Magyar Telekom Telecommunications Plc · BET:MTELEKOM

Magyar Telekom Telecommunications — Q1 2014 Earnings Presentation

29 slides from Magyar Telekom Telecommunications's earnings presentation, 2014

  1. Slide 1: Magyar Telekom Group Investor Presentation

    MAGYAR TELEKOM GROUP INVESTOR PRESENTATION

  2. Slide 2: Strategy, Outlook and Guidance

    STRATEGY, OUTLOOK AND GUIDANCE

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

    OVERVIEW – MAGYAR TELEKOM GROUP AT A GLANCE INTERNATIONAL PRESENCE BUNDLING STRATEGY Czech Republic Slovakia Austria Moldova Beyond Hungary Hungary Core Slovenia Croatia Croatia Romania Romania Core DIVERSIFIED BiH Serbia SERVICE Serbia Kosovo Bulgaria Montenegro Bulgaria PROVIDER Macedonia Macedoni

  4. Slide 4: Hungarian Economic Environment

    HUNGARIAN ECONOMIC ENVIRONMENT GROWTH STRUCTURE CONTINUED DELEVERAGING KEEPS Contribution to GDP growth (%) DOMESTIC DEMAND LOW 8  Consumer spending and investments slowly 6 turn the trend but growth remains fragile 4  EU transfers act as vital source of 2 investments 0  MT financials strongly co

  5. Slide 5: Market Positions on the Hungarian Telecommunication Market

    MARKET POSITIONS ON THE HUNGARIAN TELECOMMUNICATION MARKET MOBILE VOICE MARKET SHARES (TOTAL SIM BASED) MOBILE BROADBAND MARKET SHARES (TOTAL SIM BASED) Subscribers Subscribers 12,000,000 5,000,000 22.8% 22.5% 22.4% 4,000,000 9,000,000 24.7% 25.0% 31.3% 30.9% 30.8% 3,000,000 Vodafone 25.9% 6,000,000

  6. Slide 6: Wide Range of Telecom Services, System Integration and IT Infrastructure Competences

    WIDE RANGE OF TELECOM SERVICES, SYSTEM INTEGRATION AND IT INFRASTRUCTURE COMPETENCES CONNECTIVITY 40% of total revenue 64 % of total margin* Fixed voice Fixed data Fixed internet Mobile voice Mobile internet Mobile data SYSTEM INTEGRATION 17% of total revenue 10% of total margin* Business Intelligen

  7. Slide 7: Market Leader in IT Services

    MARKET LEADER IN IT SERVICES SYSTEM INTEGRATION IT INFRASTRUCTURE SI & IT Package Custom System IT App. OS & Infra. OS & Infra. proj. Public Hosting application app. dev. integration consulting operation operation service Cloud 33% 30% 20% 18% 18% 18% 15% 15% 10% 9% 8% 5% 6% Fornax Revenue based mar

  8. Slide 8: 2013 Group Results – Revenues and EBITDA

    2013 GROUP RESULTS – REVENUES AND EBITDA GROUP REVENUES GROUP EBITDA HUF bn +5.0% HUF bn -7.9% 194.8 -12.1 640 5.1 637.5 195 21.7 630 192 620 189 9.8 610 607.1 -12.4 186 14.3 600 -9.0 -2.6 183 -2.9 3.8 -3.7 1.7 179.5 590 180 3.0 580 177 -1.6 570 174 10 0 0 2012 Mobile Fixed Fixed M. non- Equip. SI/I

  9. Slide 9: 2013 Group Results – Capex and FCF

    2013 GROUP RESULTS – CAPEX AND FCF GROUP CAPEX GROUP FCF* HUF bn HUF +42.8bn HUF bn HUF -59.1bn 7.2 -1.4 146.1 59.7 -19.9 150 17.5 60 38.0 3.1 45 -15.4 103.3 -10.9 100 -10.7 30 -30.1 15 50 -0.3 0.6 0 6.6 0 -15 2012 License Mac. License Mac. Annual STB Other 2013 2012 Pro-M EBITDA Spectrum Other cash

  10. Slide 10: Group Revenue Developments

    GROUP REVENUE DEVELOPMENTS SIGNIFICANT REVENUE POTENTIAL FROM NON-CORE ACTIVITIES HUF bn 800 CAGR: ca. +2% 600 Beyond core  Mobile broadband growth ca. 18% only partially compensates Near core for decline in voice ca. 26% revenue 400  Further growth in near- core revenues expected Core  Increasin

  11. Slide 11: Disciplined Cost Management

    DISCIPLINED COST MANAGEMENT EBITDA AND COST DEVELOPMENTS (RELATIVE TO REVENUES)  Direct costs expected to rise in 100% parallel with increase in 32% revenues and change in 80% 37% 37% 40% product mix  Indirect costs to decline by 60% CAGR ca. 2% by 2017 vs. 31% 2012 29% 30% 26% 40%  Constant oper

  12. Slide 12: Efficiency Investments Free Up Capex for New Technologies and Services

    EFFICIENCY INVESTMENTS FREE UP CAPEX FOR NEW TECHNOLOGIES AND SERVICES CAPEX DEVELOPMENTS* HUF bn 15% 13% 14% 12% 100  Fixed access: focus on increasing HSI coverage 80  Mobile access: 4G population coverage to reach 80% by 2015 60  Efficiency investments: – Replacement of legacy network – PSTN m

  13. Slide 13: Current Spectrum Situation

    CURRENT SPECTRUM SITUATION UNUSED BAND FREQUENCIES FDD DL FDD UL 800 MHz 30 30 2×30 MHz 791 862 FDD UL FDD DL 900 MHz 5 1.8 10 8 9 5 1.8 10 8 9 2×5 MHz 880 1 915 925 1 960 FDD UL FDD DL 1800 MHz 15 15 3 15 15 11.8 15 15 3 15 15 11.8 2×15 MHz 1710 1785 1805 1880 TDD FDD UL FDD DL 2100 MHz 5 5 5 15 15

  14. Slide 14: Dividend Policy

    DIVIDEND POLICY DIVIDEND PAYMENT Net debt ratio* Dividend per share (HUF) 50% 80 43.8% 70  Maintain net debt ratio (net 40% 60 debt/total capital) target of 30% - 34.1% 34.3% 32.7% TARGET 40% reflecting the current 30.8% 30% 50 unpredictable environment  The AGM approved that no 40 74 dividend pay

  15. Slide 15: Financial Outlook

    FINANCIAL OUTLOOK 2013 RESULTS 2014 TARGETS 2017 TARGETS increasing at a CAGR of REVENUE HUF 637.5bn (+5.0%) flat to 3% decline ca. 2% compared to 2012 surpassing 2013 level of EBITDA HUF 179.5bn (-7.9%) 3% - 6% decline HUF 179.5bn CAPEX* HUF 87.5bn around HUF 87bn around HUF 80bn **excluding spectr

  16. Slide 16: Q1 2014 Results

    Q1 2014 RESULTS

  17. Slide 17: Q1 2014 Results and Public Targets for 2014

    Q1 2014 RESULTS AND PUBLIC TARGETS FOR 2014 Q1 2014 RESULTS 2014 TARGETS REVENUE -3.0% Flat to 3% decline  Lower energy revenues due to November 2013 cut in regulated retail energy prices and the mild winter  Decline in equipment sales and SI/IT revenues REPORTED +3.8% 3% - 6% decline EBITDA  Str

  18. Slide 18: Q1 2014 Group Results – Revenues and EBITDA

    Q1 2014 GROUP RESULTS – REVENUES AND EBITDA GROUP REVENUES GROUP EBITDA HUF bn HUF bn -3.0% 3.8% 158 42 156.6 -1.2 1.7 -1.1 156 -1.8 0.8 -1.3 154 -0.7 41 -1.1 40.5 -0.8 1.1 151.9 1.5 152 -1.8 0.9 0.6 40 150 148 39.0 39 2 0 0 Q1 Mobile Fixed Fixed Equip. SI/IT Energy M. non- TV Other Q1 Q1 2013 Energ

  19. Slide 19: Q1 2014 Segment Results – Revenues and EBITDA

    Q1 2014 SEGMENT RESULTS – REVENUES AND EBITDA SEGMENTS’ REVENUE DEVELOPMENTS SEGMENTS’ EBITDA DEVELOPMENT HUF bn HUF bn 160 42 3.8% 158 -3.0% 1.9 -0.3 41 -0.1 0.0 156.6 -2.9 40.5 156 40 154 -0.8 39.0 -1.5 39 0.1 0.3 151.9 152 0 35 Q1 2013 T-HU T-Systems Maced. Monten. Elim. Q1 2014 Q1 2013 T-HU T-Sy

  20. Slide 20: Hungary – Fixed Voice Market

    HUNGARY – FIXED VOICE MARKET TELEKOM HUNGARY FIXED VOICE SUBSCRIBERS  Significant reduction in fixed voice churn due to the Subscribers 2,000,000 retention effect of: -2% – Hoppá package 1,500,000 1,449,349 1,425,855 – 2Play/3Play offers – Retail energy bundling 1,000,000 VoCa  Decline in 1Play cu

  21. Slide 21: Hungary – Energy Retail

    HUNGARY – ENERGY RETAIL GAS AND ELECTRICITY POINTS OF DELIVERY (POD) RETAIL ENERGY BUSINESS PODs (thousand) 200  Soft launch in 2010, nationwide since April 2012 Gas Electricity  Residential customers receive a 3-8% discount to 150 regulated universal service prices on their energy 68.7 67.6 67.6

  22. Slide 22: Telekom Hungary – Broadband and TV Market

    TELEKOM HUNGARY -- BROADBAND AND TV MARKET FIXED BROADBAND SUBSCRIBER BREAKDOWN Subscribers +6% 1,000,000 935,962 884,043 6% 5%  Growth in broadband market driven by cable 750,000 29% 30% and fiber  Significant ARPU pressure from multiplay 500,000 Fiber Cable BB migration and local pricing 57% 56%

  23. Slide 23: Telekom Hungary – Mobile Market

    TELEKOM HUNGARY – MOBILE MARKET TELEKOM SMARTPHONE PENETRATION % of total handsets  Improving customer mix: y-o-y increase in 50 % postpaid ratio from 47.5% to 48.7% 43.9 % 41.1 % 40 %  Smartphone sales reached 92% of postpaid 31.3 % handsets 30 %  Broadband subscription attach rate at ca. 90% 20

  24. Slide 24: Macedonia and Montenegro

    MACEDONIA AND MONTENEGRO MACEDONIAN MOBILE VOICE MARKET One (T. Slovenia) MONTENEGRIN MOBILE VOICE MARKET Telenor VIP (TKA) Subscribers m:tel (T. Serbia) Subscribers T-Mobile +4% T-Mobile -8% 0% -1% 1,500,000 2,500,000 -6% -14% 24% 22% 1,200,000 0% 2,000,000 24% 24% 25% -5% 40% 20% 26% 900,000 41% 1

  25. Slide 25: Financials

    FINANCIALS

  26. Slide 26: Magyar Telekom – Consolidated Income Statement

    MAGYAR TELEKOM – CONSOLIDATED INCOME STATEMENT HUF million Q1 2013 Q1 2014 Change Mobile revenues 73,213 73,382 0.2% Fixed line revenues 54,047 51,813 -4.1% System Integration/Information Technology revenues 14,012 13,189 -5.9% Revenue from Energy Services 15,337 13,509 -11.9% Revenues 156,609 151,8

  27. Slide 27: Magyar Telekom – Consolidated Balance Sheet

    MAGYAR TELEKOM - CONSOLIDATED BALANCE SHEET HUF million Mar 31, 2013 Mar 31, 2014 Change Current assets 231,042 202,910 -12.2% Cash and cash equivalents 34,799 13,748 -60.5% Other current financial assets 42,560 33,916 -20.3% Non current assets 845,670 893,699 5.7% Property, plant and equipment - ne

  28. Slide 28: Magyar Telekom – Consolidated Cash Flow Statement

    MAGYAR TELEKOM - CONSOLIDATED CASH FLOW STATEMENT HUF million Mar 31, 2013 Mar 31, 2014 Change Net cash generated from operating activities 13,003 25,263 94.3% Investments in tangible and intangible assets (16,712) (17,292) 3.5% Adjustments to cash purchases (3,875) (8,031) 107.3% Purchase of subsid

  29. Slide 29: 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 Abbreviations: 3G: third generation, 4G: fourth generation, ARPU: average revenue per user, BB: broadband, CUG: closed user group, HQ: headquart

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