Magyar Telekom Telecommunications Plc · BET:MTELEKOM
Magyar Telekom Telecommunications — Magyar Telekom — FY2018 Earnings Presentation
37 slides from Magyar Telekom Telecommunications's earnings presentation, Feb 21, 2019
Slide 1: Magyar Telekom Results and Strategy Presentation
MAGYAR TELEKOM RESULTS AND STRATEGY PRESENTATION February 21, 2019
Slide 2: Strategic Review 2013-2018
MAGYAR TELEKOM STRATEGIC REVIEW 2013-2018
Slide 3: Disclaimer
DISCLAIMER This investor presentation contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore should n
Slide 4: Telekom 2017 Strategic Targets and Results
”TELEKOM 2017” STRATEGIC TARGETS AND RESULTS Residential segment ▪ Improve customer experience ▪ Maximize customer value Technology ▪ Bundled offers ▪ Maintain technological leadership ▪ Online capabilities ▪ Efficiency in network development LEADING Soho/SMB segment ▪ Revenue growth via increased H
Slide 5: Telekom 2017 Retrospective Financial Targets
”TELEKOM 2017” RETROSPECTIVE FINANCIAL TARGETS 2014 2017 TARGETS TARGETS REVENUE* increasing at a CAGR of ca. 2% compared to 2012 EBITDA declining at a CAGR surpassing 2013 level of 6-8% compared to 2012 CAPEX** around HUF 87 bn around HUF 80 bn HUF 86 bn FREE CASH FLOW FCF bottoming out in 2014 and
Slide 6: Telekom 2017 Financial Turnaround
”TELEKOM 2017” FINANCIAL TURNAROUND SALE OF MONTENEGRIN OPERATION IN 2017 EXIT FROM ENERGY MARKET 2016-2017 HUF bn 660 Revenues 630 600 Revenuesexcl. Energy & Montenegro 570 EBITDA 180 EBITDA excl. Montenegro 30 0 FCF 2012 2013 2014 2015 2016 2017 -30
Slide 7: 2018 Highlights
2018 HIGHLIGHTS GROWTH MAINTAINED FINANCIAL CUSTOMER BASE PERFORMANCE ▪ Focus on multi-play and ▪ Sustained turnaround FMC customer base ▪ Improving balance sheet expansion ▪ Leading market positions maintained ▪ Continued network development INTERNAL EFFICIENCY ▪ Digitalization ▪ Simplification ▪ A
Slide 8: 2018 Financials: Group Revenues and EBITDA
2018 FINANCIALS GROUP REVENUES * GROUP EBITDA * HUF bn +7.2% HUF bn +3.8% 660 19.1 0.5 0.5 655.2 194 1.6 192.8 1.7 650 192 2.5 -0.4 -4.6 640 9.3 190 3.5 630 17.8 188 620 610.9 186 185.7 610 0 0 Gross Indirect 2017 Mobile Fixed line SI/IT Energy Mobile Fixed line SI/IT 2018 2017 Gross Indirect 2018 p
Slide 9: 2018 Financials: Group Capex and FCF
2018 FINANCIALS GROUP CAPEX GROUP FCF +24.4% +16.4% HUF bn HUF bn 120 2.7 68.0 68 66 7.8 110 15.7 107.2 64 100 62 3.3 6.9 2.1 60 58.4 -1.3 90 86.2 0.9 -0.7 -1.7 -2.1 58 -2.9 0 0 2017 Mobile Fixed IT CPE Other Macedonia Freq. 2018 2017 EBITDA Working Cash R/E sale Other 2018 network network licnese e
Slide 10: Hungary – Market Shares
HUNGARY – MARKET SHARES MOBILE MARKET1 FIXED VOICE MARKET2 Subscribers (mn) Subscribers (mn) 11.8 11.7 11.8 12.0 Vodafone 4.0 Other 26.1% 26.0% 26.4% Telenor 3.1 3.1 3.0 INVITEL 9.0 3.0 3.2% 3.3% 3.5% Magyar Telekom 13.1% 12.3% DIGI 28.6% 28.9% 28.5% 11.9% 12.7% 23.8% 6.0 2.0 UPC 17.9% 19.3% 21.2% M
Slide 11: Hungary – Customer Developments
HUNGARY – CUSTOMER DEVELOPMENTS MOBILE SIMS FIXED LINE MULTIPLAY CUSTOMER BASE ‘000 -39 +37 -27 +19 ‘000 6,000 5,332 5,293 5,330 1,500 1,400 1,373 1,392 5,000 40.8% 35.5% 32.8% 32% 28% 25% 4,000 1,000 3,000 29% 28% 29% 2,000 59.2% 64.5% 67.2% 500 1Play 1,000 Prepaid 39% 44% 46% 2Play 0 Postpaid 0 3P
Slide 12: Hungary - SI / IT Markets
HUNGARY - SI / IT MARKETS IT SERVICES MARKET SHARES (BY REVENUE)1 SI/IT REVENUE BREAKDOWN BY VERTICAL SEGMENTS 2 2018, HUF bn Market share2 SYSTEM INTEGRATION IT INFRASTRUCTURE SI / IT Finance 10% 100% Manufacturing 6% 50% Retail&WS 6% 40% 8% Prof. Services 16% Telco+Media 8% 30% 6% Utilities 15% 20
Slide 13: Hungary - SI / IT Results
HUNGARY - SI / IT RESULTS SI/IT REVENUE SI/IT GROSS PROFIT HUF bn HUF bn 120 45 32% 42% 31% 29% Gross margin 105 90 46% 30 75 45% 60 50% 25.1 27.5 26.7 30.8 39% 45 28% 15 35% 30% 30 28% 15 26% 26% 22% 27% 0 0 2015 2016 2017 2018 2015 2016 2017 2018 Hardware & Software IT Infrastructure System Integr
Slide 14: Hungary - Networks
HUNGARY - NETWORKS MOBILE NETWORK COVERAGE FIXED NETWORK (POPULATION BASED) (ACCESS POINTS) % ’000 97% 98% 99% 97% 99% 4 500 100 3 964 4 015 4 090 4 000 3 925 86% 87% 83% 80 3 500 3 000 43% 47% 50% 54% 60 2 500 2 000 40 84% 87% 89% 85% 89% 71% 76% 76% 1 500 1 000 57% 53% 50% 20 46% 500 0 0 2015 2016
Slide 15: Hungary Indirect Cost 2012-2018
HUNGARY INDIRECT COST 2012-2018 EFFICIENT COST MANAGEMENT IN A GROWING BUSINESS INDIRECT COST INDIRECT COST / EBIDTA W/O TELECOM & UTILITY TAXES W/O TELECOM & UTILITY TAXES HUF bn 172.5 174.8 170.3 160 000 140 000 87.7 90.6 83.4 120 000 95.4% 100 000 92.7% 80 000 83.7% 60 000 40 000 84.8 84.2 86.9 2
Slide 16: Macedonia
MACEDONIA REVENUES * MOBILE MARKET Subscribers +0.2% 0.8% (MKD mn) +1.7% (mn) 2.5 2.197 2.202 2.184 10,498 2.0 2.6% 2.1% 89 115 1.5 49.8% 48.7% 48.3% Lycamobile One.Vip 10,318 -25 1.0 Telekom 0.5 50.2% 48.6% 49.6% 0.0 2017 Mobile Fixed SI/IT 2018 2016 2017 2018 KPIS (MOBILE/FIXED VOICE/FIXED BB/TV)
Slide 17: 2018 Results and Financial Targets
2018 RESULTS AND FINANCIAL TARGETS TARGETS RESULTS 2018 2018 REVENUE around HUF 657.1 bn HUF 630 bn EBITDA around HUF 192.5 bn HUF 190 bn CAPEX* around HUF 91.8 bn HUF 90 bn FCF around HUF 60 bn HUF 68.0 bn DPS HUF 25 proposed for the HUF 25 approval of the AGM *excluding spectrum license fees
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Slide 19: Magyar Telekom Strategy 2019-2023
MAGYAR TELEKOM STRATEGY 2019-2023
Slide 20: Our Ambitions: Telco of Tomorrow
OUR AMBITIONS TELCO OF TOMORROW GROW Lead In Customer Lead in Lead in Business Experience Technology Productivity One connectivity Integrated Secure ICT solutions & perfect service gigabit networks & big IoT Save for Growth Investments Simplify, digitalize, accelerate
Slide 21: Changing Operating Environment
CHANGING OPERATING ENVIROMENT INCREASING CUSTOMER CENTRICITY INTENSIFYING COMPETITION CHANGING REGULATORY ENVIRONMENT INCREASING WAR FOR TALENT CHANGING ROLE OF IT
Slide 22: Pillars of Our Transformation
PILLARS OF OUR TRANSFORMATION Maintain our position as the number one integrated operator. Provide a flawless digital customer experience, available everywhere. Build a universal, gigabit-capable fixed network, fit for the future. Enhance our efficiency and offering through simplicity. Take timely d
Slide 23: Our Brand
OUR BRAND VALUED BY SOCIETY LIBERATE DIGITAL COMPANY THE WHERE PEOPLE INTERNET HAVE IMPACT & GROW DRIVING HUNGARY’S EVERYDAY LIFE DIGITAL SMARTER HELPING UPGRADE SOCIETIES TO BRIDGE THE DIGITAL DIVIDE PRODUCTIVE: TRANSFORMING BUSINESSES & PUBLIC SECTOR
Slide 24: Simplicity
SIMPLICITY IN OPERATION AND CUSTOMER CHOICES Declining product variatons with fewer Portfolio product-specific eligilibity rules Product Start making our customers lives simpler by radically simplifying our products and processes Sales Fully empowered sales force Channels Gradual shift towards self
Slide 25: Digital Customer Experience
DIGITAL CUSTOMER EXPERIENCE One App e-Commerce IT Internal transformation
Slide 26: Gigabit-Capable Network
GIGABIT-CAPABLE NETWORK PRIMARY GOAL KEY ACTIVITIES ESTABLISH GIGABIT-CAPABLE NETWORK EVERYWHERE ▪ Accelerate fiber rollout IN HUNGARY ▪ Modernize ED3 network ▪ Use alternative methods ▪ Migrate to Gigabit networks, retire copper ▪ Consolidate subcontractors
Slide 27: Agile Operator
AGILE OPERATOR FASTER, STRONGER AND MORE RESULT ORIENTATED CORRESPONDING BUSINESS IMPACTS Cultural transformation via advocating new ways of working Growth in employee satisfaction and motivation Increased efficiency by reducing waste Increased customer centricity and faster time-to-market
Slide 28: Macedonia Strategy
MACEDONIA STRATEGY CONTINUES GROWTH STORY GROWTH AREAS HOW BEST NETWORKS ▪ Create more value of our base ▪ Household & business #1 FMC player DIGITALIZATION BECOME ▪ Win marketshaere in broadband THE TELCO OF TOMORROW ▪ Be #1 in TV FUEL BRAND ▪ Build ICT CULTURE CHANGE
Slide 29: Telco of Tomorrow
SUCCESSFUL TRANSFORMATION JOURNEY Fit organization TELCO OF TOMORROW Satisfied customers Time 2 market
Slide 30: Magyar Telekom Financial Outlook 2019-2021
MAGYAR TELEKOM FINANCIAL OUTLOOK 2019-2021
Slide 31: Revenue Development 2018-2021
REVENUE DEVELOPMENT 2018-2021 SLIGHT DECLINE IN 2019 BROADLY STABLE TILL 2021 100% 54% 56% 56% 15% 15% 13% 16% 15% 18% 7% 6% 5% 8% 9% 9% 2018 2019 2021 Telco Service revenue Equipment SI/IT Other MakTel
Slide 32: Resources 2018-2021
RESOURCES 2018-2021 DECREASING INDIRECT COSTS AND BROADLY STABLE INVESTMENT EXPENDITURES INDIRECT COSTS w/o utility tax CAPEX (HUF bn) 100% 11% 13% 14% 42% 44% 47% 12% 8% 13% 14% 10% 10% 9% 9% 10% 12% 12% 9% 2018 2019 2021 2018 2019 2021 MakTel IT IFRS16 Fixed Network Cust’ connection MT HU MakTel I
Slide 33: Reported EBITDA 2018-2021
REPORTED EBITDA 2018-2021 1% - 2% AVERAGE ANNUAL INCREASE HUF bn 250 200 150 100 50 0 2018 2019 2021 IFRS16 MakTel MT HU 33
Slide 34: Free Cash Flow 2018-2021
FREE CASH FLOW* 2018-2021 Ca. 5% AVERAGE ANNUAL GROWTH HUF bn 90 000 Ca 5% 80 000 70 000 60 000 50 000 40 000 30 000 20 000 10 000 0 2018 2019 2021 *excluding Spectrum license fee payments
Slide 35: Financial Targets Summary
FINANCIAL TARGETS SUMMARY 2018 2019 2021 RESULTS TARGETS2 TARGETS2 REVENUE HUF 657.1 bn slight decline broadly stable EBITDA HUF 192.5 bn increasing at a CAGR of 1% - 2% CAPEX1 HUF 91.8 bn broadly stable FCF1 HUF 68.0 bn increasing at a CAGR of ca. 5% DPS HUF 25 DPS3 HUF 27 DPS4 1excluding spectrum
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Slide 37: Thank You!
THANK YOU!