Telekom Austria Ag · VIE:TKA

Telekom Austria — Q2 2009 Earnings Presentation

54 slides from Telekom Austria's earnings presentation, Aug 19, 2009

  1. Slide 1: Telekom Austria Group Results for the Second Quarter 2009

    Telekom Austria Group Results for the Second Quarter 2009 Vienna, August 19, 2009

  2. Slide 2: Cautionary Statement

    Cautionary Statement “This presentation contains certain forward-looking statements. Actual results may differ materially from those projected or implied in such forward-looking statements. Forward-looking information involves risks and uncertainties that could significantly affect expected results.

  3. Slide 3: Agenda

    Agenda ƒ Key Developments ƒ Fixed Net ƒ Mobile Communication ƒ Financial Overview ƒ Outlook Results for the Second Quarter 2009 3

  4. Slide 4: Key Developments

    Key Developments Results for the Second Quarter 2009 4

  5. Slide 5: Telekom Austria Group – Second Quarter 2009

    Telekom Austria Group – Second Quarter 2009 ƒ Fixed Net line loss cut by 2/3 in 2Q 09 and double-digit subscriber growth in Mobile Communication ƒ Revenues decline by 6.6% to EUR 1.2 bn also driven by disposal of subsidiaries and FX translation for a total amount of EUR 24.7 mn ƒ EBITDA decreases by

  6. Slide 6: Second Quarter 2009 - EBITDA Reflects Sequential Improvement Compared to 1Q 09

    Second Quarter 2009 - EBITDA Reflects Sequential Improvement Compared to 1Q 09 Revenues FX translation effect EBITDA FX translation effect (EUR million) (EUR million) 4.8 15.3 1,191.7 -6.6% 1,276.2 450.0 -3.9% 468.5 2Q 09 2Q 08 2Q 09 2Q 08 Operating Free Cash Flow* Earnings per Share (EUR million) (

  7. Slide 7: Share Buyback Envisaged for 2010, Subject to Stable Conditions

    Share Buyback Envisaged for 2010, Subject to Stable Conditions ƒ Potential for share buyback evaluated as announced in January 09 ƒ Following dividend distribution net debt amounts to 2.1x EBITDA at the end of 2Q 09 ƒ Net debt expected to fall to ~1.9x EBITDA at year end 09 in line with targeted deb

  8. Slide 8: Fixed Net

    Fixed Net Results for the Second Quarter 2009 8

  9. Slide 9: Fixed Net Revenue Decline Reflects Market Trends, Margin Benefits From Cost Reduction

    Fixed Net Revenue Decline Reflects Market Trends, Margin Benefits From Cost Reduction Revenues (EUR million) ƒ Revenues decrease by EUR 65 mn, EUR 9.4 mn of which due to disposal of -12.5% 521.9 subsidiaries 456.9 ƒ Underlying revenue decline primarily driven by lower call volumes and access line ba

  10. Slide 10: Access Line Loss Cut by 2/3 to 12,600 Lines

    Access Line Loss Cut by 2/3 to 12,600 Lines Line Loss (in 000) ƒ Access line loss cut by 2/3 from 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 35,100 to 12,600 in 2Q 09 -2.4 -8.0 -12.6 -27.7 ƒ Retail product bundles are main -35.1 instrument to counteract line strong Christmas campaign loss Average Revenues per ƒ

  11. Slide 11: Business Product Bundle Introduced at the End of 2Q 09

    Business Product Bundle Introduced at the End of 2Q 09 ƒ Product bundle targeting small businesses launched at the end of 2Q 09 ƒ Business bundle builds on the success of retail product bundles ƒ Addresses highly fragmented Austrian business market ƒ Unlimited broadband Internet, monthly fixed net r

  12. Slide 12: Telekom Austria Group Increases Combined Broadband Market Share by 1.2%-Points

    Telekom Austria Group Increases Combined Broadband Market Share by 1.2%-Points Broadband Market Shares ƒ Fixed Net retail broadband participates in market growth and maintains market share Mobile Broadband 18.3% 24.0% other operators 11.3% ƒ Number of Fixed retail broad- Others 9.1% band lines conti

  13. Slide 13: Maintaining 2009 Target for Personnel Restructuring, Social Plan Ahead of Plan

    Maintaining 2009 Target for Personnel Restructuring, Social Plan Ahead of Plan Announced Nov. 08 Status as of Status as of Target March 31, 09 June 30, 09 Dec. 31, 2009 Social plan 400 FTE by end 2010 Social plan Social plan Split between 334 FTE 433 FTE Total of 1,250 Staff 1,250 FTE released FTE f

  14. Slide 14: Mobile Communication

    Mobile Communication Results for the Second Quarter 2009 14

  15. Slide 15: Revenues and EBITDA Impacted by Foreign Currency Translation

    Revenues and EBITDA Impacted by Foreign Currency Translation Revenues FX translation effect ƒ Mobile Communication grows (EUR million) 15.3 subscriber base by 10.1% to -1.7% 18.1million customers 800.6 814.3 ƒ Revenue growth by 0.2% excluding impact from FX translation, EBITDA 2Q 09 2Q 08 1.5 0.5 1

  16. Slide 16: mobilkom austria with EBITDA Growth and Higher Profitability

    mobilkom austria with EBITDA Growth and Higher Profitability Revenues (EUR million) ƒ mobilkom austria’s customer base grows by 8.7% to 4.6 mn subscribers -1.4% 391.8 397.4 ƒ Revenues decline by 1.4% due to lower traffic and roaming revenues 2Q 09 2Q 08 ƒ ARPU declines by 9.3% to EUR 25.5 EBITDA due

  17. Slide 17: mobilkom austria Continues to Grow Mobile Broadband Subscriber Base

    mobilkom austria Continues to Grow Mobile Broadband Subscriber Base Market Shares As of June 2009 ƒ Market share remains nearly stable at 42.3% in 2Q 09 42.3% 31.1% compared to 42.5% in 2Q 08 19.9% 6.7% ƒ Mobile broadband subscriber base grows by 43.1% to 465k 2Q 07 4Q 07 2Q 08 4Q 08 2Q 09 customers

  18. Slide 18: Bulgarian Operations Impacted by Combination of Price Competition and Economic Crisis

    Bulgarian Operations Impacted by Combination of Price Competition and Economic Crisis Revenues (EUR million) ƒ Fierce competition and economic -4.8% crisis impact revenue development 157.7 165.6 ƒ Usage growth of 14.4% partly compensates for lower prices 2Q 09 2Q 08 ƒ EBITDA trend improves after wea

  19. Slide 19: Revenue & EBITDA Growth in Belarus Despite Currency Devaluation

    Revenue & EBITDA Growth in Belarus Despite Currency Devaluation Revenues (EUR million) FX translation effect ƒ Subscriber base grows by 13.3% to 11.0 3.8 million at end of 2Q 09 75.6 6.3% 71.1 ƒ Market share declines slightly to 43.1% ƒ Revenues increase by 6.3% to 2Q 09 2Q 08 EUR 75.6 million and E

  20. Slide 20: Strong Subscriber Growth in Croatia and Slovenia, EBITDA Still Weak but Trends Improve

    Strong Subscriber Growth in Croatia and Slovenia, EBITDA Still Weak but Trends Improve Revenues Vipnet Vipnet in Croatia (EUR million) FX translation effect 1.7 ƒ Subscriber base grows by 14.8% to 119.3 -6.9% 128.2 2.6 mn customers ƒ EBITDA declines to EUR 40.6 million due to lower revenues impacted

  21. Slide 21: Greenfield Operations Show Subscriber Growth and Continue to Enhance Operations

    Greenfield Operations Show Subscriber Growth and Continue to Enhance Operations EBITDA Vip mobile Vip mobile in Serbia (EUR million) ƒ Subscriber base grows by 60.1% to 2Q 09 2Q 08 1.1 mn customers ƒ Market share increases strongly to -7.4 -9.6 10.7% after 7.2% at the end of 2Q 08 -1.6 FX translatio

  22. Slide 22: Financial Overview

    Financial Overview Results for the Second Quarter 2009 22

  23. Slide 23: Higher Profitability Dampens Impact of Lower Revenues on EBITDA and Operating Income

    Higher Profitability Dampens Impact of Lower Revenues on EBITDA and Operating Income (EUR million) 2Q 09 2Q 08 % change 1H 09 1H 08 % change Revenues 1,191.7 1,276.2 -6.6% 2,388.8 2,535.8 -5.8% EBITDA 450.0 468.5 -3.9% 904.8 954.2 -5.2% EBITDA margin 37.8% 36.7% n.a. 37.9% 37.6% n.a. Operating incom

  24. Slide 24: Reduction of Capital Expenditures Bears Fruit as Cash Flow per Share Rises

    Reduction of Capital Expenditures Bears Fruit as Cash Flow per Share Rises (EUR million) 2Q 09 2Q 08 % change 1H 09 1H 08 % change Cash Flow from operations before 390.9 406.4 -3.8% 772.8 826.8 -6.5% working capital adjustments Change in working capital -43.7 -39.3 11.2% -177.9 -154.6 15.1% Ordinary

  25. Slide 25: Capex Reduction to Protect Free Cash Flow Continues in 2Q 09

    Capex Reduction to Protect Free Cash Flow Continues in 2Q 09 (EUR million) 2Q 09 2Q 08 % change 1H 09 1H 08 % change Fixed Net 55.9 64.4 -13.2% 89.4 132.5 -32.5% Mobile Communication 93.4 126.3 -26.0% 175.9 217.8 -19.2% Ordinary capital expenditures 149.3 190.7 -21.7% 265.3 350.3 -24.3% Growth proje

  26. Slide 26: Reduction of Asset Base Due to FX Adjustments and D&A Exceeding Investments

    Reduction of Asset Base Due to FX Adjustments and D&A Exceeding Investments (EUR million) June 30, 09 Dec. 31, 08 % change Long-term assets 6,800.2 7,452.0 -8.7% Current assets 1,911.3 1,545.4 23.7% Total assets 8,711.5 8,997.4 -3.2% Current liabilities 2,281.1 2,220.5 2.7% Long-term liabilities 4,7

  27. Slide 27: Cancellation of 17 Million Shares or 3.7% of Share Capital of Telekom Austria AG

    Cancellation of 17 Million Shares or 3.7% of Share Capital of Telekom Austria AG ƒ Management Board has resolved to cancel treasury shares ƒ 17 mn shares equivalent to 3.7% of Telekom Austria AG share capital ƒ Cancellation to take effect as of August 24, 2009 ƒ Number of shares in issue will be red

  28. Slide 28: Free Cash Flow After Dividend and Cash Cover Refinancing in 2009 & 2010

    Free Cash Flow After Dividend and Cash Cover Refinancing in 2009 & 2010 Debt Maturing Sources of Cash as of June 30, 2009 as of June 30, 2009 (in EUR million) Debt maturing 2009 224 Cash and Short-term Investments Debt maturing 2010 1,462 Free Cash Flow 2009+2010 after dividends ƒ EUR 1.3 bn of undr

  29. Slide 29: Outlook

    Outlook Results for the Second Quarter 2009 29

  30. Slide 30: Outlook on Constant Currency Basis Fully Reiterated as Announced at 1Q 09

    Outlook on Constant Currency Basis Fully Reiterated as Announced at 1Q 09 Telekom Austria Group 2009 on a constant currency basis Revenues slightly weaker than originally expected EUR 5.1 bn* EBITDA ~ EUR 1.9 bn CAPEX ~ EUR 0.8 bn Operating Free Cash Flow** ~ EUR 1.1 bn Dividend DPS of 75 cent minim

  31. Slide 31: Appendix

    Appendix Results for the Second Quarter 2009 31

  32. Slide 32: Regulatory Issues – Key Aspects (1)

    Regulatory Issues – Key Aspects (1) Amendments to the Austrian Telecommunications Act: On July 16, 2009 amendments to the Austrian Telecommunications Act entered into force with the goal to stimulate innovation and investment in infrastructure. Next Generation Networks: The European Commission has l

  33. Slide 33: Regulatory Issues – Key Aspects (2)

    Regulatory Issues – Key Aspects (2) International roaming charges: on July 1, 2009 the extension of the existing roaming regulation entered into force. The regulation includes: ƒ Extension of the voice roaming regulation at both wholesale and retail level due to expire in July 2012. ƒ Per-second bil

  34. Slide 34: Development of Revenues 2Q vs. 2Q

    Development of Revenues 2Q 09 vs. 2Q 08 Revenues (EUR million) 1,276.2 -65.0 -5.6 -7.9 4.5 -8.9 2.7 -6.0 -4.0 5.7 1,191.7 Eliminations Vip mobile mobilkom Si.mobil Mobiltel Fixed Net Velcom Vipnet operator Corporate, Revenues Revenues austria Others & 2Q 08 2Q 09 Vip Results for the Second Quarter 2

  35. Slide 35: Development of EBITDA 2Q vs. 2Q

    Development of EBITDA 2Q 09 vs. 2Q 08 EBITDA (EUR million) 468.5 -13.5 7.6 -8.1 3.8 -8.8 -4.1 1.2 1.2 450.0 2.2 Eliminations Vip mobile mobilkom Si.mobil Mobiltel Fixed Net Velcom Vipnet operator Corporate, EBITDA EBITDA austria 2Q 08 2Q 09 Others & Vip Results for the Second Quarter 2009 35

  36. Slide 36: Fixed Net - Access Lines

    Fixed Net - Access Lines (in 000) 2Q 09 2Q 08 % change Access lines (without broadband lines) 1,357.8 1,540.5 -11.9% Fixed Net broadband retail lines 895.8 757.5 18.3% Fixed Net broadband wholesale lines 62.6 68.9 -9.1% Fixed Net broadband lines 958.4 826.4 16.0% Total access lines 2,316.2 2,366.9 -

  37. Slide 37: Fixed Net – Voice & Broadband Market Shares

    Fixed Net – Voice & Broadband Market Shares Market Share Voice Minutes 76.9% 73.6% Mobile Other Fixed Net 8.3% 9.7% 14.8% TA Fixed Net 16.7% 2Q 09 2Q 08 Market Share Broadband Lines 18.3% 24.0% Mobile Broadband other operators 11.3% 9.1% Others 19.4% Cable 24.1% Mobile Broadband 15.5% mobilkom austr

  38. Slide 38: Fixed Net Key Performance Indicators

    Fixed Net Key Performance Indicators Average Revenues per Access Line Fixed Net Broadband Net Adds incl. Wholesale (in EUR) (in 000) 37.5 36.5 36.5 35.7 50.4 49.9 34.5 22.7 8.9 8.9 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 Fixed Broadband Access Lines (in 000) 872.3 895.8 818.9 757

  39. Slide 39: Fixed Net - Minutes

    Fixed Net - Minutes (in million minutes) 2Q 09 2Q 08 % change National 583 673 -13.5% Fixed-to-mobile 171 186 -8.3% International 86 101 -14.8% Total voice minutes 839 960 -12.6% Total Fixed Net minutes 878 1,045 -16.0% (in million minutes) 2Q 09 2Q 08 % change National wholesale 1,586 1,757 -9.8% I

  40. Slide 40: Mobile Subscribers

    Mobile Subscribers (in 000) 2Q 09 2Q 08 % change Austria 4,628.4 4,257.4 8.7% Market share 42.3% 42.5% Bulgaria 5,205.4 5,154.2 1.0% Market share 50.0% 50.5% Belarus 3,817.4 3,369.0 13.3% Market share 43.1% 44.4% Croatia 2,609.0 2,272.2 14.8% Market share 43.3% 42.2% Slovenia 581.8 534.7 8.8% Market

  41. Slide 41: Operational Data – mobilkom austria

    Operational Data – mobilkom austria MoU per Subscriber ARPU (in minutes) (in EUR) 177.1 169.5 175.0 168.3 163.8 28.1 27.8 28.6 25.5 25.5 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 Quarterly Churn SAC per Gross Add (in EUR) 7.7% 6.5% 59.1 55.0 56.9 57.4 3.3% 3.4% 35.6 2.1% 1.1% 2Q 08

  42. Slide 42: Mobile Data - mobilkom austria

    Mobile Data - mobilkom austria Mobile Broadband Customers Number of SMS (in 000) (in million) 621 595 593 541 535 400 441 465 325 348 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 Data ARPU Data as % of Traffic Releated ( in EUR) Revenues 37.4% 33.9% 35.1% 31.0% 32.1% 7.0 7.3 7.2 6.9 6

  43. Slide 43: ARPU & MoU per Subscriber for Selected Mobile Communication Operations

    ARPU & MoU per Subscriber for Selected Mobile Communication Operations MoU per Subscriber (in minutes) 177.1 163.8 165.8 155.5 147.8 98.6 135.4 86.2 93.0 84.1 mobilkom austria Mobiltel Velcom Vipnet Si.mobil 2Q 08 2Q 09 ARPU (in EUR) 28.1 25.5 23.6 21.2 14.9 9.9 12.3 9.5 6.9 6.4 mobilkom austria Mob

  44. Slide 44: Headcount Development

    Headcount* Development (Average period) 2Q 09 2Q 08 change Fixed Net** 8,213 9,474 -1,261 Mobile Communciation 8,612 8,192 420 Telekom Austria Group 16,825 17,666 -841 (End of period) 2Q 09 2Q 08 change Fixed Net** 8,216 9,454 -1,238 Mobile Communciation 8,643 8,230 413 Telekom Austria Group 16,859

  45. Slide 45: Revenues by Segment

    Revenues by Segment (EUR million) 2Q 09 2Q 08 % change 1H 09 1H 08 % change Fixed Net revenues 456.9 521.9 -12.5% 926.4 1,043.8 -11.2% Mobile Communication revenues 800.6 814.3 -1.7% 1,590.9 1,610.8 -1.2% Corporate, Other & Eliminations -65.8 -60.0 9.7% -128.5 -118.8 8.2% Revenues Telekom Austria Gr

  46. Slide 46: EBITDA and Operating Income by Segment

    EBITDA and Operating Income by Segment (EUR million) 2Q 09 2Q 08 % change 1H 09 1H 08 % change Fixed Net EBITDA 142.0 155.5 -8.7% 299.8 312.4 -4.0% Mobile Communciation EBITDA 313.7 319.4 -1.8% 620.0 652.8 -5.0% Corporate, Other & Eliminations -5.7 -6.4 -10.9% -15.0 -11.0 36.4% EBITDA Telekom Austri

  47. Slide 47: Fixed Net - Revenue Breakdown

    Fixed Net - Revenue Breakdown (EUR million) 2Q 09 2Q 08 % change 1H 09 1H 08 % change Access, Voice and Broadband 240.4 276.3 -13.0% 490.4 554.1 -11.5% Data & ICT-Solutions 96.7 115.8 -16.5% 194.2 219.1 -11.4% Wholesale Voice & Internet 86.6 103.8 -16.6% 176.6 214.6 -17.7% Others 33.2 26.0 27.7% 65.

  48. Slide 48: Fixed Net – Expense Breakdown

    Fixed Net – Expense Breakdown (EUR million) 2Q 09 2Q 08 % change 1H 09 1H 08 % change Material expense 14.1 23.2 -39.2% 30.1 47.2 -36.2% Employee costs 130.3 146.0 -10.8% 263.8 290.5 -9.2% Depreciation, amortization and impairment charges 118.6 132.4 -10.4% 231.3 259.4 -10.8% Interconnection 72.6 89

  49. Slide 49: Mobile Communication - Revenue Breakdown

    Mobile Communication - Revenue Breakdown (EUR million) 2Q 09 2Q 08 % change 1H 09 1H 08 % change Subscription and Traffic 586.8 597.5 -1.8% 1,150.7 1,160.3 -0.8% Equipment 51.0 54.1 -5.7% 108.3 115.2 -6.0% Roaming 28.5 39.6 -28.0% 62.5 90.0 -30.6% Interconnection 125.8 122.3 2.9% 251.9 237.2 6.2% Ot

  50. Slide 50: Mobile Communication – Expense Breakdown

    Mobile Communication – Expense Breakdown (EUR million) 2Q 09 2Q 08 % change 1H 09 1H 08 % change Material expense 80.1 74.4 7.7% 166.8 154.8 7.8% Employee costs 70.3 66.8 5.2% 141.6 126.6 11.8% Depreciation, amortization and impairment charges 161.4 162.1 -0.4% 323.5 318.6 1.5% Interconnection 100.6

  51. Slide 51: Capital Expenditures by Segment

    Capital Expenditures by Segment (EUR million) 2Q 09 2Q 08 % change 1H 09 1H 08 % change Fixed Net 55.9 64.4 -13.2% 89.4 132.5 -32.5% Mobile Communication 93.4 126.3 -26.0% 175.9 217.8 -19.2% Total Capex Telekom Austria Group 149.3 190.7 -21.7% 265.3 350.3 -24.3% Thereof tangible 117.0 152.4 -23.2% 1

  52. Slide 52: Net Debt - Telekom Austria Group

    Net Debt - Telekom Austria Group (EUR million) Jun 30, 2009 Dec 31, 2008 % change Long-term debt 3,760.6 3,599.5 4.5% Short-term debt 1,158.5 961.5 20.5% Cash and cash equivalents, short-term and long term investments, financing with related parties -893.8 -513.1 74.2% Derivate financial instruments

  53. Slide 53: EUR 750 mn Bond Issued in 1Q 09 Supports Refinancing Beyond 2010

    EUR 750 mn Bond Issued in 1Q 09 Supports Refinancing Beyond 2010 Debt Maturity Profile (EUR million) 2,230 1,462 Ratings: 769 ƒ S&P: BBB+ (negative outlook) 224 215 ƒ Moody‘s: A3 (stable outlook) 2009 2010 2011 2012 there after Lines of Credit ƒ Undrawn committed lines of credit amounting to EUR 1.3

  54. Slide 54: Free Cash Flow After Dividend and Cash Cover Refinancing in 2009 & 2010

    Free Cash Flow After Dividend and Cash Cover Refinancing in 2009 & 2010 Debt Maturing Sources of Cash as of June 30, 2009 as of June 30, 2009 (in EUR million) Debt maturing 2009 224 Cash and Short-term Investments Debt maturing 2010 1,462 Free Cash Flow 2009+2010 after dividend ƒ EUR 1.3 bn of undra

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