Telekom Austria Ag · VIE:TKA

Telekom Austria — A1 Telekom Austria Group — Q2 2018 Earnings Presentation

48 slides from Telekom Austria's earnings presentation, Jul 24, 2018

  1. Slide 1: Results for the first half and second quarter 2018

    Results for the first half and second quarter 2018 24th July 2018, Vienna

  2. 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

  3. Slide 3: Key financial developments for the first half and second quarter 2018

    Key financial developments for the first half and second quarter 2018

  4. Slide 4: Q2 2018: Sound operational trends continued with strong EBITDA contribution from CEE markets

    Q2 2018: Sound operational trends continued with strong EBITDA contribution from CEE markets Reported Proforma Group (in EUR million) Q2 2018 Q2 2017 % change Total revenues 1,099.3 1,084.7 1.3% EBITDA 356.4 359.7 -0.9% CAPEX 168.1 171.5 -2.0%  Group total revenues increased by 1.3% on a proforma b

  5. Slide 5: Austria: Solid operational performance driven by retail fixed-line

    Austria: Solid operational performance driven by retail fixed- line; EBITDA almost stable despite strong comparable Q2 2017 ARPU ARPL Operational data (in EUR) (in EUR)  Postpaid subscriber base grew by 3.0% driven by ongoing high demand Δ: +2.9% Δ: +7.2% for mobile WiFi routers and high-value tari

  6. Slide 6: Higher equipment revenues and solid service revenue trends in most CEE countries

    Higher equipment revenues and solid service revenue trends in most CEE countries, negative FX impact in Belarus EBITDA Highlights CEE (proforma, in EUR mn) Bulgaria: EUR 36.3 mn EUR 27.9 mn EUR 45.3 mn  Equipment and fixed-line service revenue growth, mobile service revenues rose slightly Δ: +3.0 m

  7. Slide 7: Operational improvement, less interest and CAPEX paid led to strong growth in free cash flow

    Operational improvement, less interest and CAPEX paid led to strong growth in free cash flow (in EUR million) Q2 2018 Q2 2017 % change 1-6 M 2018 1-6 M 2017 % change Net cash flow from operating activities 330.8 314.2 5.3% 600.1 576.1 4.2% Capital expenditures paid -178.6 -169.4 5.5% -366.4 -378.2 -

  8. Slide 8: Focus Points

    Telekom Austria iM Group i ‘as X<

  9. Slide 9: Bulgaria: Strengthening of market position supported by rebranding and new products

    Bulgaria: Strengthening of market position supported by rebranding and new products Mtel is now A1 Extended fixed-line porfolio  Start in May 2018  Own sports channel: MAX Sport  Shop redesign  70% of TV gross adds take MAX Sport  Good acceptance of My A1 App  Smart Home launched in June 2018

  10. Slide 10: Paving the way for future-proof mobile networks – preparing the network for 5G deployment

    Paving the way for future-proof mobile networks – preparing the network for 5G deployment Status and plan of 4.5G and Pre-5G for 2018 What’s to follow  4xCarrier Aggregation trial and deployment  Enabling intelligent transport Austria  NB-IoT deployment networks which identify weak  mMIMO** tria

  11. Slide 11: Frequency spectrum auctions for 3.5 GHz planned for 2018 and 2019 in Austria

    Frequency spectrum auctions for 3.5 GHz planned for 2018 and 2019 in Austria 1 3.5 GHz Frequency Auction 2018/19 2 Multiband Auction 2019 Earliest start in November 2018: Start of auction not before Q2 2019: Band 42 – 3.4-3.6 GHz Band 28 – 700 MHz  3,410 – 3,600 MHz  703 – 733 MHz and 758 – 788 MH

  12. Slide 12: Agreement at EU level on retail price caps on intra-EU calls and SMS

    Agreement at EU level on retail price caps on intra-EU calls and SMS to be effective as of 15 May 2019 Political Formal agreement Political agreement: agreement and publication (retail price caps on intra- EU calls and SMS) Expected effect: (estimated impact of political agreement) 19 EURc ~1% of Gr

  13. Slide 13: Outlook for the full year 2018

    Outlook for the full year 2018

  14. Slide 14: A1 Telekom Austria Group outlook for the full year 2018 unchanged

    A1 Telekom Austria Group outlook for the full year 2018 unchanged 17 July 2018 Consensus 2018 Total revenues +1-2% EUR 4,421 mn CAPEX ~ EUR 750 mn EUR 754 mn Proposed dividend EUR 0.20 / share -  Outlook based on reported figures; assumed devaluation of BYN vs. EUR: ~10%  CAPEX: does not include i

  15. Slide 15: Appendix

    @ Appendix 1

  16. Slide 16: The leading regional communications player providing convergent telecommunication services

    The leading regional communications player providing convergent telecommunication services as of 30 June 2018 (in ‘000) Austria Bulgaria Croatia Mobile market position #1 Mobile market position: #1 Mobile market position #2 Mobile subscriber: Mobile subscriber: Mobile subscriber:  5,284 (Q2 2017: 5

  17. Slide 17: A1 Telekom Austria Group – Profit and Loss

    A1 Telekom Austria Group – Profit and Loss (in EUR million) Q2 2018 Q2 2017 % change Service Revenues 949.8 944.5 0.6% Equipment Revenues 123.2 116.6 5.7% Other operating income 26.3 21.8 20.4% Total Revenues 1,099.3 1,082.9 1.5% Cost of Service -342.8 -342.7 0.0% Cost of Equipment -144.0 -128.9 -11

  18. Slide 18: Total revenues & costs and expenses per segment

    A1 Telekom Austria Group – Total revenues & costs and expenses per segment A1 Telekom Austria Group - Total Revenue Split Total Revenues (in EUR million) Q2 2018 Q2 2017 % change Austria 651.1 647.4 0.6% Bulgaria 110.5 103.3 7.0% Croatia 110.0 108.6 1.3% Belarus 97.7 101.9 -4.1% Slovenia 54.7 53.5 2

  19. Slide 19: A1 Telekom Austria Group – Headcount development

    A1 Telekom Austria Group – Headcount development FTE (Average Period) Q2 2018 Q2 2017 % change Austria 8,200 8,285 -1.0% International 10,349 10,059 2.9% Corporate 351 256 37.3% A1 Telekom Austria Group 18,900 18,600 1.6% FTE (End of Period) Q2 2018 Q2 2017 % change Austria 8,182 8,274 -1.1% Interna

  20. Slide 20: A1 Telekom Austria Group – Capital expenditure split

    A1 Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q2 2018 Q2 2017 % change Austria 112.7 100.2 12.4% Bulgaria 13.5 25.2 -46.4% Croatia 22.6 20.2 11.7% Belarus 4.4 10.3 -56.8% Slovenia 4.2 4.6 -10.0% Republic of Serbia 5.5 9.2 -40.1% Republic of Macedonia 4.6

  21. Slide 21: A1 Telekom Austria Group – Net debt

    A1 Telekom Austria Group – Net debt per 30 June 2018 Net Debt (in EUR million) 30 June 2018 31 December 2017 % change Long-term Debt 2,535.1 2,533.6 0.1% Short-term Borrowings 422.7 0.6 n.m. Cash and Cash Equivalents and Short-term Investments -63.7 -202.4 68.5% Net Debt of A1 Telekom Austria Group

  22. Slide 22: A1 Telekom Austria Group – Debt maturity profile

    A1 Telekom Austria Group – Debt maturity profile as of 30 June 2018 746.5 745.7 744.0 298.7 240.2 182.6 0.1 0.0 0.0 2018 2019 2020 2021 2022 2023 2024 2025 2026  EUR 2,957.8 mn short-and long-term borrowings as of 30 June 2018  Average cost of debt of approximately 2.52%  Cash and cash equivalent

  23. Slide 23: A1 Telekom Austria Group – Debt profile

    A1 Telekom Austria Group – Debt profile as of 30 June 2018 Overview debt instruments Fixed/floating mix 14% 14% 86% 86% Bonds Loans Fixed Floating Lines of credit Ratings  Undrawn committed credit lines  S&P: BBB (positive outlook) amounting to EUR 1,315 mn  Moody’s: Baa1 (stable outlook)  Avera

  24. Slide 24: Segment Austria – Fixed-line key performance indicators

    Segment Austria – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 30.5 30.4 30.5 29.5 28.5 3,435.1 3,396.6 3,390.4 3,378.7 3,362.7 194.0 192.2 191.7 189.1 185.9 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPL ARPL-rel

  25. Slide 25: Segment Austria – Mobile key performance indicators

    Segment Austria – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 15.9 16.0 15.9 1.8 1.8 1.7 15.5 15.5 1.7 1.5 255.6 254.6 252.9 249.7 248.1 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPU Service revenues Subsidies Mobile penetra

  26. Slide 26: Segment Austria – Broadband market split

    Segment Austria – Broadband market split Market share total broadband Market share mobile Market share fixed- (in %) broadband line broadband (in %) (in %) 1.9 2.8 3.8 4.7 34.7 35.6 Mobile Broadband Other Operators 21.4 23.6 16.2 16.9 Unbundled Lines 3.6 3.0 22.5 22.9 Cable 39.3 4.2 4.1 16.2 16.7 36

  27. Slide 27: Segment Austria – Voice market split

    Segment Austria – Voice market split Market share voice RGUs (in %) 12.8 13.6 3.2 3.2 23.6 23.3 Others UPC Tele2/UTA 60.4 59.9 A1 Q2 17 Q2 18 Results for the first half and second quarter 2018 27

  28. Slide 28: Segment Bulgaria – Fixed-line key performance indicators

    Segment Bulgaria – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 1,002.0 994.4 1,005.0 1,005.1 1,014.7 12.5 12.1 12.2 11.8 11.4 19.9 19.3 19.5 18.8 18.3 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPL ARPL-relevant

  29. Slide 29: Segment Bulgaria – Mobile key performance indicators

    Segment Bulgaria – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 2.4 2.3 2.0 5.4 5.7 5.5 5.4 5.6 1.5 1.4 70.1 66.4 65.8 64.6 66.6 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPU Service revenues Subsidies Mobile penetration (in

  30. Slide 30: Segment Croatia – Fixed-line key performance indicators

    Segment Croatia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 28.6 28.8 28.8 667.2 659.9 28.3 28.5 654.1 655.4 658.2 26.0 25.9 25.6 25.5 25.5 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPL ARPL-relevant revenues

  31. Slide 31: Segment Croatia – Mobile key performance indicators

    Segment Croatia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 14.1 3.6 12.2 12.3 11.2 11.2 2.4 2.4 76.9 1.8 1.7 63.5 60.5 65.1 59.3 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPU Service revenues Subsidies Mobile penetration

  32. Slide 32: Segment Belarus – Fixed-line key performance indicators

    Segment Belarus – Fixed-line key performance indicators ARPL & ARPL-relevant revenues* Total RGUs* (in EUR, in EUR million) (in ‘000) 8.5 614.9 6.9 461.9 463.4 475.5 5.9 5.9 5.6 300.7 4.5 5.5 5.4 6.4 5.1 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPL ARPL-relevant revenues Fixed Br

  33. Slide 33: Segment Belarus – Mobile key performance indicators

    Segment Belarus – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 5.0 4.7 1.7 73.6 4.4 4.3 1.7 4.1 1.6 1.5 1.4 68.1 63.7 63.2 59.0 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPU Service revenues Subsidies Mobile penetration (in E

  34. Slide 34: Segment Slovenia – Fixed-line key performance indicators

    Segment Slovenia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 36.6 35.8 35.3 35.0 183.0 34.9 179.8 177.1 176.9 7.7 7.6 171.4 7.5 7.4 7.4 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPL ARPL-relevant revenues Fixe

  35. Slide 35: Segment Slovenia – Mobile key performance indicators

    Segment Slovenia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 16.0 1.7 1.8 15.7 1.7 15.2 1.6 15.0 1.5 14.4 34.3 33.7 31.8 31.8 30.2 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPU Service revenues Subsidies Mobile penetration

  36. Slide 36: Segment Serbia – Mobile key performance indicators

    Segment Serbia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 3.4 3.4 3.2 3.1 2.9 6.2 5.7 5.7 5.5 5.3 40.1 37.4 37.2 36.1 34.0 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPU Service revenues Subsidies Mobile penetration (in EU

  37. Slide 37: Segment Macedonia – Fixed-line key performance indicators

    Segment Macedonia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 12.4 12.3 355.6 348.6 12.1 340.7 11.7 11.7 322.4 316.9 5.3 5.3 5.3 5.4 5.3 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPL ARPL-relevant revenues Fix

  38. Slide 38: Segment Macedonia – Mobile key performance indicators

    Segment Macedonia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 6.7 6.5 6.3 2.9 6.1 6.1 2.3 1.6 1.7 1.7 21.6 21.3 20.0 19.9 20.1 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 ARPU Service revenues Subsidies Mobile penetration (in

  39. Slide 39: Appendix 2 – Regulatory topics

    Appendix 2 – Regulatory topics

  40. Slide 40: Glide Path of Mobile Termination Rates

    Glide Path of Mobile Termination Rates Jul Jan Jul Jan Jul Jan 2015 2016 2016 2017 2017 2018 Austria (EUR) 0.008049 0.008049 0.008049 0.008049 0.008049 0.008049 Bulgaria (BGN) 0.019 0.019 0.019 0.014 0.014 0.014 Croatia (HRK)* 0.063 0.063 0.063 0.063 0.047 0.047 MTS 0.025/0.0125 MTS 0.025/0.0125 MTS

  41. Slide 41: Upcoming spectrum tenders/prolongations/assignments

    Upcoming spectrum tenders/prolongations/ assignments* Expected Comments 2018 (3400-3800 MHz) Austria 2019 (700, 1500, 2100 MHz) Beginning of 3400–3800 Mhz auction not before Q3 2018. 2020 (1500, 2300 MHz) 2018-2019 (800, 1800, 2100 MHz) An agreement between mobile operators, NRA and ministry of defe

  42. Slide 42: EU roaming price regulation

    EU roaming price regulation RETAIL (in EURc) July 2014 30 April 2016 15 June 2017 Data (per MB) 20 domestic tariff + 5* domestic tariff Voice-calls made 19 domestic tariff + 5* domestic tariff (per minute) Voice-calls received 5 weighted average MTR 0 (per minute) SMS (per SMS) 6 domestic tariff + 2

  43. Slide 43: Appendix 3 – Personnel restructuring in Austria

    Appendix 3 – Personnel restructuring in Austria

  44. Slide 44: Overview – Restructuring charges and provision vs. FTE

    Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) 2013 2014 2015 2016 2017 Q1 18 Q2 18 2013 2014 2015 2016 2017 Q1 18 Q2 18 FTE reduction 149.0 86.4* 69.5** 95.0 9.1 -2.4 19.2 Transfer to government 22 52 49 6 3 0 0 Servicekom contr

  45. 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 2013 108.0  Total cash flow impact comprises old and new 2014 107.1 programmes 2015 101.9 2016 105.5  Cash flow impact for Q2 2018 of EUR 23.5 mn 2017 102.4  Expected cash flow impact fo

  46. Slide 46: Appendix 4 – Corporate sustainability

    Appendix 4 – Corporate sustainability

  47. Slide 47: Alignment with core business and materiality analysis define sustainability strategy

    Alignment with core business and materiality analysis define sustainability strategy Results for the first half and second quarter 2018 47

  48. Slide 48: Key figures – Corporate Sustainability

    Key figures – Corporate Sustainability Selected group-wide KPIs Ratings Environment 2017 Total CO2 emissions (Scope 1+2 market-based in tonnes) 218,488 Classification: B- Classification: B- Energy efficiency index (in Mwh/terabyte) 0,2 Paper consumption (in kg) 1,614,058 Collected old mobile phones

A1 Telekom Austria Group — Q2 2018 Earnings Presentation on 6ix