Telekom Austria Ag · VIE:TKA
Telekom Austria — FY2012 Earnings Presentation
48 slides from Telekom Austria's earnings presentation, Feb 28, 2013
Slide 1: Results for the Fourth Quarter and Full Year 2012
Results for the Fourth Quarter and Full Year 2012 Vienna, 28 February 2013 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 > Operational and Financial Highlights for the Full Year 2012 > Key Financial Developments in the Fourth Quarter 2012 > Focus Points > Outlook for the Full Year 2013 > Appendix Results for the Full Year 2012 3
Slide 4: Operational and Financial Highlights for the Full Year 2012
Operational and Financial Highlights for the Full Year 2012 Results for the Full Year 2012 4
Slide 5: FY 2012: Key Strategic Steps Taken to Stabilise Mature Markets – Growth in All Other Segments
FY 2012: Key Strategic Steps Taken to Stabilise Mature Markets – Growth in All Other Segments > Austrian and Bulgarian segments drive 2.8% revenue and 4.7% EBITDA comparable decline to EUR 4.33 bn and EUR 1.46 bn respectively > Croatia benefits from full-year consolidation of the fixed line business
Slide 6: Full Year 2012 Results at Upper End of Revised Guidance
Full Year 2012 Results at Upper End of Revised Guidance Guidance Reported Revenues approx. EUR 4.2 bn EUR 4.33 bn EBITDA Comparable EUR 1.40 bn – EUR 1.45 bn EUR 1.46 bn CAPEX* EUR 0.70 bn – EUR 0.75 bn Reported: EUR 0.73 bn Excl. spectrum: EUR 0.69 bn Operating Free Cash Flow** EUR 0.70 bn –
Slide 7: Key Financial Developments in the Fourth Quarter 2012
Key Financial Developments in the Fourth Quarter 2012 Results for the Full Year 2012 7
Slide 8: Q4 2012: Strong Revenue Trends; Extraordinary Tax Effect Impacts Net Result
Q4 2012:Strong Revenue Trends; Extraordinary Tax Effect Impacts Net Result (in EUR million) Q4 2012 Q4 2011 % change > Strong revenue trends despite Revenues 1,117.8 1,115.9 0.2% EUR 23.9 mn regulatory impact EBITDA comparable* EBITDA comparable margin* 318.8 28.5% 336.9 30.2% -5.4% > Price declines
Slide 9: 0.2% Revenue Growth Due to Belarusian, Additional Markets and Croatian Segments
0.2% Revenue Growth Due to Belarusian, Additional Markets and Croatian Segments Quarterly Revenue Development (in EUR million) + 0.2% 1,115.9 -31.0 5.8 6.7 1,117.8 42.1 -21.8 0.1 Revenues Austria Bulgaria Croatia Belarus Additional Others* Revenues Q4 2011 Markets Q4 2012 Segment Austria Internation
Slide 10: Growth in Belarus and Additional Markets Limits EBITDA Comparable Decline to 5.4%
Growth in Belarus and Additional Markets Limits EBITDA Comparable Decline to 5.4% Quarterly EBITDA Comparable Development (in EUR million) - 5.4% 336.9 -26.7 27.9 2.6 1.1 318.8 -15.2 -7.8 EBITDA comp. Austria Bulgaria Croatia Belarus Additional Others* EBITDA comp. Q4 2011 markets Q4 2012 Segment Au
Slide 11: Working Capital Requirements Drive Free Cash Flow Decline in 2012
Working Capital Requirements Drive Free Cash Flow Decline in 2012 (in EUR million) Q4 2012 Q4 2011 % change 1-12 M 2012 1-12 M 2011 % change Gross cash flow 287.8 302.0 -4.7% 1,295.9 1,339.6 -3.3% Change in working capital -37.2 76.6 n.m. -248.0 -126.4 96.3% Ordinary capital expenditures -238.8 -284
Slide 12: CAPEX 2012 in Line with Guidance
CAPEX 2012 in Line with Guidance Guidance* Reported Spectrum Excluding Spectrum Auctions Auctions CAPEX EUR 0.70 bn – EUR 0.75 bn EUR 0.73 bn EUR 34.5 mn EUR 0.69 bn Spectrum Tenders in 2012 Croatia Republic of Macedonia Belarus Frequency 800 MHz Frequency 1800 MHz Frequency 2100 MHz Band 2x10 MHz
Slide 13: EUR 600 mn Hybrid Bond Supports Credit Ratings
EUR 600 mn Hybrid Bond Supports Credit Ratings Terms and Conditions Placement Banks Volume EUR 600 mn 18% Maturity Date perpetual 1st Call Date 1 February 2018 Hedge Funds Coupon 6% 5.625% until 1st Call Date Insurances and Pension Funds Asset Managers Equity Treatment 100% under IFRS 11% 65% 50% by
Slide 14: Focus Points
Focus Points Results for the Full Year 2012 14
Slide 15: Refined Strategy to Address Challenges in Bulgarian Segment
Refined Strategy to Address Challenges in Bulgarian Segment Key Challenges: > Severe macroeconomic headwinds > 57.7% MTR cuts in July 2012 and further 13.0% in January 2013 > Price pressure in fixed and mobile business > Major changes to competitive environment (New vivacom ownership, Globul on sale
Slide 16: Strong Operational Performance Lessens Hyperinflation Accounting and FX Impact in Belarus
Strong Operational Performance Lessens Hyperinflation Accounting and FX Impact in Belarus Revenue Development in the Belarusian Segment (in EUR million) 76.0 -74.6 301.2 38.9 260.9 Revenues FY 2011 Inflation related price Effects from Real operational Revenues FY 2012 increases hyperinflation accoun
Slide 17: Austrian Segment: ARPL Driven by Strong Demand for Bundles and Other Fixed Line Products
Austrian Segment: ARPL Driven by Strong Demand for Bundles and Other Fixed Line Products Fixed Line Revenue Development* ARPL Y-o-Y Change (in EUR million) (in %) + 0.2% 2.0% 1.3% 1.3% 1,098 1,101 1.0% Q4 2011 Q1 2012 Q2 2012 0.0% Q3 2012 Q4 2012 -1.0% +7.5% Broadband, TV and -2.0% Others -2.0% -2.2
Slide 18: Austrian Segment: Price Erosion Drives Revenue Loss Through Churn and Tariff Migration
Austrian Segment: Price Erosion Drives Revenue Loss Through Churn and Tariff Migration Split of EUR 84.8 mn ARPU-Relevant Revenue Decline Year-on-year (in EUR million) - 6.8% 1,240.2 1,155.3 ARPU relevant Regulation Tariff migration Churn Gross adds ARPU relevant revenues 2011 revenues 2012 Key Chal
Slide 19: 4 Focus Areas to Enhance Product Differentiation
4 Focus Areas to Enhance Product Differentiation Convergence Focus on Customer Satisfaction > Only convergent operator in Austria > Best in class both for residential and > 1.04 mn product bundles business > One-stop solution for customers > Improvements in service lines, business sales and shops In
Slide 20: Outlook for the Full Year 2013
Outlook for the Full Year 2013 Results for the Full Year 2012 20
Slide 21: Telekom Austria Group Full Year 2013 Guidance
Telekom Austria Group Full Year 2013 Guidance Financial Outlook for 2013 On a constant currency basis for all markets as well as before any effects of hyperinflation accounting for the Belarusian segment Revenues approx. EUR 4.1 bn CAPEX* approx. EUR 700 mn Proposed Dividend EUR 0.05 * Does not incl
Slide 22: Appendix
Appendix 1 Results for the Full Year 2012 22
Slide 23: Telekom Austria Group is a Leading Telco Provider in Fixed and Mobile Markets
Telekom Austria Group is a Leading Telco Provider in Fixed and Mobile Markets as of 31 December 2012 (in 000, in %) Austria Slovenia Belarus Mobile: Mobile: Mobile: > Market share: 38.8% (PY 40.0%) > Market share: 30.3% (PY 29.7%) > Market share: 43.5% (PY 41.1%) > Subscriber base: 5,380 (PY 5,271)
Slide 24: Telekom Austria Group – Revenue Breakdown
Telekom Austria Group – Revenue Breakdown Revenue Split - Segment Austria (in EUR million) Q4 2012 Q4 2011 % change Monthly fee and traffic 472.2 502.7 -6.1% Data and ICT Solutions 62.2 55.3 12.5% Wholesale (incl. Roaming) 38.2 60.7 -37.1% Interconnection 74.9 85.2 -12.1% Equipment 68.7 45.5 51.1% O
Slide 25: Telekom Austria Group – Expense Breakdown
Telekom Austria Group – Expense Breakdown Operating Expense - Segment Austria (in EUR million) Q4 2012 Q4 2011 % change Material expense 104.5 81.7 27.9% Employee costs 182.7 165.8 10.2% Interconnection 69.3 80.6 -14.1% Maintenance and repairs 33.1 36.0 -7.9% Services received 26.1 31.3 -16.9% Other
Slide 26: Telekom Austria Group – Headcount Development
Telekom Austria Group – Headcount Development FTE (End of period) Q4 2012 Q4 2011 % change Austria 9,077 9,292 -2.3% International 7,205 7,762 -7.2% Telekom Austria Group* 16,446 17,217 -4.5% FTE (Average period) Q4 2012 Q4 2011 % change Austria 9,254 9,281 -0.3% International 7,192 7,693 -6.5% Tele
Slide 27: Telekom Austria Group – Capital Expenditures Split
Telekom Austria Group – Capital Expenditures Split Capital Expenditures (in EUR million) Q4 2012 Q4 2011 % change Segment Austria 126.7 166.5 -23.9% Segment Bulgaria 19.9 22.2 -10.3% Segment Croatia 38.0 24.7 53.9% Segment Belarus 25.5 30.6 -16.6% Segment Additional Markets 28.9 40.2 -28.2% Slovenia
Slide 28: Telekom Austria Group – Net Debt
Telekom Austria Group – Net Debt Net debt (in EUR million) Dec. 31, 2012 Dec. 31. 2011 % change Long-term debt 2,832.0 2,960.4 -4.3% Short-term borrowings 1,078.6 1,052.4 2.5% Cash and cash equivalents, short-term and long term investments, finance lease receivables -715.3 -657.7 8.8% Cash and cash
Slide 29: Telekom Austria Group – Debt Maturity Profile
Telekom Austria Group – Debt Maturity Profile Debt Maturity Profile* (in EUR million) 1,078.6 822.9 739.3 565.6 268.8 220.7 * 136.6 62.7 0.0 15.4 2013** 2014 2015 2016 2017 2018 2019 2020 2021 2022 > EUR 3,910.6 mn of short- and long-term borrowings as of 31 December 2012 > Average cost of debt of a
Slide 30: Telekom Austria Group – Debt Profile
Telekom Austria Group – Debt Profile Overview Debt Instruments Fixed-Floating Mix 72% 30% 70% 28% Bonds Loans Floating Fixed Lines of Credit Ratings > Undrawn committed credit lines > S&P: BBB (stable outlook) amounting to EUR 1,060.0 mn > Moody’s: Baa1 (negative outlook) > Average term to maturity
Slide 31: 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 000) 40.0 39.5 250.0 39.0 38.5 38.0 37.5 245.0 37.0 36.5 36.0 35.5 35.0 34.5 32.9 240.0 34.0 33.5 33.0 32.5 31.9 31.5 32.2 2,336 2,320 32.5 32.0 31.5 235.0 12.0 2,28
Slide 32: Segment Austria – Mobile Key Performance Indicators
Segment Austria – Mobile Key Performance Indicators ARPU & ARPU Relevant Revenues MoU per Subscriber (in EUR) (in min) 19.2 18.5 18.3 18.3 20.0 152.7 17.5 151.9 152.4 300.0 15.0 149.1 300.9 293.6 290.7 290.8 280.3 250.0 10.0 145.8 200.0 5.0 150.0 0.0 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q4 11 Q1 12 Q2 12 Q
Slide 33: Segment Austria – Broadband Market Split
Segment Austria – Broadband Market Split Market Share Total Broadband Market Share Mobile Broadband 8.8% 8.4% 23.1% 25.9% YESSS! 7.9% 7.9% Hutchison 9.7% 10.0% Tele.ring Mobile Broadband 12.1% 12.2% Other Operations Orange 29.5% 32.0% Unbundled Lines T-mobile 38.4% 35.6% A1 6.1% 5.5% Cable 14.5% 14.
Slide 34: Segment Austria – Voice Market Split
Segment Austria – Voice Market Split Market Share Total Minutes Market Share Fixed Line Minutes 13.8% 13.7% 4.0% 4.5% 21.4% 21.0% 83.0% 85.7% 60.8% 60.8% 6.4% 5.4% 10.6% 8.9% Q4 11 Q4 12 Q4 11 Q4 12 Fixed Line Telekom Austria Fixed Line Others Mobile A1 Tele2/UTA UPC Others Results for the Full Year
Slide 35: 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 000) 17.0 16.5 7.0 16.0 15.5 15.0 15.0 14.5 13.3 14.0 13.5 12.4 6.5 13.0 12.5 11.5 12.0 11.5 11.0 11.0 10.5 6.0 156.4 10.0 9.5 160.0 12.0 132.6 138.0 142.8 9.0 8.5 140.0 7.0 1
Slide 36: Segment Bulgaria – Mobile Key Performance Indicators
Segment Bulgaria – Mobile Key Performance Indicators ARPU MoU per Subscriber (in EUR) (in min) 97.8 7.0 6.6 97.5 6.1 5.7 97.2 5.4 96.7 96.6 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Mobile Broadband Customers Mobile Penetration (in 000) (in %) 370.7 324.7 159.9% 278.8 157.5% 242.4
Slide 37: 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 000) 30.0 29.5 29.0 16.0 28.5 28.0 27.5 27.0 26.5 26.0 24.0 23.7 23.8 24.1 15.0 25.5 25.0 24.5 22.6 24.0 23.5 23.0 22.5 22.0 21.5 14.0 21.0 20.5 20.0 19.5 19.0 18.5 13.0 18.0 1
Slide 38: Segment Croatia – Mobile Key Performance Indicators
Segment Croatia – Mobile Key Performance Indicators ARPU* MoU per Subscriber* (in EUR) (in min) 12.8 12.6 110.8 12.4 108.5 104.3 12.1 11.7 95.8 92.6 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Mobile Broadband Customers* Mobile Penetration* (in 000) (in %) 123.7% 206.5 170.6 169.5 18
Slide 39: Segment Belarus – Mobile Key Performance Indicators
Segment Belarus – Mobile Key Performance Indicators ARPU MoU per Subscriber (in EUR) (in min) 189.8 191.6 193.0 4.9 4.9 4.9 3.5 3.7 179.8 174.1 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Mobile Broadband Customers Mobile Penetration (in 000) (in %) 803.4 118.8% 119.4% 713.7 116.6% 5
Slide 40: Segment Additional Markets – Mobile Key Performance Indicators
Segment Additional Markets – Mobile Key Performance Indicators Slovenia - ARPU Slovenia - MoU per Subscriber (in EUR) (in min) 23.0 184.5 178.3 177.0 179.1 21.4 21.6 21.7 167.9 20.7 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Republic of Serbia - ARPU Republic of Macedonia - ARPU (in
Slide 41: Appendix – Regulatory Topics
Appendix 2 – Regulatory Topics Results for the Full Year 2012 41
Slide 42: Negative Impact from Regulation in 2013 - 2016
Negative Impact from Regulation in 2013 - 2016 Telekom Austria Group Roaming Telekom Austria Group Revenues Interconnection Revenues (in EUR million) (in EUR million) Approx. EUR –130 mn* Approx. EUR –160 mn** 2012E 2016E 2012E 2016E Negative regulatory impact for 2013 is included in outlook for 201
Slide 43: Glide Path of Mobile Termination Rates
Glide Path of Mobile Termination Rates EU Pressure on National Regulatory Authorities to Further Decrease Rates (in EURc) Jan 2012 Jun 2012 Jul 2012 Jan 2013 Jul 2013 Sep 2013 Jan 2014 Austria 2.01 2.01 2.01 2.01 0.80* 0.80* 0.80* Bulgaria 6.39 6.39 2.70 2.35 undecided Croatia 4.00 4.00 4.00 2.61 2.
Slide 44: Continuation of Roaming Price Regulation
Continuation of Roaming Price Regulation RETAIL (in EURc) Before July 2012 July 2013 July 2014 Data (per MB) none 70 45 20 Voice-calls made (per minute) 35 29 24 19 Voice-calls received (per minute) 11 8 7 5 SMS (per SMS) 11 9 8 6 WHOLESALE (in EURc) Before July 2012 July 2013 July 2014 Data (per MB
Slide 45: Appendix – Personnel Restructuring in Austria
Appendix 3 – Personnel Restructuring in Austria Results for the Full Year 2012 45
Slide 46: Quarterly Overview – Restructuring Charges and Provision vs. FTE
Quarterly Overview – Restructuring Charges and Provision vs. FTE Overview Restructuring Charges FTEs Addressed (in EUR million) 2012 2012 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FTE effect 4.4 6.6 10.6 28.3 Transfer to government 9 18 3 14 Servicekom 0.0 0.0 0.0 -76.7* Social plans 0 0 17 77 Interest rate adjustmen
Slide 47: Full Year Overview – Restructuring Charges and Provision vs. FTE
Full Year Overview – Restructuring Charges and Provision vs. FTE Overview Restructuring Charges FTEs Addressed (in EUR million) 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 FTE effect 632.1 -10.0 76.9 274.3 49.9 Transfer to government 0 0 158 106 44 Servicekom 0.0 0.0 0.0 -40.6 -76.7* Social pl
Slide 48: 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 2008 14.7 as well as new programmes 2009 62.0 > Total cash flow impact for 2012 of 2010 57.9 EUR 92.6 mn 2011 89.0 > Total expected cash flow impact f