Magyar Telekom Telecommunications Plc · BET:MTELEKOM
Magyar Telekom Telecommunications — Q3 2013 Earnings Presentation
26 slides from Magyar Telekom Telecommunications's earnings presentation, December 2013
Slide 1: Magyar Telekom Group Investor Presentation
MAGYAR TELEKOM GROUP INVESTOR PRESENTATION DECEMBER 2013
Slide 2: Strategy, Outlook and Guidance
STRATEGY, OUTLOOK AND GUIDANCE
Slide 3: Overview – Magyar Telekom Group at a Glance
OVERVIEW – MAGYAR TELEKOM GROUP AT A GLANCE INTERNATIONAL PRESENCE BUNDLING STRATEGY Czech Republic Slovakia Austria Moldova Beyond Hungary Hungary Core Slovenia Croatia Croatia Romania Romania Core DIVERSIFIED BiH Serbia SERVICE Serbia Kosovo Bulgaria Montenegro Bulgaria PROVIDER Macedonia Macedoni
Slide 4: Hungarian Economic Environment
HUNGARIAN ECONOMIC ENVIRONMENT GROWTH STRUCTURE AND WAGES CONTINUED DELEVERAGING KEEPS Contribution to GDP growth (%) DOMESTIC DEMAND LOW 8 GDP performance dependent on export 6 dynamics 4 Consumer spending affected by the 2 weakening HUF and high unemployment 0 MT financials strongly correlat
Slide 5: Market Positions on the Hungarian Telecommunication Market
MARKET POSITIONS ON THE HUNGARIAN TELECOMMUNICATION MARKET MOBILE VOICE MARKET SHARES (TOTAL SIM BASED) MOBILE BROADBAND MARKET SHARES (TOTAL SIM BASED) Subscribers Subscribers 12,000,000 4,000,000 23.0% 22.8% 22.7% 25.3% 9,000,000 3,000,000 25.9% 32.0% 31.3% 31.0% 29.6% Vodafone 6,000,000 2,000,000
Slide 6: Wide Range of Telecom Services, System Integration and IT Infrastructure Competences
WIDE RANGE OF TELECOM SERVICES, SYSTEM INTEGRATION AND IT INFRASTRUCTURE COMPETENCES CONNECTIVITY 42% of total revenue 64 % of total margin* Fixed voice Fixed data Fixed internet Mobile voice Mobile internet Mobile data SYSTEM INTEGRATION 17% of total revenue 10% of total margin* Business Intelligen
Slide 7: Market Leader in IT Services
MARKET LEADER IN IT SERVICES SYSTEM INTEGRATION IT INFRASTRUCTURE SI & IT Package Custom System IT App. OS & Infra. OS & Infra. proj. Hosting Cloud application app. dev. integration consulting operation operation service 33% 20% 29% 20% 18% 17% 15% 10% 10% 9% 8% 5% 3% Revenue based market share in 2
Slide 8: Group Revenue Developments
GROUP REVENUE DEVELOPMENTS SIGNIFICANT REVENUE POTENTIAL FROM NON-CORE ACTIVITIES HUF bn 800 CAGR: ca. +2% CAGR: 0% 600 Beyond core Mobile broadband growth ca. 18% only partially compensates Near core for decline in voice ca. 26% revenue 400 Further growth in near- core revenues expected Core
Slide 9: Disciplined Cost Management
DISCIPLINED COST MANAGEMENT EBITDA AND COST DEVELOPMENTS (RELATIVE TO REVENUES) Direct costs expected to rise in 100% parallel with increase in 26% 32% revenues and change in 80% 37% 40% product mix Indirect costs to decline by 60% 35% CAGR ca. 2% by 2017 vs. 31% 2012 30% 26% 40% 4% Constant o
Slide 10: Efficiency Investments Free Up Capex for New Technologies and Services
EFFICIENCY INVESTMENTS FREE UP CAPEX FOR NEW TECHNOLOGIES AND SERVICES CAPEX DEVELOPMENTS* HUF bn 15% 14% 12% 100 Fixed access: focus on increasing HSI coverage 80 Efficiency investments: – Replacement of legacy network – PSTN migration 60 – Mobile network modernization – CRM & Billing system pr
Slide 11: Current Spectrum Situation
CURRENT SPECTRUM SITUATION UNUSED BAND FREQUENCIES FDD DL FDD UL 800 MHz 30 30 2×30 MHz 791 862 FDD UL FDD DL 900 MHz 5 1.8 10 8 9 5 1.8 10 8 9 2×5 MHz 880 1 915 925 1 960 FDD UL FDD DL 1800 MHz 15 15 3 15 15 11.8 15 15 3 15 15 11.8 2×15 MHz 1710 1785 1805 1880 TDD FDD UL FDD DL 2100 MHz 5 5 5 15 15
Slide 12: Dividend Policy
DIVIDEND POLICY DIVIDEND PAYMENT Net debt ratio* Dividend per share (HUF) 50% 80 42.7% 70 40% Maintain net debt ratio (net 34.1% 34.3% 60 debt/total capital) target of 30% - 32.7% TARGET 40% reflecting the current 30.8% 50 unpredictable environment 30% 40 Based on the dividend policy, the 74 Gro
Slide 13: Financial Outlook
FINANCIAL OUTLOOK 2013 GUIDANCE 2014 TARGETS 2017 TARGETS REVENUE increasing increasing at a CAGR of ca. 2% compared to 2012 declining at a CAGR of EBITDA 9-12% decline surpassing 2013 level 6%-8% compared to 2012 absolute CAPEX to CAPEX* around HUF 87bn around HUF 80bn decline by ca. 5% **excluding
Slide 14: Q3 2013 Results
Q3 2013 RESULTS
Slide 15: Q3 2013 Group Results – Revenues and EBITDA
Q3 2013 GROUP RESULTS – REVENUES AND EBITDA GROUP REVENUES GROUP EBITDA HUF bn 5.4% HUF bn -8.2% 160 57 56.6 -0.5 1.5 158.3 -1.4 3.4 -1.4 155 5.4 54 -3.7 150.1 -3.0 4.0 51.9 150 2.2 -2.0 1.1 51 -0.6 145 -1.6 48 0 0 Q3 Mobile Fixed Fixed M. non- Mobile SI/IT Energy Other Q3 Q3 2012 Direct Employee- N
Slide 16: Q3 2013 Segment Results – Revenues and EBITDA
Q3 2013 SEGMENT RESULTS – REVENUES AND EBITDA SEGMENTS’ REVENUE DEVELOPMENTS SEGMENTS’ EBITDA DEVELOPMENT HUF bn HUF bn -8.2% 165 5.4% 60 56.6 0.3 0.2 -5.8 5.7 -0.5 0.0 -1.6 55 160 158.3 0.5 51.9 0.2 50 4.5 155 45 150.1 150 40 0 35 Q3 2012 T-HU T-Systems Maced. Monten. Elim. Q3 2013 Q3 2012 T-HU T-S
Slide 17: Hungary – Fixed Voice Market
HUNGARY – FIXED VOICE MARKET TELEKOM HUNGARY FIXED VOICE SUBSCRIBERS Significant reduction in fixed voice churn due to the Subscribers retention effect of: 2,000,000 -3% Hoppá package 1,553,901 1,514,987 1,500,000 2Play/3Play offers Retail energy bundling 1,000,000 VoCa Decline in 1Play custom
Slide 18: Hungary – Energy Retail
HUNGARY – ENERGY RETAIL GAS AND ELECTRICITY POINTS OF DELIVERY (POD) RETAIL ENERGY BUSINESS PODs (thousand) 200 Soft launch in 2010, nationwide since April 2012 Gas Electricity Residential customers receive a 3-8% discount to 150 regulated universal service prices on their energy 68.7 67.6 68.0
Slide 19: Telekom Hungary – Broadband and TV Market
TELEKOM HUNGARY -- BROADBAND AND TV MARKET FIXED BROADBAND SUBSCRIBER BREAKDOWN Subscribers +5% 1,000,000 867,300 906,367 5.4% Growth in broadband market driven by cable 4.5% 750,000 and fiber 27.4% 30.0% Internet service portfolio restructured to 500,000 Fiber support fixed broadband subscriber
Slide 20: Telekom Hungary – Mobile Market
TELEKOM HUNGARY – MOBILE MARKET TELEKOM SMARTPHONE PENETRATION % of total handsets Improving customer mix: y-o-y increase in 40 % 39.1 % postpaid ratio from 46.5% to 48% 31.3 % Smartphone sales reached 67% of total 30 % handsets 20 % 18.4 % Broadband subscription attach rate at ca. 84% Full
Slide 21: Macedonia and Montenegro
MACEDONIA AND MONTENEGRO MACEDONIAN MOBILE VOICE MARKET MONTENEGRIN MOBILE VOICE MARKET One (T. Slovenia) Telenor VIP (TKA) Subscribers m:tel (T. Serbia) Subscribers T-Mobile T-Mobile +4% -8% +1% 1,500,000 2,500,000 -6% -14% +14% 24% 22% 1,200,000 2,000,000 24% 23% 40% 21% 26% 900,000 41% 39% 1,500,
Slide 22: Financials
FINANCIALS
Slide 23: Magyar Telekom – Consolidated Income Statement
MAGYAR TELEKOM – CONSOLIDATED INCOME STATEMENT HUF million 3Q 2012 3Q 2013 Change Mobile revenues 80,021 80,040 0.0% Fixed line revenues 53,662 52,946 -1.3% System Integration/Information Technology revenues 11,237 16,628 48.0% Revenue from Energy Services 5,225 8,650 65.6% Revenues 150,145 158,264
Slide 24: Magyar Telekom – Consolidated Balance Sheet
MAGYAR TELEKOM - CONSOLIDATED BALANCE SHEET HUF million Sep 30, 2012 Sep 30, 2013 Change Current assets 179,666 198,502 10.5% Cash and cash equivalents 13,867 15,922 14.8% Other current financial assets 40,038 24,354 -39.2% Non current assets 845,175 898,065 6.3% Property, plant and equipment - net
Slide 25: Magyar Telekom – Consolidated Cash Flow Statement
MAGYAR TELEKOM - CONSOLIDATED CASH FLOW STATEMENT HUF million Sep 30, 2012 Sep 30, 2013 Change Net cash generated from operating activities 105,441 75,256 -28.6% Investments in tangible and intangible assets (70,891) (117,445) 65.7% Adjustments to cash purchases (1,658) 51,018 n.a. Purchase of subsi
Slide 26: 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, CUG: closed user group, HQ: headquart
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