Telekom Austria Ag · VIE:TKA

Telekom Austria — Q1 2010 Earnings Presentation

50 slides from Telekom Austria's earnings presentation, May 12, 2010

  1. Slide 1: Telekom Austria Group Results for the First Quarter 2010

    Telekom Austria Group Results for the First Quarter 2010 Vienna, May 12, 2010

  2. 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.

  3. Slide 3: Agenda

    Agenda  Key Developments  Fixed Net  Mobile Communication  Financial Overview  Outlook  New IR-Officer Appointed Results for the First Quarter 2010 3

  4. Slide 4: Key Developments

    Key Developments Results for the First Quarter 2010 4

  5. Slide 5: Telekom Austria Group – First Quarter 2010

    Telekom Austria Group – First Quarter 2010  Fixed line subscriber base stabilized with line loss of only 0.8%  Mobile Communication subscriber base grows by 6.0% with contract subscriber growth across all operations  Revenue decline driven by lower contributions from Austria and Bulgaria  Cost r

  6. Slide 6: Free Cash Flow Increases by 26%, Strong Cost Control Demonstrated

    Free Cash Flow Increases by 26%, Strong Cost Control Demonstrated Revenues EBITDA (EUR million) (EUR million) -5.9% -6.4% 454.8 1,126.0 1,197.1 425.9 1Q 10 1Q 09 1Q 10 1Q 09 Free Cash Flow Earnings per Share (EUR million) (EUR) +25.8% +6.7% 165.7 131.7 0.21 0.19 1Q 10 1Q 09 1Q 10 1Q 09 Results for t

  7. Slide 7: Fixed Net

    Fixed Net Results for the First Quarter 2010 7

  8. Slide 8: Revenue Decline Decelerates Further and Hits Four quarter Low

    Revenue Decline Decelerates Further and Hits Four quarter Low Revenues (EUR million) -3.7%  Revenue decline hits 4 quarter 452.1 469.5 low (4Q 09: -7.0%, 3Q 09: -5.3%, 2Q 09: -12.5%)  Reduction of voice minutes is driving factor for revenue 1Q 10 1Q 09 development EBITDA  Deceleration induced by

  9. Slide 9: Access Line Loss Cut by 60%, Product Bundles Instrumental to Stabilize Subscriber Base

    Access Line Loss Cut by 60%, Product Bundles Instrumental to Stabilize Subscriber Base Line Development (in 000)  Access line loss cut by 60.0% year -60.0% on year with only 3,200 lines lost 4.4  ARPL decline hits four quarter low 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 with 3.9% (4Q 09: -4.9%, 3Q 09: -7.0

  10. Slide 10: Fixed Net Broadband Holds Strong in a Growing Broadband Market

    Fixed Net Broadband Holds Strong in a Growing Broadband Market Broadband Market Shares  Fixed Net retail broadband defends market share of 15.8% 30.1% 20.1% Cable 7.8%  Number of Fixed Net retail Unbundled lines 9.5% broadband lines rises by 27.1% Mobile Broadband other operators 23.0% 15.9% to 1.

  11. Slide 11: Mobile Communication

    Mobile Communication Results for the First Quarter 2010 11

  12. Slide 12: Higher Profitability on Lower Revenues, Cost Control Mitigate Impact of Lower Prices

    Higher Profitability on Lower Revenues, Cost Control Mitigate Impact of Lower Prices Revenues (EUR million)  Mobile Communication’s customer -7.1% base grows by 6.0% to 19.0 mn 734.2 790.3 subscribers  Rising or stable market position in almost all mobile operations 1Q 10 1Q 09  Lower prices and

  13. Slide 13: Strong Cost Control Compensates for Lower Prices and Interconnection Rates in Austria

    Strong Cost Control Compensates for Lower Prices and Interconnection Rates in Austria Revenues (EUR million)  mobilkom austria’s customer base -9.5% grows by 6.8% to 4.9 mn subscribers 365.2 403.6  Lower prices and regulation are major drivers for 9.5% decrease in 1Q 10 1Q 09 revenues  SAC cut in

  14. Slide 14: Higher Profitability as Cost Cuts Soften Impact From Lower Termination Rates and Prices

    Higher Profitability as Cost Cuts Soften Impact From Lower Termination Rates and Prices Revenues Mobiltel (EUR million)  Steep reduction of termination rates and lower prices are main -9.7% driver for lower revenues 135.5 150.1  Stable customer base of 5.3 mn, market share at 50.1% 1Q 10 1Q 09  M

  15. Slide 15: Revenue Growth Almost Entirely Offset by FX-Effects in Belarus

    Revenue Growth Almost Entirely Offset by FX- Effects in Belarus Revenues Velcom (EUR million) FX translation effect  Subscriber base grows by 9.4% 8.4 to 4.1 million at the end of 1Q 10 73.5 +1.0% 72.8  Mobile penetration up to 105.3% from 88.8%  On a local currency basis 1Q 10 1Q 09 revenues gro

  16. Slide 16: Cost Reduction in Croatia Despite Mobile Tax, Double Digit EBITDA Growth in Slovenia

    Cost Reduction in Croatia Despite Mobile Tax, Double Digit EBITDA Growth in Slovenia Revenues Vipnet Vipnet in Croatia (EUR million) -4.8%  Subscriber base grows by 5.2% to 2.6 mn customers 100.3 105.4  EBITDA impacted by 28.0% cut of MTRs since January 09 and a 6% 1Q 10 1Q 09 mobile tax Revenues

  17. Slide 17: Customer Growth Drives EBITDA of Greenfield Operations

    Customer Growth Drives EBITDA of Greenfield Operations Revenues Vip mobile Vip mobile in Serbia (EUR million)  Subscriber base grows by 16.2% to +50.6% 1.2 mn customers 23.2  Market share grows to 12.2% up 15.4 from 10.2% 1Q 10 1Q 09  Improvement of EBITDA continues Revenues Vip operator Vip oper

  18. Slide 18: Financial Overview

    Financial Overview Results for the First Quarter 2010 18

  19. Slide 19: Stable Profitability, Bottom Line Grows on Lower D&A and Improved Financial Result

    Stable Profitability, Bottom Line Grows on Lower D&A and Improved Financial Result (EUR million) 1Q 10 1Q 09 % change Revenues 1,126.0 1,197.1 -5.9% EBITDA 425.9 454.8 -6.4% EBITDA margin 37.8% 38.0% Operating income 166.3 180.1 -7.7% Financial result -49.1 -70.6 -30.5% Income before income 117.2 10

  20. Slide 20: Free Cash Flow Increases by approximately 26% as Working Capital Improves

    Free Cash Flow Increases by approximately 26% as Working Capital Improves (EUR million) 1Q 10 1Q 09 % change Cash Flow from operations before 385.9 381.9 1.0% working capital adjustments Change in working capital -83.8 -134.2 -37.6% Ordinary capital expenditures -136.4 -116.0 17.6% Free cash flow 16

  21. Slide 21: Capital Expenditures Increase From Unusual Low Level in 1Q 09

    Capital Expenditures Increase From Unusual Low Level in 1Q 09 (EUR million) 1Q 10 1Q 09 % change Fixed Net 65.2 33.5 94.6% Mobile Communication 71.2 82.5 -13.7% Ordinary capital expenditures 136.4 116.0 17.6% Growth projects & acquisitions 0.0 3.2 Capex, growth projects & 136.4 119.2 14.5% acquisiti

  22. Slide 22: Net Debt Remains Stable at 2.0x as Deleveraging Continues

    Net Debt Remains Stable at 2.0x as Deleveraging Continues (EUR million) March 31, 10 Dez 31, 09 % change Long-term assets 6,340.7 6,474.9 -2.1% Current assets 1,512.6 2,023.8 -25.3% Total assets 7,853.3 8,498.7 -7.6% Current liabilities 1,951.6 2,679.5 -27.2% Long-term liabilities 4,191.7 4,205.1 -0

  23. Slide 23: Integration of Domestic Operations to Build a Convergent Player on Track

    Integration of Domestic Operations to Build a Convergent Player on Track  Telekom Austria announced its plan to merge its domestic Fixed Net and Mobile Communication operations in February 2010  Alignment of domestic operations to match future market requirements and build a convergent player  Sw

  24. Slide 24: Outlook

    Outlook Results for the First Quarter 2010 24

  25. Slide 25: Outlook 2010 Fully Reiterated, DPS Floor Maintained

    Outlook 2010 Fully Reiterated, DPS Floor Maintained Telekom Austria Group 2010 on a Constant Currency Basis* Revenues ~ EUR 4.7 bn EBITDA ~ EUR 1.6 bn CAPEX ~ EUR 0.8 bn Operating Free Cash Flow** ~ EUR 0.8 bn Dividend DPS of 75 cents minimum *Excluding Impact from Merger of Domestic Operations **Op

  26. Slide 26: Telekom Austria Appoints New Head of Investor Relations

    Telekom Austria Appoints New Head of Investor Relations Results for the First Quarter 2010 26

  27. Slide 27: Matthias Stieber Appointed Head of Investor Relations from June 1, 2010

    Matthias Stieber Appointed Head of Investor Relations from June 1, 2010  Matthias joined Telekom Austria in February 2010  Professional career in Investment Banking  Matthias will be Head of Investor Relations of Telekom Austria Group from Contact: June 1st, 2010 Matthias Stieber Direct: +43 5905

  28. Slide 28: Appendix

    Appendix Results for the First Quarter 2010 28

  29. Slide 29: Regulatory Issues – Key Aspects

    Regulatory Issues – Key Aspects Next Generation Networks: The European Commission launched its 2nd public consultation on the regulatory treatment of next generation access in June 2009. Previous guidelines of the Commission have partly contradicted the terms adopted by the European Parliament for t

  30. Slide 30: Revenue Development Primary Driven by Domestic Mobile Business

    Revenue Development Primary Driven by Domestic Mobile Business Revenues (EUR million) 1,197.1 -17.4 -38.4 -14.6 0.7 -5.1 7.8 3.0 -0.9 1,126.0 -6.2 Eliminations Vip mobile mobilkom Si.mobil Mobiltel Velcom Vip operator Vipnet Fixed Net Corporate, Revenues Revenues austria Others & 1Q 10 1Q 09 Results

  31. Slide 31: Group EBITDA Margin Stable at Approximately 38%

    Group EBITDA Margin Stable at Approximately 38% EBITDA (EUR million) 454.8 -11.4 -16.3 -4.1 2.8 2.8 425.9 -1.9 -3.8 1.8 1.2 Eliminations Vip mobile mobilkom Si.mobil Mobiltel Fixed Net Velcom Vipnet operator Corporate, EBITDA EBITDA austria 1Q 09 1Q 10 Others & Vip Results for the First Quarter 2010

  32. Slide 32: Retail Fixed Net – Broadband Subscriber Base Grows Approximately 16%

    Retail Fixed Net – Broadband Subscriber Base Grows Approximately 16% (in 000) 1Q 10 1Q 09 % change Access lines (without broadband lines) 1,245.3 1,393.1 -10.6% Fixed Net broadband retail lines 1,011.4 872.3 15.9% Fixed Net broadband wholesale lines 53.6 63.4 -15.5% Fixed Net broadband lines 1,065.0

  33. Slide 33: Fixed Net – Retail Broadband Market Share Stable in a Growing Market

    Fixed Net – Retail Broadband Market Share Stable in a Growing Market Market Share Voice Minutes 78.4% Mobile 74.9% Other Fixed Net 8.0% 9.1% Telekom Austria 13.6% 16.0% Fixed Net 1Q 10 1Q 09 Market Share Broadband Lines 15.8% 20.1% Cable 7.8% Unbundled lines 9.5% 27.1% Mobile Broadband 23.0% other o

  34. Slide 34: Fixed Net Key Performance Indicators

    Fixed Net Key Performance Indicators Average Revenues per Access Line Fixed Net Broadband Net Adds incl. Wholesale (in EUR) (in 000) 35.7 34.5 34.9 34.7 49.9 42.4 34.3 40.0 22.7 24.2 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 Fixed Broadband Access Lines (in 000) 967.2 1,011.4 872.3

  35. Slide 35: Further Contraction of Fixed Net - Voice Minutes

    Further Contraction of Fixed Net - Voice Minutes (in million minutes) 1Q 10 1Q 09 % change National 544 644 -15.6% Fixed-to-mobile 159 176 -9.7% International 82 93 -12.2% Total voice minutes 784 913 -14.1% Total Fixed Net minutes 806 970 -16.9% (in million minutes) 1Q 10 1Q 09 % change National who

  36. Slide 36: Mobile Subscriber Base Grows to 19mn Customers

    Mobile Subscriber Base Grows to 19mn Customers (in 000) 1Q 10 1Q 09 % change Austria 4,891.2 4,581.7 6.8% Market share 42.4% 42.4% Bulgaria 5,263.7 5,279.1 -0.3% Market share 50.1% 50.0% Belarus 4,116.3 3,762.9 9.4% Market share 41.2% 43.8% Croatia 2,634.1 2,503.3 5.2% Market share 43.7% 41.4% Slove

  37. Slide 37: Operational Data – mobilkom austria

    Operational Data – mobilkom austria MoU per Subscriber ARPU (in minutes) (in EUR) 168.3 163.8 159.9 165.3 159.8 25.5 25.5 24.3 23.6 22.2 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 Quarterly Churn SAC per Gross Add (in EUR) 8.4% 7.7% 56.9 57.4 59.8 3.9% 3.7% 41.6 30.7 2.0% 2.3% 1Q 09

  38. Slide 38: Mobile Data - mobilkom austria

    Mobile Data - mobilkom austria Mobile Broadband Customers Number of SMS (in 000) (in million) 666 640 595 593 585 540 590 441 465 500 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 Data ARPU Data in % of Revenues ( in EUR) 41.3% 37.4% 38.9% 35.1% 36.7% 7.2 6.9 7.0 6.9 6.7 1Q 09 2Q 09 3Q

  39. Slide 39: ARPU & MoU per Subscriber for Selected Mobile Communication Operations

    ARPU & MoU per Subscriber for Selected Mobile Communication Operations MoU per Subscriber (in minutes) 168.3 159.8 145.1 149.4 139.6 153.4 91.1 95.5 83.2 68.5 83.0 61.9 80.6 51.7 mobilkom Mobiltel Velcom Vipnet Vip mobile Vip operator Si.mobil austria 1Q 09 1Q 10 ARPU (in EUR) 25.5 22.2 21.7 19.4 12

  40. Slide 40: Headcount Development

    Headcount* Development (Average period) 1Q 10 1Q 09 change Fixed Net** 7,942 8,333 -391 Mobile Communciation 8,664 8,490 174 Telekom Austria Group 16,606 16,823 -217 (End of period) 1Q 10 1Q 09 change Fixed Net** 7,991 8,265 -274 Mobile Communciation 8,646 8,524 122 Telekom Austria Group 16,637 16,7

  41. Slide 41: Revenues by Segment

    Revenues by Segment (EUR million) 1Q 10 1Q 09 % change Fixed Net revenues 452.1 469.5 -3.7% Mobile Communication revenues 734.2 790.3 -7.1% Corporate, Other & Eliminations -60.3 -62.7 -3.8% Revenues Telekom Austria Group 1,126.0 1,197.1 -5.9% Results for the First Quarter 2010 41

  42. Slide 42: EBITDA and Operating Income by Segment

    EBITDA and Operating Income by Segment (EUR million) 1Q 10 1Q 09 % change Fixed Net EBITDA 146.4 157.8 -7.2% Mobile Communciation EBITDA 286.2 306.3 -6.6% Corporate, Other & Eliminations -6.7 -9.3 -28.0% EBITDA Telekom Austria Group 425.9 454.8 -6.4% (EUR million) 1Q 10 1Q 09 % change Fixed Net oper

  43. Slide 43: Fixed Net – Revenue Breakdown

    Fixed Net – Revenue Breakdown (EUR million) 1Q 10 1Q 09 % change Access, Voice and Broadband 237.0 249.9 -5.2% Data 91.7 97.5 -5.9% Wholesale Voice & Internet 88.3 90.0 -1.9% Others 35.1 32.0 9.7% Fixed Net revenues 452.1 469.5 -3.7% Results for the First Quarter 2010 43

  44. Slide 44: Fixed Net – Expense Breakdown

    Fixed Net – Expense Breakdown (EUR million) 1Q 10 1Q 09 % change Material expense 15.4 16.0 -3.8% Employee costs 134.0 133.5 0.4% Depreciation, amortization and impairment charges 106.8 112.7 -5.2% Interconnection 68.0 70.4 -3.4% Maintenance and repairs 20.0 21.0 -4.8% Services received 31.5 23.0 37

  45. Slide 45: Mobile Communication - Revenue Breakdown

    Mobile Communication - Revenue Breakdown (EUR million) 1Q 10 1Q 09 % change Subscription and Traffic 555.0 563.9 -1.6% Equipment 45.8 57.3 -20.1% Roaming 26.3 34.0 -22.6% Interconnection 98.5 126.1 -21.9% Other 18.0 17.9 0.6% Discounts -9.4 -8.9 5.6% Mobile Communication revenues 734.2 790.3 -7.1% R

  46. Slide 46: Mobile Communication – Expense Breakdown

    Mobile Communication – Expense Breakdown (EUR million) 1Q 10 1Q 09 % change Material expense 68.4 86.7 -21.1% Employee costs 72.5 71.3 1.7% Depreciation, amortization and impairment charges 152.9 162.1 -5.7% Interconnection 86.1 100.7 -14.5% Repairs 21.3 20.2 5.4% Services received 64.8 66.5 -2.6% O

  47. Slide 47: Capital Expenditures by Segment

    Capital Expenditures by Segment (EUR million) 1Q 10 1Q 09 % change Fixed Net 65.2 33.5 94.6% Mobile Communication 71.2 82.5 -13.7% Total Capex Telekom Austria Group 136.4 116.0 17.6% Thereof tangible 95.2 81.0 17.5% Thereof intangible 41.2 35.0 17.7% (EUR million) 1Q 10 1Q 09 % change Mobile Communi

  48. Slide 48: Net Debt - Telekom Austria Group

    Net Debt - Telekom Austria Group (EUR million) Mär 31, 2010 Dez 31, 2009 % change Long-term debt 3,226.5 3,234.8 -0.3% Short-term borrowings* 843.6 1,501.6 -43.8% Cash and cash equivalents, short-term and long term investments, finance lease receivables -562.4 -1,099.0 -48.8% Derivate financial inst

  49. Slide 49: Debt Maturity Profile

    Debt Maturity Profile Debt Maturity Profile (EUR million) 1,292 942 Ratings: 699* 769 315 *  S&P: BBB (stable outlook)  Moody‘s: A3 (stable outlook) 2010 2011 2012 2013 thereafter Lines of Credit  Undrawn committed lines of credit amounting to EUR 1.1 bn  Average term to maturity of approximatel

  50. Slide 50: Contact Details Investor Relations Telekom Austria Group

    Contact Details Investor Relations Telekom Austria Group Head of Investor Relations Barbara Plößnig Direct: +43 59059 1 19003 e-mail: barbara.ploessnig@telekom.at Matthias Stieber Direct: +43 59059 1 19001 Barbara has been with the IR Team since 2005 e-mail: matthias.stieber@telekom.at and will purs

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