Magyar Telekom Telecommunications Plc · BET:MTELEKOM

Magyar Telekom Telecommunications — Magyar Telekom — FY2014 Earnings Presentation

31 slides from Magyar Telekom Telecommunications's earnings presentation, 2015

  1. Slide 1: Magyar Telekom Group Investor Presentation

    MAGYAR TELEKOM GROUP INVESTOR PRESENTATION

  2. Slide 2: Strategy and Market Positions

    STRATEGY AND MARKET POSITIONS

  3. Slide 3: Overview – Magyar Telekom at a Glance

    OVERVIEW – MAGYAR TELEKOM AT A GLANCE INTERNATIONAL PRESENCE HUNGARY Czech Republic Slovakia Austria Moldova Hungary Hungary Slovenia Croatia Croatia Romania Romania BiH Serbia Serbia Kosovo Bulgaria Bulgaria Montenegro Macedonia Macedonia Albania Greece Magyar Telekom copper Invitel copper UPC copp

  4. Slide 4: Strategy Overview

    STRATEGY OVERVIEW TELEKOM 2017 STRATEGY BUNDLING STRATEGY BEYOND 1 LEADING INTEGRATED QUALITY BRAND BEST CUSTOMER EXPERIENCE CORE IT/SYSTEM 2 EFFORTLESS PRODUCTS & SIMPLIFIED PROCESSES INTEGRATION PUSH IN B2B 3 ONLINE CUSTOMER SERVICING DIVERSIFIED SERVICE COMPANY WITH 4 INTEGRATED ALL-IP NETWORK NT

  5. Slide 5: Strategic Highlights

    STRATEGIC HIGHLIGHTS SPECTRUM  Extension of existing spectrum licenses on 900 MHz and 1800 MHz in Hungary in 2013 ACQUISITIONS  Acquisition of necessary spectrum blocks in 2014 to reinforce mobile market leadership MOBILE NETWORK  Agreement with Telenor Hungary to develop and maintain shared 4G n

  6. Slide 6: Hungarian Economic Environment

    HUNGARIAN ECONOMIC ENVIRONMENT GROWTH STRUCTURE DOMESTIC DEMAND SHOWS SIGNS OF IMPROVEMENT AS ECONOMY RECOVERS 8%  Governmental measures support consumer 6% spending 4%  Investment levels show strong volatility due 2% to EU fund cycles 0%  MT is expected to benefit from positive -2% trends of dom

  7. Slide 7: Market Positions on the Hungarian Telco Markets

    MARKET POSITIONS ON THE HUNGARIAN TELCO MARKETS TOTAL MOBILE MARKET SHARES* FIXED VOICE MARKET SHARES** Subscribers Subscribers 12,000,000 4,000,000 Other Vodafone Invitel 22.8% 22.5% 22.7% +1% Telenor DIGI 9,000,000 Telekom 3,000,000 5.7% 5.8% 5.8% 12.6% UPC 13.0% 12.7% 31.3% 30.9% 30.5% 8.9% 9.5%

  8. Slide 8: Wide Range of Telecom Services, System Integration and IT at T-Systems Hungary

    WIDE RANGE OF TELECOM SERVICES, SYSTEM INTEGRATION AND IT INFRASTRUCTURE COMPETENCES AT T-SYSTEMS HUNGARY CONNECTIVITY 43.0% of total revenue 65% of total margin* Fixed voice Fixed data Fixed internet Mobile voice Mobile internet Mobile data SYSTEM INTEGRATION 17.5% of total revenue 31% of total mar

  9. Slide 9: Market Leader in IT Services

    MARKET LEADER IN IT SERVICES DUE TO WIDE RANGE OF IT SOLUTIONS BOTH IN IT PROJECTS AND IT OUTSOURCING Revenue based SYSTEM INTEGRATION IT INFRASTRUCTURE SI & IT market shares* Package Custom System IT App. OS & Infra. OS & Infra. proj. Hosting Cloud (H1 2014) application app. Dev. integration consul

  10. Slide 10: Guidance and Outlook

    GUIDANCE AND OUTLOOK

  11. Slide 11: Financial Outlook

    FINANCIAL OUTLOOK 2014 RESULTS 2015 TARGETS 2017 TARGETS roughly stable REVENUE HUF 626.4bn (-1.7%) up to 3% increase compared to 2014 level EBITDA HUF 181.2bn (+1.0%) up to 3% decline surpassing HUF 185bn CAPEX* HUF 86.8bn around HUF 105bn around HUF 80bn FCF** ca. HUF -19.0bn surpassing HUF 50bn m

  12. Slide 12: Revenue Growth Driven by Successful Rebalancing

    REVENUE GROWTH DRIVEN BY SUCCESSFUL REBALANCING GROUP REVENUE DEVELOPMENTS HUF bn 750  0-3% revenue growth anticipated for 2015 vs. 2014 600  2017 revenues to be roughly stable compared to the 2014 level due to the 450 fall out of business energy revenues  Mobile broadband growth mostly 300 compe

  13. Slide 13: Disciplined Cost Management

    DISCIPLINED COST MANAGEMENT EBITDA AND COST DEVELOPMENTS (RELATIVE TO REVENUES) 100%  2015 EBITDA to decline by a maximum 3% vs. 2014 level 32% 37% 36% 37% 37%  2017 EBITDA expected to surpass 80% HUF 185 billion  2015 indirect costs include the 60% 31% expected ca. HUF 8 billion severance 29% 30

  14. Slide 14: Efficiency Investments Free Up Capex for New Technologies and Services

    EFFICIENCY INVESTMENTS FREE UP CAPEX FOR NEW TECHNOLOGIES AND SERVICES CAPEX DEVELOPMENTS*  Ca. HUF 105 billion Capex earmarked for 2015 HUF bn 120  Fixed access: focus on increasing HSI 15% 14% 14% 16% 13% coverage 100  Mobile access: 4G population coverage to reach 97% by end 2015 80  Efficien

  15. Slide 15: Dividend Policy

    DIVIDEND POLICY DIVIDEND PAYMENT AND NET DEBT RATIO DEVELOPMENTS Net debt ratio* Dividend per share (HUF) 50% 70  Maintain net debt ratio (net debt/total 45.7% 43.8% capital) target of 30% - 40% 60 40%  Board of Directors proposes no 34.1% 34.3% dividend payment on 2014 earnings 32.7% TARGET 50 fo

  16. Slide 16: 2014 Full Year Results

    2014 FULL YEAR RESULTS

  17. Slide 17: 2014 Public Targets Achieved

    2014 PUBLIC TARGETS ACHIEVED 2014 RESULTS 2014 TARGETS REVENUE -1.7% up to 3% decline  Further decline in fixed and mobile voice revenues  Lower energy revenues due to cuts in regulated retail energy prices  Decline in SI/IT revenues reflecting change in service mix REPORTED +1.0% up to 3% declin

  18. Slide 18: 2014 Group Results – Revenues and EBITDA

    2014 GROUP RESULTS – REVENUES AND EBITDA GROUP REVENUES GROUP EBITDA HUF bn HUF bn -1.7% 3.1 -8.1 184 1.0% 640 637.5 -6.1 4.8 -2.1 4.9 3.6 -4.8 635 1.9 -4.8 182 2.1 -3.0 181.2 630 -0.7 180 626.4 179.5 625 0 0 2013 Mobile Mobile Mobile Fixed Fixed TV SI/IT Energy Other 2014 2013 gross margin bad debt

  19. Slide 19: 2014 Group Results – Capex and FCF

    2014 GROUP RESULTS – CAPEX AND FCF GROUP CAPEX GROUP FCF* HUF bn HUF +38.2bn HUF bn 200 6.5 184.4 30 38.9 HUF -14.4bn 146.1 -41.1 15.8 -17.6 150 58.7 15 -17.5 100 -7.2 1.8 0.6 0 50 -4.4 -7.4 0 -15 -2.6 -13.8 2013 Spect. Annual STB in Spect. Annual Other 2014 licenses freq. fee 2013 licenses freq. fe

  20. Slide 20: 2014 Segment Results – Revenues and EBITDA

    2014 SEGMENT RESULTS – REVENUES AND EBITDA SEGMENTS’ REVENUE DEVELOPMENTS SEGMENTS’ EBITDA DEVELOPMENT HUF bn HUF bn -1.7% 1.0% 640 637.5 -2.4 184 4.2 -2.2 -11.9 635 183 630 8.7 626.4 182 625 -0.8 -5.0 0.2 181.2 0.4 181 620 -0.5 615 180 179.5 0 0 2013 T-HU T-Systems Maced. Monten. Elim. 2014 2013 T-

  21. Slide 21: Subscriber Developments on the Hungarian Telco Markets

    SUBSCRIBER DEVELOPMENTS ON THE HUNGARIAN TELCO MARKETS TOTAL MOBILE MOBILE BROADBAND subscribers subscribers +1% +1% „WE ARE FIRST, 6,000,000 2,500,000 +17% WE STAY FIRST” +27% 4,500,000 2,000,000 1,500,000 3,000,000 1,000,000 1,500,000 500,000 0 0 2012 2013 2014 2012 2013 2014 FIXED VOICE FIXED BRO

  22. Slide 22: Telekom Hungary – Fixed Line Market

    TELEKOM HUNGARY – FIXED LINE MARKET MULTIPLAY DEVELOPMENTS 3P  Reduction in fixed voice churn due to the retention effect of 2P Subscribers 1P local packages, 2Play/3Play offers and retail energy bundling 2,000,000 -2% Annual churn rate  Growth in broadband market driven by cable and fiber 1,565,3

  23. Slide 23: Telekom Hungary – Energy Retail

    TELEKOM HUNGARY – ENERGY RETAIL GAS AND ELECTRICITY POINTS OF DELIVERY (POD) RETAIL ENERGY BUSINESS PODs (thousand)  6.8% of total revenues from energy in 2014 200 Gas Electricity  Discounts offered to residential customers compared 150 68.7 67.6 to the regulated universal service prices were cut

  24. Slide 24: Telekom Hungary – Mobile Market

    TELEKOM HUNGARY – MOBILE MARKET SMARTPHONE PENETRATION AND ATTECHED RATE MOBILE BUSINESS 49.8% 50% 50%  Smartphone sales reached 95% of postpaid 41.1% handsets in Q4 2014 40% 40% 31.3%  Postpaid attach rate at 72% 30% 30% 18.4%  78% population-based countrywide 4G coverage 20% 38.9% 20% 32.9% 22.

  25. Slide 25: Hungarian Mobile Spectrum Situation

    HUNGARIAN MOBILE SPECTRUM SITUATION CURRENT SPECTRUM SITUATION FDD (2x1 MHz) Magyar Telekom BAND Telenor 800 MHz 10 10 10 Vodafone Digi Available 900 MHz 2 10 1 10 2 10 1800 MHz 15 5 5 5 15 30 2100 MHz 15 15 15 15 2600 MHz 30 20 20 25

  26. Slide 26: Macedonia and Montenegro

    MACEDONIA AND MONTENEGRO MACEDONIAN MOBILE MARKET One (T. Slovenia) MONTENEGRIN MOBILE MARKET Telenor VIP (T. Austria) Subscribers m:tel (T. Serbia) Subscribers T-Mobile +4% T-Mobile -8% 0% -1% 1,500,000 2,500,000 -6% -14% 24% 22% 1,200,000 0% +2% 2,000,000 24% 24% 25% 40% 20% 26% 900,000 41% 1,500,

  27. Slide 27: Financials

    FINANCIALS

  28. Slide 28: Magyar Telekom – Consolidated Income Statement

    MAGYAR TELEKOM – CONSOLIDATED INCOME STATEMENT HUF million 2013 2014 Change Mobile revenues 310,945 317,424 2.1% Fixed line revenues 215,382 207,518 -3.7% System Integration/Information Technology revenues 64,054 59,206 -7.6% Revenue from Energy Services 47,140 42,299 -10.3% Revenues 637,521 626,447

  29. Slide 29: Magyar Telekom – Consolidated Balance Sheet

    MAGYAR TELEKOM - CONSOLIDATED BALANCE SHEET HUF million Dec 31, 2013 Dec 31, 2014 Change Current assets 193,941 197,897 2.0% Cash and cash equivalents 14,633 14,625 -0.1% Other current financial assets 28,615 23,690 -17.2% Non current assets 897,307 992,879 10.7% Property, plant and equipment - net

  30. Slide 30: Magyar Telekom – Consolidated Cash Flow Statement

    MAGYAR TELEKOM - CONSOLIDATED CASH FLOW STATEMENT HUF million Dec 31, 2013 Dec 31, 2014 Change Net cash generated from operating activities 131,612 145,495 10.5% Investments in tangible and intangible assets (146,122) (184,364) -26.2% Adjustments to cash purchases 25,984 42,211 62.4% Purchase of sub

  31. Slide 31: For further questions please contact the IR department

    For further questions please contact the IR department: Investor Relations Phone: +36 1 458-0424 Fax : +36 1 458-0443 e-mail: investor.relations@telekom.hu Abbreviations: 3G: third generation, 4G: fourth generation, ARPU: average revenue per user, BB: broadband, IP: internet protocol, IT: informatio

Magyar Telekom — FY2014 Earnings Presentation on 6ix