Telekom Austria Ag · VIE:TKA
Telekom Austria — Q2 2015 Earnings Presentation
46 slides from Telekom Austria's earnings presentation, Jul 16, 2015
Slide 1: Results for the first half and second quarter 2015
Results for the first half and second quarter 2015 Vienna, 16 July 2015
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 2015
Operational and financial highlights for the first half and second quarter 2015 Results for the first half and second quarter 2015 3
Slide 4: H1 2015: Austria resilient to new entrants but CEE remains challenging
H1 2015: Austria resilient to new entrants but CEE remains challenging Clean Group revenues* +0.4% Clean EBITDA comparable** +2.4% Net profit EUR 171.4 mn Mobile Austria Increase in data package volumes Subsidies Improving subscriber trends Fixed line Austria Tariff adjustments to base Churn in li
Slide 5: H1 2015: Austria resilient to new entrants but CEE remains challenging (ctd.)
H1 2015: Austria resilient to new entrants but CEE remains challenging (ctd.) Regulation New roaming glidepath New net neutrality proposal Convergence Approval of Amis acquisition expected for Q3 2015 Consolidation Merger of Vip Operator and ONE approved in Republic of Macedonia Full Year 2015 Group
Slide 6: Key financial developments in the first half and second quarter 2015
Key financial developments in the first half and second quarter 2015 Results for the first half and second quarter 2015 6
Slide 7: Q2 2015: Revenue and EBITDA comparable growth (both clean)
Q2 2015: Revenue and EBITDA comparable growth (both clean) (in EUR million) Q2 2015 Q2 2014 % change > Clean Group revenues**: Growth of Revenues 982.8 963.0 2.1% +0.8% yoy EBITDA comparable* 326.8 299.4 9.1% > EUR 7.9 mn negative FX effect EBITDA comparable margin* 33.3% 31.1% EUR 28.2 mn negative
Slide 8: Revenues: Positive trend in Austria offsets CEE headwinds in Q2 2015
Revenues: Positive trend in Austria offsets CEE headwinds in Q2 2015 EUR 618.5 mn Group Revenues Δ: +6.0% Reported EUR 982.8 mn +2.1% Clean* EUR 999.2 mn +0.8% EUR 86.1 mn EUR 90.2 mn EUR 84.4 mn EUR 114.0 mn Δ: -5.9% Δ: -2.6% Δ: -1.1% Δ: -5.2% Austria Bulgaria Croatia Belarus Additional markets Seg
Slide 9: Group EBITDA comparable grows 2.2% on a clean basis
Group EBITDA comparable grows 2.2% on a clean basis* Group EBITDA comparable EUR 212.7 mn Δ: +23.5% Reported EUR 326.8 mn 9.1% Clean* EUR 334.7 mn 2.2% EUR 32.1 mn EUR 43.7 mn EUR 25.3 mn EUR 19.0 mn Δ: -17.2% Δ: +4.5% Δ: -25.2% Δ: -14.4% Austria Bulgaria Croatia Belarus Additional markets Segment A
Slide 10: Strong increase in Free Cash Flow due to lower working capital needs and lower CAPEX
Strong increase in Free Cash Flow due to lower working capital needs and lower CAPEX (in EUR million) Q2 2015 Q1 2014 % change 1-6 M 2015 1-6 M 2014 % change Gross cash flow 297.3 303.4 -2.0% 600.9 587.4 2.3% Change in working capital -35.0 -78.8 n.m. -66.5 -213.9 n.m. Cashflow from operating activi
Slide 11: Focus points
Focus points Results for the first half and second quarter 2015 11
Slide 12: Revenue outlook adjusted mainly due to FX and worse-than-expected momentum in CEE
Revenue outlook adjusted mainly due to FX and worse-than-expected momentum in CEE Old outlook: Exp. yoy New outlook: Analyst Exp. yoy Approx. change: Approx. consensus: change: ++2.0% 2,0% flat + 0,0 ‐ 0,5% -0.1% Revenue Austria Bulgaria Croatia Belarus Additional Current expectations markets reve
Slide 13: Austria: Price pressure in no-frills segment as a result of new MVNOs
Austria: Price pressure in no-frills segment as a result of new MVNOs, counter measures in place > MVNO launches: > Counter measures implemented: > UPC in Dec 2014 > Tariff adjustments in no-frills segments > HoT in Jan 2015 > More content (e.g. data allowance) > Mass response (Spusu) in June 2015 >
Slide 14: European institutions agree on new regulation for roaming and net neutrality
European institutions agree on new regulation for roaming and net neutrality Roaming: New glidepath > Zero retail roaming as of 15 June 2017; RETAIL (in EURc) July 2014 30 April 2016 15 July 2017 wholesale review by 30/06/2016 Data (per MB) 20 domestic tariff domestic + 5* tariff > Transition period
Slide 15: Important steps taken to achieve convergence in Slovenia and consolidation in Rep. of Macedonia
Important steps taken to achieve convergence in Slovenia and consolidation in Rep. of Macedonia Amisco NV Amis Slovenia Amis Croatia ONE FY 2014 FY 2014 FY 2014 Business Fixed-line Fixed-line Market share 25.4%* (No. 3) reseller reseller & own fibre network Customers 715,000 Customers 63,000 23,00
Slide 16: Outlook for the full year 2015
Outlook for the full year 2015 Results for the first half and second quarter 2015 16
Slide 17: Telekom Austria Group adjusts revenue outlook for the full year 2015
Telekom Austria Group adjusts revenue outlook for the full year 2015 16 July 2015 22 April 2015 Revenues Revenues Approx. flat Approx. +2.0% CAPEX* CAPEX* EUR 700-750 mn EUR 700-750 mn Proposed ProposedDividend** dividend** EUR 0.05 EUR 0.05 On a constant currency basis with the exception of Belarus
Slide 18: Appendix 1
Appendix 1 Results for the first half and second quarter 2015 18
Slide 19: The leading regional communications player providing convergent telecommunication services
The leading regional communications player providing convergent telecommunication services as of 30 June 2015 (in ‘000, in %) Austria Slovenia Belarus Mobile: Mobile: Mobile: > Market share: 40.1% (Q2 2014: 41.5%) > Market share: 29.5% (Q2 2014: 29.8%) > Market share: 42.4% (Q2 2014: 42.5%) > Subscr
Slide 20: Telekom Austria Group – Revenue breakdown
Telekom Austria Group – Revenue breakdown Revenue Split - Segment Austria (in EUR million) Q2 2015 Q2 2014 % change Monthly fee and traffic 450.2 413.6 8.8% Data and ICT solutions 54.2 45.7 18.6% Wholesale (incl. Roaming) 34.2 48.1 -29.0% Interconnection 44.7 47.3 -5.5% Equipment 27.8 20.3 37.0% Oth
Slide 21: Telekom Austria Group – Expense breakdown
Telekom Austria Group – Expense breakdown Operating Expense - Segment Austria (in EUR million) Q2 2015 Q2 2014 % change Material expense 60.2 55.8 7.9% Employee costs 172.4 167.5 2.9% Interconnection 42.2 44.4 -5.2% Maintenance and repairs 23.6 26.0 -9.0% Services received 22.7 29.3 -22.6% Other sup
Slide 22: Telekom Austria Group – Headcount development
Telekom Austria Group – Headcount development Austria 8,683 8,854 -1.9% International 7,295 7,034 3.7% Telekom Austria Group* 16,158 16,062 0.6% FTE (End of period) Q2 2015 Q2 2014 % change Austria 8,655 8,837 -2.1% International 7,246 7,035 3.0% Telekom Austria Group* 16,080 16,044 0.2% * Including
Slide 23: Telekom Austria Group – Capital expenditures split
Telekom Austria Group – Capital expenditures split Capital Expenditures (in EUR million) Q2 2015 Q2 2014 % change Segment Austria 97.6 79.9 22.2% Segment Bulgaria 15.6 41.2 -62.2% Segment Croatia 12.3 18.4 -33.2% Segment Belarus 10.6 7.3 44.3% Segment Additional Markets 16.8 82.8 -79.7% Slovenia 5.0
Slide 24: Telekom Austria Group – Net debt
Telekom Austria Group – Net debt Net debt* (in EUR million) 30 June 2015 31 December 2014 % change Long-term debt 2,635.1 3,385.0 -22.2% Short-term borrowings** 1,058.6 340.8 210.6% Cash and cash equivalents and short-term investments -1,185.7 -1,032.5 n.m. Net Debt of Telekom Austria Group 2,508.0
Slide 25: Telekom Austria Group – Debt maturity profile
Telekom Austria Group – Debt maturity profile Debt Maturity Profile (Including accrued interest)* (in EUR million) 840.7 743.3 742.2 546.3 270.6 298.0 205.3 47.3 0.0 2015 2016 2017 2018 2019 2020 2021 2022 2023 > EUR 3,693.7 mn of short- and long-term borrowings as of 30 June 2015** > Average cost o
Slide 26: Telekom Austria Group – Debt profile
Telekom Austria Group – Debt profile Overview debt instruments Fixed-floating mix 16.4% 83.6% 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 27: Segment Austria – Fixed-line key performance indicators
Segment Austria – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total fixed access lines & net adds (in EUR, in EUR million) (in ‘000) 30.3 30.2 30.5 29.5 29.3 2,275 2,275 2,287 2,289 2,282 207.4 208.5 11.6 206.0 202.7 200.5 0.4 1.8 -6.7 -12.6 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 1
Slide 28: Segment Austria – Mobile key performance indicators
Segment Austria – Mobile key performance indicators ARPU & ARPU-relevant revenues* MoU per subscriber** (in EUR) (in min) 16.2 16.9 16.5 15.7 16.0 139.0 141.0 137.8 137.6 136.4 277.4 268.6 270.2 257.9 254.1 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 ARPU ARPU relevant revenues Mobil
Slide 29: Segment Austria – Broadband market split
Segment Austria – Broadband market split Market share total broadband Market share mobile broadband (in %) (in %) 7.1% 6.2% Tele.ring 16.3% 17.6% T-mobile 41.9% 43.7% Hutchison Mobile Broadband 30.8% 33.1% A1 Other Operations Unbundled Lines 34.7% 30.2% 4.7% 4.3% Cable Q2 14 Q2 15 16.6% 16.7% Market
Slide 30: Segment Austria – Voice market split
Segment Austria – Voice market split Market share total minutes Market share fixed-line minutes (in %) (in %) 13.9% 13.1% 3.9% 3.4% 22.3% 23.0% 86.7% 87.4% 59.9% 60.5% 5.2% 4.8% 8.2% 7.8% Q2 14 Q2 15 Q2 14 Q2 15 Fixed Line Telekom Austria Fixed Line Others Mobile A1 Tele2/UTA UPC Others Results for
Slide 31: Segment Bulgaria – Fixed-line key performance indicators
Segment Bulgaria – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total fixed access lines (in EUR, in EUR million) (in ‘000) 14.5 14.4 14.4 183.5 13.4 11.7 170.4 6.7 6.6 6.6 6.5 6.3 153.0 151.3 153.6 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 ARPL ARPL-relevant
Slide 32: Segment Bulgaria – Mobile key performance indicators
Segment Bulgaria – Mobile key performance indicators ARPU MoU per subscriber (in EUR) (in min) 134.4 6.2 6.2 129.6 129.7 129.6 127.5 5.9 5.5 5.5 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Mobile broadband customers Mobile penetration (in ‘000) (in %) 287.4 152.7% 271.2 150.5% 248.9
Slide 33: Segment Croatia – Fixed-line key performance indicators
Segment Croatia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total fixed access lines (in EUR, in EUR million) (in ‘000) 237.8 21.3 21.9 228.9 21.1 21.4 21.2 15.3 219.9 13.9 14.3 212.3 13.3 208.0 13.2 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 ARPL ARPL-rele
Slide 34: Segment Croatia – Mobile key performance indicators
Segment Croatia – Mobile key performance indicators ARPU MoU per subscriber (in EUR) (in min) 160.6 150.7 154.4 11.5 146.6 145.0 11.4 11.2 11.1 10.7 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Mobile broadband customers Mobile penetration (in ‘000) (in %) 173.6 178.4 144.2 154.7 140.
Slide 35: Segment Belarus – Mobile key performance indicators
Segment Belarus – Mobile key performance indicators ARPU MoU per subscriber* (in EUR) (in min) 6.2 201.4 197.7 198.8 199.6 187.8 5.0 5.0 4.5 4.6 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Mobile broadband customers Mobile penetration (in ‘000) (in %) 289.2 122.8% 123.1% 123.3% 284.1
Slide 36: Segment Additional Markets – Mobile key performance indicators
Segment Additional Markets – Mobile key performance indicators Slovenia - ARPU Slovenia - MoU per subscriber (in EUR) (in min) 192.2 188.0 190.4 190.3 189.1 19.8 19.6 17.3 15.8 16.2 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Republic of Serbia - ARPU Republic of Macedonia - ARPU (in
Slide 37: Appendix – Regulatory topics
Appendix 2 – Regulatory topics Results for the first half and second quarter 2015 37
Slide 38: Glide Path of Mobile Termination Rates
Glide Path of Mobile Termination Rates EU Pressure on National Regulatory Authorities to Further Decrease Rates Jan Jul Sep Jan Jul 2014 2014 2014 2015 2015 Austria (EUR) 0.008049 0.008049 0.008049 0.008049 0.008049 Bulgaria (BGN) 0.02 0.02 0.02 0.019 0.019 Croatia (HRK) 0.1282* 0.1282* 0.1282* 0.06
Slide 39: 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 40: Upcoming spectrum tenders / prolongations / assignments
Upcoming spectrum tenders / prolongations / assignments Planned/Expected Comments Austria 2019 (2100 MHz) - 2600 MHz band planned to be free from 1st Sept. 2015; Bulgaria 2015 (1800 MHz) allocation procedure currently undecided 2100 MHz: dependent on LTE roll out dynamics and traffic 2015 (1800 MHz)
Slide 41: Appendix – Personnel restructuring in Austria
Appendix 3 – Personnel restructuring in Austria Results for the first half and second quarter 2015 41
Slide 42: Quarterly overview – Restructuring charges and provision vs. FTE
Quarterly 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 2015 2010 2011 2012 2013 2014 2015 2015 FTE effect 76.9 274.3 49.9 149.0 86.4* 4.5 17.4 Transfer to 158 106 44 22 52 10 18 governm
Slide 43: Overview – Cash flow impact of restructuring
Overview – Cash flow impact of restructuring Overview cash flow impact* (in EUR million) Total cash-flow impact > Total cash flow impact comprises old 2010 57.9 and new programmes 2011 93.4 > Cash flow impact for Q2 2015 of 2012 104.0 EUR 25.6 mn 2013 108.0 > Total expected cash flow impact for 2014
Slide 44: Appendix – Corporate sustainability
Appendix 4 – Corporate sustainability Results for the first half and second quarter 2015 44
Slide 45: 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 2015 45
Slide 46: Key figures
Key figures Selected Group-wide KPIs Ratings Environment: Living Green 2014 Total CO2 Emissions (Scope 1+2 in tonnes) 170,842 Energy efficiency index (in Mwh/terabyte) 0.8 Paper consumption (in tonnes) 1,771 › Classification: B › Classification: C+ (93 points out of Collected old mobile phones (in p
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