Telekom Austria Ag · VIE:TKA
Telekom Austria — Q3 2013 Earnings Presentation
49 slides from Telekom Austria's earnings presentation, Nov 14, 2013
Slide 1: Results for the First Nine Months and the Third Quarter 2013
Results for the First Nine Months and the Third Quarter 2013 Vienna, 14 November 2013 1
Slide 2: Cautionary Statement
Cautionary Statement “This presentation contains forward-looking statements. These forward-looking statements are usually accompanied by words such as “believe”, “intend”, “anticipate”, “plan”, “expect” and similar expressions. Actual events may differ materially from those anticipated ti i t d iin
Slide 3: Agenda
Agenda > Operational p and Financial Highlights g g for the First Nine Months of 2013 > Keyy Financial Developments p in the Third Quarter 2013 > Focus Points > Outlook for the Full Year 2013 > Appendix Results for the First Nine Months and the Third Quarter 2013 3
Slide 4: Operational and Financial Highlights for the First Nine Months of 2013
Operational O ti l and d Fi Financial i l Hi Highlights hli ht ffor th the First Nine Months of 2013 Results for the First Nine Months and the Third Quarter 2013 4
Slide 5: 1-9M 2013: Operational Developments in Line With Expectations
1-9M 2013: Operational Developments in Line With Expectations > Group revenues down 2.6% year year-on-year on year as growth in the Belarus and in the Additional Markets segment partly mitigates decline in Austria, Bulgaria and Croatia > While overall revenues still decline by 3.6% in Austria, high-
Slide 6: Key Financial Developments in the Third Quarter 2013
Key Financial Developments in the Third Quarter 2013 Results for the First Nine Months and the Third Quarter 2013 6
Slide 7: Q3 2013: OPEX Savings Partly Mitigate Revenue Decline
Q3 2013: OPEX Savings Partly Mitigate Revenue Decline (in EUR million) Q3 2013 Q3 2012 % change > Operational trends remain unchanged, but Revenues 1,036.0 1,093.7 -5.3% regulatory effects following Croatia’s EU EBITDA comparable* 357.9 410.4 -12.8% accession plus 6.5% BYR devaluation put EBITDA com
Slide 8: Additional Restructuring Efforts Contribute to Cost Savings
Additional Restructuring Efforts Contribute to Cost Savings Overview Restructuring Charges (in EUR million) Q1 2013 Q2 2013 Q3 2013 > Total restructuring charge of EUR 27.7 mn in Q3 2013 FTE effect 2.7 25.5 27.4 > 98 FTEs addressed in Q3 2013 after 68 FTEs in Q2 2013 servicekom 0.0 -20.6* 0.3 and 20
Slide 9: Price Pressure & Regulatory Effects Remain Biggest Revenue Burdens
Price Pressure & Regulatory Effects Remain Biggest Revenue Burdens; Softer BYR Adds to Strain Quarterlyy Revenue Development Q p (in EUR million) -5.3% 1,093.7 , -39.4 -14.0 14 0 -16.2 6.5 1,036.0 0.2 5.3 Revenues Austria Bulgaria Croatia Belarus Additional Others* Others Revenues Q3 2012 Markets Q3
Slide 10: EUR 37.4 mn Gross Cost Savings Help Mitigate Revenue Pressure on EBITDA Comparable
EUR 37.4 mn Gross Cost Savings Help Mitigate Revenue Pressure on EBITDA Comparable Quarterlyy EBITDA Comparable Q p Development p (in EUR million) -12.8% 410.4 -35.4 -10.1 -18.1 7.1 0.3 357.9 3.8 EBITDA comp. Austria Bulgaria Croatia Belarus Additional Others* Others EBITDA comp. Q3 2012 Markets Q3
Slide 11: Decline in Gross Cash Flow Partly Offset by Lower Working Capital Needs
Decline in Gross Cash Flow Partly Offset by Lower Working Capital Needs ((in EUR million)) Q3 2013 Q Q3 2012 Q % change g 1-9 M 2013 1-9 M 2012 % change g Gross cash flow 313.0 377.1 -17.0% 909.5 1,008.1 -9.8% Change in working capital -17.5 -55.0 n.m. -120.0 -210.7 n.m. Ordinary capital expenditure
Slide 12: Focus Points
Focus Points Results for the First Nine Months and the Third Quarter 2013 12
Slide 13: Significant Increase in Spectrum Holdings After the Multiband Auction
Telekom Austria Group Sees Significant Increase in Spectrum Holdings After the Multiband Auction Before After Band abs. abs. in % of total 800 MHz MH - 2 x 20 67% 2 x 20.2 Auctioned 900 MHz 2 x 15 43% (until 2015/2017) 2 x 15 1800 MHz 2 x 35 46% (until 2015) 2100 MHz 2 x 19.6 2 x 19.6 33% Not Auctio
Slide 14: New 800-MHz Spectrum - Nationwide LTE Service
New 800-MHz Spectrum - Nationwide LTE Service and Potential for Advanced Technologies in Future Next steps: > Fulfil 800-MHz coverage obligations, especially in rural areas: > 180 communities in 1.5 years, 360 communities in 3 years > Complement p existing g LTE coverage g in urban areas byy utilisi
Slide 15: Leadership in All Mobile Technologies Across Urban and Rural Areas
Leadership in All Mobile Technologies Across Urban and Rural Areas Sp
Slide 16: New YESSS! Tariffs – 'More for More' Strategy in Austria
New YESSS! Tariffs – ‘More for More’ Strategy in Austria Fully Implemented Unlimited voice and SMS Data monetarisation Go! April 2013 ‘More More for 50% more content More’ Strategy 50% more content January 2013 September 2013 All Austrian brands of Telekom Austria have now launched new tarif
Slide 17: Outlook for the Full Year 2013
Outlook for the Full Year 2013 Results for the First Nine Months and the Third Quarter 2013 17
Slide 18: Telekom Austria Group Outlook for Full Year 2013 Results Unchanged
Telekom Austria Group Outlook for Full Year 2013 Results 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 A off 14 November As N b 2013 P i Previous G id Guidance Revenues approx. E
Slide 19: Appendix
Appendix pp 1 Results for the First Nine Months and the Third Quarter 2013 19
Slide 20: Telekom Austria Group is a Leading Telecom Provider in Fixed and Mobile Markets
Telekom Austria Group is a Leading Telecom Provider in Fixed and Mobile Markets as of 30 September 2013 (in ‘000, in %) Austria* Slovenia Belarus Mobile: Mobile: Mobile: > Market share: 42.7% (Q3 2012: 38.2%) > Market share: 29.9% (Q3 2012 30.0%) > Market share: 42.9% (Q3 2012: 43.9%) > Subscriber b
Slide 21: Telekom Austria Group – Revenue Breakdown
Telekom Austria Group – Revenue Breakdown Revenue Split - Segment Austria (in EUR million) Q3 2013 Q3 2012 % change Monthly fee and traffic 459.6 480.9 -4.4% Data and ICT solutions 54.6 49.1 11.3% Wholesale (incl. Roaming) 28.9 42.3 -31.7% Interconnection 65 5 65.5 77 6 77.6 -15 15.6% 6% Equipment 3
Slide 22: Telekom Austria Group – Expense Breakdown
Telekom Austria Group – Expense Breakdown Operating Expense - Segment Austria (in EUR million) Q3 2013 Q3 2012 % change Material expense 73.4 64.3 14.3% Employee costs 153.9 157.0 -2.0% Interconnection 59.4 70.3 -15.5% Maintenance and repairs 28 0 28.0 28 1 28.1 -0 1% -0.1% Services received 27.3 34
Slide 23: Telekom Austria Group – Headcount Development
Telekom Austria Group – Headcount Development FTE (Average period) Q3 2013 Q3 2012 % change Austria 9,190 9,287 -1.0% International 6,929 7,276 -4.8% Telekom Austria Group* 16,274 16,724 -2.7% FTE (End of period) Q3 2013 Q3 2012 % change Austria 9,136 9,287 -1.6% International 6,948 7,213 -3.7% Tele
Slide 24: Telekom Austria Group – Capital Expenditures Split
Telekom Austria Group – Capital Expenditures Split Capital Expenditures (in EUR million) Q3 2013 Q3 2012 % change Segment Austria 107.4 106.6 0.8% Segment Bulgaria 10.4 9.6 8.2% Segment Croatia 12.0 10.7 11.4% Segment Belarus 6.1 5.8 6.2% Segment Additional Markets 31.7 25.7 23.3% Slovenia 5.4 3.5 5
Slide 25: Telekom Austria Group – Net Debt
Telekom Austria Group – Net Debt Net debt (in EUR million) 30 September 2013 31 December 2012 % change Long-term debt 3,080.5 2,832.0 8.8% Short-term borrowings 296.2 1,078.6 -72.5% Cash and cash equivalents, short-term and long term investments, finance lease receivables -667.9 -715.3 n.m. Cash and
Slide 26: Telekom Austria Group – Debt Maturity Profile
Telekom Austria Group – Debt Maturity Profile Debt Maturityy Profile ((Including g Accrued Interest)* ) (in EUR million) 823.8 740.2 566.0 268.8 297.5 243.1 220.7 138.5 62.7 15 4 15.4 0 0 0.0 2013 2014 2015 2016 2017 2018* 2019 2020 2021 2022 2023 > EUR 3 3,376.7 376 7 mn off short- h t and d long-t
Slide 27: Telekom Austria Group – Debt Profile
Telekom Austria Group – Debt Profile Overview Debt Instruments Fixed-Floating g Mix 12.0% 30 8% 30.8% 69.2% 88.0% 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: Baa2 (stable outlook) > Average te
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 EUR million) (in ‘000) 40 40 39 39 255 38 38 37 37 36 36 35 35 32.9 245 34 34 32.2 32.2 33 33 32 30.8 30.9 2,285 2,282 2,281 2,274 2,274 32 31 2,300 12 235 31 30 30 2
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) 340 18.9 18.2 20 158.2 320 16.1 16.3 16.3 150.8 300 15 143.8 280 141 3 141.3 138.4 260 290.8 280.3 284.1 283.8 282.3 10 240 05 220 200 00 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q3 12 Q4
Slide 30: Segment Austria – Broadband Market Split
Segment Austria – Broadband Market Split Market Share Total Broadband* Market Share Mobile Broadband* (in %) (in %) 8.1% 7.5% Tele.ring 12.5% 13.4% T-mobile 25 3% 25.3% 29.9% Mobile Broadband 40.6% 31.6% Other Operations Hutchison Unbundled Lines 18.7% 5.1% Orange incl. 5.7% YESSS! 15.4% . Cable 35.
Slide 31: 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% 4.5% 4.0% 20.9% 21.5% 85.1% 85.6% 61 1% 61.1% 61 0% 61.0% 5.6% 5.4% 9.3% 9.0% Q3 Q 12 Q3 Q 13 Q3 12 Q3 13 Fixed Line Telekom Austria Fixed Line Others Mobile A1 Tele2/UTA UPC Oth
Slide 32: 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 17 08 16 16 15 15 08 14 14 13 11.5 11.6 11.1 07 13 12 12 11.0 10.9 162.1 162.0 11 07 158.6 11 10 156.4 10 09 5.6 5.4 06 09 08 5 2 5.2 5 2 5.2 08 07 06
Slide 33: Segment Bulgaria – Mobile Key Performance Indicators
Segment Bulgaria – Mobile Key Performance Indicators ARPU MoU p per Subscriber (in EUR) (in min) 5.7 100.3 98.5 5.4 97.2 5.3 5.3 96 6 96.6 5.0 95.4 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Mobile Broadband Customers* Mobile Penetration (in ‘000) (in %) 163.9 174.1 155.1 159.9% 137
Slide 34: 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 29 16 28 27 23.8 24.1 15 26 25 23.4 22.7 22.6 24 23 14 22 21 20 12.4 179.3 188.8 19 18 17 11.6 11.7 11.9 180 13 12 158.5 163.0 172.1 16 15 14 11 1 11.1
Slide 35: Segment Croatia – Mobile Key Performance Indicators
Segment Croatia – Mobile Key Performance Indicators ARPU MoU p per Subscriber (in EUR) (in min) 12.8 130.6 118.4 129.4 108.5 110.8 12.1 12.0 11 7 11.7 11.4 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Mobile Broadband Customers* Mobile Penetration (in ‘000) (in %) 123.7% 192.2 199.8 1
Slide 36: Segment Belarus – Mobile Key Performance Indicators
Segment Belarus – Mobile Key Performance Indicators ARPU MoU p per Subscriber (in EUR) (in min) 4.9 4.9 198.5 197.0 4.9 4.8 191.6 193.0 4.7 182.4 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Mobile Broadband Customers* Mobile Penetration (in ‘000) (in %) 120.7% 235.4 116.6% 116.8% 117
Slide 37: 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) 23.0 184.5 184.7 185.8 21.7 176.1 21.4 20.8 20 8 167.9 20.3 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Republic of Serbia - ARPU Republic of Macedonia - A
Slide 38: Appendix 2 – Regulatory Topics
Appendix 2 – Regulatory g y Topics p Results for the First Nine Months and the Third Quarter 2013 38
Slide 39: 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 40: 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) Jul Jan Jul Nov Jan Jul Sep Jan Jul 2012 2013 2013 2013 2014 2014 2014 2015 2015 Austria 2.01 2.01 2.01 0.8049 0.8049 0.8049 0.8049 0.8049 0.8049 Bulgaria 2.70 2.35 1.18 1.18
Slide 41: 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 42: Appendix 3 – Personnel Restructuring in Austria
Appendix 3 – Personnel Restructuring in Austria Results for the First Nine Months and the Third Quarter 2013 42
Slide 43: 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) Q1 Q2 Q3 Q1 Q2 Q3 2008 2009 2010 2011 2012 2013 2013 2013 2008 2009 2010 2011 2012 2013 2013 2013 FTE effect 632.1 -10.0 76.9 274.3 49.9 2.7 25.5 27.4 Transfer to 0 0 1
Slide 44: Overview – Cash-Flow Impact of Restructuring
Overview – Cash-Flow Impact of Restructuring Overview Cash Flow Impact* p (in EUR million) Total cash-flow impact > Total cash-flow impact comprises old 2008 14 7 14.7 and new programmes 2009 62.0 > Total expected cash-flow impact for 2010 57.9 2013 of approximately pp y EUR 100 mn 2011 93.4 2012 10
Slide 45: Appendix 4 – Spectrum Portfolio
Appendix 4 – Spectrum Portfolio Results for the First Nine Months and the Third Quarter 2013 45
Slide 46: Spectrum Portfolio After Austrian Multiband Auction
Spectrum Portfolio After Austrian Multiband Auction Band (MHz) FDD UL* FDD DL* 800 Licenses (MHz) currently awarded to: 20.0 10.0 20.0 10.0 A1 T-Mobile H3G (until 2029) Auctioned lots 2013 (MHz) FDD UL* FDD DL* 900 Auctioned 3.2 9.2 5.0 7.8 7.8 0.8 12.4 5.0 7.8 7.8 0.8 (until 2034) 15.0 5.0 15.0 15.
Slide 47: Appendix 5 – Corporate Sustainability
Appendix 5 – Corporate Sustainability Results for the First Nine Months and the Third Quarter 2013 47
Slide 48: Alignment with Core Business and Materiality Analysis Defines Sustainability Strategy
Alignment with Core Business and Materiality Analysis Defines Sustainability Strategy Providing Sustainable Creating Equal Living g Green Empowering p g People p P d t Products O Opportunities t iti Develop Products in a Manage Resources in an Systematically Promote Creating Equal Future-Oriented an
Slide 49: Key Figures
Key Figures Selected Group-wide KPIs Ratings Products: Providing Responsible Products 2012 Customer contacts in customer service ('000) 45.569 E-billing share (in %) 29 › Classification: C › Classification: C+ Collected old mobile phones (in pcs) 73.877 (74 points out of 100) Environment: Living Gre