Magyar Telekom Telecommunications Plc · BET:MTELEKOM
Magyar Telekom Telecommunications — Magyar Telekom — Q3 2022 Earnings Presentation
28 slides from Magyar Telekom Telecommunications's earnings presentation, November 2022
Slide 1: Magyar Telekom Group Investor Presentation
MAGYAR TELEKOM GROUP INVESTOR PRESENTATION November 2022
Slide 2: Disclaimer
DISCLAIMER This investor presentation contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore should n
Slide 3: Strategy and Market Position
STRATEGY AND MARKET POSITION
Slide 4: Overview – Magyar Telekom at a Glance
OVERVIEW – MAGYAR TELEKOM AT A GLANCE Overview Pillars of transformation ▪ Integrated operations in Hungary and North Macedonia GROW ▪ Leading telecommunications service provider in both countries Lead In Customer Lead in Lead in Business ▪ Leading SI/IT service provider in Hungary Experience Techno
Slide 5: Progress Against Strategic Priorities
PROGRESS AGAINST STRATEGIC PRIORITIES Network Customers Resilience ▪ Continued fiber rollout to provide seamless ▪ Continued strong momentum in mobile data and ▪ Price increases to offset inflationary connectivity to expanding customer base gigabit broadband demand pressures ▪ Ongoing RAN modernizat
Slide 6: Hungarian Telco Market Positions
HUNGARIAN TELCO MARKET POSITIONS Mobile voice market1 Mobile data market1 SIMs (mn) SIMs (mn) Others Others 9.7 9.8 9.8 9.6 8.0 10 Vodafone 8 7.1 7.4 4iG/Digi 0.7% 1.4% 1.9% 2.1% 6.6 2.2% 0.3% 2.4% 0.2% 26.4% 26.7% 26.9% 26.5% Yettel 2.2% 29.4% Vodafone 8 1.1% 27.2% Magyar Telekom 6 26.9% 27.3% Yett
Slide 7: IT Market in Hungary: 2020-2026
IT MARKET IN HUNGARY: 2020-2026 Total B2B IT market 2 IT Services market shares1,2 HUF bn Magyar Telekom Group +5.7% 1,200 1,158 12.0% 1,090 1,100 +14.5% 1,035 NISZ 977 24% 1,000 922 23% 8.5% 900 877 21% 19% 14% 17% 800 766 700 11% 29% 29% 8.2% 4iG Plc. 29% 29% 29% 29% 600 28% 500 2.4% 3.6% 13% 13%
Slide 8: Hungarian Economic Environment
HUNGARIAN ECONOMIC ENVIRONMENT Growth structure & Domestic demand ▪ Magyar Telekom leveraged positive trends of domestic demand 8% 7.1% 5.1% 4.9% in the past periods 6% 4.0% 4% 2.0% ▪ Investment levels show volatility due to EU fund cycles 2% 0% ▪ GDP growth is expected to slow down in H2 2022 (H1 2
Slide 9: Guidance, Outlook and Shareholder Remuneration 2022-2024
GUIDANCE, OUTLOOK AND SHAREHOLDER REMUNERATION 2022-2024
Slide 10: 2022 Public Targets and 2023-2024 Outlook Reflect Strong Commercial Momentum
2022 PUBLIC TARGETS AND 2023-2024 OUTLOOK REFLECTS STRONG COMMERCIAL MOMENTUM 2021 results 2022 guidance 2023 – 2024 outlook REVENUE HUF 700.1 bn1 ca 5% growth2 moderate annual growth EBITDA AL HUF 216.3 bn moderate decline moderate annual growth CAPEX AL3 HUF 109.3 bn broadly stable FCF 3 HUF 56.2
Slide 11: Shareholder Remuneration After 2021 Results and Policy for 2022-2024
SHAREHOLDER REMUNERATION AFTER 2021 RESULTS AND POLICY FOR 2022-2024 Shareholder remuneration Shareholder remuneration policy for 2022-2024 HUF bn 29.6 ▪ The Board of Directors approved the shareholder 25.5 remuneration policy for 2022-2024 ▪ Goal is to increase transparency, visibility and reliabil
Slide 12: Q3 2022 Results
Q3 2022 RESULTS
Slide 13: ARPU Growth in Hungary Driven by Data Monetization
ARPU GROWTH IN HUNGARY DRIVEN BY DATA MONETIZATION Mobile SIMs Mobile ARPU ‘000 HUF +5.9% M2M Q3 2021 5,914 Prepaid 3,774 Q3 2022 5,582 Blended* +2.2% 12.5% Postpaid 3,856 10.1% 26.3% 24.0% 5,351 Postpaid* +3.0% 5,514 63.6% 63.5% 1,248 Prepaid +5.5% 1,316 Q3 2021 Q3 2022 Mobile data SIMs Mobile broa
Slide 14: Growing Customer Base Coupled with Positive BB and TV ARPU Developments
GROWING CUSTOMER BASE COUPLED WITH POSITIVE BB AND TV ARPU DEVELOPMENTS Fixed line multiplay residential subscribers Fixed Voice, BB and TV ARPU ‘000 HUF +2.9% Q3 2021 1,974 Q3 2022 1,514 1,558 Fixed voice -5.7% 1,861 18% 15% 1Play 2Play 3,656 37% 40% Fixed BB +5.2% 3Play 3,845 3,364 45% 45% Pay TV
Slide 15: Revenue Growth Driven by Sustained Commercial Momentum
REVENUE GROWTH DRIVEN BY SUSTAINED COMMERCIAL MOMENTUM Revenue, Q3 2022 vs Q3 2021* ▪ Growth in mobile service revenues driven by HUF bn +9.0% strong data demand 5.1 1.6 190.9 3.3 ▪ Fixed service growth attributable to strong -0.4 6.4 demand for broadband and TV services 175.1 ▪ Increase in equipmen
Slide 16: EBITDA AL Performance Strongly Impacted by New Supplementary Telecommunication Tax
EBITDA AL PERFORMANCE STRONGLY IMPACTED BY NEW SUPPLEMENTARY TELECOMMUNICATION TAX EBITDA AL, Q3 2022 vs Q3 2021 ▪ Increase in gross profit attributable to positive HUF bn -2.8% underlying telecommunication service 8.7 developments -3.4 60.3 -6.5 58.6 ▪ Recently imposed supplementary -0.5 telecommun
Slide 17: Supplementary Telecommunication Tax and Weakening Forint Weigh on Net Profit
SUPPLEMENTARY TELECOMMUNICATION TAX AND WEAKENING FORINT WEIGH ON NET PROFIT Net income (and adjusted net income), Q3 2022 vs Q3 2021 ▪ Lower D&A reflects copper network retirement, HUF bn lower SW-related D&A expenses and lower -4.5% 3.0 20.1 spectrum-related amortization in Hungary 17.9 0.1 17.1 -
Slide 18: Continued Focus on Network Development
CONTINUED FOCUS ON NETWORK DEVELOPMENT CAPEX AL, 9M 2022 vs 9M 2021 ▪ Increased investment in fixed network HUF bn driven by continued fiber rollout efforts 154.5 +16.2% 3.1 86.1 2.5 83.0 ▪ RAN modernization in Hungary continued 2.2 3.5 3.5 71.4 ▪ Increase in other investments led by higher -83.1 sp
Slide 19: Free Cashflow Reflects Strong Underlying Results
FREE CASHFLOW REFLECTS STRONG UNDERLYING RESULTS; SUPPLEMENTARY TELECOMMUNICATION TAX DUE IN Q4 2022 Free cashflow, 9M 2022 vs 9M 2021 HUF bn +54% 19.5 5.5 2.1 52.9 6.0 4.5 6.1 34.4 5.6 47.4 9M 2021 EBITDA w/o Working Other op. Capex Disposal of Other changes 9M 2022 excl. spectrum 9M 2022 with Pan-
Slide 20: Upgraded Revenue Target Due to Strong Commercial Momentum
UPGRADED REVENUE TARGET DUE TO STRONG COMMERCIAL MOMENTUM 9M 2022 results 2021 results 2022 targets (change YoY) HUF 547.5 bn REVENUE HUF 692.8 bn1 ca. 5% growth 2 (+9.4%) HUF165.8 bn EBITDA AL HUF 216.3 bn moderate decline (+5.1%) HUF 83.0 bn CAPEX AL3 HUF 109.3 bn broadly stable (+16.2%) HUF 52.9
Slide 21: Q&A
Q&A ? For further questions please contact the IR department: Diana Várkonyi Rita Walfisch Capital Market Relations Hub Lead Investor Relations Manager Phone: +481-7676 Phone: +36 1 457-6084 e-mail: varkonyi.diana.annamaria@telekom.hu e-mail: walfisch.rita@telekom.hu
Slide 22: North Macedonia: Q3 and 9M 2022 Results
NORTH MACEDONIA: Q3 AND 9M 2022 RESULTS Revenues, Q3 2022 vs Q3 2021* EBITDA AL, Q3 2022 vs Q3 2021 HUF mn +16.0% HUF mn -0.1% 685 1,958 19,908 2,238 -178 17,163 7,689 7,680 -1,902 -65 Q3 2021 Mobile Fixed SI/IT Q3 2022 Q3 2021 Gross profit Indirect costs IFRS 16 impact Q3 2022 Revenues, 9M 2022 vs
Slide 23: Sustainability Strategy 2016-2021 and Achievements
SUSTAINABILITY STRATEGY 2016-2021 AND ACHIEVEMENTS ▪ Diversity: comprehensive targets safeguarding ▪ Climate protection: decreasing operational emission and governance, diversity and inclusion, workplace offering green products to customers flexibility and others Diversity & Climate ✓ carbon neutral
Slide 24: Sustainability Strategy 2021 - 2025 - 2030
SUSTAINABILITY STRATEGY 2021 - 2025 - 2030 2025 2030 Target Target Scope 1 + 2 • keep at net zero (by an overall 16% decrease in • keep at net zero (by 84% decrease compared I. Climate (direct & indirect emissions) consumption) to 2015) protection Scope 3 (emissions of our suppliers & • decrease by
Slide 25: Company's ESG Efforts Continue to Gain External Recognition
COMPANY’S ESG EFFORTS CONTINUE TO GAIN EXTERNAL RECOGNITION Ratings Index inclusion ▪ Outstanding MSCI ESG rating of AA maintained for the 3rd year in a row Magyar Telekom remains a constituent of the FTSE4Good Index Series following a recent index review with a 99-percentile rank in telecommunicati
Slide 26: Other Awards and Recognitions in 2021
OTHER AWARDS AND RECOGNITIONS IN 2021 ▪ Zyntern.com #2 most attractive employer ▪ PwC Hungary – Most Attractive Workplace (Telecommunication category) ▪ Randstad Most Attractive Workplace (Telecommunication sector) ▪ IPRA Golden World Award ▪ GKI Digital - the biggest turnover online in the mobile p
Slide 27: Further Details on Adjustments on Net Income
FURTHER DETAILS ON ADJUSTMENTS ON NET INCOME ’Adjusted Net Income’* is to be adjusted for major non-cash below EBITDA one-off items that are not part of the underlying performance Such as: ➢ Change in fair value of derivatives ➢ FX result realized on principal of the CCIR (cross currency interest ra
Slide 28: Hungarian Mobile Spectrum
HUNGARIAN MOBILE SPECTRUM Spectrum allocation (MHz) 700 10 10 5 25 800 10 10 10 30 900 15 10 10 35 1800 15 5 10 20 5 20 75 2100 15 15 15 5 10 60 2600 30 20 20 70 1500 40 2600 5 25 15 5 50 3500 10 60 20 50 60 200 3700 60 140 200 Magyar Telekom Vodafone Yettel Digi not allocated 28