Telekom Austria Ag · VIE:TKA
Telekom Austria — Q1 2013 Earnings Presentation
43 slides from Telekom Austria's earnings presentation, May 7, 2013
Slide 1: Results for the First Quarter 2013
Results for the First Quarter 2013 Vienna, 7 May 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 forward looking statements statements. Forward-looking Forward looking information involves risks and uncertainties that c
Slide 3: Agenda
Agenda > Operational and Financial Highlights for the First Quarter 2013 > Key Financial Developments in the First Quarter 2013 > Focus Points > Outlook for the Full Year 2013 > Appendix Results for the First Quarter 2013 3
Slide 4: Operational and Financial Highlights for the First Quarter 2013
Operational O ti l and d Fi Financial i l Hi Highlights hli ht ffor th the First Quarter 2013 Results for the First Quarter 2013 4
Slide 5: Q1 2013 Developments in Line With Expectations, High Value Strategy on Track
Q1 2013 Developments in Line With Expectations, High Value Strategy on Track > Group revenues fell slightly by 0.6% to EUR 1,049.0 mn, benefitting from growth in the Belarusian and Additional Markets segments > Declining revenues in the Austrian and Bulgarian segments as a consequence of continuing
Slide 6: Key Financial Developments in the First Quarter 2013
Key Financial Developments in the First Quarter 2013 Results for the First Quarter 2013 6
Slide 7: Revenues Almost Stable While EBITDA Comparable Continues to Decline
Revenues Almost Stable While EBITDA Comparable Continues to Decline (in EUR million) Q1 2013 Q1 2012 % change > EUR 20.9 mn and EUR 11.5 mn Revenues 1,049.0 1,055.0 -0.6% regulatory effect on Group revenues EBITDA comparable* 336.9 361.4 -6.8% and EBITDA comparable respectively EBITDA comparable mar
Slide 8: Revenues: Belarus and Additional Markets Growth Almost Offsets Decline in Austria And Bulgaria
Revenues: Belarus and Additional Markets Growth Almost Offsets Decline in Austria And Bulgaria Quarterlyy Revenue Development Q p (in EUR million) -0.6% 1,055.0 -26.3 7.9 1,049.0 98 9.8 -18.4 21.4 -0.5 Revenues Austria Bulgaria Croatia Belarus Additional Others* Revenues Q1 2012 Markets Q1 2013 Segm
Slide 9: Growth in Croatia, Belarus and Additional Markets Limits EBITDA Comparable Decline to 6.8%
Growth in Croatia, Belarus and Additional Markets Limits EBITDA Comparable Decline to 6.8% Quarterlyy EBITDA Comparable Q p Development p (in EUR million) -6.8% 361.4 -37.3 16 0 16.0 37 3.7 0.9 336 9 336.9 -9.7 1.9 EBITDA comp. Austria Bulgaria Croatia Belarus Additional Others* EBITDA comp. Q1 2012
Slide 10: Free Cash Flow Impacted by Lower Gross Cash Flow and Change in Working Capital
Free Cash Flow Impacted by Lower Gross Cash Flow and Change in Working Capital (in EUR million) Q1 2013 Q1 2012 % change Gross cash flow 297.1 326.9 -9.1% Change in working capital -105.4 -134.4 n.m. Ordinary capital expenditures -149.0 -145.8 n.m. Proceeds from sale of equipment 1.1 1.4 -16.8% Free
Slide 11: Focus Points
Focus Points Results for the First Quarter 2013 11
Slide 12: Mobile Austria: High-Value Strategy Successfully Implemented
Mobile Austria: High-Value Strategy Successfully Implemented Strategy gy roadmap: p 4 Subsidy 3 Focus on revenue market policy review 2 Optimisation of share and profitability low-end segment g 1 Protection of customer base Steps taken (1-3) (1 3) to implement the high-value high value strategy: Lau
Slide 13: Mobile Market in Austria: Major Uncertainties Remain
Mobile Market in Austria: Major Uncertainties Remain Potential new entrant at spectrum auctions > Timing: September 2013 H3G Strategy > Auctioned frequencies: 800 MHz, 900 MHz, 1800 MHz > Strategy following integration of Orange remains unknown Austria MVNOs - up to 16 MVNOs possible > Condition for
Slide 14: Execution of Value Focus in International Markets – New Tariff Structures in Bulgaria and Croatia
Execution of Value Focus in International Markets – New Tariff Structures in Bulgaria and Croatia New tariff structures introduced in March 2013: Bulgaria: Croatia: > Improved customer segmentation: > Elimination of low price unlimited offer offer* > High value: M-Tel, smartphone focus > New upgradi
Slide 15: Execution of Value Focus in International Markets – Improved Contract Customer Share
Execution of Value Focus in International Markets – Improved Contract Customer Share Development p of contract customer share (In %) Bulgaria Croatia Belarus 71.0% 43.4% 80.6% 80.0% 69.2% 39.2% Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Slovenia Republic of Serbia Republic of Macedonia 77.0% 47
Slide 16: Outlook for the Full Year 2013
Outlook for the Full Year 2013 Results for the First Quarter 2013 16
Slide 17: Financial Outlook for Full Year 2013 Unchanged
Financial Outlook for Full Year 2013 Unchanged 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 inc
Slide 18: Appendix
Appendix pp 1 Results for the First Quarter 2013 18
Slide 19: 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 March 2013 (in 000, in %) Austria Slovenia Belarus Mobile (incl. YESSS!): Mobile: Mobile: > Market share: 43.8% (Q1 2012: 39.5%) > Market share: 30.0% (Q1 2012 29.6%) > Market share: 43.6% (Q1 2012: 41.1%) > Subsc
Slide 20: Telekom Austria Group – Revenue Breakdown
Telekom Austria Group – Revenue Breakdown Revenue Split - Segment Austria (in EUR million) Q1 2013 Q1 2012 % change Monthly fee and traffic 469.7 486.0 -3.4% Data and ICT Solutions 53.1 52.6 1.0% Wholesale (incl. Roaming) 41.8 46.1 -9.3% Interconnection 68 4 68.4 93 3 93.3 -26 26.7% 7% Equipment 43.
Slide 21: Telekom Austria Group – Expense Breakdown
Telekom Austria Group – Expense Breakdown Operating Expense - Segment Austria (in EUR million) Q1 2013 Q1 2012 % change Material expense 81.2 64.1 26.6% Employee costs 175.8 172.6 1.8% Interconnection 67.2 71.8 -6.4% Maintenance and repairs 23 0 23.0 22 1 22.1 3 8% 3.8% Services received 27.2 28.8 -
Slide 22: Telekom Austria Group – Headcount Development
Telekom Austria Group – Headcount Development FTE (Average period) Q1 2013 Q1 2012 % change Austria 9,191 9,328 -1.5% International 7,144 7,721 -7.5% Telekom Austria A stria Gro Group* p* 16 495 16,495 17 211 17,211 -4.2% 4 2% FTE (End of period) Q1 2013 Q1 2012 % change A ti Austria 9 235 9,235 9 3
Slide 23: Telekom Austria Group – Capital Expenditures Split
Telekom Austria Group – Capital Expenditures Split Capital Expenditures (in EUR million) Q1 2013 Q1 2012 % change Segment Austria 102.1 93.7 9.0% Segment Bulgaria 11.1 23.2 -52.2% g Segment Croatia 14.4 13.3 8.3% Segment Belarus 4.2 5.1 -18.8% Segment Additional Markets 17.2 10.7 60.6% Slovenia 3.6
Slide 24: Telekom Austria Group – Net Debt
Telekom Austria Group – Net Debt Net debt (in EUR million) Mar 31 Mar. 31, 2013 Dec 31, Dec. 31 2012 % change Long-term debt 2,830.6 2,832.0 0.0% Short-term borrowings 1,014.9 1,078.6 -5.9% Cash and cash equivalents, short-term and long term investments, finance lease receivables -956.1 -715.3 n.m.
Slide 25: Telekom Austria Group – Debt Maturity Profile
Telekom Austria Group – Debt Maturity Profile Debt Maturityy Profile ((including g accrued interest)* ) (in EUR million) 1,012.8 , 823.2 739.6 565.7 268.8 220.7 * 136.6 62.7 0.0 15.4 2013 2014 2015 2016 2017 2018* 2019 2020 2021 2022 > EUR 3,845.5 mn of short- and long-term borrowings as of 31 March
Slide 26: Telekom Austria Group – Debt Profile
Telekom Austria Group – Debt Profile Overview Debt Instruments Fixed-Floating g Mix 72.8% 29.2% 27.2% 70.8% 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
Slide 27: 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 EUR million) (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 31.9 31.5 32.2 32.2 33.0 32.5 32.0 235.0 2,320 2,28
Slide 28: Segment Austria – Mobile Key Performance Indicators
Segment Austria* – Mobile Key Performance Indicators ARPU & ARPU Relevant Revenues MoU p per Subscriber (in EUR) (in min) 340.0 18.5 18.3 18.3 20.0 17.5 320.0 15.5* 151.9 152.4 149.1 300.0 15.0 145.8 280.0 293.6 290.7 290.8 284.1 10.0 136.1* 260.0 280.3 240.0 5.0 220.0 200.0 0.0 Q1 12 Q2 12 Q3 12 Q4
Slide 29: Segment Austria – Broadband Market Split
Segment Austria – Broadband Market Split Market Share Total Broadband* Market Share Mobile Broadband* (in %) (in %) 7.9% 7.8% Tele.ring 12.7% 12.3% T-mobile 23.4% 38.3% Hutchison 18.3% 28.9% Mobile Broadband 30.4% Orange incl. Other Operations YESSS! Unbundled Lines 37.7% 41.6% 5.3% A1 5 9% 5.9% 15.
Slide 30: Segment Austria – Voice Market Split
Segment Austria – Voice Market Split Market Share Total Minutes Market Share Fixed-Line Minutes (in %) (in %) 13.5% 13.5% 4.1% 4.5% 21.0% 21.4% 83.9% 85.1% 61 4% 61.4% 60 6% 60.6% 5.9% 5.6% 10.2% 9.2% Q1 12 Q1 13 Q1 12 Q1 13 Fixed Line Telekom Austria Fixed Line Others Mobile A1 Tele2/UTA UPC Others
Slide 31: 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 EUR million) (in 000) 17.0 16.5 7.0 16.0 15.5 15.0 14.5 13.3 14.0 13.5 12.4 6.5 13.0 12.5 11.0 11.5 11.6 12.0 11.5 11.0 10.5 156.4 162.1 10.0 160.0 6.0 12.0 138.0 142.8 9.5 9.0
Slide 32: Segment Bulgaria – Mobile Key Performance Indicators
Segment Bulgaria – Mobile Key Performance Indicators ARPU MoU p per Subscriber (in EUR) (in min) 6.6 6.1 5.7 97.8 5.4 5.0 97.2 96.7 96.6 95.4 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Mobile Broadband Customers* Mobile Penetration (in 000) (in %) 147.9 155.1 159.9% 158.3% 127.4 137
Slide 33: 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 EUR million) (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 23.4 15.0 25.5 25.0 24.5 24.0 23.5 23.0 22.5 22.0 21.5 14.0 21.0 20.5 20.0 19.5 19.0
Slide 34: Segment Croatia – Mobile Key Performance Indicators
Segment Croatia – Mobile Key Performance Indicators ARPU MoU p per Subscriber (in EUR) (in min) 12.8 12.6 118.4 104.3 108.5 110.8 12.1 95.8 11 7 11.7 11.4 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Mobile Broadband Customers* Mobile Penetration (in 000) (in %) 123.7% 192.2 155.4 166
Slide 35: Segment Belarus – Mobile Key Performance Indicators
Segment Belarus – Mobile Key Performance Indicators ARPU MoU p per Subscriber (in EUR) (in min) 4.9 4.9 4.9 189.8 191.6 193.0 4.8 3.7 182.4 174 1 174.1 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Mobile Broadband Customers* Mobile Penetration (in 000) (in %) 226.5 227.5 227.6 119.4%
Slide 36: Segment Additional Markets – Mobile Key Performance Indicators
Segment Additional Markets – Mobile Key Performance Indicators Slovenia - ARPU Slovenia - MoU p per Subscriber (in EUR) (in min) 23.0 184.5 184.7 177.0 179.1 21.6 21.7 20 7 20.7 167 9 167.9 20.3 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Republic of Serbia - ARPU Republic of Macedon
Slide 37: Appendix 2 – Regulatory Topics
Appendix 2 – Regulatory g y Topics p Results for the First Quarter 2013 37
Slide 38: 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 39: Glide Path of Mobile Termination Rates
Glide Path of Mobile Termination Rates EU Pressure on National Regulatory g y Authorities to Further Decrease Rates (in EURc) Jan 2012 Jun 2012 Jul 2012 Jan 2013 Jul 2013 Aug 2013 Sep 2013 Jan 2014 Austria 2.01 2.01 2.01 2.01 0.80* 0.80* 0.80* 0.80* Bulgaria 6.39 6.39 2.70 2.35 1.18 1.18 1.18 1.02 C
Slide 40: EU Roaming Price Regulation
EU 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) 50 25 15 5
Slide 41: Appendix 3 – Personnel Restructuring in Austria
Appendix 3 – Personnel Restructuring in Austria Results for the First Quarter 2013 41
Slide 42: Full Year Overview – Restructuring Charges and Provision vs. FTE
Full Year Overview – Restructuring Charges and Provision vs. FTE Overview Restructuring g Charges g FTEs Addressed (in EUR million) 2008 2009 2010 2011 2012 Q1 2013 2008 2009 2010 2011 2012 Q1 2013 Transfer to FTE effect 632.1 -10.0 76.9 274.3 49.9 2.7 0 0 158 106 44 7 government Servicekom 0.0 0.0
Slide 43: Overview – Cash Flow Impact of Restructuring
Overview – Cash Flow Impact of Restructuring Overview Cash Flow Impact* p (in EUR million) Total cash flow impact 2008 14 7 14.7 > Total cash flow impact comprises old as well as new programmes 2009 62.0 > Total cash flow impact for 2012 of 2010 57.9 EUR 104.0 mn 2011 93.4 > Total expected cash flow
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