Magyar Telekom Telecommunications Plc · BET:MTELEKOM

Magyar Telekom Telecommunications — Magyar Telekom — Q2 2015 Earnings Presentation

34 slides from Magyar Telekom Telecommunications's earnings presentation, September 2015

  1. Slide 1: Magyar Telekom Group Investor Presentation

    MAGYAR TELEKOM GROUP INVESTOR PRESENTATION SEPTEMBER, 2015

  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 (FY2014) Czech Republic 17% Slovakia 8% Austria Moldova 5% Hungary Hungary 70% Slovenia Croatia Croatia Romania Romania BiH EBITDA (FY2014) Serbia Serbia 7% Montenegro Kosovo Bulgaria Bulgaria Macedonia 13% 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 +0.8% Telenor Invitel 10,000,000 22.8% 22.7% Telekom 3,000,000 5.8% 5.8% 5.1% DIGI 13.0% 12.6% 12.7% 2,500,000 UPC 8,000,000 9.2% 9.7% 10.4% 30.9% 30.5% MT 2,000,000 13.5%

  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 (2014) application a

  6. Slide 6: Strategy Overview: Telekom 2017 strategy and EoY 2015 targets

    STRATEGY OVERVIEW Telekom 2017 strategy and EoY 2015 targets 1  Increase the awareness of the Telekom brand to the 1 LEADING INTEGRATED QUALITY BRAND level of our previous brands BEST CUSTOMER EXPERIENCE 2  Cut billable / sellable products by 50% 2 EFFORTLESS PRODUCTS & SIMPLIFIED PROCESSES 3  Cu

  7. Slide 7: Strategic Highlights

    STRATEGIC HIGHLIGHTS  Acquisition of necessary spectrum blocks in 2014 to reinforce mobile market leadership MOBILE  Agreement with Telenor Hungary to develop and maintain shared 4G network in 800 MHz band NETWORK  More than 700 thousand active LTE users, 4G traffic exceeds 3G traffic in our netw

  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 „turn Topli

  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 4%  Governmental measures support consumer 2% spending 0%  Investment levels show strong volatility due to EU fund cycles -2%  MT is expected to benefit from positive trends -4% of

  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: Guidance and Outlook

    GUIDANCE AND OUTLOOK

  13. Slide 13: Financial Highlights and Targets

    FINANCIAL HIGHLIGHTS AND TARGETS 2014 RESULTS 2015 TARGETS 2017 TARGETS roughly stable excluding REVENUE HUF 626.4bn (-1.7%) roughly stable energy compared to 2014 EBITDA HUF 181.2bn (+1.0%) up to 3% decline surpassing HUF 185bn CAPEX* HUF 86.8bn around HUF 105bn around HUF 80bn FCF** HUF -19.9bn su

  14. Slide 14: Roughly Stable Revenues Excluding Energy

    ROUGHLY STABLE REVENUES EXCLUDING ENERGY Group revenue developments Highlights HUF bn 750  Roughly stable revenue anticipated for 2015 vs. 2014  2017 revenues to be roughly stable 600 compared to the 2014 level due to the fall out of energy revenues 450  Mobile broadband cannot fully compensate f

  15. Slide 15: Increasing EBITDA Margin

    INCREASING EBITDA MARGIN EBITDA and cost developments (relative to revenues) Highlights 100%  2015 EBITDA to decline by a maximum 3% vs. 2014 level 80% 37% 36% 37% 35%  2017 EBITDA expected to surpass HUF 185 billion  2015 indirect costs include the 60% expected ca. HUF 8 billion severance 30% 28

  16. Slide 16: Efficiency Investments Free Up Capex for Access Developments

    EFFICIENCY INVESTMENTS FREE UP CAPEX FOR ACCESS DEVELOPMENTS Capex developments* Highlights HUF bn 120  Ca. HUF 105 billion Capex earmarked 14% 14% 16% 13% for 2015 100  Fixed access: focus on increasing HSI coverage 80  Mobile access: 4G population coverage to reach 97% by end 2015 60  Efficien

  17. Slide 17: Dividend Policy

    DIVIDEND POLICY Dividend payment and net debt ratio developments Highlights Net debt ratio* Dividend per share (HUF) 50% 70  Maintain net debt ratio (net debt/total 45.7% 45.6% capital) target of 30% - 40% 43.8% 60  Board of Directors proposed no 40% 34.1% 34.3% dividend payment on 2014 earnings f

  18. Slide 18: H1 2015 Results

    H1 2015 RESULTS

  19. Slide 19: Strategic Highlights in 1H2015

    STRATEGIC HIGHLIGHTS IN 1H2015  On April 1, MTR was cut by 76% resulting in a sharp decline in mobile voice revenues MOBILE  Mobile data growth due to attractive device portfolio and strong 4G push almost fully offset revenue loss caused by regulation HUNGARY  Successful upgrade campaigns led to

  20. Slide 20: Financial Highlights and Targets

    FINANCIAL HIGHLIGHTS AND TARGETS 1H 2015 RESULTS 2015 TARGETS 2017 TARGETS roughly stable REVENUE +3.9% roughly stable excluding energy compared to 2014  Group wide mobile data and device sales growth due to 4G push  Hungarian MTR cut effective from April 1  Improved fixed line performance in Hun

  21. Slide 21: Group Segmental Revenue and EBITDA

    GROUP SEGMENTAL REVENUE AND EBITDA Group segmental revenue Group segmental EBITDA HUF bn HUF bn +4.4% 160 54 1.7 158.5 +5.2% 0.9 -0.6 3.4 -0.4 158 53 4.8 -0.1 -0.2 -0.2 -0.1 52.2 156 52 154 51 151.8 152 50 49.6 0 0 2Q 2014 T-HU T-Systems Maced. Monten. Elim. 2Q 2015 2Q 2014 T-HU T-Systems Maced. Mon

  22. Slide 22: Segmental Overview

    SEGMENTAL OVERVIEW

  23. Slide 23: T-Hungary

    T-HUNGARY T-Hungary revenue T-Hungary EBITDA HUF bn HUF bn +9.1% +4.3% 116 2.3 115.6 41 0.4 40.8 3.7 -4.5 1.2 115 114 40 0.3 2.0 -0.2 0.3 113 0.9 39 112 1.7 0.4 110.8 111 -0.5 38 37.4 110 109 37 1 0 0 2Q Mobile Mobile Mobile Fixed Fixed TV Fixed Si/IT Energy 2Q 2Q 2014 Gross Special tax Employee Oth

  24. Slide 24: T-Hungary – Mobile

    T-HUNGARY – MOBILE Mobile RPC Mobile ARPU (HUF) ‘000 HUF +0.8% 4,898 4,933 4,964 4,948 4,938 5,000 Prepaid 2Q 2014 3,477 Postpaid Blended -4.9% 2Q 2015 4,000 3,306 50.7% 50.4% 50.0% 49.6% 49.0% 3,000 1,303 +104 Prepaid -13.0% 1,133 2,000 49.3% 49.6% 50.0% 50.4% 51.0% 5,741 1,000 Postpaid -5.6% 5,421

  25. Slide 25: T-Hungary – Fixed Broadband and TV

    T-HUNGARY – FIXED BROADBAND AND TV Fixed BB RPC Pay TV RPC ‘000 +9.6% ‘000 +3.6% 1,000 922 940 961 1,000 925 934 939 877 887 907 911 8% 8% 8% <10Mbps Sat 11% 9% 800 10Mbps -30Mbps 800 34% 33% 33% 33% Cable 34% >30Mbps IPTV 600 68% 600 69% 69% 20% 19% 19% 19% 18% 68% 69% 400 400 200 200 46% 47% 48% 4

  26. Slide 26: 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 -0.9% 2Play 1,500 1,421 1,417 1,418 1,408 1,408 2,000 -1.3% PSTN 3Play 1,549 1,524 1,538 1,546 1,529 Annual churn rate 36% IP based* 48% 44% 1,500 57% 1,000 61% 40% 39% 38%

  27. Slide 27: T-Systems

    T-SYSTEMS Financials SI/IT revenue and margin Revenues (HUF bn) EBITDA (HUF bn) HUF bn +3.4% -10.1% +2.6% 2.2 28.9 3.8 -0.6 +13.6% 29 3.8 20 18.0 27.9 -0.5 3.6 Revenue 28 15.8 -0.7 0.3 3.4 3.4 15 Gross margin* 27 3.2 10 5.8 5.9 5 0 0.0 0 2Q Mobile Fixed Si/IT 2Q 2Q Gross Other 2Q 2Q 2014 2Q 2015 201

  28. Slide 28: Macedonia

    MACEDONIA Financials Mobile KPIs Revenues (HUF bn) EBITDA (HUF bn) Subscribers 0.0% -3.2% 100 One (T. Slovenia)* 14.0 -4.6% 5.2 5.1 -0.6 23.3% 25.1% 25.3% 80 VIP (T. Austria) 13.5 -0.4 0.4 5.0 13.5 5.0 60 28.2% 27.6% 28.1% T-Mobile -0.5 +13,322 0.2 12.9 4.8 40 13.0 4.6 20 48.5% 46.1% 46.6% 12.5 0 2Q

  29. Slide 29: Montenegro

    MONTENEGRO Financials Mobile KPIs Revenues (HUF bn) EBITDA (HUF bn) Subscribers +3.4% -6.5% -1.0% 100 Telenor 8.1 3.4 3.4 -0.3 8.0 -0.3 38.2% 38.1% 37.6% m:tel (T. Serbia) 8.0 0.3 8.0 3.3 T-Mobile 7.9 3.2 0.1 3.2 26.4% 28.1% 27.6% 7.8 -0.1 3.1 +2,301 7.7 35.4% 34.2% 34.3% 3.0 7.6 0 2Q 2013 2Q 2014 2

  30. Slide 30: Financials

    FINANCIALS

  31. Slide 31: Magyar Telekom – Consolidated Income Statement

    MAGYAR TELEKOM – CONSOLIDATED INCOME STATEMENT HUF million Q2 2014 Q2 2015 Change Mobile revenues 77 372 76 873 -0,6% Fixed line revenues 51 533 52 645 2,2% System Integration/Information Technology revenues 14 785 18 534 25,4% Revenue from energy services 8 096 10 443 29,0% Revenues 151 786 158 495

  32. Slide 32: Magyar Telekom – Consolidated Balance Sheet

    MAGYAR TELEKOM – CONSOLIDATED BALANCE SHEET HUF million Jun 30, 2014 Jun 30, 2015 Change Current assets 182 923 194 421 6,3% Cash and cash equivalents 13 967 12 812 -8,3% Other current financial assets 14 420 7 313 -49,3% Non current assets 886 558 986 041 11,2% Property, plant and equipment - net 4

  33. Slide 33: Magyar Telekom – Consolidated Cash Flow Statement

    MAGYAR TELEKOM – CONSOLIDATED CASH FLOW STATEMENT HUF million Jun 30, 2014 Jun 30, 2015 Change Net cash generated from operating activities 56 216 58 479 4,0% Investments in tangible and intangible assets (33 330) (35 088) 5,3% Adjustments to cash purchases (9 390) (6 201) -34,0% Purchase of subsidi

  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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