Slide 1: Results for the Second Quarter 2010
Results for the Second Quarter 2010 Vienna, August 18, 2010 Results for the Second Quarter 2010 1
Slide 2: Cautionary Statement
Cautionary Statement “This presentation contains certain forward-looking statements. Actual results may differ materially from those projected or implied in such forward-looking statements. Forward-looking information involves risks and uncertainties that could significantly affect expected results.
Slide 3: Agenda
Agenda > Telekom Austria Group – Highlights of 2Q 2010 > Key Financial Developments > Markets & Operations > Outlook FY 2010 > Appendix Results for the Second Quarter 2010 3
Slide 4: Telekom Austria Group – Highlights of the Second Quarter 2010
Telekom Austria Group – Highlights of the Second Quarter 2010 > Continued challenging operating environment driven by fierce competition, regulatory induced pressure and macro-economic headwinds > Stabilization of Fixed Net line losses to 6,000 in 2Q 2010 vs. 12,600 in 2Q 2009 > Further Mobile Commu
Slide 5: Key Financial Developments
Key Financial Developments Results for the Second Quarter 2010 5
Slide 6: Slow down of Revenue Decline, EBITDA Impacted by EUR 14.0 mn One-off Charges in 2Q 10
Slow down of Revenue Decline, EBITDA Impacted by EUR 14.0 mn One-off Charges in 2Q 10 (EUR million) 2Q 10 2Q 09 % change Revenues 1,168.7 1,191.7 -1.9% > Slow down of revenue decline to -1.9% year-on-year driven by higher EBITDA 403.8 450.0 -10.3% Fixed Net revenues and slowing EBITDA margin 34.6% 3
Slide 7: Fixed Net Revenues Grow by EUR 1.6 mn, Mobile Subscriber Base Increases by 5.9%
Fixed Net Revenues Grow by EUR 1.6 mn, Mobile Subscriber Base Increases by 5.9% on Group Level Fixed Net: mobilkom austria: Velcom: > Further stabilization of fixed > Subscriber base grows by > 14.3% revenue growth driven by 8.6% lines to 6,000 lines lost 7.3% increase in subscriber base and 3G laun
Slide 8: Group-EBITDA Impacted by One-Offs in Domestic Operations and Regulatory Burden
Group-EBITDA Impacted by One-Offs in Domestic Operations and Regulatory Burden Fixed Net: mobilkom austria: Velcom: > EUR 14.0 mn one-off charges for > EUR 7.6 mn cost > Strong EBITDA growth of transfer of civil servants, reductions keep 8.8% despite increased EBITDA-Margin Vipnet: restructuring cha
Slide 9: Improved Change in Working Capital Mitigates Higher Capex, Free Cash Flow Remains Stable
Improved Change in Working Capital Mitigates Higher Capex, Free Cash Flow Remains Stable (EUR million) 2Q 10 2Q 09 % change 1H 10 1H 09 % change Cash Flow from operations before working 383.6 390.9 -1.9% 769.5 772.8 -0.4% capital adjustments Change in working capital -24.0 -43.7 -45.1% -107.8 -177.9
Slide 10: Markets & Operations
Markets & Operations Results for the Second Quarter 2010 10
Slide 11: Key Trends in Telekom Austria’s Mobile Communication Markets
Key Trends in Telekom Austria’s Mobile Communication Markets First Signs of ARPU Stabilization Strong Growth of Mobile Broadband in CEE in EUR in number of customers 30 Broadbandshares 2Q 2010 2Q 2009 % change 25 20 mobilkom austria 622k 465k 33.8% 15 Mobiltel 73k 42k 74.5% 10 Vipnet 156k 92k 69.4%
Slide 12: Giganet Update
Giganet Update Results for the Second Quarter 2010 12
Slide 13: Enhanced VDSL@CO Roll-Out – The Next Step in Telekom Austria’s Giganet Strategy
Enhanced VDSL@CO Roll-Out – The Next Step in Telekom Austria’s Giganet Strategy VDSL@CO Build Out Plans… …While Fiber Trials Continue > Up to 30 Mbit/s > Fiber trials on track: > Combines existing fibre infrastructure at > Villach finished in 10/2009 central office with existing copper network > Kla
Slide 14: Next Steps Giganet Roll-Out – Up to 30 MBit/s to 40% of Total Households
Next Steps Giganet Roll-Out – Up to 30 MBit/s to 40% of Total Households in Austria by end of 2010 VDSL@CO – Addressable market by 2013 (in mn; % of total households) > VDSL@CO roll-out to urban as well as 48% 2.000 rural areas in Austria 38% 36% 1.513 1.591 > As of September 1, 2010 nationwide cove
Slide 15: Update on Integration of Austrian Operations
Update on Integration of Austrian Operations Results for the Second Quarter 2010 15
Slide 16: Focus Points: Organizational and Legal Integration in 1H 2010, Operational Implementation in 2H 2010
Focus Points: Organizational and Legal Integration in 1H 2010, Operational Implementation in 2H 2010 Overview Key Points of Integration 2010 Focus 1H 2010 Focus 2H 2010 (March - July) (August - December) Implementation of operational structures > Start of realizations of synergies such as: and man
Slide 17: Efficient Integration Leads to Reduced Negative Cash Flow Impact in 2010
Efficient Integration Leads to Reduced Negative Cash Flow Impact in 2010 Cash Flow-Effect of Integration (in EUR mn) > Strict focus on efficient execution of integration leads to reduced estimated negative impact on cash EUR -10/-15 mn flow: > OPEX: EUR 20 - 25 mn EUR -20/-25 mn > CAPEX: EUR 10 - 15
Slide 18: Overall Schedule Confirmed with Better Visibility on Cash Flow Effects
Overall Schedule Confirmed with Better Visibility on Cash Flow Effects CF Effect of Merger of Domestic Operations (in EUR mn) Cash Flow - Drivers > Approx. 30% Revenue Growth approx. EUR 100 mn p.a. > Cross- and up-selling in Wholesale- and Retail-business > Unified communications/ convergent produc
Slide 19: Outlook FY 2010
Outlook FY 2010 Results for the Second Quarter 2010 19
Slide 20: Outlook 2010 Refined – Now Including Merger, DPS Floor Reiterated
Outlook 2010 Refined – Now Including Merger, DPS Floor Reiterated Telekom Austria Group 2010 including merger of domestic operations* As of August 18, 2010 As of May 12, 2010 Revenues approx. EUR 4.7 bn approx. EUR 4.7 bn EBITDA EUR 1.60 – 1.65 bn approx. EUR 1.6 bn CAPEX EUR 0.75 – 0.80 bn approx.
Slide 21: Appendix
Appendix 1 Results for the Second Quarter 2010 21
Slide 22: Telekom Austria Group – Fixed Net & Mobile Communication Revenue Breakdown
Telekom Austria Group – Fixed Net & Mobile Communication Revenue Breakdown Fixed Net revenue breakdown (EUR million) 2Q 2010 2Q 2009 % change Access, Voice and Broadband 237.4 240.4 -1.2% Data & ICT-Solutions 93.5 96.7 -3.4% Wholesale Voice & Internet 88.6 86.6 2.4% Others 39.0 33.2 17.5% Total Fixe
Slide 23: Telekom Austria Group – Fixed Net & Mobile Communication Expense Breakdown
Telekom Austria Group – Fixed Net & Mobile Communication Expense Breakdown Fixed Net expense breakdown (EUR million) 2Q 2010 2Q 2009 % change Material expense 18.5 14.1 31.2% Employee costs 145.7 130.3 11.8% Depreciation, amortization and impairment charges 112.8 118.6 -4.9% Interconnection 73.3 72.
Slide 24: Telekom Austria Group - Mobile Communication Subscriber Base
Telekom Austria Group - Mobile Communication Subscriber Base Mobile Subscribers (in 000) 2Q 2010 2Q 2009 % change Austria 4,967.4 4,628.4 7.3% Market share 42.1% 42.3% Bulgaria 5,241.4 5,205.4 0.7% Market share 50.2% 50.0% Belarus 4,144.9 3,817.4 8.6% Market share 41.1% 43.1% Croatia 2,638.3 2,609.0
Slide 25: Telekom Austria Group – Headcount Development
Telekom Austria Group – Headcount* Development FTE (Average period) 2Q 2010 2Q 2009 change Fixed Net** 7,956 8,213 -3.1% Mobile Communciation 8,613 8,612 0.0% Telekom Austria Group 16,569 16,825 -1.5% FTE (End of period) 2Q 2010 2Q 2009 change Fixed Net** 7,939 8,216 -3.4% Mobile Communciation 8,591
Slide 26: Telekom Austria Group – Capital Expenditures Split
Telekom Austria Group – Capital Expenditures Split Group CAPEX (EUR million) 2Q 2010 2Q 2009 % change Fixed Net 80.5 55.9 44.0% Mobile Communication 79.6 93.4 -14.8% Total CAPEX Telekom Austria Group 160.1 149.3 7.2% Thereof tangible 131.4 117.0 12.3% Thereof intangible 28.7 32.3 -11.1% Mobile Commu
Slide 27: Telekom Austria Group – Net Debt
Telekom Austria Group – Net Debt Net debt (EUR million) June 30, 2010 Dec 31, 2010 % change Long-term debt 3,019.5 3,234.8 -6.7% Short-term borrowings* 1,083.6 1,501.6 -27.8% Cash and cash equivalents, short-term and long term investments, finance lease receivables -386.0 -1,099.0 -64.9% Derivate fi
Slide 28: Telekom Austria Group – Debt Maturity Profile
Telekom Austria Group – Debt Maturity Profile Debt Maturity Profile (EUR million) Ratings: 1,292 > S&P: BBB (stable outlook) 943 769 > Moody’s: A3 (stable outlook) 612 * 371* 2010 2011 2012 2013 thereafter Lines of Credit > Undrawn committed lines of credit amounting to EUR 1.1 bn > Average term to
Slide 29: Telekom Austria Group – Regulatory Issues and Key Aspects
Telekom Austria Group – Regulatory Issues and Key Aspects > Next Generation Networks: The European Commission published its draft Recommendation on “regulated access to Next Generation Access Networks (NGA)” which was adopted in a first step by the member states mid June 2010. In September it is for
Slide 30: Telekom Austria – Fixed Net Key Performance Indicators
Telekom Austria – Fixed Net Key Performance Indicators Average Revenues per Line Fixed Net Broadband Net Adds incl. (in EUR) Wholesale (in EUR) 34.5 34.9 34.7 34.3 34.2 40.0 40.0 42.4 42.4 22.7 24.2 24.2 24.7 24.7 22.7 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 2Q2Q 0909 3Q 3Q09 09 4Q 4Q 09 09 1Q10 1Q 10 2Q1010
Slide 31: Telekom Austria – Fixed Net Broadband Market Split
Telekom Austria – Fixed Net Broadband Market Split Market Share Broadband Lines Market Share Voice Minutes Mobile Broadband 24.0% 27.3% other operators 9.1% Unbundled lines 7.6% 19.4% Cable 15.4% 76.9% 79.8% mobile broadband Mobile 15.5% mobilkom austria 18.1% 2.1% TA fixed wholesale 1.5% 29.9% TA f
Slide 32: mobilkom austria - Key Performance Indicators
mobilkom austria - Key Performance Indicators Average Revenues per User MoU per Subscriber (in EUR) (in 000) 25.5 24.3 23.6 22.2 22.6 163.8 159.9 165.3 159.8 160.0 13 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 Mobile Broadband Customers Market Penetration (in 000) (in %) 590 622 140
Slide 33: mobiltel - Key Performance Indicators
mobiltel - Key Performance Indicators Average Revenues per User MoU per Subscriber (in EUR) (in 000) 9.5 101.5 9.1 9.0 98.6 98.2 98.6 8.5 8.0 95.5 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 Mobile Broadband Customers Market Penetration (in 000) 73.0 (in %) 66.7 142.0% 60.1 50.7 41.8
Slide 34: Velcom - Key Performance Indicators
Velcom - Key Performance Indicators Average Revenues per User MoU per Subscriber (in EUR) (in 000) 6.4 6.4 169.2 6.2 155.5 158.5 156.4 5.5 5.5 149.4 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 Market Share Market Penetration (in %) (in %) 43.1% 43.5% 105.3% 106.3% 42.7% 99.4% 41.2% 4
Slide 35: Vipnet - Key Performance Indicators
Vipnet - Key Performance Indicators Average Revenues per User MoU per Subscriber (in EUR) (in 000) 84.1 80.5 12.6 74.7 71.6 12.3 68.5 12.0 11.4 11.0 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 Mobile Broadband Customers Market Penetration (in 000) 156 (in %) 138.4% 137 146 125 137.8%
Slide 36: Si.mobil/ Vip mobile - Key Performance Indicators
Si.mobil/ Vip mobile - Key Performance Indicators Si.mobil - Average Revenues per User Si.mobil – MoU per Subcriber (in EUR) (in 000) 158.2 23.0 154.1 153.4 21.2 147.8 20.8 20.6 19.4 139.8 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 Vip mobile – Average Revenue per User Vip mobile –
Slide 37: Vip operator - Key Performance Indicators
Vip operator- Key Performance Indicators Average Revenues per User MoU per Subscriber (in EUR) (in 000) 6.8 94.4 6.6 73.0 76.5 80.6 83.0 6.5 6.2 6.0 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 Results for the Second Quarter 2010 37
Slide 38: Appendix – Examples for Giganet offering
Appendix 2 – Examples for Giganet offering Results for the Second Quarter 2010 38
Slide 39: Marketing Based on Product Bundles and Upselling of Add-On Services
Marketing Based on Product Bundles and Upselling of Add- On Services 16 Mbit/s (incl. VAT) 30 Mbit/s (incl. VAT) Average price of EUR 24.9 per Average price of EUR 24.9 per month month Standard products Convergent products Standard products Convergent products + + GigaSpeed 16 providing 16Mbit/s Gig