Telekom Austria Ag · VIE:TKA

Telekom Austria — Q1 2009 Earnings Presentation

56 slides from Telekom Austria's earnings presentation, May 13, 2009

  1. Slide 1: Telekom Austria Group Results for the First Quarter 2009

    Telekom Austria Group Results for the First Quarter 2009 Vienna, May 13, 2009

  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: Reporting Changes

    Reporting Changes Starting with 1Q 2009 foreign exchange gains and losses are reported as a part of the financial result instead of being split between other operating income and financial result. Comparative figures for 1Q 2008 and year-end 2008 were adjusted accordingly by a total FX gain of EUR 1

  4. Slide 4: Agenda

    Agenda ƒ Key Developments ƒ Fixed Net ƒ Mobile Communication ƒ Financial Overview ƒ Outlook Results for the First Quarter 2009 4

  5. Slide 5: Key Developments

    Key Developments Results for the First Quarter 2009 5

  6. Slide 6: Successful Cost Reduction in Fixed Net; Weaker Contribution from Mobile Communication

    Successful Cost Reduction in Fixed Net; Weaker Contribution from Mobile Communication ƒ All Mobile Communication operations contribute to subscriber growth of 13.0% to 17.9 million customers ƒ Significant slowdown of Fixed Net access line loss continues ƒ Disposal of Fixed Net subsidiaries and lower

  7. Slide 7: First Quarter 2009 EBITDA Reflects Weaker Mobile Communication Segment

    First Quarter 2009 EBITDA Reflects Weaker Mobile Communication Segment Revenues EBITDA (EUR million) (EUR million) -5.0% -6.4% 1,197.1 1,259.6 485.7 454.8 1Q 09 1Q 08 1Q 09 1Q 08 Net Income Earnings per Share (EUR million) (EUR) -34.2% 129.7 85.3 -34.2% 0.29 0.19 1Q 09 1Q 08 1Q 09 1Q 08 Results for

  8. Slide 8: Hannes Ametsreiter Took Over as New CEO of Telekom Austria Group

    Hannes Ametsreiter Took Over as New CEO of Telekom Austria Group Starting With 2Q 09 ƒ New management team fully commits to strategy presented at the Capital Market Day in January 2009 ƒ Focus for 2009 on operational excellence to tackle the crisis and exploit the potential of existing operations ƒ

  9. Slide 9: Fixed Net

    Fixed Net Results for the First Quarter 2009 9

  10. Slide 10: Slight EBITDA Growth Despite Lower Revenues Benefiting from Lower Costs

    Slight EBITDA Growth Despite Lower Revenues Benefiting from Lower Costs Revenues (EUR million) ƒ Revenue decline reflects lower volume -10.0% of minutes due to fixed-to-mobile 469.5 521.9 substitution ƒ Disposal of subsidiaries in Poland, 1Q 09 1Q 08 Slovakia and Czech Republic results into a revenu

  11. Slide 11: Slowdown of Access Line Loss Continues Despite Expiry of Promotions

    Slowdown of Access Line Loss Continues Despite Expiry of Promotions in Mid-January 09 Line Loss (in 000) ƒ Promotion of product bundles slows down line loss 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 -2.4 -8.0 ƒ Line loss decreases from 32k in -32.4 -35.1 -27.7 1Q 08 to 8k in 1Q 09 Average Revenues per ƒ Line lo

  12. Slide 12: Telekom Austria Maintains Market Share in a Growing Broadband Market

    Telekom Austria Maintains Market Share in a Growing Broadband Market Broadband Market Shares ƒ Fixed Net retail broadband market share rises to 30.0% Mobile Broadband in 1Q 09 vs. 4Q 08 16.6% 23.0% other operators 9.5% Unbundled Lines 11.7% ƒ Product bundles enable Fixed Net to participate in market

  13. Slide 13: Re-energization of the Fixed Net Segment to Tackle Future Challenges

    Re-energization of the Fixed Net Segment to Tackle Future Challenges Project Energy The Future is Broadband Growth Technology Efficiency ƒ Private/Business ƒ Infrastructure ƒ Cost-conscious action customers ƒ New systems ƒ Lean processes ƒ Wholesale ƒ Regulation Employees and Management ƒ Change & c

  14. Slide 14: Personnel Restructuring Program Progressing According to Plan

    Personnel Restructuring Program Progressing According to Plan Announced Nov. 08 Status as of Target March 31, 2009 Dec. 31, 2009 Social plan 400 FTE Split between Social plan Total of 1,250 334 FTE 1,250 FTE Staff FTE released from work Staff 850 FTE released from work 654 FTE Results for the First

  15. Slide 15: Mobile Communication

    Mobile Communication Results for the First Quarter 2009 15

  16. Slide 16: EBITDA Impacted by Lower Roaming Revenues and Lower International Contributions

    EBITDA Impacted by Lower Roaming Revenues and Lower International Contributions Revenues (EUR million) ƒ Subscriber base in Mobile Communi- -0.8% cation grows by 13.0% to 17.9 790.3 796.5 million customers ƒ Foreign currency translation results in 1Q 09 1Q 08 a decline in revenues of EUR 12.6 mn EBI

  17. Slide 17: mobilkom austria's Results Impacted by Lower Roaming Revenues & SAC

    mobilkom austria’s Results Impacted by Lower Roaming Revenues & SAC to Stimulate Data Growth Revenues (EUR million) ƒ Customer base of mobilkom austria -1.3% grows by 11.7% to 4.6 million 403.6 409.0 subscribers ƒ Revenue decrease of 1.3% due to 1Q 09 1Q 08 lower subscription and traffic as well as

  18. Slide 18: mobilkom austria Continues to Increase its Market Leadership

    mobilkom austria Continues to Increase its Market Leadership Market Shares As of March 2009 42.4% ƒ Market share grows from 41.2% 31.7% in 1Q 08 to 42.4% in 1Q 09 19.3% ƒ Mobile broadband subscriber 6.6% base grows by 42.3% to 441k 1Q 07 3Q 07 1Q 08 3Q 08 1Q 09 customers mobilkom austria T-Mobile in

  19. Slide 19: Ongoing Strong Usage and Customer Growth in Bulgaria

    Ongoing Strong Usage and Customer Growth in Bulgaria Despite Difficult Environment Revenues (EUR million) ƒ Mobiltel’s subscriber base grows by -2.8% 150.1 154.4 4.4% to 5.3 million customers ƒ Price declines and weak economy 1Q 09 1Q 08 impact revenue development EBITDA Asset sale EUR ƒ Usage growt

  20. Slide 20: Double Digit Revenue & EBITDA Growth in Belarus Despite Currency Devaluation

    Double Digit Revenue & EBITDA Growth in Belarus Despite Currency Devaluation Revenues (EUR million) 12.9% ƒ Subscriber base grows by 16.6% to 72.8 64.5 3.8 million at end of 1Q 09 ƒ Market share remains almost stable at 43.8% 1Q 09 1Q 08 ƒ Revenues increase by 12.9% to EBITDA EUR 72.8 million and EB

  21. Slide 21: Strong Subscriber Growth in Croatia and Slovenia

    Strong Subscriber Growth in Croatia and Slovenia, National Roaming Loss Drags on Vipnet Revenues Vipnet Vipnet in Croatia (EUR million) ƒ Subscriber base grows by 14.0% to -9.5% 105.4 116.5 2.5 mn customers ƒ EBITDA declines to EUR 32.6 million due to lower revenues impacted by the 1Q 09 1Q 08 expir

  22. Slide 22: Start-up Operations Strengthen Market Position and Increase Contribution

    Start-up Operations Strengthen Market Position and Increase Contribution EBITDA Vip mobile Vip mobile in Serbia (EUR million) ƒ Subscriber base grows by 2/3 and reaches 1 million mark 1Q 09 1Q 08 ƒ Market share of 10.2% compared -6.8 to 6.7% at the end of 1Q 08 -13.0 Vip operator in Macedonia EBITDA

  23. Slide 23: Retroactive Reduction of Mobile Termination Rates Pose No Risk for 2009 EBITDA Guidance

    Retroactive Reduction of Mobile Termination Rates Pose No Risk for 2009 EBITDA Guidance Final decision Draft for new glide path (in cents) Jul. 1, 08 Jan. 1, 09 Jul. 1, 09 Jan. 1, 10 Jul. 1, 10 Jan. 1, 11 mobilkom austria 5.72 4.50 3.88 3.26 2.63 2.01 T-Mobile 5.72 4.50 3.88 3.26 2.63 2.01 Orange 5.

  24. Slide 24: Financial Overview

    Financial Overview Results for the First Quarter 2009 24

  25. Slide 25: Revenue Decline Driven by Fixed Net, Lower EBITDA due to Weaker Mobile Communication

    Revenue Decline Driven by Fixed Net, Lower EBITDA due to Weaker Mobile Communication (EUR million) 1Q 09 1Q 08 % change Revenues 1,197.1 1,259.6 -5.0% EBITDA 454.8 485.7 -6.4% Operating income 180.1 202.3 -11.0% Financial result -70.6 -36.0 96.1% Income before income 109.5 166.3 -34.2% taxes Income

  26. Slide 26: Reduction of Capital Expenditures to Protect Free Cash Flow

    Reduction of Capital Expenditures to Protect Free Cash Flow Despite Expansion of Working Capital (EUR million) 1Q 09 1Q 08 % change Cash Flow from operations before 381.9 420.4 -9.1% working capital adjustments Change in working capital -134.2 -115.3 16.4% Ordinary capital expenditures -116.0 -159.6

  27. Slide 27: Capex Reduction to Protect Free Cash Flow and Proceeds from Bond Reinvested

    Capex Reduction to Protect Free Cash Flow and Proceeds from Bond Reinvested (EUR million) 1Q 09 1Q 08 % change Fixed Net 33.5 68.1 -50.8% Mobile Communication 82.5 91.5 -9.8% Ordinary capital expenditures 116.0 159.6 -27.3% Growth projects & acquisitions 3.2 2.0 60.0% Capex, growth projects & 119.2

  28. Slide 28: Current Assets Increase as Proceeds from Bond Issue are Reinvested

    Current Assets Increase as Proceeds from Bond Issue are Reinvested (EUR million) March 31, 09 Dec. 31, 08 Long-term assets 7,022.8 7,452.0 Current assets 2,065.0 1,545.4 Total assets 9,087.8 8,997.4 Current liabilities 2,132.8 2,220.5 Long-term liabilities 4,985.1 4,621.3 Stockholders' equity 1,969.

  29. Slide 29: Free Cash Flow After Dividend and Cash Cover Refinancing in 2009 & 2010

    Free Cash Flow After Dividend and Cash Cover Refinancing in 2009 & 2010 Debt Maturing Sources of Cash as of March 31, 2009 as of March 31, 2009 (in EUR million) Debt maturing 2009 289 Cash and Short-term Investments Debt maturing 2010 1,465 Free Cash Flow 2009+2010 after dividend Results for the Fir

  30. Slide 30: Telekom Austria Withdraws Request for Extension of Authorization for Convertible Bond

    Telekom Austria Withdraws Request for Extension of Authorization for Convertible Bond ƒ Existing authorization to issue convertible bonds has been in place for 5 years and expires in June 2009 ƒ Request for extension was planned at upcoming AGM to maintain flexibility ƒ However funding for next year

  31. Slide 31: Outlook

    Outlook Results for the First Quarter 2009 31

  32. Slide 32: EBITDA, CAPEX & Operating Free Cash Flow Guidance Fully Reiterated

    EBITDA, CAPEX & Operating Free Cash Flow Guidance Fully Reiterated Telekom Austria Group 2009 on constant currencies basis Revenues slightly weaker than originally expected EBITDA ~ EUR 1.9 bn CAPEX ~ EUR 0.8 bn Operating Free Cash Flow* ~ EUR 1.1 bn Dividend DPS of 75 cent minimum ƒ Weaker revenues

  33. Slide 33: Appendix

    Appendix Results for the First Quarter 2009 33

  34. Slide 34: Regulatory Issues – Key Aspects (1)

    Regulatory Issues – Key Aspects (1) Mobile termination rates: The national regulatory authority has recently published a draft for a new gliding path which will bring down MTR to 2,01c/min by Jan. 1, 2011. The new gliding path is expected to start on July 1, 2009 with an initial value of 3,88c/min a

  35. Slide 35: Regulatory Issues – Key Aspects (2)

    Regulatory Issues – Key Aspects (2) International roaming charges: Mid of April 09 the EU Parliament voted in favor of an extension of the existing roaming regulation, which will be most likely adapted by the EU Council in June 09 and enter into force on July 1, 2009. The proposed regulation include

  36. Slide 36: Development of Revenues 1Q vs. 1Q

    Development of Revenues 1Q 09 vs. 1Q 08 Revenues (EUR million) 1,259.6 -52.4 -5.4 -4.3 8.3 -11.1 3.3 2.1 -4.6 1.6 1,197.1 Eliminations Vip mobile mobilkom Si.mobil Mobiltel Fixed Net Velcom Vipnet operator Corporate, Revenues Revenues austria Others & 1Q 08 1Q 09 Vip Results for the First Quarter 20

  37. Slide 37: Development of EBITDA 1Q vs. 1Q

    Development of EBITDA 1Q 09 vs. 1Q 08 EBITDA (EUR million) 485.7 0.9 -9.4 -16.3 4.8 -9.6 6.2 1.7 -4.8 -4.4 454.8 Eliminations Vip mobile mobilkom Si.mobil Mobiltel Fixed Net Velcom Vipnet operator Corporate, EBITDA EBITDA austria 1Q 08 1Q 09 Others & Vip Results for the First Quarter 2009 37

  38. Slide 38: Fixed Net - Access Lines

    Fixed Net - Access Lines (in 000) 1Q 09 1Q 08 % change Access lines (without broadband lines) 1,393.1 1,584.4 -12.1% Fixed Net broadband retail lines 872.3 745.8 17.0% Fixed Net broadband wholesale lines 63.4 71.8 -11.7% Fixed Net broadband lines 935.7 817.6 14.4% Total access lines 2,328.8 2,402.0

  39. Slide 39: Fixed Net – Voice & Broadband Market Shares

    Fixed Net – Voice & Broadband Market Shares Market Share Voice Minutes 74.9% Mobile 71.4% 9.1% Fixed Net others 10.8% 16.0% Fixed Net TA 17.8% 1Q 09 1Q 08 Market Share Broadband Lines Mobile Broadband 16.6% 23.0% other operations 11.7% 9.5% Unbundled Lines 20.1% Cable 24.9% Mobile Broadband 15.2% mo

  40. Slide 40: 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) 66.9 37.0 37.5 36.5 36.5 50.4 49.9 35.7 8.9 8.9 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 Fixed Broadband Access Lines (in 000) 818.9 872.3 745.8 757

  41. Slide 41: Fixed Net - Minutes

    Fixed Net - Minutes (in million minutes) 1Q 09 1Q 08 % change National 644 732 -12.0% Fixed-to-mobile 176 189 -7.0% International 93 106 -12.8% Total voice minutes 913 1,028 -11.2% Total Fixed Net minutes 970 1,147 -15.4% (in million minutes) 1Q 09 1Q 08 % change National wholesale 1,699 2,893 -41.3

  42. Slide 42: Mobile Subscribers

    Mobile Subscribers (in 000) 1Q 09 1Q 08 % change Austria 4,581.7 4,100.9 11.7% Market share 42.4% 41.2% Bulgaria 5,279.1 5,058.5 4.4% Market share 50.0% 51.0% Belarus 3,762.9 3,227.1 16.6% Market share 43.8% 43.9% Croatia 2,503.3 2,196.2 14.0% Market share 41.4% 42.6% Slovenia 582.4 513.1 13.5% Mark

  43. Slide 43: Operational Data – mobilkom austria

    Operational Data – mobilkom austria MoU per Subscriber ARPU (in minutes) (in EUR) 183.4 177.1 169.5 175.0 168.3 28.7 28.1 27.8 28.6 25.5 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 Quarterly Churn SAC per Gross Add (in EUR) 8.0% 8.4% 59.1 55.0 56.9 4.0% 3.9% 43.6 35.6 2.0% 2.0% 1Q 08

  44. Slide 44: Mobile Data - mobilkom austria

    Mobile Data - mobilkom austria Mobile Broadband Customers Number of SMS (in 000) (in million) 621 595 441 535 541 535 400 310 325 348 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 Data ARPU Data in % of Revenues ( in EUR) 37.4% 33.9% 31.6% 31.0% 32.1% 7.3 7.2 7.0 7.0 6.9 1Q 08 2Q 08 3Q

  45. Slide 45: ARPU & MoU per Subscriber for Selected Mobile Communication Operations

    ARPU & MoU per Subscriber for Selected Mobile Communication Operations 183.4 168.3 147.7 145.1 138.6 139.6 MoU per Subscriber 79.2 91.1 87.1 83.2 (in minutes) mobilkom austria Mobiltel Velcom Vipnet Si.Mobil 1Q 08 1Q 09 28.7 25.5 23.3 21.7 14.4 ARPU 12.1 (in EUR) 9.4 8.7 6.5 6.2 mobilkom austria Mob

  46. Slide 46: Headcount Development

    Headcount* Development (Average period) 1Q 09 1Q 08 change Fixed Net** 8,333 9,553 -1,220 Mobile Communciation 8,490 8,094 396 Telekom Austria Group 16,823 17,647 -824 (End of period) 1Q 09 1Q 08 change Fixed Net** 8,265 9,532 -1,267 Mobile Communciation 8,524 8,142 382 Telekom Austria Group 16,789

  47. Slide 47: Revenues by Segment

    Revenues by Segment (EUR million) 1Q 09 1Q 08 % change Fixed Net revenues 469.5 521.9 -10.0% Mobile Communication revenues 790.3 796.5 -0.8% Corporate, Other & Eliminations -62.7 -58.8 6.6% Revenues Telekom Austria Group 1,197.1 1,259.6 -5.0% Results for the First Quarter 2009 47

  48. Slide 48: EBITDA and Operating Income by Segment

    EBITDA and Operating Income by Segment (EUR million) 1Q 09 1Q 08 % change Fixed Net EBITDA 157.8 156.9 0.6% Mobile Communciation EBITDA 306.3 333.4 -8.1% Corporate, Other & Eliminations -9.3 -4.6 102.2% EBITDA Telekom Austria Group 454.8 485.7 -6.4% (EUR million) 1Q 09 1Q 08 % change Fixed Net opera

  49. Slide 49: Fixed Net - Revenue Breakdown

    Fixed Net - Revenue Breakdown (EUR million) 1Q 09 1Q 08 % change Access, Voice and Broadband 249.9 277.8 -10.0% Data & ICT-Solutions 97.5 103.3 -5.6% Wholesale Voice & Internet 90.0 110.8 -18.7% Others 32.0 30.0 6.7% Fixed Net revenues 469.5 521.9 -10.0% Results for the First Quarter 2009 49

  50. Slide 50: Fixed Net – Expense Breakdown

    Fixed Net – Expense Breakdown (EUR million) 1Q 09 1Q 08 % change Material expense 16.0 24.0 -33.3% Employee costs 133.5 144.5 -7.6% Depreciation, amortization and impairment charges 112.7 127.0 -11.3% Interconnection 70.4 86.4 -18.5% Maintenance and repairs 21.0 25.3 -17.0% Services received 23.0 20

  51. Slide 51: Mobile Communication - Revenue Breakdown

    Mobile Communication - Revenue Breakdown (EUR million) 1Q 09 1Q 08 % change Subscription and Traffic 563.9 562.8 0.2% Equipment 57.3 61.1 -6.2% Roaming 34.0 50.4 -32.5% Interconnection 126.1 114.9 9.7% Other 17.9 17.3 3.5% Discounts -8.9 -10.0 -11.0% Mobile Communication revenues 790.3 796.5 -0.8% R

  52. Slide 52: Mobile Communication – Expense Breakdown

    Mobile Communication – Expense Breakdown (EUR million) 1Q 09 1Q 08 % change Material expense 86.7 80.4 7.8% Employee costs 71.3 59.8 19.2% Depreciation, amortization and impairment charges 162.1 156.5 3.6% Interconnection 100.7 94.5 6.6% Repairs 20.2 18.0 12.2% Services received 66.5 69.5 -4.3% Othe

  53. Slide 53: Capital Expenditures by Segment

    Capital Expenditures by Segment (EUR million) 1Q 09 1Q 08 % change Fixed Net 33.5 68.1 -50.8% Mobile Communication 82.5 91.5 -9.8% Others and Eliminations 0.0 0.0 n.a. Total Capex Telekom Austria Group 116.0 159.6 -27.3% Thereof tangible 81.0 122.2 -33.7% Thereof intangible 35.0 37.4 -6.4% (EUR mill

  54. Slide 54: Net Debt - Telekom Austria Group

    Net Debt - Telekom Austria Group (EUR million) Mar 31, 2009 Dec 31, 2008 % change Long-term debt 4,000.2 3,599.5 11.1% Short-term debt 989.3 961.5 2.9% Cash and cash equivalents, short-term and long term investments, financing with related parties -1,051.8 -513.1 105.0% Derivate financial instrument

  55. Slide 55: EUR 750 mn Bond Supports Refinancing Beyond 2010

    EUR 750 mn Bond Supports Refinancing Beyond 2010 Debt Maturity Profile (EUR million) 2,230 1,465 Ratings: 769 ƒ S&P: BBB+ (negative outlook) 289 215 ƒ Moody‘s: A3 (stable outlook) 2009 2010 2011 2012 there after Lines of Credit ƒ Undrawn committed lines of credit amounting to EUR 1.2 bn ƒ Average li

  56. Slide 56: Free Cash Flow After Dividend and Cash Cover Refinancing in 2009 & 2010

    Free Cash Flow After Dividend and Cash Cover Refinancing in 2009 & 2010 Debt Maturing Sources of Cash as of March 31, 2009 as of March 31, 2009 (in EUR million) Debt maturing 2009 289 Cash and Short-term Investments Debt maturing 2010 1,465 Free Cash Flow 2009+2010 after dividend Results for the Fir

Telekom Austria Group — Q1 2009 Earnings Presentation on 6ix