Telekom Austria Ag · VIE:TKA

Telekom Austria — A1 Telekom Austria Group — Q3 2018 Earnings Presentation

49 slides from Telekom Austria's earnings presentation, Oct 16, 2018

  1. Slide 1: Results for the first nine months and third quarter 2018

    Results for the first nine months and third quarter 2018 16th October 2018, Vienna

  2. 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 in these forw

  3. Slide 3: Key financial developments for the first nine months and third quarter 2018

    Key financial developments for the first nine months and third quarter 2018

  4. Slide 4: Highlights Q3 2018

    Highlights Q3 2018  1.4% increase in Group revenues and stable EBITDA excl. restructuring (+0.3%)  Service revenue growth both in mobile and fixed-line business  3.9% EBITDA growth (excl. restructuring) in Austria  FY 2018 Outlook unchanged: Revenue growth of 1-2%, CAPEX at EUR 750 mn and EURc 2

  5. Slide 5: Q3 2018: Group results benefit from continuous strong service revenue development

    Q3 2018: Group results benefit from continuous strong service revenue development in most segments Reported Proforma Group (in EUR million) Q3 2018 Q3 2017 % change Total revenues 1,126.2 1,111.1 1.4% EBITDA 389.8 410.0 -4.9% excl. restructuring 397.8 396.7 0.3% CAPEX 193.8 147.2 31.7%  Service rev

  6. Slide 6: Austria: Strong operational performance driven by service revenue growth

    Austria: Strong operational performance driven by sound service revenue growth and better equipment margin ARPU ARPL Operational data (in EUR) (in EUR)  Postpaid subscriber base grew by 2.4% driven by ongoing high Δ: +2.5% Δ: +4.7% demand for mobile WiFi routers and high-value tariffs 30.8 29.5  A

  7. Slide 7: Service revenue growth in CEE profits from solid trends in Bulgaria, Serbia and Macedonia

    Service revenue growth in CEE profits from solid trends in Bulgaria, Serbia and Macedonia Highlights CEE EBITDA Bulgaria: (proforma, in EUR mn)  Equipment and fixed-line service revenue growth, mobile service revenues rose slightly due to the business segment Δ: -7.9%  EBITDA excl. one-off effects

  8. Slide 8: 1-9 M: Stable free cashflow as higher Capex paid were offset by lower interest

    1-9 M: Stable free cashflow as higher Capex paid were offset by lower interest payments (in EUR million) Q3 2018 Q3 2017 % change 1-9 M 2018 1-9 M 2017 % change Net cash flow from operating activities 318.1 333.9 -4.7% 918.2 910.1 0.9% Capital expenditures paid -192.2 -142.9 34.5% -558.6 -521.1 7.2%

  9. Slide 9: Focus Points

    Telekom Austria Group

  10. Slide 10: Internet@Home in Austria growing: Customer demand-oriented broadband solutions

    Internet@Home in Austria growing: Customer demand-oriented broadband solutions Internet@Home RGUs (in millions) Fixed-line 1.7 1.6 Hybrid 1.5 1.4 1.3 Net cube Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018  Cash & carry fixed-line internet product launched i

  11. Slide 11: Enhance product propositions with new content offerings

    Enhance product propositions with new content offerings by selective OPEX- and CAPEX-efficient investments Exclusive sports content Austria  Austrian Soccer League (4 top games per year)  Popular local events; e.g. Beach Volleyball Major Vienna, Cycling Tour of Austria, Red Bull Air Race Bulgaria

  12. Slide 12: Frequency spectrum auction for 3.4-3.8 GHz in Austria

    Frequency spectrum auction for 3.4-3.8 GHz in Austria: Update after publication of tender documents Band 42:  190 MHz TDD frequency band; 19 blocks of 10 MHz each 3.4-3.6 GHz  Available as of 1 January 2020 Band 43:  200 MHz TDD frequency band; 20 blocks of 10 MHz each 3.6-3.8 GHz  Available imm

  13. Slide 13: Digital Transformation Center of Excellence established across A1 Group

    ´Digital Transformation Center of Excellence´was established to join forces for digitalisation efforts across A1 Group Robotic Process Marketing Automation Big Data Automation  Increase usage & interactions  Simplify & Harmonize  Datalake – sustainable way to on digital interfaces store data (Ope

  14. Slide 14: Outlook for the full year 2018

    Outlook for the full year 2018

  15. Slide 15: A1 Telekom Austria Group outlook for the full year 2018 unchanged

    A1 Telekom Austria Group outlook for the full year 2018 unchanged 16 October 2018 Consensus 2018 Total revenues +1-2% EUR 4,429 mn CAPEX ~ EUR 750 mn EUR 746 mn Proposed dividend EUR 0.20 / share -  Outlook based on reported figures; assumed devaluation of BYN vs. EUR: ~10%  CAPEX: does not includ

  16. Slide 16: Appendix 1

    Appendix 1 All figures are stated according to IAS 18 on a reported basis

  17. Slide 17: The leading regional communications player providing convergent telecommunication services

    The leading regional communications player providing convergent telecommunication services as of 30 September 2018 (in ‘000) Austria Bulgaria Croatia Mobile market position #1 Mobile market position: #1 Mobile market position #2 Mobile subscriber: Mobile subscriber: Mobile subscriber:  5,304 (Q3 20

  18. Slide 18: A1 Telekom Austria Group – Profit and Loss

    A1 Telekom Austria Group – Profit and Loss (in EUR million) Q3 2018 Q3 2017 % change Service Revenues 973.5 957.8 1.6% Equipment Revenues 129.4 123.5 4.7% Other operating income 23.3 29.3 -20.3% Total Revenues 1,126.2 1,110.7 1.4% Cost of Service -347.3 -344.8 -0.7% Cost of Equipment -144.9 -143.7 -

  19. Slide 19: Total revenues & costs and expenses per segment

    A1 Telekom Austria Group – Total revenues & costs and expenses per segment A1 Telekom Austria Group - Total Revenue Split Total Revenues (in EUR million) Q3 2018 Q3 2017 % change Austria 657.3 655.3 0.3% Bulgaria 112.5 112.3 0.2% Croatia 118.2 121.0 -2.4% Belarus 103.8 99.8 4.0% Slovenia 53.7 55.5 -

  20. Slide 20: A1 Telekom Austria Group – Headcount development

    A1 Telekom Austria Group – Headcount development FTE (Average Period) Q3 2018 Q3 2017 % change Austria 8,141 8,287 -1.8% International 10,374 10,124 2.5% Corporate 357 283 26.4% A1 Telekom Austria Group 18,872 18,694 1.0% FTE (End of Period) Q3 2018 Q3 2017 % change Austria 8,128 8,278 -1.8% Interna

  21. Slide 21: A1 Telekom Austria Group – Capital expenditure split

    A1 Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q3 2018 Q3 2017 % change Austria 119.4 85.5 39.6% Bulgaria 26.3 15.5 69.8% Croatia 19.8 15.8 25.3% Belarus 15.0 14.2 5.3% Slovenia 3.7 3.9 -2.9% Republic of Serbia 6.8 7.6 -9.7% Republic of Macedonia 2.5 4.2 -

  22. Slide 22: A1 Telekom Austria Group – Net debt

    A1 Telekom Austria Group – Net debt per 30 September 2018 Net Debt (in EUR million) 30 September 2018 31 December 2017 % change Long-term Debt 2,536.3 2,533.6 0.1% Short-term Borrowings 288.9 0.6 n.m. Cash and Cash Equivalents and Short-term Investments -49.7 -202.4 75.4% Net Debt of A1 Telekom Aust

  23. Slide 23: A1 Telekom Austria Group – Debt maturity profile

    A1 Telekom Austria Group – Debt maturity profile as of 30 September 2018 746.9 746.0 744.2 298.8 240.4 48.6 0.3 0.0 0.0 2018 2019 2020 2021 2022 2023 2024 2025 2026  EUR 2,825.1 mn short-and long-term borrowings as of 30 September 2018  Average cost of debt of 2.64%  Cash and cash equivalents and

  24. Slide 24: A1 Telekom Austria Group – Debt profile

    A1 Telekom Austria Group – Debt profile as of 30 September 2018 Overview debt instruments Fixed/floating mix 10% 10% 90% 90% Bonds Loans Fixed Floating Lines of credit Ratings  Undrawn committed credit lines  S&P: BBB (positive outlook) amounting to EUR 1,315 mn  Moody’s: Baa1 (stable outlook) 

  25. Slide 25: Segment Austria – Fixed-line key performance indicators

    Segment Austria – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 30.5 30.4 30.5 30.8 29.5 3,396.6 3,390.4 3,378.7 3,362.7 3,334.3 194.0 192.2 192.0 191.7 189.1 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPL ARPL-rel

  26. Slide 26: Segment Austria – Mobile key performance indicators

    Segment Austria – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 15.9 16.0 15.9 16.3 1.8 1.8 1.7 15.5 1.5 1.6 255.6 254.6 258.3 252.9 248.1 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPU Service revenues Subsidies Mobile penetra

  27. Slide 27: Segment Austria – Broadband market split

    Segment Austria – Broadband market split Market share total broadband Market share mobile Market share fixed- (in %) broadband line broadband (in %) (in %) 2.1 3.1 4.0 4.8 34.9 35.4 Mobile Broadband Other Operators 21.8 23.4 16.5 17.0 Unbundled Lines 3.6 3.0 22.6 23.0 Cable 38.8 35.6 4.2 4.0 16.4 16

  28. Slide 28: Segment Austria – Voice market split

    Segment Austria – Voice market split Market share voice RGUs (in %) 13.0 13.7 3.2 3.3 23.3 22.7 Others UPC Tele2/UTA 60.5 60.3 A1 Q3 17 Q3 18 Results for the first nine months and third quarter 2018 28

  29. Slide 29: Segment Bulgaria – Fixed-line key performance indicators

    Segment Bulgaria – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 12.8 994.4 1,005.0 1,005.1 1,014.7 1,017.6 12.5 12.1 12.2 11.8 20.4 19.9 19.3 19.5 18.8 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPL ARPL-relevant

  30. Slide 30: Segment Bulgaria – Mobile key performance indicators

    Segment Bulgaria – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 2.4 2.3 5.7 5.5 5.4 5.6 5.8 1.5 1.4 1.4 70.1 70.4 65.8 64.6 66.6 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPU Service revenues Subsidies Mobile penetration (in

  31. Slide 31: Segment Croatia – Fixed-line key performance indicators

    Segment Croatia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 30.1 30.4 30.3 30.3 668.5 29.9 659.9 654.1 655.4 658.2 27.3 26.8 26.9 26.8 26.6 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPL ARPL-relevant revenues

  32. Slide 32: Segment Croatia – Mobile key performance indicators

    Segment Croatia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 14.1 13.3 3.6 12.3 11.2 11.2 2.4 2.4 1.7 2.0 76.9 73.9 60.5 65.1 59.3 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPU Service revenues Subsidies Mobile penetration

  33. Slide 33: Segment Belarus – Fixed-line key performance indicators

    Segment Belarus – Fixed-line key performance indicators ARPL & ARPL-relevant revenues* Total RGUs* (in EUR, in EUR million) (in ‘000) 614.9 615.8 6.9 461.9 463.4 475.5 5.9 5.9 5.6 5.5 5.1 6.4 6.9 5.5 5.4 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPL ARPL-relevant revenues Fixed Br

  34. Slide 34: Segment Belarus – Mobile key performance indicators

    Segment Belarus – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 4.7 1.7 4.4 4.3 4.4 1.7 4.1 1.6 68.1 1.5 1.4 63.7 63.2 63.9 59.0 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPU Service revenues Subsidies Mobile penetration (in E

  35. Slide 35: Segment Slovenia – Fixed-line key performance indicators

    Segment Slovenia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 36.6 35.8 35.0 34.9 35.2 183.0 179.8 178.1 176.9 171.4 7.7 7.6 7.6 7.4 7.4 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPL ARPL-relevant revenues Fixe

  36. Slide 36: Segment Slovenia – Mobile key performance indicators

    Segment Slovenia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 16.0 1.8 15.7 1.7 15.2 1.6 15.0 1.5 14.4 1.3 34.3 32.6 31.8 31.8 30.2 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPU Service revenues Subsidies Mobile penetration

  37. Slide 37: Segment Serbia – Mobile key performance indicators

    Segment Serbia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 3.4 3.4 6.2 6.4 5.7 5.7 5.5 3.2 42.1 40.1 3.1 3.1 37.4 37.2 36.1 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPU Service revenues Subsidies Mobile penetration (in EU

  38. Slide 38: Segment Macedonia – Fixed-line key performance indicators

    Segment Macedonia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 12.3 367.8 12.1 355.6 348.6 11.7 11.7 340.7 11.6 322.4 5.5 5.3 5.3 5.4 5.3 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPL ARPL-relevant revenues Fix

  39. Slide 39: Segment Macedonia – Mobile key performance indicators

    Segment Macedonia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 6.8 6.7 6.5 6.3 2.9 6.1 22.2 1.6 1.7 1.7 21.6 21.3 1.2 19.9 20.1 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 ARPU Service revenues Subsidies Mobile penetration (in

  40. Slide 40: Appendix 2 – Regulatory topics

    Appendix 2 – Regulatory topics

  41. Slide 41: Glide Path of Mobile Termination Rates

    Glide Path of Mobile Termination Rates Currently no further reductions expected Jul Jan Jul Jan Jul Jan 2015 2016 2016 2017 2017 2018 Austria (EUR) 0.008049 0.008049 0.008049 0.008049 0.008049 0.008049 Bulgaria (BGN) 0.019 0.019 0.019 0.014 0.014 0.014 Croatia (HRK)* 0.063 0.063 0.063 0.063 0.047 0.

  42. Slide 42: Upcoming spectrum tenders/prolongations/assignments

    Upcoming spectrum tenders/prolongations/ assignments* Expected Comments 2019 (3400-3800 MHz) Austria 2019 (700, 1500, 2100 MHz) 3400–3800 Mhz auction in February 2018. 2020 (1500, 2300 MHz) 2018-2019 (800, 1800, 2100 MHz) An agreement between mobile operators, NRA and ministry of defense will be Bul

  43. Slide 43: EU roaming price regulation

    EU roaming price regulation RETAIL (in EURc) July 2014 30 April 2016 15 June 2017 Data (per MB) 20 domestic tariff + 5* domestic tariff Voice-calls made 19 domestic tariff + 5* domestic tariff (per minute) Voice-calls received 5 weighted average MTR 0 (per minute) SMS (per SMS) 6 domestic tariff + 2

  44. Slide 44: Appendix 3 – Personnel restructuring in Austria

    Appendix 3 – Personnel restructuring in Austria

  45. Slide 45: Full Year Overview – Restructuring charges and provision vs. FTE

    Full Year Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 FTE reduction 49.9 149.0 86.4* 69,5** 95.0 9.1 Transfer to government 44 22 52 49 6 3 Servicekom contribution -7

  46. Slide 46: Overview – Cash flow impact of restructuring

    Overview – Cash flow impact of restructuring Overview cash flow impact (in EUR million) Total cash flow impact 2013 108.0  Total cash flow impact comprises old and new 2014 107.1 programmes 2015 101.9  Cash flow impact for Q3 2018 of EUR 23.8 mn 2016 105.5 2017 102.4  Expected cash flow impact fo

  47. Slide 47: Appendix 4 – Corporate sustainability

    Appendix 4 – Corporate sustainability

  48. Slide 48: Alignment with core business and materiality analysis define sustainability strategy

    Alignment with core business and materiality analysis define sustainability strategy Results for the first nine months and third quarter 2018 48

  49. Slide 49: Key figures – Corporate Sustainability

    Key figures – Corporate Sustainability Selected group-wide KPIs Ratings Environment 2017 Total CO2 emissions (Scope 1+2 market-based in tonnes) 218,488 Classification: B- Classification: B- Energy efficiency index (in Mwh/terabyte) 0,2 Paper consumption (in kg) 1,614,058 Collected old mobile phones

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