Telekom Austria AG · VIE:TKA
Telekom Austria — Debt Investor Presentation (July 2003)
44 slides from Telekom Austria's debt investor presentation, July 2003
Slide 1: Telekom Austria Public Bond Investor Presentation July 2003
Telekom Austria Public Bond Investor Presentation July, 2003
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.
Slide 3: Legal Disclaimer
Legal Disclaimer The following information does not include an offer to subscribe or to purchase or a solicitation to treat relating to the securities and may not be construed to contain such offer or solicitation. Furthermore, it does not constitute a prospectus within the meaning of Austrian civil
Slide 4: Table of Contents
Table of Contents § Group Overview § Business Overview § Financial Overview § Credit Rating § Summary of Key Credit Strengths 4
Slide 5: Group Overview
Group Overview 5
Slide 6: Group Overview
Group Overview § Incumbent telecommunications operator in Austria § Market leader in all core domestic markets § As of year end 2002: Ÿ Access Lines: 3.1 million in Austria Ÿ Mobile subscribers: 3.0 million in Austria, 1.1 million in Croatia and 350,000 in Slovenia Ÿ Internet subscribers: 847,000 in
Slide 7: Telekom Austria Group
Telekom Austria Group Telekom Austria Group § Organised in two strategic business segments, Wireline and Wireless Wireline Wireless § Developed from product-oriented 100% Telekom Austria AG mobilkom austria AG & Co KG 99% infrastructure company to a customer VIPnet doo 100% Czech On Line a.s. 75% fo
Slide 8: Telekom Austria Ownership Structure
Telekom Austria Ownership Structure as of March 31, 2003 Shareholder Structure Highlight ÖIAG § Holding and Privatisation Agency of the Republic of Austria Telecom § New Austrian Government has Italia reiterated its intention to proceed 14.8% with a full privatisation Free Float Telecom Italia 38.0%
Slide 9: Group Overview - 2002 Highlights
Group Overview - 2002 Highlights § Strengthening of domestic market position across all business segments Ÿ Stabilisation of fixed line operations Ÿ Limited downside from further market de-regulation § Profitable growth in all mobile activities § Strong financial performance in 2002 Ÿ first net prof
Slide 10: Financial Highlights
Financial Highlights Revenues EBITDA* EUR mln EUR mln +2.7% +1.3% +1.5% 3,908 1,515 1,475 3,859 +0.4% 399.8 405.9 962.5 966.5 FY 2001 FY 2002 1Q 2002 1Q 2003 FY 2001 FY 2002 1Q 2002 1Q 2003 Net Debt CAPEX -1.3% EUR mln -2.4% EUR mln 3,282 -18.4% -10.0% 3,204 3,204.2 3,162.1 812 81.0 72.9 662 FY 2001
Slide 11: Business Overview
Business Overview 11
Slide 12: Wireline
Wireline § 2002 revenue decline due to strong price competition and lower volumes Ÿ significant revenue improvement over course of year (4Q revenue growth of 2.1% vs. 1Q decline of 9.7%) § Stable EBITDA margin due to sustainable improvement in efficiency Ÿ headcount reduction by 1,690 § Stabilisatio
Slide 13: Wireline - Costs Reduction in 2002
Wireline - Costs Reduction in 2002 § 80% completion of 5-year headcount reduction plan within two years § EUR 85 million of costs reductions in the fixed line segment during 2002 § 4Q impacted by reversals (EUR 24.3mln) and extraordinary costs (EUR 27.4mln) Personnel Costs in 2002 Other Operating Co
Slide 14: Stable Wireline
Stable Wireline § Increase in voice minutes in 1Q 03 compared to 1Q 02; stable total volumes incl. Internet dial-up (- 0.1% compared to 1Q 02) § Due to the increased integration of local and long-distance, these are now shown as “national” as of 1Q 03 Wireline Minutes Voice Market Shares (minutes) 2
Slide 15: ADSL-Growth Driven by Marketing Push
ADSL-Growth Driven by Marketing Push Weekly ADSL Net ADSL Net Additions adds Highlights 24 (‚000) 22 19 § ADSL to drive revenues 16 16 growth and customer retention § Net adds rise following simplified product offering 1Q 02 2Q 02 3Q 02 4Q 02 1Q 03 ARPU / Month* § 40% of current ADSL customers had n
Slide 16: Wireless
Wireless § Repurchase of minority stake in mobilkom austria (now 100% owned) § 11.5% growth in revenues to EUR 1.9bn and 15.7% EBITDA growth to EUR 661mln in 2002 § Increase in Austrian market share despite strong competition and penetration of 84% § Accelerated domestic subscriber growth in 2002 an
Slide 17: Wireless (cont'd)
Wireless (cont’d) § Growth in Croatian/Slovenian mobile subsidiaries Ÿ access to further Eastern European growth markets § Strong mobile data proposition Ÿ significant growth in GPRS users Ÿ increasing SMS/MMS usage § No 3G greenfield exposure Ÿ low UMTS licence fee Wireless Footprint Wireless Reven
Slide 18: Partnership Agreement with Vodafone
Partnership Agreement with Vodafone § Agreement includes Austria, Croatia and Slovenia and, inter alia, the following acitivities: Ÿ Roaming Ÿ Development of products and services Ÿ Global account management Ÿ Purchasing / Supply Chain Management § Current status of cooperation Ÿ Eurocall roaming ta
Slide 19: mobilkom austria - ARPU and Costs
mobilkom austria - ARPU and Costs § 1Q 03 blended ARPU increased 2.3% compared to 1Q 02; MOUs up by 5.1% § 1Q 03 competition driven higher by handset subsidies leading to rising SAC and SRC compared to 1Q 02 (1Q 02 SRC include reversal of provision for retention costs in the amount of EUR 2 million)
Slide 20: Financial Overview
Financial Overview 20
Slide 21: Financial Overview - Telekom Austria Group
Financial Overview - Telekom Austria Group 2002 % Change 2001 (EUR mln) (EUR mln) Revenues 3,908 +1.3% 3,859 EBITDA* 1,515 +2.7% 1,475 EBITDA margin (%) 38.8% + 0.6 p.p. 38.2% Net Interest 156 -1.2% 158 Net Debt 3,204 -2.4% 3,282 Free Cash Flow 670 +11.8% 599 Net Debt/EBITDA 2.1x -5.0% 2.2x EBITDA/N
Slide 22: Telekom Austria Debt Maturity Profile
Telekom Austria Debt Maturity Profile Telekom Austria Debt Maturity Profile* Highlights EUR mln 1,400 1,310** § Most of the bonds were issued and 1,200 108 6 loans granted while Telekom Austria was fully owned by the 1,000 Republic of Austria. 737 800 600 § As per 31 December 2002, a total of EUR 1.
Slide 23: Net Debt Reduction
Net Debt Reduction § Capex declines by 18%; capex to revenue ratio falls from 21% to 17% § Net debt/EBITDA 2.1x; interest coverage of 9.7x; net gearing of 128% Capital Expenditures Net Debt EUR mln EUR mln 917.7 693 771 812.2 3,282 3,204 662.4 594.6 449.0 340.7 693 Mobilkom purchase price 323.1 363.
Slide 24: Employee Benefit Obligations
Employee Benefit Obligations Ÿ Pension liabilities are negligible EUR mln FY2002 FY2001 Pensions 9.7 9.9 Contractual termination benefits 132.3 287.3 Service awards 57.9 59.2 Severance 32.6 21.8 24
Slide 25: Credit Ratios Improving
Financial Overview - Telekom Austria Group - Credit Ratios Improving EBITDA/Net Interest FY2000 - FY2002 Net Debt/EBITDA FY2000 - FY2002 3.20x 9.68x 9.32x 2.20x 2.10x 6.60x FY 2000 FY 2001 FY 2002 FY 2000 FY 2001 FY 2002 § Telekom Austria managed to § Net Debt/EBITDA has dropped to strongly improve
Slide 26: Telekom Austria vs European Peers
Financial Overview - Telekom Austria vs European Peers* EBITDA margin FY2002 EBITDA Interest Cover FY2002 Net Debt/EBITDA FY2002 3.2x 46% 2.8x 12.7x 11.3x 41% 2.4x 40% 39% 2.1x 9.7x 36% 1.9x 1.8x 1.8x 8.0x 7.3x 31% 5.2x 28% 3.7x Telekom Austria New Telecom Italia Telekom Austria New Telecom Italia K
Slide 27: Medium Term Internal Financial Targets
Medium Term Internal Financial Targets Term Target Revenue CAGR 2003 - 2006 app. 2% EBITDA CAGR 2003 - 2006 app. 3% CAPEX 2003 EUR 640mln CAPEX/Revenues ~ 14% Average Yearly FCF EUR 500mln Net Debt/Equity 2003 120% Net Debt/EBITDA 2003 2.0x Wireline headcount reduction 2003 600 Wireline Operating Co
Slide 28: Credit Rating
Credit Rating 28
Slide 29: Credit Rating
Credit Rating 25 June 2003 25 June 2003 Senior unsecured: Baa2 outlook stable Senior unsecured: BBB outlook stable § Austria’s leading provider of § Leading market positions in all telecommunications and Information and telecommunications segments in Austria; Communication Technology services § Stro
Slide 30: Summary of Key Credit Strengths
Summary of Key Credit Strengths 30
Slide 31: Summary of Key Credit Strengths
Summary of Key Credit Strengths § Management focused on cash flow generation and reducing costs and Group capital expenditure further § Low Leverage (Net Debt/EBITDA) of 2.1x with scope for further debt reduction § Interest coverage and cash flow to debt ratios are strong and amongst the best in the
Slide 32: Summary of Terms
Summary of Terms Issuer Telekom Finanzmanagement GmbH Guarantor Telekom Austria AG Rating Baa2 (stable) / BBB (stable) Issue Size Benchmark Maturity tbd Documentation Off Telekom Austria’s EMTN Programme Listing Luxembourg Use of Proceeds Restructuring of Debt Maturity Profile Bookrunners ABN AMRO,
Slide 33: Appendix
Appendix 33
Slide 34: Net Debt - Telekom Austria Group
Net Debt - Telekom Austria Group EUR mln Mar. 31, 03 Dec. 31, 02 Long-term debt 1,957.4 2,079.9 Short-term debt 1,394.0 1,309.9 - Cross border lease, included in short-term debt -108.2 -107.9 + Capital lease obligations 5.6 7.3 + Related parties 0.6 0.4 Cash and cash equivalents, short-term and long
Slide 35: Debt Allocation as of March 31, 2003
Debt Allocation as of March 31, 2003 § 21% of Telekom Austria Group Debt is located in the Wireless segment/mobilkom austria Group, of which 17% is guaranteed by Telekom Austria TELEKOM AUSTRIA GROUP DEBT ALLOCATION Wireless stand alone 4% Wireless secured by Telekom Austria 17% Wireline 79% 35
Slide 36: Regulation Overview
Regulation Overview Wireline Wireless § New regulator in charge as of § One of the lowest termination November 2002 rates in Europe § New Telecom Law to be introduced in July 2003 § Number portability not expected Ÿ Focus on infrastructure based before the end of 2003 providers Ÿ Reduced number of m
Slide 37: Financial Overview - Total Managed Results
Financial Overview - Total Managed Results* Annual growth EUR mln 1Q 2002 2Q 2002 3Q 2002 4Q 2002 2002 1Q 2003 (1Q 03 vs 1Q 02) Operating Revenues Wireline 565.9 541.8 555.7 596.6 2,260.0 555.7 -1.8% Wireless 452.2 454.8 509.8 492.6 1,909.4 474.7 5.0% Intersegmental eliminations & -55.6 -61.3 -63.5
Slide 38: Financial Overview - Total Managed Results (cont'd)
Financial Overview - Total Managed Results (cont’d)* Annual growth EUR mln 1Q 2002 2Q 2002 3Q 2002 4Q 2002 2002 1Q 2003 (1Q 03 vs 1Q 02) Wireline EBITDA 211.9 207.8 208.3 179.4 807.4 215.5 1.7% Idle workforce costs 9.7 9.2 3.0 7.5 29.4 4.8 -50.5% Net loss of retirement of long-lived 4.0 0.8 0.7 2.2
Slide 39: Financial Overview - Wireline
Financial Overview - Wireline* Annual growth EUR mln 1Q 2002 2Q 2002 3Q 2002 4Q 2002 2002 1Q 2003 (1Q 03 vs 1Q 02) Operating Revenues 565.9 541.8 555.7 596.6 2,260.0 555.7 -1.8% EBITDA 211.9 207.8 208.3 179.4 807.4 215.5 1.7% EBIT 5.1 -3.6 8.1 -124.9 -115.3 10.2 100.0% Wireline operating revenues Sw
Slide 40: Financial Overview - Wireline (cont'd)
Financial Overview - Wireline (cont’d) Annual growth 1Q 2002 2Q 2002 3Q 2002 4Q 2002 2002 1Q 2003 (1Q 03 vs 1Q 02) Minutes (in million) National 1,178 1,111 1,120 1,198 4,607 1,194 1.4% Fixed-to-mobile 197 203 213 213 826 210 6.6% International 123 109 117 122 471 120 -2.4% Total voice minutes 1,498
Slide 41: Financial Overview - Wireless
Financial Overview - Wireless* Annual growth EUR mln 1Q 2002 2Q 2002 3Q 2002 4Q 2002 2002 1Q 2003 (1Q 03 vs 1Q 02) Operating Revenues mobilkom austria 379.0 365.9 394.1 399.3 1,538.3 391.4 3.3% VIPnet 58.8 72.7 99.6 72.5 303.6 65.3 11.1% Si.mobil 16.3 19.0 21.8 22.1 79.2 19.0 16.6% mobilkom [liechte
Slide 42: Financial Overview - Wireless (cont'd)
Financial Overview - Wireless (cont’d) Annual growth 1Q 2002 2Q 2002 3Q 2002 4Q 2002 2002 1Q 2003 (1Q 03 vs 1Q 02) mobilkom austria Market Share (Subs) 42.6% 42.8% 42.9% 44.4% 44.4% 44.1% 1.5 p.p. Penetration in Austria 81.9% 83.1% 84.1% 83.1% 83.1% 84.2% 2.3 p.p. Subscribers (000’s) Contract 1,445.
Slide 43: Financial Overview - Wireless (cont'd)
Financial Overview - Wireless (cont’d) Annual growth 1Q 2002 2Q 2002 3Q 2002 4Q 2002 2002 1Q 2003 (1Q 03 vs 1Q 02) VIP net Market Share (Subs) 47.6% 48.1% 47.1% 48.2% 48.2% 50.3% 2.7 p.p. Penetration in Croatia 42.3% 45.3% 49.1% 51.9% 51.9% 50.5% 8.2 p.p. Vip Net's Subscribers (000’s) Contract 129.3
Slide 44: Further Details
Further Details Listing § Vienna Listing: TKA AV / TELA.VI § NYSE Listing: TKA US / TKA.N Contact § Contact Person: Mr Hans Lang § Telephone: +43 (0)59 0 59 1 25208 § Fax: +43 (0)59 0 59 91 25208 § E-Mail: groupfinance@telekom.at § Website: www.telekom.at Financial Calendar § August 26, 2003: First
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