telekom Austria Group – Debt Maturity Profile Debt Maturity Profile (Including Accrued Interest)* (in EUR million) 823.8 740.2 566.0 268.8 297.5 243.1 220.7 138.5 62.7 15.4 0.0 2013 2014 2015 2016 2017 2018* 2019 2020 2021 2022 2023 > EUR 3,376.7 mn of short- and long-term borrowings as of 30 Septem
Slide 28: Telekom Austria Group – Debt Profile
Telekom Austria Group – Debt Profile Overview Debt Instruments Fixed-Floating Mix 12.0% 30.8% 69.2% 88.0% Bonds Loans Floating Fixed Lines of Credit Ratings > Undrawn committed credit lines > S&P: BBB- (stable outlook) amounting to EUR 1,060.0 mn > Moody’s: Baa2 (stable outlook) > Average term to ma
Slide 29: Segment Austria - Fixed Line Key Performance Indicators
Segment Austria - Fixed Line Key Performance Indicators ARPL & ARPL-Relevant Revenues Total Fixed Access Lines & Net Adds (in EUR, in EUR million) (in ‘000) 40 40 39 39 255 38 38 37 37 36 36 35 35 32.9 245 34 34 32.2 32.2 33 33 32 30.8 30.9 2,285 2,282 2,281 2,274 2,274 32 31 2,300 12 235 31 30 30 2
Slide 30: Segment Austria – Mobile Key Performance Indicators
Segment Austria* – Mobile Key Performance Indicators ARPU & ARPU-Relevant Revenues* MoU per Subscriber* (in EUR) (in min) 340 18.9 18.2 20 158.2 320 16.1 16.3 16.3 150.8 300 15 143.8 280 141.3 138.4 260 290.8 280.3 284.1 283.8 282.3 10 240 05 220 200 00 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q3 12 Q4 12 Q1 1
Slide 31: Segment Austria – Broadband Market Split
Segment Austria – Broadband Market Split Market Share Total Broadband* Market Share Mobile Broadband* (in %) (in %) 8.1% 7.5% Tele.ring 12.5% 13.4% T-mobile 25.3% 29.9% Mobile Broadband 40.6% 31.6% Other Operations Hutchison Unbundled Lines 18.7% 5.7% 5.1% Orange incl. YESSS! 15.4% Cable 35.4% 38.5%
Slide 32: Segment Austria – Voice Market Split
Segment Austria – Voice Market Split Market Share Total Minutes Market Share Fixed-Line Minutes (in %) (in %) 13.5% 13.5% 4.5% 4.0% 20.9% 21.5% 85.1% 85.6% 61.1% 61.0% 5.6% 5.4% 9.3% 9.0% Q3 12 Q3 13 Q3 12 Q3 13 Fixed Line Telekom Austria Fixed Line Others Mobile A1 Tele2/UTA UPC Others Results for
Slide 33: Segment Bulgaria – Fixed-Line Key Performance Indicators
Segment Bulgaria – Fixed-Line Key Performance Indicators ARPL & ARPL-Relevant Revenues Total Fixed Access Lines (in EUR, in EUR million) (in ‘000) 17 17 08 16 16 15 15 08 14 14 07 13 13 11.0 11.5 11.6 11.1 10.9 12 12 07 162.1 162.0 11 11 156.4 158.6 10 10 5.6 06 09 09 5.4 08 08 5.2 5.2 06 07 07 06 0
Slide 34: Segment Bulgaria – Mobile Key Performance Indicators
Segment Bulgaria – Mobile Key Performance Indicators ARPU MoU per Subscriber (in EUR) (in min) 5.7 100.3 98.5 5.4 97.2 5.3 5.3 96.6 5.0 95.4 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Mobile Broadband Customers* Mobile Penetration (in ‘000) (in %) 163.9 174.1 155.1 159.9% 137.8 147.
Slide 35: Segment Croatia – Fixed-Line Key Performance Indicators
Segment Croatia – Fixed-Line Key Performance Indicators ARPL & ARPL-Relevant Revenues Total Fixed Access Lines (in EUR, in EUR million) (in ‘000) 30 29 16 28 27 23.8 24.1 15 26 25 23.4 22.7 22.6 24 23 14 22 21 20 12.4 13 179.3 188.8 19 18 17 11.6 11.7 11.9 180 12 158.5 163.0 172.1 16 15 14 11.1 160
Slide 36: Segment Croatia – Mobile Key Performance Indicators
Segment Croatia – Mobile Key Performance Indicators ARPU MoU per Subscriber (in EUR) (in min) 12.8 130.6 118.4 129.4 108.5 110.8 12.1 12.0 11.7 11.4 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Mobile Broadband Customers* Mobile Penetration (in ‘000) (in %) 123.7% 192.2 199.8 121.0% 1
Slide 37: Segment Belarus – Mobile Key Performance Indicators
Segment Belarus – Mobile Key Performance Indicators ARPU MoU per Subscriber (in EUR) (in min) 4.9 4.9 198.5 197.0 4.9 4.8 191.6 193.0 4.7 182.4 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Mobile Broadband Customers* Mobile Penetration (in ‘000) (in %) 120.7% 235.4 116.6% 116.8% 117.1
Slide 38: Segment Additional Markets – Mobile Key Performance Indicators
Segment Additional Markets – Mobile Key Performance Indicators Slovenia - ARPU Slovenia - MoU per Subscriber (in EUR) (in min) 23.0 184.5 184.7 185.8 21.7 176.1 21.4 20.8 167.9 20.3 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Republic of Serbia - ARPU Republic of Macedonia - ARPU (in
Slide 39: Appendix 2 – Regulatory Topics
Appendix 2 – Regulatory Topics Results for the First Nine Months and the Third Quarter 2013 39
Slide 40: Negative Impact from Regulation in 2013 - 2016
Negative Impact from Regulation in 2013 - 2016 Telekom Austria Group Roaming Telekom Austria Group Revenues Interconnection Revenues (in EUR million) (in EUR million) Approx. EUR –130 mn* Approx. EUR –160 mn** 2012E 2016E 2012E 2016E Negative regulatory impact for 2013 is included in outlook for 201
Slide 41: Glide Path of Mobile Termination Rates
Glide Path of Mobile Termination Rates EU Pressure on National Regulatory Authorities to Further Decrease Rates (in EURc) Jul Jan Jul Nov Jan Jul Sep Jan Jul 2012 2013 2013 2013 2014 2014 2014 2015 2015 Austria 2.01 2.01 2.01 0.8049 0.8049 0.8049 0.8049 0.8049 0.8049 Bulgaria 2.70 2.35 1.18 1.18 1.0
Slide 42: EU Roaming Price Regulation
EU Roaming Price Regulation RETAIL (in EURc) Before July 2012 July 2013 July 2014 Data (per MB) none 70 45 20 Voice-calls made (per minute) 35 29 24 19 Voice-calls received (per minute) 11 8 7 5 SMS (per SMS) 11 9 8 6 WHOLESALE (in EURc) Before July 2012 July 2013 July 2014 Data (per MB) 50 25 15 5
Slide 43: Appendix 3 – Personnel Restructuring in Austria
Appendix 3 – Personnel Restructuring in Austria Results for the First Nine Months and the Third Quarter 2013 43
Slide 44: Full Year Overview – Restructuring Charges and Provision vs. FTE
Full Year Overview – Restructuring Charges and Provision vs. FTE Overview Restructuring Charges FTEs Addressed (in EUR million) Q1 Q2 Q3 Q1 Q2 Q3 2008 2009 2010 2011 2012 2013 2013 2013 2008 2009 2010 2011 2012 2013 2013 2013 FTE effect 632.1 -10.0 76.9 274.3 49.9 2.7 25.5 27.4 Transfer to 0 0 158 1
Slide 45: Overview – Cash-Flow Impact of Restructuring
Overview – Cash-Flow Impact of Restructuring Overview Cash Flow Impact* (in EUR million) Total cash-flow impact > Total cash-flow impact comprises old 2008 14.7 and new programmes 2009 62.0 > Total expected cash-flow impact for 2010 57.9 2013 of approximately EUR 100 mn 2011 93.4 2012 104.0 Q1 2013
Slide 46: Appendix 4 – Spectrum Portfolio
Appendix 4 – Spectrum Portfolio Results for the First Nine Months and the Third Quarter 2013 46
Slide 47: Spectrum Portfolio After Austrian Multiband Auction
Spectrum Portfolio After Austrian Multiband Auction * FDD UL/DL = Frequency Division Duplex Uplink/Downlink, TDD = Time Division Duplex ** Concrete position of spectrum within band is still to be assigned, Source: TKK, RTR Results for the First Nine Months and the Third Quarter 2013 47
Slide 48: Appendix 5 – Corporate Sustainability
Appendix 5 – Corporate Sustainability Results for the First Nine Months and the Third Quarter 2013 48
Slide 49: Alignment with Core Business and Materiality Analysis Defines Sustainability Strategy
Alignment with Core Business and Materiality Analysis Defines Sustainability Strategy Providing Sustainable Creating Equal Living Green Empowering People Products Opportunities Develop Products in a Manage Resources in an Systematically Promote Creating Equal Future-Oriented and Efficient and Sustai
Slide 50: Key Figures
Key Figures Selected Group-wide KPIs Ratings Products: Providing Responsible Products 2012 Customer contacts in customer service ('000) 45.569 E-billing share (in %) 29 › Classification: C › Classification: C+ Collected old mobile phones (in pcs) 73.877 (74 points out of 100) Environment: Living Gre