Magyar Telekom Telecommunications Plc · BET:MTELEKOM

Magyar Telekom Telecommunications — Magyar Telekom — Q2 2012 Earnings Presentation

28 slides from Magyar Telekom Telecommunications's earnings presentation, September 2012

  1. Slide 1: Investor presentation Magyar Telekom Group – September 2012

    Investor presentation M Magyar Telekom T l k Group G – September S b 2012 Strong market position maintained, but difficult economic environment pputs increasingg ppressure on EBITDA 1

  2. Slide 2: Strategy, Outlook and Guidance

    Strategy, Outlook and Guidance 2

  3. Slide 3: Overview – Magyar Telekom Group at a glance

    Overview – Magyar Telekom Group at a glance International presence Overview Integrated operations in Hungary, Macedonia and Montenegro Czech Republic „ leading telecommunications service provider in all three Slovakia Austria Moldova countries Hungary Slovenia Croatia Croatia Romania „ leading SI/IT

  4. Slide 4: Market trends

    Market trends Revenue based market shares in Hungary in 2011 (HUF bn) Evolution of Magyar Telekom’s market share since 2006 321 44 99 98 111 29 100 % 25% 80 % 38% 49% 50% 56% 67% 60 % 28% 18% 40 % 1% 21% 22% 6% 19% 13% 24% 9% 3% 20 % 2% 30% 27% 17% 25% 26% 19% 0% 2% 5% 2006 2007 2008 2009 2010 2011

  5. Slide 5: Change in revenue trends

    Change in revenue trends Hungarian ICT market development (HUF bn) Change in Magyar Telekom Telekom’ss Hungarian revenue mix 1.7% 100% 1,256 1,279 1,210 1,233 1 159 1,159 , 1,171 1,186 New 80% New revenue revenue sources New sources IT ca.30% revenue ca.40% 60% sources ca.55% Fixed data TV 40% Voice

  6. Slide 6: Unfavorable impact of special tax to be compensated by continued efficiency improvements

    Unfavorable impact of special tax to be compensated by continued efficiency improvements Telecom taxes Cost saving HUF bn HUF bn 35 -5% 150 131 30 126 121 116 ca. 8.0 116 106 103 106 25 100 20 15 27.0 25.4 24.0 50 10 ca. 20.0 5 0 0 2010 2011 2012E 2013F 2008 2009 2010 2011 New telecom tax Special p

  7. Slide 7: Capex developments

    Capex developments C Capex trendd C Capex bbreakdown kd HUF bn Capex to Sales % of total 150 22% 100% 22% 20% 33% 32% 108 -8% 80% 102 100 92 18% 84 60% 34% 16% 16% 15% 16% 33% 36% 14% 40% 14% 50 14% 9% 10% 20% 12% 30% 25% 22% 0 10% 0% 2008 2009 2010 2011 2010 2011 2012F CAPEX Capex to Sales Maintena

  8. Slide 8: Free cash flow and dividends

    Free cash flow and dividends Free cash flow* flow generation Dividend payment HUF bn Net debt ratio** DPS (HUF) 120 50 % 74 80 26 70 100 39.3 % 17 40 % 28 34.1 % 60 14 32.7 % 50 Target 80 14 30 % 50 50 12 60 40 20 % 30 40 84 78 69 65 20 10 % 20 10 0 0% 0 2008 2009 2010 2011 2010 2011 Q2 2012 Telecom

  9. Slide 9: Hungarian economic trends 2010-2013

    Hungarian economic trends 2010-2013 Growth structure and wages g Contribution to GDP growth (%) 8 -0.8% 0.8% 6 4 Macro effects 2 0 Economic downturn coupled with -2 high rate of inflation -4 „ GDP performance is Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY FY dependent on export 2010 2011 2012 2012* 2013* dynam

  10. Slide 10: 2012 targets and H1 2012 results

    2012 targets and H1 2012 results 2012 targets H1 2012 results Revenue Flat to -2% 2% +2 1% +2.1% s results vs results „ changing revenue mix and energy resale are facilitating revenue turnaround „ increase in recessionary pressures and declines in household consumption „ 2011 comparable figure: HUF

  11. Slide 11: 2012 H1 Group results – Revenues and EBITDA

    2012 H1 Group results – Revenues and EBITDA Group revenues Group EBITDA HUF bn HUF bn 295 115 Underlying performance 3.8 0.8 291.7 12.3 6.6 110 290 7.9 286.1 3.8 105 15 1.5 1.3 5.7 0.8 101.2 285 1.4 100 97.8 1.5 280 95 90 275 85 270 80 H1 M. voice M. non- Mobile F. voice TV Energy SI/IT Other H1 201

  12. Slide 12: Q2 2012 Results

    Q2 2012 Results 12

  13. Slide 13: 2012 Q2 Group results – Revenues and EBITDA

    2012 Q2 Group results – Revenues and EBITDA Group revenues Group EBITDA HUF bn HUF bn 57 Underlying performance 148 10.6 4.9 3.1 0.8 54 146 145 5 145.5 51 1.5 143.6 2.6 0.8 49.6 144 2.7 0.7 2.6 48 0.7 142 0.7 45 44.6 140 42 138 39 136 36 Q2 M. voice M. non- Mobile F. voice TV Energy SI/IT Other Q2 2

  14. Slide 14: Telekom Hungary – Energy resale compensates for voice losses

    Telekom Hungary – Energy resale compensates for voice losses Fixed line and Energy resale revenues Mobile revenues HUF million HUF million 60,000 +2% 80,000 -3% 45,440 46,379 58,536 56,777 45,000 60,000 10,034 9,804 7,745 4,629 384 3,056 10,997 12,114 30,000 6,942 7,371 Other 40,000 10,233 10 304 10

  15. Slide 15: Hungary -- Improvement in fixed voice churn

    Hungary -- Improvement in fixed voice churn Telekom Hungary fixed voice subscribers Subscribers 2,500,000 Fixed voice -4% 2,000,000 , , 1,633,276 1,569,246 ƒ significant reduction in fixed voice churn 1,500,000 due to the retention effect of: 1,000,000 ƒ Hoppá package: flat fee package VoCa ((34% of

  16. Slide 16: Hungary -- Fixed broadband: solid market position

    Hungary -- Fixed broadband: solid market position Fixed broadband market shares in Hungary Hungary* Subscribers +7% 2,500,000 2,118,000 1,982,000 2,000,000 18 5% 18.5% 20.5% Fi d broadband Fixed b db d 9.8% 1,500,000 10.0% Other 12.2% 13.2% ƒ market growth driven by cable and fiber, Invitel 1,000,00

  17. Slide 17: Hungary -- TV market: strong subscriber growth

    Hungary -- TV market: strong subscriber growth TV market shares in Hungary Hungary* Subscribers 4,000,000 +1% 3,177,000 3,221,000 3 000 000 3,000,000 27.6% 24.6% TV customer growth 2,000,000 22.9% 23.2% ƒ significant migration from cable to 25.4% Other IPTV driven by ED3-enabled cable 23 7% 23.7% 1,

  18. Slide 18: Hungary -- Mobile voice: increased market share

    Hungary -- Mobile voice: increased market share Mobile voice market shares (based on total SIM cards) Subscribers 15,000,000 -1% 11,703,221 11,527,858 , , 12 000 000 12,000,000 Mobile voice 22.6% 22.8% 9,000,000 ƒ 116% population-based penetration 32.9% 31.3% 6,000,000 ƒ increase in T-Mobile’s marke

  19. Slide 19: Hungary -- Mobile broadband: continued dynamic growth

    Hungary -- Mobile broadband: continued dynamic growth Mobile broadband market shares (based on total SIM cards) Subscribers +62% 3,000,000 2 525 212 2,525,212 2,500,000 23.7% Mobile broadband 2,000,000 1,561,332 28.4% ƒ 770 HSPA+ base stations offering a download 1,500,000 26.2% speed of 21 Mbps 1,0

  20. Slide 20: Hungary – Energy resale business as major growth driver

    Hungary – Energy resale business as major growth driver Gas and electricity points of delivery (POD) PODs 90,000 87,819 75,000 61,516 60,000 Gas Energy resale Electricity 45,000 35,262 ƒ soft launch in 2010, nationwide from April 30,000 24,628 2012 15,226 ƒ customers receive a 5-8% discount on their

  21. Slide 21: T-Systems Hungary – strong growth in SI/IT revenues

    T-Systems Hungary – strong growth in SI/IT revenues Revenues HUF million +5% T-Systems Hungary 30,000 27,597 26 229 26,229 Falling voice and data revenues 25,000 39.9% 49.6% „ lower usage both on fixed and mobile 20,000 networks 15,000 „ continued pressure on tariff levels 31.6% 10,000 28.9% SI/IT G

  22. Slide 22: Macedonia – Financial performance

    Macedonia – Financial performance Revenues Macedonia HUF million -4% Significant FX impact: HUF weakened by 10.4% 18,000 17,023 Q2-o-Q2 against MKD 16,330 15,000 11.0% 11 0% 11.0% Fixed voice hit primarily by cable competition 12,000 „ repositioned portfolio with attractively 41.5% 40.4% priced bund

  23. Slide 23: Montenegro – Financial performance

    Montenegro – Financial performance Revenues Montenegro HUF million +6% Significant FX impact: HUF weakened by 10.5% 10,000 Q2-o-Q2 against EUR 88,249 249 8,000 7,782 11.0% Pressure on fixed voice revenues 10.4% „ strong mobile substitution 6,000 33.7% 35.9% „ growing internet and TV revenues compens

  24. Slide 24: Financials

    Financials 24

  25. Slide 25: Magyar Telekom – Consolidated Income Statement

    Magyar Telekom – Consolidated Income Statement HUF million 2Q 2011 2Q 2012 Change Mobile revenues 75,798 74,799 -1.3% Fixed line revenues 58,086 55,171 -5.0% System Integration/Information Technology revenues 9,298 12,436 33.7% Revenue from Energy Services 384 3,056 Revenues 143,566 145,462 1.3% Dir

  26. Slide 26: Magyar Telekom - Consolidated Balance Sheet

    Magyar Telekom - Consolidated Balance Sheet HUF million Dec 31, 2011 June 30, 2012 Change Current assets 220,396 220 396 183,176 183 176 -16.9% 16 9% Cash and cash equivalents 14,451 11,992 -17.0% Other current financial assets 65,286 36,461 -44.2% Non current assets 877,632 851,077 -3.0% Property,

  27. Slide 27: Magyar Telekom - Consolidated Cashflow Statement

    Magyar Telekom - Consolidated Cashflow Statement HUF million June 30, 2011 June 30, 2012 Change Net cash generated from operating activities 95,464 63,559 -33.4% Investments in tangible and intangible assets (26,656) (40,181) 50.7% Adjustments to cash purchases (7,948) (13,881) 74.6% P h off subsidi

  28. Slide 28: For further questions please contact the IR department

    For further questions please contact the IR department: Investor Relations Phone: +36 1 458-0423 Fax: +36 1 458-0443 e-mail: investor.relations@telekom.hu Abbreviations: 3G: third generation, 4G: fourth generation, ADR: american depository receipt, ADS: american depository shares, AGM: Annual Genera

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