Telekom Austria Ag · VIE:TKA

Telekom Austria — FY2008 Earnings Presentation

54 slides from Telekom Austria's earnings presentation, Feb 25, 2009

  1. Slide 1: Results for the Financial Year and 4Q 2008

    Telekom Austria Group Results for the Financial Year and 4Q 2008 Vienna, February 25, 2009

  2. 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.

  3. Slide 3: Agenda

    Agenda ƒ Key Developments ƒ Fixed Net ƒ Mobile Communication ƒ Financial Overview ƒ Outlook Results for the Financial Year 2008 3

  4. Slide 4: Key Developments

    Key Developments Results for the Financial Year 2008 4

  5. Slide 5: Results of Telekom Austria Group are Evidence for Major Achievements

    Results of Telekom Austria Group are Evidence for Major Achievements ƒ Strong operational performance despite headwinds ƒ New strategic market approach in Fixed Net segment bears fruit ƒ Restructuring of Fixed Net segment yields first results and progresses according to plan ƒ No impact of economic

  6. Slide 6: Full Year 2008 Results Underpin Strong Operational Performance

    Full Year 2008 Results Underpin Strong Operational Performance ƒ Well performing mobile operation drives revenue growth of 5.1% to EUR 5,170.3 mn ƒ Strong operational performance increases clean EBITDA by 3.9% to 1,927.7 mn ƒ Reported EBITDA of EUR 1,295.6 mn depressed by EUR 632.1 mn charge for the

  7. Slide 7: Full Year 2008 Operating Performance Clearly Above Guidance

    Full Year 2008 Operating Performance of Telekom Austria Group Clearly Above Guidance Revenues EBITDA (EUR million) (EUR million) Guidance 3.9% Guidance 5.1% +3.0% 1,927.7 1,854.9 +5.0% 5,170.3 4,919.0 1,295.6 FY 08 FY 07 FY 08 FY 07 Net Income/Loss Earnings/Loss per Share (EUR million) (EUR) Guidanc

  8. Slide 8: Fixed Net

    Fixed Net Results for the Financial Year 2008 8

  9. Slide 9: Delivery on Cost Saving Targets Mitigates Impact of Lower Revenues

    Delivery on Cost Saving Targets Mitigates Impact of Lower Revenues Revenues (EUR million) ƒ Revenue decline reflects lower -9.0% customer base and calling volume due 547.4 498.1 to fixed-to-mobile substitution ƒ Excluding restructuring expenses 4Q 08 4Q 07 EBITDA declines only by 2.7% EBITDA ƒ Opex

  10. Slide 10: Access Line Growth in November and December 2008 while ARPL Remains Stable

    Access Line Growth in November and December 2008 while ARPL Remains Stable Line Loss ƒ Successful marketing of product (in 000) bundles slows down access line 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 loss sustainably -2.4 ƒ Access line growth registered in -27.7 -47.6 -32.4 -35.1 November and December 2008 for

  11. Slide 11: Telekom Austria Exploits Broadband Penetration Growth via Product Bundles

    Telekom Austria Exploits Broadband Penetration Growth via Product Bundles ƒ Fixed Net retail broadband Broadband Market Shares 4Q 08 market share rises to 29.9% in 4Q 08 vs. 3Q 08 29.9% ƒ Product bundles let 21.8% 21.0% Telekom Austria participate 14.7% in penetration growth 10.2% 2.4% ƒ Mobile broa

  12. Slide 12: Cost Cutting Measures Aimed at Curbing EBITDA Decline in 2009

    Cost Cutting Measures Aimed at Curbing EBITDA Decline in 2009 ƒ Restructuring expenses will result in lower personnel expenses in 2009 ƒ Process reengineering expected to further reduce cost for sales, sales support & product development ƒ Focused marketing & sponsoring, reduction of energy & logist

  13. Slide 13: Mobile Communication

    Mobile Communication Results for the Financial Year 2008 13

  14. Slide 14: Double Digit Growth Driven by Strong Performance in Austria and Belarus

    Double Digit Growth Driven by Strong Performance in Austria and Belarus Revenues (EUR million) FX gain EUR 14.2 mn ƒ Subscriber base grows by 15.2% to 11.1% 884.4 17.8 million customers 796.2 ƒ Revenue grows by 11.1% and EBITDA by 14.6% 4Q 08 4Q 07 ƒ On constant currencies, revenue EBITDA (EUR milli

  15. Slide 15: Larger Customer Base of mobilkom austria Drives Profitable Growth

    Larger Customer Base of mobilkom austria Drives Profitable Growth Revenues (EUR million) ƒ Customer base of mobilkom austria 11.6% grows by 13.6% to 4.5 million 441.6 395.8 subscribers ƒ Lower SAC & SRC improve profitability 4Q 08 4Q 07 ƒ EBITDA margin rises from 28.4% to EBITDA 29.7% (EUR million)

  16. Slide 16: mobilkom austria Reports Largest Market Share Growth Ever

    mobilkom austria Reports Largest Market Share Growth Ever Market Shares ƒ Market share grows from 40.3% As of December 2008 42.5% in 4Q 07 to 42.5% in 4Q 08 32.0% 19.2% ƒ Successful multibrand strategy with combination of premium & 5.8% no-frills brand 4Q 06 2Q 07 4Q 07 2Q 08 4Q 08 mobilkom austria

  17. Slide 17: Mobiltel in Bulgaria Grows Customer Base and Maintains High Profitability

    Mobiltel in Bulgaria Grows Customer Base and Maintains High Level of Profitability Revenues (EUR million) ƒ Mobiltel’s subscriber base grows by 0.5% 168.4 167.6 5.8% to 5.4 million customers ƒ Stable market share of 50.0% 4Q 08 4Q 07 despite competitive environment EBITDA ƒ Usage growth of 21.3% par

  18. Slide 18: Velcom in Belarus Delivers Strong Organic Growth Across all Major KPIs

    Velcom in Belarus Delivers Strong Organic Growth Across all Major KPI’s Revenues (EUR million) FX gain EUR 10.8 mn ƒ Subscriber base grows by 20.9% to 44.2% 3.7 million at end of 4Q 08 92.3 64.0 ƒ Market share increases to 44.8% from 43.4% at the end of 4Q 07 4Q 08 4Q 07 ƒ Revenues increase by 44.2%

  19. Slide 19: Double Digit Subscriber Growth in Croatia and Slovenia

    Double Digit Subscriber Growth in Croatia and Slovenia, National Roaming Loss Drags on Vipnet Revenues Vipnet Vipnet in Croatia (EUR million) -0.6% ƒ Subscriber base grows by 14.1% to 121.1 121.8 2.5 mn customers ƒ EBITDA declines by 12.0% to EUR 35.2 mn primarily due to loss of 4Q 08 4Q 07 national

  20. Slide 20: Rising Contribution from Start-up Operations

    Rising Contribution from Start-up Operations Despite Marketing Intensive Christmas Business EBITDA Development Vip mobile in Serbia Vip mobile (in 000) ƒ Subscriber base grows by 78.4% to 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 907,900 customers -9.5 -9.2 -5.1 ƒ Market share of 9.1% compared to -13.4 5.8% at

  21. Slide 21: Financial Overview

    Financial Overview Results for the Financial Year 2008 21

  22. Slide 22: Operational Performance Better than Expected, Restructuring Charge Weighs on Results

    Operational Performance Better than Expected, Restructuring Charge Weighs on Reported Results (EUR million) 4Q 08 4Q 07 % change FY 2008 FY 2007* % change Revenues 1,306.5 1,288.1 1.4% 5,170.3 4,919.0 5.1% EBITDA -212.0 391.3 n.a. 1,295.6 1,854.9 -30.2% Operating income/loss -516.1 93.4 n.a. 135.5 7

  23. Slide 23: Lower Ordinary Capital Expenditures Support Free Cash Flow Generation

    Lower Ordinary Capital Expenditures Support Free Cash Flow Generation (EUR million) 4Q 08 4Q 07 % change FY 2008 FY 2007* % change Cash Flow from operations before 388.6 339.9 14.3% 1,693.7 1,681.5 0.7% working capital adjustments Change in working capital 69.5 204.4 -66.0% -129.9 60.4 n.a. Ordinary

  24. Slide 24: Absence of M&A Drives Lower Cash Consumption for Investing Activities

    Absence of M&A Primarily Drives Lower Cash Consumption for Investing Activities (EUR million) 4Q 08 4Q 07 % change FY 2008 FY 2007* % change Fixed Net 82.3 135.7 -39.4% 263.5 324.5 -18.8% Mobile Communication 193.2 180.8 6.9% 546.3 441.7 23.7% Others & elimination -2.2 0.0 n.a. -2.2 0.0 n.a. Ordinar

  25. Slide 25: Asset Base Remains Stable as Higher Cash Offsets Reduction of Long-Term Assets

    Asset Base Remains Stable as Higher Cash Offsets Reduction of Long-Term Assets (EUR million) Dec. 31, 08 Dec. 31, 07 % change Long-term assets 7,452.0 7,677.5 -2.9% Current assets 1,545.4 1,326.2 16.5% Total assets 8,997.4 9,003.7 -0.1% Current liabilities 2,220.5 2,557.2 -13.2% Long-term liabilitie

  26. Slide 26: Capital Allocation Announced at Capital Market Day Underpins Value Creation

    Capital Allocation Announced at Capital Market Day Underpins Focus on Value Creation (in EUR million) Telekom Austria Group Fixed Net & Mobile Communication Free Cash Flow* Net debt 1. 1. Stable StableDividend DividendPolicy Policy Priorities New FCF 3,200 - 100 from Profitable Profitablegrowth grow

  27. Slide 27: EUR 750 mn Bond Placed in January 2009 Covers Refinancing Beyond 2010

    EUR 750 mn Bond Placed in January 2009 Covers Refinancing Beyond 2010 Key Facts Volume EUR 750 mn ƒ Orderbook of EUR 3.3 bn Maturity 7 years ƒ Good company names with solid 6.375%, Coupon 325 bps spread rating can access debt capital markets Allocation 10% ƒ Bond issue is net debt neutral and increa

  28. Slide 28: Outlook

    Outlook Results for the Financial Year 2008 28

  29. Slide 29: Expects 2009 Operating Free Cash Flow of EUR 1.1 billion

    Telekom Austria Group Expects 2009 Operating Free Cash Flow* of EUR 1.1 billion Telekom Austria Group 2009 Revenues ~ EUR 5.1 bn EBITDA ~ EUR 1.9 bn CAPEX ~ EUR 0.8 bn Dividend DPS of 75 cent minimum * Operating Free Cash Flow = EBITDA - Capex Results for the Financial Year 2008 29

  30. Slide 30: Appendix

    Appendix Results for the Financial Year 2008 30

  31. Slide 31: Regulatory Issues – Key Aspects (1)

    Regulatory Issues – Key Aspects (1) Mobile termination rates: The Austrian administrative court rescinded the last two SMP-decisions because the National Regulatory Authority imposed an ex-ante obligation on mobile operators retroactively which is illegal in the court’s view. With this revocation th

  32. Slide 32: Regulatory Issues – Key Aspects (2)

    Regulatory Issues – Key Aspects (2) Review of the Regulatory Electronic Communication Framework: The new regulatory framework is now under discussion in a trialogue between the European Parliament, the Council and the Commission, with the goal of reaching an agreement by mid-March 2009 at the latest

  33. Slide 33: Regulatory Issues – Key Aspects (3)

    Regulatory Issues – Key Aspects (3) International roaming charges: As of end of September 2008 the EU- Commission filed its draft proposal to the EU Parliament and the Council to extend the existing roaming regulation. The proposal calls for: ƒ Extension of the voice roaming regulation at both whole

  34. Slide 34: Development of Revenues 4Q vs. 4Q

    Development of Revenues 4Q 08 vs. 4Q 07 Revenues (EUR million) 9.3 1.6 -22.7 28.3 -0.7 5.3 1,306.5 1,288.1 -49.3 45.8 0.8 Eliminations Vip mobile mobilkom Si.mobil Mobiltel Fixed Net Velcom Vipnet operator Corporate, Revenues Revenues austria Others & 4Q 07 4Q 08 Vip Results for the Financial Year 2

  35. Slide 35: Development of EBITDA 4Q vs. 4Q

    Development of EBITDA 4Q 08 vs. 4Q 07 EBITDA (EUR million) Includes expenses of EUR 632.1 mn for a restructuring program 391.3 -635.8 -212.0 12.5 -4.8 0.0 19.3 3.7 -17.0 18.9 -0.1 Eliminations Vip mobile mobilkom Si.mobil Mobiltel Fixed Net Velcom Vipnet operator Corporate, EBITDA EBITDA austria 4Q

  36. Slide 36: Fixed Net - Access Lines

    Fixed Net - Access Lines (in 000) 4Q 08 4Q 07 % change PSTN access lines 1,955.3 2,028.9 -3.6% Basic ISDN access lines 330.5 360.2 -8.2% Multi ISDN access lines 6.4 6.5 -1.5% Naked broadband lines 44.6 38.8 14.9% Total access lines in service 2,336.8 2,434.4 -4.0% of these broadband access lines 885

  37. Slide 37: Fixed Net – Voice & Broadband Market Shares

    Fixed Net – Voice & Broadband Market Shares 70% 65% Fixed to mobile National traffic 60% 55% International 50% Fixed Net broadband 45% 40% 35% 30% 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 Results for the Financial Year 2008 37

  38. Slide 38: Fixed Net Key Performance Indicators

    Fixed Net Key Performance Indicators Average Revenues per Access Line Fixed Net Broadband Net Adds incl. Wholesale (in EUR) (in 000) 33.3 66.9 33.0 33.0 32.7 32.6 50.4 28.6 8.9 8.9 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 Fixed Broadband Access Lines (in 000) 818.9 745.8 757.5 766

  39. Slide 39: Fixed Net - Minutes and Average Tariffs

    Fixed Net - Minutes and Average Tariffs (in million minutes) 4Q 08 4Q 07 % change National 657 765 -14.1% Fixed-to-mobile 182 195 -6.8% International 98 106 -8.3% Total voice minutes 937 1,067 -12.2% Internet dial-up 68 148 -54.1% Total Fixed Net minutes 1,005 1,215 -17.3% (Average tariffs in EUR) 4

  40. Slide 40: Mobile Subscribers

    Mobile Subscribers (in 000) 4Q 08 4Q 07 % change Austria 4,496.3 3,959.3 13.6% Market share 42.5% 40.3% Bulgaria 5,396.2 5,098.6 5.8% Market share 50.0% 50.3% Belarus 3,697.9 3,058.7 20.9% Market share 44.8% 43.4% Croatia 2,486.6 2,179.6 14.1% Market share 42.2% 43.0% Slovenia 570.6 497.3 14.7% Mark

  41. Slide 41: Operational Data – mobilkom austria

    Operational Data – mobilkom austria MoU per Subscriber ARPU & Data ARPU (in minutes) (in EUR) 186.1 183.4 177.1 169.5 175.0 28.4 28.7 28.1 27.8 28.6 7.1 7.0 6.9 7.0 7.3 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 Blended ARPU Data ARPU Quarterly Churn SAC per Gross Add (in EUR) 68.4

  42. Slide 42: Mobile Data - mobilkom austria

    Mobile Data - mobilkom austria Mobile Broadband Customers Number of SMS (in 000) (in million) 621 400 523 535 541 535 325 348 290 310 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 Vodafone Live! Customers Data in % of Revenues (in 000) 33.9% 1,776 1,780 1,750 1,750 30.7% 31.6% 31.0% 32

  43. Slide 43: ARPU & MoU per Subscriber for Selected Mobile Operations

    ARPU & MoU per Subscriber for Selected Mobile Communication Operations 186.1 175.0 149.8 159.6 134.7 137.6 MoU per 95.6 90.9 85.7 78.8 Subscriber (in minutes) mobilkom austria Mobiltel Velcom Vipnet Si.Mobil 4Q 07 4Q 08 28.4 28.6 23.2 23.2 ARPU (in EUR) 15.1 13.9 10.4 9.6 8.2 7.1 mobilkom austria Mo

  44. Slide 44: Headcount Development

    Headcount* Development (average period) 4Q 08 4Q 07 change Fixed Net 9,030 9,685 -655 Mobile Communciation 8,385 7,035 1,350 Telekom Austria Group 17,415 16,720 695 (end of period) 4Q 08 4Q 07 change Fixed Net 8,571 9,598 -1,027 Mobile Communciation 8,383 8,030 353 Telekom Austria Group 16,954 17,62

  45. Slide 45: Fixed Net - Revenue Breakdown

    Fixed Net - Revenue Breakdown (EUR million) 4Q 08 4Q 07 % change FY 2008 FY 2007 % change Switched voice base traffic 75.9 88.7 -14.4% 318.0 349.9 -9.1% Switched voice monthly & other voice revenues 112.3 111.9 0.4% 456.9 471.0 -3.0% Payphones & VAS 9.5 12.4 -23.4% 41.2 46.7 -11.8% Wholesale data &

  46. Slide 46: Fixed Net – Expense Breakdown

    Fixed Net – Expense Breakdown (EUR million) 4Q 08 4Q 07 % change FY 2008 FY 2007 % change Material expense 19.1 24.3 -21.4% 86.4 79.0 9.4% Employee costs* 769.7 158.4 n.a. 1,186.1 559.4 n.a. Depreciation, amortization and impairment charges 131.5 142.6 -7.8% 509.5 553.8 -8.0% Interconnection 84.4 83

  47. Slide 47: Mobile Communication - Revenue Breakdown

    Mobile Communication - Revenue Breakdown (EUR million) 4Q 08 4Q 07 % change FY 2008 FY 2007* % change Traffic revenues 423.5 398.4 6.3% 1,650.3 1,473.0 12.0% Monthly rental 201.5 176.6 14.1% 763.1 613.8 24.3% Equipment 84.2 85.6 -1.6% 269.8 278.7 -3.2% Roaming 29.6 40.3 -26.6% 182.1 240.8 -24.4% Int

  48. Slide 48: Mobile Communication – Expense Breakdown

    Mobile Communication – Expense Breakdown (EUR million) 4Q 08 4Q 07 % change FY 2008 FY 2007* % change Material expense 116.2 109.0 6.6% 360.3 345.9 4.2% Employee costs 74.0 66.3 11.6% 266.8 236.5 12.8% Depreciation, amortization and impairment charges 173.0 155.4 11.3% 651.3 540.1 20.6% Interconnect

  49. Slide 49: Revenues by Segment

    Revenues by Segment (EUR million) 4Q 08 4Q 07 % change FY 2008 FY 2007* % change Fixed Net revenues 498.1 547.4 -9.0% 2,038.8 2,133.0 -4.4% Mobile Communication revenues 884.4 796.2 11.1% 3,390.9 3,035.1 11.7% Corporate, Other & Eliminations -76.0 -55.5 36.9% -259.4 -249.1 4.1% Revenues Telekom Aust

  50. Slide 50: EBITDA and Operating Income by Segment

    EBITDA and Operating Income by Segment (EUR million) 4Q 08 4Q 07 % change FY 2008 FY 2007* % change Fixed Net EBITDA** -499.6 136.2 n.a. -21.3 705.0 n.a. Mobile Communciation EBITDA 295.6 258.0 14.6% 1,340.6 1,177.6 13.8% Corporate, Other & Eliminations -8.0 -2.9 n.a. -23.7 -27.7 -14.4% EBITDA Telek

  51. Slide 51: Capital Expenditures by Segment

    Capital Expenditures by Segment (EUR million) 4Q 08 4Q 07 % change FY 2008 FY 2007* % change Fixed Net tangible 60.2 106.5 -43.5% 201.8 272.6 -26.0% Mobile Communication tangible 116.0 114.1 1.7% 390.1 364.9 6.9% Tangible 176.2 220.6 -20.1% 591.9 637.5 -7.2% Fixed Net intangible 22.1 29.2 -24.3% 61.

  52. Slide 52: Net Debt - Telekom Austria Group

    Net Debt - Telekom Austria Group (EUR million) Dec 31, 2008 Dec 31, 2007 % change Long-term debt 3,598.5 3,438.0 4.7% Short-term debt 961.5 1,236.1 -22.2% - Short-term portion of capital and cross border lease obligations 0.0 0.0 n.a. + Capital lease obligations 1.0 1.0 -3.8% Cash and cash equivalen

  53. Slide 53: EUR 750 mn Bond Supports Refinancing Beyond 2010

    EUR 750 mn Bond Supports Refinancing Beyond 2010 Debt Maturity Profile (EUR million) 2,229* Ratings: 1,232 961 ƒ S&P: BBB+ (negative outlook) 643 ƒ Moody‘s: A3 (stable outlook) 215 2009 2010 2011 2012 there after Lines of Credit ƒ Undrawn committed lines of credit amounting to EUR 1.5 bn ƒ Average l

  54. Slide 54: Free Cash Flow After Dividend, Cash and Bond Proceeds Cover Refinancing

    Free Cash Flow After Dividend, Cash on Hand and Bond Proceeds Cover Refinancing in 2009 & 2010 Debt Maturing Sources of Cash (in EUR million) Cash on Hand Debt maturing 2009 961 Bond issue January 2009 Free Cash Flow Debt maturing 2010 2009+2010 after dividend 1,232 ƒ Free cash flow (after dividend)

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