Telekom Austria Ag · VIE:TKA
Telekom Austria — Q1 2011 Earnings Presentation
38 slides from Telekom Austria's earnings presentation, May 11, 2011
Slide 1: Results for the First Quarter 2011
Results for the First Quarter 2011 Vienna, 11 May 2011
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-lookingg statements. Forward-looking g information involves risks and uncertainties that could significantly affect expected resul
Slide 3: Agenda
Agenda > Operational and Financial Highlights of the First Quarter 2011 > Key Financial Developments of the First Quarter 2011 > Special Topics > Outlook FY 2011 pp > Appendix Results for the First Quarter 2011 3
Slide 4: Operational and Financial Highlights of the First Quarter 2011
Operational and Financial Highlights of the First Quarter 2011 4
Slide 5: Operational and Financial Highlights of the First Quarter 2011
Operational and Financial Highlights of the First Quarter 2011 > Continued strong g demand for fixed and mobile broadband solutions as well as for smartphones > Groupwide mobile broadband subscriber growth of 51.1% > Fixed Fi d access line li growth g th off 7,300 7 300 li lines iin A Austria ti > M
Slide 6: Key Financial Developments of the First Quarter 2011
Key Financial K Fi i lD Developments l t off th the First Quarter 2011 6
Slide 7: Strong Operational Performance Limits Revenue Decline
Strong Operational Performance Limits Revenue Decline (EUR million) Q1 2011 Q1 2010 % change Revenues 1,118.0 1,126.0 -0.7% > Growth in Belarusian and Additional EBITDA comparable* 396.7 426.8 -7.1% Markets segments almost offsets EBITDA comparable margin* 35.5% 37.9% revenue declines in the Austria
Slide 8: Demand for Broadband Solutions and Smartphones Characterizes Revenue Development
Demand for Broadband Solutions and Smartphones Characterizes the Group’s Revenue Development Austria: Belarus: > Fixed broadband demand drives access line growth, > Revenue growth driven by higher customer but cannot offset loss of fixed voice minutes base, higher usage and increased ARPU > 5.2% inc
Slide 9: Revenue Related OPEX Drive EBITDA Comparable Decline
Revenue Related OPEX Drive EBITDA Comparable Decline Bulgaria: Austria: > EUR 5.9 mn increase in OPEX mainly y due to Belarus: > EBITDA decline driven by lower revenues higher material expenses driven by > Strong operating performance drives > Operating expenses remain stable as smartphones as well
Slide 10: Free Cash Flow Impacted by Lower Cash Flow from Operations and Working Capital
Free Cash Flow Impacted by Lower Cash Flow from Operations and Change in Working Capital (EUR million) Q1 2011 Q1 2010 % change Cash Flow from operations before working capital adjustments 335.8 385.9 -13.0% Change in working capital -185.2 -83.8 121.1% Ordinary capital expenditures -120.4 -136.4 -1
Slide 11: Special Topics
Special Topics 11
Slide 12: 2011 Headcount Reduction Targets More than Fulfilled in Q1 2011
2011 Headcount Reduction Targets More than Fulfilled in Q1 2011 FTEs Addressed & Resulting g Restructuring g Charge > High acceptance of offered social plans Initial guidance as > Transfers of civil servants to government FTEs addressed Q1 2011 of Feb. 23, 2011 bodies on track Transfer to government
Slide 13: Targeted New Long Term Solution for Idle Workforce
Targeted New Long Term Solution for Idle Workforce to Provide Positive Cash Flow Effect > Idle civil servants will be integrated into servicekom Social plans > Servicekom will provide economic solutions Internal & Internal & & transfers external t l external t l leasing to govern- services > Reinteg
Slide 14: Telekom Austria Group Launches A1 as Single Brand in Austria
Telekom Austria Group Launches “A1” as Single Brand in Austria Next Step p in the Integration g Process > “A1” single brand for fixed and mobile services in Austria + > Truly integrated and harmonized product portfolio out of one hand > Strengthens Telekom Austria Group‘s position as only true conve
Slide 15: Telekom Austria Group Brand Portfolio
Telekom Austria Group Brand Portfolio A1 Austria Bulgaria Serbia Croatia Macedonia Belarus Slovenia Liechtenstein Results for the First Quarter 2011 15
Slide 16: Strong Operating Performance in Belarus while Foreign Exchange Risk Rises
Strong Operating Performance in Belarus while Foreign Exchange Risk Rises Revenue and EBITDA Comparable p FX-Sensitivityy Analysis y Development (EUR million) (in %) +25.2% without FX-Effect -10% +23.7% +23 7% -15% 15% without -20% FX-Effect -15% -20% -23% -26% -31% 89 9 89.9 73.5 -38% 34.8 42.1 Rev
Slide 17: Outlook
Outlook 17
Slide 18: Unchanged Financial Outlook for Full Year 2011
Unchanged Financial Outlook for Full Year 2011 Telekom Austria Group p – Full Year 2011 On a constant currency basis As of May 11, 2011 Revenues up to EUR 4.6 bn EBITDA comparable up to EUR 1.60 bn CAPEX up to EUR 0.80 bn Operating Free Cash Flow* approximately EUR 0.8 bn 55% of free cash flow, Divi
Slide 19: Appendix
Appendix 1 19
Slide 20: Telekom Austria Group – Revenue Breakdown
Telekom Austria Group – Revenue Breakdown Revenue Split - Segment Austria (EUR million) Q1 2011 Q1 2010 % change Monthly fee and traffic 505.7 522.4 -3.2% Data and ICT Solutions 49.3 49.1 0.3% Wholesale (incl. Roaming) 51.5 54.5 -5.5% Interconnection 87.5 104.5 -16.2% E i Equipment t 31 2 31.2 17 7
Slide 21: Telekom Austria Group – Expense Breakdown
Telekom Austria Group – Expense Breakdown Operating Expense - Segment Austria (EUR million) Q1 2011 Q1 2010 % change Material expense 65.6 46.4 41.2% Employee costs 171.9 173.9 -1.2% Interconnection 75.1 91.1 -17.5% Maintenance and repairs 25.2 27.3 -7.7% S Services i received i d 38 6 38.6 47 8 47.
Slide 22: Mobile Communication Subscriber Base
Telekom Austria Group - Mobile Communication Subscriber Base Mobile Subscribers (in 000) Q1 2011 Q1 2010 % change Austria 5,145 4,891 5.2% Market share 41.0% 42.4% Bulgaria 5,277 5,264 0.3% Market share 49.3% 50.1% Croatia 2,682 2,634 1.8% Market share 41.9% 43.7% Belarus 4,415 4,116 7.3% Market sha
Slide 23: Telekom Austria Group – Headcount Development
Telekom Austria Group – Headcount Development FTE (Average period) Q1 2011 Q1 2010 % change Austria 9,699 10,075 -3.7% International 6,745 6,506 3.7% Telekom Austria Group* 16,600 16,606 0.0% FTE (End of period) Q1 2011 Q1 2010 % change Austria 9,649 10,132 -4.8% 4.8% International 7,351 6,496 13.2%
Slide 24: Telekom Austria Group – Capital Expenditures Split
Telekom Austria Group – Capital Expenditures Split Capital Expenditures (EUR million) Q1 2011 Q1 2010 % change Segment Austria 78.4 83.6 -6.3% Segment Bulgaria 13.9 8.6 61.0% Segment Croatia 8.6 15.4 -44.1% S Segment tBBelarus l 31 3.1 12 7 12.7 -75.6% 75 6% Segment Additional Markets 16.4 16.0 2.4%
Slide 25: Telekom Austria Group – Net Debt
Telekom Austria Group – Net Debt Net debt (EUR million) Mar. 31, 2011 Dec. 31, 2010 % change Long-term debt 3,582.5 3,146.4 13.9% Short-term borrowings 330.2 522.6 -36.8% Cash and cash equivalents, short-term and long term investments, finance lease receivables -558.5 -355.0 57.3% Derivate financial
Slide 26: Telekom Austria Group – Debt Maturity Profile
Telekom Austria Group – Debt Maturity Profile Debt Maturityy Profile (EUR million) 938 * 937 795 497 267 200 200 78 * 2011 2012 2013 2014 2015 2016 2017 2018 *Includes approx. EUR 51.7 mn in 2012 related to Velcom > EUR 3,912.7 mn of short- and long-term borrowings as of March 31, 2011 > Average cos
Slide 27: Telekom Austria Group – Debt Profile
Telekom Austria Group – Debt Profile Overview Debt Instruments Fixed-Floating g Mix 20% 48.9% 51.1% 80% Bonds Loans Floating Fixed Lines of Credit Ratings > Undrawn committed lines of credit > S&P: BBB (stable outlook) amounting to EUR 1.0 bn > Moody’s: A3 (negative outlook)* g term to maturityy of
Slide 28: 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 2,322 39.0 38.5 2,325 38.0 37.5 37.0 36.5 36.0 34.0 245.0 2,315 35.5 35.0 34.5 33.3 32.8 33.2 32.5 2,315 8.0 2,310 34.0 33.5 240.0 2,304 , 33.0
Slide 29: Segment Austria – Mobile Key Performance Indicators
Segment Austria – Mobile Key Performance Indicators ARPU & ARPU Relevant Revenues MoU p per Subscriber (in EUR) (in min) 22.4 23.0 159.8 160.0 159.7 355.0 22.3 21.9 22.5 345.0 21.6 22.0 155 0 155.0 335.0 21.5 21.0 152.0 325.0 334.2 330.5 20.1 20.5 315.0 326.3 320.1 20.0 305.0 19.5 309.9 295.0 19.0 Q
Slide 30: Segment Austria – Broadband Market Split
Segment Austria – Broadband Market Split Market Share Broadband Lines Market Share Voice Minutes (in %) (in %) Mobile 27.4% 28.3% Broadband other operators 7.9% Unbundled lines 6.7% 78.4% 80.9% 16.0% 15.1% Mobile Cable A1 TA 16.7% Mobile broadband 18.2% A1 TA 1.4% 1 2% 1.2% fixed wholesale A1 TA Oth
Slide 31: Segment Bulgaria – Mobile Key Performance Indicators
Segment Bulgaria – Mobile Key Performance Indicators ARPU MoU p per Subscriber (in EUR) (in min) 8.7 111.8 8.5 8 2 8.2 101.5 102 6 102.6 104 2 104.2 8.0 95.5 7.6 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Mobile Broadband Customers Mobile Penetration (in 000) (in %) 142 126 142.6% 9
Slide 32: Segment Croatia – Mobile Key Performance Indicators
Segment Croatia – Mobile Key Performance Indicators ARPU MoU p per Subscriber (in EUR) (in min) 71.6 71.3 11.4 12.0 11.0 10.7 9 2 9.2 68 5 68.5 6 9 67.9 66.2 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Mobile Broadband Customers Mobile Penetration (in 000) (in %) 179 179 179 156 144.
Slide 33: Segment Belarus – Mobile Key Performance Indicators
Segment Belarus – Mobile Key Performance Indicators ARPU MoU p per Subscriber (in EUR) (in min) 174.1 176.3 6.4 6.7 6.2 169.2 168.6 6.1 5 5 5.5 149.4 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Mobile Broadband Customers Mobile Penetration (in 000) (in %) 113.5% 197.5 143.5 109.6% 10
Slide 34: Segment Additional Markets – Mobile Key Performance Indicators
Segment Additional Markets – Mobile Key Performance Indicators Slovenia - ARPU Slovenia - MoU p per Subcriber (in EUR) (in min) 21.7 163.9 165.1 20.6 20 4 20.4 158 2 158.2 19.4 19.1 153.4 150.9 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Serbia - ARPU Macedonia - ARPU (in EUR) (in EU
Slide 35: Appendix 2 – Regulatory Topics
Appendix A di 2 – Regulatory Topics 35
Slide 36: Negative Impact of Approx. EUR 175 mn on EBITDA Comparable Expected until 2013
Negative Impact of Approx. EUR 175 mn on EBITDA Comparable Expected until 2013* Keyy Points Impact EBITDA comp. Interconnection 2010 - 2013: EUR -75 75 mn Impact EBITDA comp. 2011 -2013: Impact EBITDA comp. EUR -175 mn Roaming g 2010 - 2013: EUR -100 mn > EU commission: before Januaryy 1, Digital Di
Slide 37: Glide Path of Mobile Termination Rates
Glide Path of Mobile Termination Rates July January July August January June July August January July August In EUR c ents 2009 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 market analysis during Austria 4.00 3.50 3.01 2.51 2.01 2011 6.65 (until market analysis started in Q1 2011-> decision exp
Slide 38: EU-Roaming Glide Path
EU-Roaming Glide Path July 2009 July 2010 July 2011 Voice Wholesale 0.26 0.22 0.18 Retail active 0.43 0.39 0.35 Retail passive 0.19 0.15 0.11 SMS Wholesale 0.04 0.04 0.04 Retail 0.11 0.11 0.11 Data Wholesale 1.00 0.80 0.50 Results for the First Quarter 2011 38