Telekom Austria Ag · VIE:TKA
Telekom Austria — Q2 2016 Earnings Presentation
46 slides from Telekom Austria's earnings presentation, Jul 22, 2016
Slide 1: Results for the first half and second quarter 2016
Results for the first half and second quarter 2016 Vienna, 22 July 2016
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: Operational and financial highlights for the first half and second quarter 2016
Operational and financial highlights for the first half and second quarter 2016 Results for the first half and second quarter 2016 3
Slide 4: Q2 2016: Group results mostly driven by continuing positive momentum in Austria
Q2 2016: Group results mostly driven by continuing positive momentum in Austria Reported Proforma* Group (in EUR million) Q2 16 Q2 15 % change Total revenues 1,030.7 1,032.2 -0.2% EBITDA 329.3 326.8 0.7% CAPEX 206.3 167.0 23.6% > Group total revenues declined by 0.2% on a proforma basis* while they
Slide 5: Austria: New roaming regulation impacts wireless service revenue trends
Austria: New roaming regulation impacts wireless service revenue trends ARPU ARPL Operational data (in EUR) (in EUR) > 1.3% y-o-y mobile subscriber growth (excl. Δ: -0.9% 28.3 28.0 M2M) due to increase in high-value segments Δ: -6.7% > Trend towards mobile WiFi routers 15.6 14.5 > ARPU decline mainl
Slide 6: Largly unchanged CEE trends: Results driven by M&A, negative FX effects and fierce competition
Largly unchanged CEE trends: Results driven by M&A, negative FX effects and fierce competition EBITDA Highlights CEE (reported, in EUR mn) Bulgaria: > Slight growth in proforma total revenues driven by EUR 30.7 mn EUR 20.8 mn EUR 35.0 mn higher equipment revenues and slowdown in mobile service reven
Slide 7: Lower free cash flow due to inversion in working capital needs and higher CAPEX paid
Lower free cash flow due to inversion in working capital needs and higher CAPEX paid (in EUR million) Q2 2016 Q2 2015 % change 1-6 M 2016 1-6 M 2015 % change 1-12 M 2015 Net cash flow from operating activities 255.1 295.1 -13.5% 562.3 690.9 -18.6% 1,228.4 Capital expenditures paid -171.7 -147.4 n.m.
Slide 8: Focus points
Focus points Results for the first half and second quarter 2016 8
Slide 9: Group OPEX savings are sustainable, well on track and with good visibility for future periods
Group OPEX savings are sustainable, well on track and with good visibility for future periods 20% of total cost savings in 2016 Top 3 OPEX saving initiatives 2016 have a multi-year element Purchasing initiatives continue 2015 2016 2017 to provide ~60% of total cost savings: ~5% • More than 1,000 i
Slide 10: Single-vendor (RAN) savings enable LTE push and fixed network quality improvements
Single-vendor (RAN) savings enable LTE push and fixed network quality improvements Modernisation of mobile network based on multi-standard equipment in order to strengthen the A1 quality leadership Austria Exploit A1’s broad spectrum (LTE800, UMTS900 and LTE1800 MHz) Nokia Process simplificati
Slide 11: Austria: Fibre power and TV as well as solutions and connectivity stabilise fixed service revenues
Austria: Fibre power and TV as well as solutions and connectivity stabilise fixed service revenues Fixed-line revenues (in EUR mn) 330 328 -0.1% 326 324 322.8 321.4 322 320 318 316 314 312 310 Q2 2015 Voice Broadband TV Solutions Interconnection Q2 2016 & and other Connectivity revenues > Growth alm
Slide 12: NOW – Telekom Austria Group's innovative OTT TV streaming solution
NOW – Telekom Austria Group’s innovative OTT TV streaming solution NOW functionalities at a glance NOW in Telekom Austria Group 40 live TV channels Jan A1 trial 7 day TV replay service via Apr Mtel launched personal cloud recorder Jul A1 full launch, Vipnet soft launch Up to 3,000 series and f
Slide 13: Outlook for the full year 2016
Outlook for the full year 2016 Results for the first half and second quarter 2016 13
Slide 14: Financial outlook for the full year 2016 unchanged, new dividend outlook
Financial outlook for the full year 2016 unchanged, new dividend outlook 22 July 2016 Consensus Total revenues approx. +1% EUR 4,143.8 mn CAPEX approx. EUR 750 mn EUR 759.2 mn Dividend EUR 0.20 / share - > Outlook based on reported figures and constant currencies except for Belarus (assumed 20%, in
Slide 15: Appendix 1
Appendix 1 Results for the first half and second quarter 2016 15
Slide 16: The leading regional communications player providing convergent telecommunication services
The leading regional communications player providing convergent telecommunication services as of 30 June 2016 (in ‘000) Austria Slovenia Belarus Mobile market position #1 Mobile market position #2 Mobile market position #2 Mobile subscriber: Mobile subscriber: Mobile subscriber: > 5,870 (Q2 2015: 5,
Slide 17: Telekom Austria Group – Profit and Loss
Telekom Austria Group – Profit and Loss (in EUR million) Q2 2016 Q2 2015 % change Service Revenues 929.2 915.6 1.5% Equipment Revenues 101.5 80.5 26.0% Total Revenues 1,030.7 996.1 3.5% Cost of Service -333.2 -325.8 n.m. Cost of Equipment -125.3 -102.1 n.m. Selling, General & Administrative Expenses
Slide 18: Telekom Austria Group – Revenues and OPEX per segment
Telekom Austria Group – Revenues and OPEX per segment Revenues (in EUR million) Q2 2016 Q2 2015 % change Austria 632.6 629.8 0.4% Bulgaria 99.9 87.6 14.0% Croatia 98.7 88.8 11.1% Belarus 76.1 85.7 -11.2% Slovenia 52.3 45.3 15.4% Republic of Serbia 52.7 52.4 0.6% Republic of Macedonia 29.1 17.0 70.6%
Slide 19: Telekom Austria Group – Headcount development
Telekom Austria Group – Headcount development FTE (Average Period) Q2 2016 Q2 2015 % change Austria 8,483 8,703 -2.5% International 8,940 7,329 22.0% Corporate 214 182 17.1% Telekom Austria Group 17,637 16,215 8.8% FTE (End of Period) Q2 2016 Q2 2015 % change Austria 8,464 8,655 -2.2% International
Slide 20: Telekom Austria Group – Capital expenditure split
Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q2 2016 Q2 2015 % change Austria 116.0 105.3 10.2% Bulgaria 22.0 15.6 40.9% Croatia 16.0 12.3 30.1% Belarus 28.6 10.7 168.7% Slovenia 7.5 5.0 51.0% Republic of Serbia 7.2 8.8 -17.4% Republic of Macedonia 11.6 3.1
Slide 21: Telekom Austria Group – Net debt
Telekom Austria Group – Net debt Net Debt* (in EUR million) 30 June 2016 31 December 2015 % change Long-term Debt 2,041.3 2,584.1 -21.0% Short-term Borrowings 597.1 810.4 -26.3% Cash and Cash Equivalents and Short-term Investments -139.2 -911.5 n.m. Net Debt of Telekom Austria Group 2,499.1 2,483.0
Slide 22: Telekom Austria Group – Debt maturity profile
Telekom Austria Group – Debt maturity profile Debt maturity profile* (in EUR million) 744.3 743.3 547.1 298.2 205.3 52.8 47.3 0.0 2016 2017 2018 2019 2020 2021 2022 2023 > EUR 2,638.4** mn short- and long-term borrowings as of 30 June 2016 > Average cost of debt of approximately 3.73% > Cash and cas
Slide 23: Telekom Austria Group – Debt profile
Telekom Austria Group – Debt profile Overview debt instruments Fixed/floating mix 13.3% 86.7% 100.0% Loans Bonds Fixed Lines of credit Ratings > Undrawn committed credit lines > S&P: BBB (outlook stable) amounting to EUR 1,000 mn > Moody’s: Baa2 (outlook stable) > Average term to maturity of approx.
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) 28.3 28.3 28.7 3,510.0 3,521.2 3,534.4 3,530.8 3,513.2 28.1 28.0 192.5 188.3 186.9 189.6 189.3 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 ARPL ARPL-rel
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 %) 15.6 16.0 15.3 14.9 1.6 14.5 1.4 1.4 1.3 1.3 271.4 255.3 262.6 263.4 259.1 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 ARPU Service Revenues Subsidies Mobile penetra
Slide 26: Segment Austria – Broadband market split
Segment Austria – Broadband market split Market share total broadband Market share mobile broadband (in %) (in %) 2.1 3.4 21.8 21.3 Hofer T-Mobile Mobile 39.9 41.3 32.0 Broadband Other Hutchison 34.0 Operators Unbundled Lines A1 36.2 33.7 4.1 3.9 Cable 16.2 16.0 Q2 15 Q2 16 A1 Mobile Broadband Marke
Slide 27: Segment Austria – Voice market split
Segment Austria – Voice market split Market share total minutes Market share voice RGUs (in %) (in %) 13.1 13.1 3.4 3.4 Mobile 23.0 23.1 Others 88.1 88.7 Fixed Line Others UPC Tele2/UTA Fixed Line Telekom A1 Austria 60.5 60.4 4.7 4.5 7.2 6.8 Q2 15 Q2 16 Q2 15 Q2 16 Results for the first half and sec
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) 1,011.9 1,019.1 1,025.5 12.2 12.5 12.3 10.8 10.8 5.9 264.4 285.0 5.6 17.5 17.4 17.6 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 ARPL ARPL-relevant reve
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 %) 2.1 2.3 2.1 2.0 5.4 5.5 5.5 1.8 5.3 5.3 70.1 71.2 67.2 65.9 67.5 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 ARPU Service Revenues Subsidies Mobile penetration (in
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) 576.8 593.7 535.8 553.0 23.7 24.2 23.6 23.3 23.6 460.1 17.9 14.8 16.0 18.4 19.4 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 ARPL ARPL-relevant revenues
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 %) 12.8 3.6 11.7 11.1 11.1 11.9 2.4 2.1 2.0 61.3 1.8 68.8 60.9 58.7 57.1 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 ARPU Service Revenues Subsidies Mobile penetration
Slide 32: Segment Belarus – Mobile key performance indicators
Segment Belarus – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 4.9 4.5 4.2 4.1 1.6 1.6 3.5 1.4 1.3 1.4 72.0 59.6 66.8 61.9 52.0 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 ARPU Service Revenues Subsidies Mobile penetration (in E
Slide 33: 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) 76.7 170.7 159.7 147.5 147.6 37.7 36.5 36.6 2.5 n.a. 7.4 7.4 7.7 n.a. Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 ARPL ARPL-relevant revenues Fixed bro
Slide 34: Segment Slovenia – Mobile key performance indicators
Segment Slovenia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 16.6 17.5 15.8 15.3 15.9 1.5 1.5 1.6 1.3 1.3 34.2 34.1 36.6 33.5 32.6 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 ARPU Service Revenues Subsidies Mobile penetration
Slide 35: Segment Serbia – Mobile key performance indicators
Segment Serbia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 6.4 6.2 6.0 5.5 5.7 4.1 3.3 3.4 3.6 3.1 40.4 35.5 39.4 37.9 34.7 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 ARPU Service Revenues Subsidies Mobile penetration (in EU
Slide 36: 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) 13.6 304.5 307.2 305.7 12.4 12.0 12.3 12.4 184.1 187.9 5.3 5.6 5.3 3.1 3.1 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 ARPL ARPL-relevant revenues Fix
Slide 37: Segment Macedonia – Mobile key performance indicators
Segment Macedonia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 7.0 7.2 6.3 3.3 5.8 6.1 2.4 2.2 2.1 1.7 20.7 20.2 20.8 12.9 13.3 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 ARPU Service Revenues Subsidies Mobile penetration (in
Slide 38: Appendix 2 – Regulatory topics
Appendix 2 – Regulatory topics Results for the first half and second quarter 2016 38 38
Slide 39: Glide Path of Mobile Termination Rates
Glide Path of Mobile Termination Rates Jan Jul Jan Jul Jan Jul 2015 2015 2016 2016 2017 2017 Austria (EUR) 0.008049 0.008049 0.008049 0.0080492 0.0080492 0.0080492 Bulgaria (BGN) 0.019 0.019 0.019 0.019 No data No data Croatia (HRK) 0.063* 0.063* 0.063* 0.0631 0.0631 0.0631 MTS 250/125 MTS 250/125 M
Slide 40: EU roaming price regulation
EU roaming price regulation RETAIL (in EURc) Before July 2012 July 2013 July 2014 30 April 2016 15 July 2017 domestic tariff Data (per MB) none 70 45 20 domestic tariff + 5* Voice-calls made domestic tariff 35 29 24 19 domestic tariff (per minute) + 5* Voice-calls received weighted 11 8 7 5 domestic
Slide 41: Upcoming spectrum tenders/prolongations/assignments
Upcoming spectrum tenders/prolongations/ assignments Expected Comments 2019 (2100 MHz) Austria - 2020 (700 MHz) 2018 (800 MHz) Bulgaria - 2019 (2100 MHz) 2017 (2100 MHz) Croatia - 2020 (700 MHz) 2016 (1800 MHz) LTE license only awarded to B-cloud, allocation to other operators not Belarus 2016 (2100
Slide 42: Appendix 3 – Personnel restructuring in Austria
Appendix 3 – Personnel restructuring in Austria Results for the first half and second quarter 2016 42
Slide 43: Overview – Restructuring charges and provision vs. FTE
Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) Q1 Q2 Q1 Q2 2010 2011 2012 2013 2014 2015 2016 2016 2010 2011 2012 2013 2014 2015 2016 2016 Transfer to FTE effect 76.9 274.3 49.9 149.0 86.4* 69.5** 9.2 21.0 158 106 44 22 52 49 0 1
Slide 44: Overview – Cash flow impact of restructuring
Overview – Cash flow impact of restructuring Overview cash flow impact* (in EUR million) Total cash-flow impact 2010 57.9 > Total cash flow impact comprises 2011 93.4 old and new programms 2012 104.0 > Cash flow impact for Q2 2016 of 2013 108.0 EUR 25.7 mn 2014 107.1 > Total expected cash flow impac
Slide 45: Appendix 4 – Corporate sustainability
Appendix 4 – Corporate sustainability Results for the first half and second quarter 2016 45
Slide 46: Key figures – Corporate Sustainability
Key figures – Corporate Sustainability Selected Group-wide KPIs Ratings Products: Providing Responsible Products 2015 Customer contacts in customer service ('000) 38,175 Environment 2015 ›Classification: B ›Classification: B- Total CO2 Emissions (Scope 1+2 in tonnes) 187,383 (99 points out of 100) E
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