Magyar Telekom Telecommunications Plc · BET:MTELEKOM

Magyar Telekom Telecommunications — Magyar Telekom — Q3 2011 Earnings Presentation

27 slides from Magyar Telekom Telecommunications's earnings presentation, November 2011

  1. Slide 1: Roadshow presentation – Magyar Telekom Group – November 2011

    Roadshow presentation M Magyar Telekom T l k Group G – November N b 2011 Signs of revenue pressures easing with growth in underlying y g EBITDA margin; g guidance g for full-year y confirmed 1

  2. Slide 2: Strategy, Outlook and Guidance

    Strategy, Outlook and Guidance 2

  3. Slide 3: Overview – Magyar Telekom Group at a glance

    Overview – Magyar Telekom Group at a glance International presence Overview Integrated operations in Hungary, Macedonia and Montenegro „ leading telecommunications service provider in all three Moldova countries Hungary Slovenia Croatia Croatia Romania „ leading SI/IT service provider in Hungary BiH

  4. Slide 4: Market trends

    Market trends Revenue based market shares in Hungary in 2010 (HUF bn) Magyar Telekom’s market share development (%) 333 35 116 95 108 31 100 90 23% 38% 80 48% 51% 54% 70 69% 29% 60 18% 50 1% 21% 4% 17% 40 23% 13% 26% 1% 30 7% 1% 20 31% 26% 17% 28% 31% 20% 10 5% 0 Mobile voice Mobile BB Fixed voice F

  5. Slide 5: Change in revenue trends

    Change in revenue trends Hungarian ICT market development (HUF bn) Change in Magyar Telekom’s Hungarian revenue mix +1 4% +1,4% 1.391 100% 1.342 1.280 1.295 1.299 1.263 1.209 1.215 1.209 1.229 1.206 New New New 80% revenue revenue revenue IT sources sources sources ca 30% ca.30% ca 40% ca.40% ca 50%

  6. Slide 6: Continued efficiency improvements in core operations

    Continued efficiency improvements in core operations Cost saving Stable underlying margin and CAPEX spending HUF billion -5% 150 60 % 131 121 126 116 116 50 % 106 105 40,7 % 40,8 % 40,7 % ca. 40% 100 40 % 30 % 50 20 % 16,0 % 15,8 % 15,1 % ca. 15% Total workforce 10 % Und. EBITDA margin Net other ope

  7. Slide 7: Free cash flow generation and dividend policy

    Free cash flow generation and dividend policy Free cash flow* generation Dividend payment HUF million Net debt ratio* DPS (HUF) 90 000 82 043 14 504 50% 74 74 80 80 000 122 30 301 2 473 77 495 70 70 000 27 746 40 % 22 928 60 32.7 % 31.9 % Target 60 000 30.8 % 30 % 50 50 50 000 40 40 000 20 % 30 30 0

  8. Slide 8: Results and Hungarian macro-economy trends 2009-2011

    Results and Hungarian macro-economy trends 2009-2011 Growth structure and wages Contribution to GDP growth (%) 10 5 Macro effects 0 Economic recovery still doubtful -5 and hurts MT results - 10 „ MT results are most - 15 sensitive to Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 developments in internal 2009 201

  9. Slide 9: Public targets for 2011

    Public targets for 2011 2011 Public targets 2011 9M Results Revenue Revenue 3 5% decline 3-5% -3.2% 3 2% „ intense competition, slow recovery of „ intense competition, unfavorable economy economic environment and regulatory „ further decrease in governmental revenues impacts „ growth in TV, mobile B

  10. Slide 10: Q3 2011 Results

    Q3 2011 Results 10

  11. Slide 11: Q3 highlights

    Q3 highlights ƒ deteriorating economic indicators, GDP forecast downgraded to ca. 1% Revenues down byy 1.7% , ƒ fixed fi d voice i churn h slowed l d ddown improvement compared to last ƒ higher SI/IT revenues thanks to some infrastructure projects at KFKI quarters ƒ increasing TV and mobile internet

  12. Slide 12: Q3 2011 Group results

    Q3 2011 Group results Group revenues Group EBITDA 156 000 154 768 4 224 72 000 Special Influence Underlying performance 154 000 67 436 6 320 2 479 152 120 152 000 64 000 4 098 5 473 2 071 150 000 791 5 085 148 000 708 375 56 000 146 000 829 251 51 638 4 000 0 Q3 F. F voice i M.M voice i F.F data d t

  13. Slide 13: Telekom Hungary – fixed revenue decline slowing down

    Telekom Hungary – fixed revenue decline slowing down Fixed line revenues Mobile revenues HUF million -3% HUF million -2% 50 000 47 137 45 521 70 000 61 970 60 737 9 830 60 000 8 373 40 000 10 695 8 364 6 601 50 000 10 940 7 189 11 504 30 000 40 000 10 204 10 001 30 000 20 000 Other TV 20 000 42 657

  14. Slide 14: Hungary – Fixed voice: improvement in churn

    Hungary – Fixed voice: improvement in churn Telekom Hungary fixed voice subscribers Subscribers Hungary fixed voice churn -6% 2000 000 1 727 268 1 617 679 1500 000 Fixed voice ƒ significantly lower fixed voice churn 1000 000 thanks to the retention effect of: ƒ Hoppá package: flat fee package VoCa 5

  15. Slide 15: Hungary – Fixed broadband: stable market position

    Hungary -- Fixed broadband: stable market position Fixed broadband market developments in Hungary T-Home retail fixed BB market share 36.4% 36.6% Subscribers +10% Fixed broadband 800 000 724 331 657 201 ƒ market growth driven by cable and fiber, 600 000 while ADSL market growth has slowed down 400 0

  16. Slide 16: Hungary – TV market: significant growth achieved

    Hungary -- TV market: significant growth achieved TV market growth in Hungary T-Home market share Subscribers +6% 3500 000 TV customer growth 3 157 000 2 981 000 3000 000 2500 000 28.8% 26.6% ƒ significant migration from cable to IPTV driven by EuroDocsis 3-enabled cable 2000 000 23.3% 21.5% network

  17. Slide 17: Hungary – Mobile voice: stable market share

    Hungary -- Mobile voice: stable market share Mobile voice market shares (based on total SIM cards) -1% Subscribers 11 832 566 11 668 700 12000 000 22.1% 22.8% Mobile voice 10000 000 8000 000 34.4% 32.4% ƒ population-based penetration at 117% 6000 000 ƒ stable market share, slight growth in 4000 000

  18. Slide 18: Hungary – Mobile broadband: major growth driver

    Hungary -- Mobile broadband: major growth driver Mobile broadband market developments (based on total SIM cards) +53% Mobile broadband Subscribers 1800 000 1 792 361 ƒ 300 HSPA+ base stations offering 21 Mbps, 1600 000 24.8% full coverage by 2013 1400 000 1 174 976 ƒ significantly increasing smartph

  19. Slide 19: T-Systems Hungary – Revenue growth of 16% in Q3

    T-Systems Hungary – Revenue growth of 16% in Q3 Revenues T-Systems HUF million +16% Falling voice and data revenues 35 000 30 776 „ lower usage and high fixed churn, churn 30 000 26 518 principally caused by mobile substitution 25 000 48.6% „ continued pressure on mobile tariff levels 20 000 42.9% „

  20. Slide 20: Macedonia – Financial performance

    Macedonia – Financial performance Revenues Macedonia HUF million 25 000 -12% HUFstrengthened by 3.9% Q3-o-Q3 against MKD 20 793 Declining fixed line revenues 20 000 10.7% 18 221 11.9% „ decreasing fixed retail voice revenues due 15 000 45.3% to cable competition and strong mobile 42.8% substitution

  21. Slide 21: Montenegro – Financial performance

    Montenegro – Financial performance Revenues Montenegro HUF million -5% 10 000 9 556 HUFstrengthened by 3.9% Q3-o-Q3 against EUR 9 109 6.4% 9.3% Fixed voice revenues under pressure 8 000 „ deterioration in retail voice revenues driven 42.9% 6 000 40.6% by strong mobile substitution „ growing internet

  22. Slide 22: Financials

    Financials 22

  23. Slide 23: Magyar Telekom - Consolidated Income Statement

    Magyar Telekom - Consolidated Income Statement HUF million Q3, 2010 Q3, 2011 Change Fixed line revenues 62 157 59 167 -4.8% Mobile revenues 81 651 79 922 -2.1% System Integration/Information Technology revenues 10 960 13 031 18.9% R Revenues 154 768 152 120 -1.7% 1 7% Direct costs (39 084) (41 521)

  24. Slide 24: Magyar Telekom - Consolidated Balance Sheet

    Magyar Telekom - Consolidated Balance Sheet HUF million Dec 31, 2010 Sep 30, 2011 Change Current assets 200 574 196 151 -2.2% C and cash equivalents Cash 15 841 8 15 087 08 -4.8% 8% Other current financial assets 56 560 49 650 -12.2% Non current assets 908 432 891 404 -1.9% Propert plant and eq Prop

  25. Slide 25: Magyar Telekom - Consolidated Cashflow Statement

    Magyar Telekom - Consolidated Cashflow Statement HUF million Sep 30, 2010 Sep 30, 2011 Change Net cash generated from operating activities 148 185 134 233 -9.4% Investments in tangible and intangible assets (54 303) (43 875) -19.2% Adjustments to cash purchases (4 177) (6 705) 60.5% Purchase of subs

  26. Slide 26: Investigations into certain consultancy contracts

    Investigations into certain consultancy contracts As previously disclosed, the Company’s Audit Committee conducted an internal investigation regarding certain contracts relating to the activities of the Company and/or its affiliates in Montenegro and Macedonia that totaled more than EUR 31 million.

  27. Slide 27: For further questions please contact the IR department

    For further questions please contact the IR department: Investor Relations Phone: +36 1 458-0423 Fax: +36 1 458-0443 e-mail: investor.relations@telekom.hu Abbreviations: 3G: third generation, ARPU: average revenue per user, BB: broadband, CBC: call-by-call, CPS: carrier pre-selection, HQ: headquarte

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