Telekom Austria Ag · VIE:TKA

Telekom Austria — A1 Telekom Austria Group — FY2019 Earnings Presentation

56 slides from Telekom Austria's earnings presentation, Feb 11, 2020

  1. Slide 1: Results for the fourth quarter and full year 2019

    Results for the fourth quarter and full year 2019 February 11, 2020, 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: Operational and financial highlights for the full year 2019

    Operational and financial highlights for the full year 2019

  4. Slide 4: Highlights FY 2019

    Highlights FY 2019  Group total revenue growth of 2.9% and EBITDA excl. restructuring growth of 4.7% (reported: +0.8%) primarily driven by CEE  Mobile contract customer base increase of 4.4% y-o-y with growth in all markets except for Bulgaria (inactive SIM cards cleaning)  RGUs decrease of 1.0%

  5. Slide 5: FY 2019 – Service revenue growth translated into strong operational EBITDA increase

    FY 2019 – Service revenue growth translated into strong operational EBITDA increase IFRS 16 IFRS 16 based Group (in EUR million) 2019 2018 % change Total revenues 4,565.2 4,435.4 2.9% Service revenues 3,805.5 3,680.8 3.4% EBITDA excl. restructuring* 1,644.7 1,571.0 4.7% Net Result 327.4 243.7 34.4%

  6. Slide 6: FY 2019 – EBITDA benefits from growth in mobile service revenues and solutions & connectivity

    FY 2019 – EBITDA benefits from growth in mobile service revenues and solutions & connectivity with costs under control Equipment Service revenues OOI OPEX Non-operating effects margin 1,644.7 1,571.0 EUR mn EBITDA 2018 Mobile Fixed Solutions OOI Subsidies Handset Opex Opex One-offs FX Regulation EBI

  7. Slide 7: FY 2019: Ongoing cost efficiency initiatives mostly offset core opex increases

    FY 2019: Ongoing cost efficiency initiatives mostly offset core opex* increases Core OPEX* development 2019 Savings initiatives 2020  Successful ‘Sourcing 4 Success’ program will continue and targets especially:  Maintenance  Energy  Content  Focus on demand reduction as well as process efficie

  8. Slide 8: Operational and financial highlights for the fourth quarter 2019

    Operational and financial highlights for the fourth quarter 2019

  9. Slide 9: Solid trends of the last quarters continued in Q4

    Solid trends of the last quarters continued in Q4 and resulted again in operational EBITDA growth in all markets IFRS 16 IFRS 16 based Group (in EUR million) Q4 2019 Q4 2018 % change Total revenues 1,200.4 1,153.2 4.1% Service revenues 962.7 929.6 3.6% EBITDA excl. restructuring* 376.5 347.9 8.2% CA

  10. Slide 10: Growth mostly driven by CEE markets in Q4 2019

    Growth mostly driven by CEE markets in Q4 2019 Total revenues Service Revenues EBITDA excl. restructuring (in EUR mn) (in EUR mn) (in EUR mn) 40.6 1,200.4 962.7 31.2 1,153.2 1.4 929.6 -2.0 25.4 376.5 +4.1% 0.7 347.9 +3.6% +8.2% Revenues Austria International Revenues Service Austria International Se

  11. Slide 11: Austria: Slightly higher operational EBITDA due to operational efficiency

    Austria: Slightly higher operational EBITDA due to operational efficiency outweighing a lower equipment margin ARPU ARPL Operational data (in EUR) (in EUR)  +1.8% contract subscribers which continued to be driven by solid demand Δ: +1.5% for mobile WiFi routers and high-value tariffs Δ: +3.9% 31.6

  12. Slide 12: CEE: Strong service revenue growth in mobile and fixed-line businesses

    CEE: Strong service revenue growth in mobile and fixed-line businesses led again to EBITDA growth in all CEE markets Highlights CEE EBITDA (in EUR mn; Q4 %-change vs. PY) Bulgaria:  Ongoing strong service revenue growth (+9.2%):  Fixed-line driven by strong performance in the business segment as Δ

  13. Slide 13: FY 2019: Higher free cash flow excluding frequencies paid

    FY 2019: Higher free cash flow excluding frequencies paid driven by better operational development (in EUR million) Q4 2019 Q4 2018 % change FY 2019 FY 2018 % change Net cash flow from operating activities 361.3 349.4 3.4% 1,458.0 1,390.6 4.8% Capital expenditures paid -202.0 -212.9 -5.1% -873.9 -77

  14. Slide 14: Focus Points

    Telekom Austria

  15. Slide 15: A1 has launched the biggest 5G network in Austria

    A1 has launched the biggest 5G network in Austria; further 5G rollout together with ongoing fiber expansion to build 5Giganet A1 5Giganet: Best combination of largest fiber network & fastest 5G technology 5G rollout Fiber rollout  Focus of rollout in rural and urban areas in 2020  Leverage the bes

  16. Slide 16: 5Giga portfolio in Austria

    5Giga portfolio in Austria: Best quality of service for mobile products and guaranteed bandwidth in fiber network A1 5GigaMobil A1 Mobil A1 5GigaMobil & A1 5GigaCube 1  5Giga Priority: 12 quality of service classes L € 9990 (300 Mbps, ∞) L € 5990 (100 Mbps, 30 GB) leading to strong differentiation

  17. Slide 17: Belarus: Increasing competitive edge after expanding LTE capacity

    Belarus: Increasing competitive edge after expanding LTE capacity and through targeted market activities Expanding LTE capacity Data monetization and X-Mas marketing  LTE cooperation with beCloud started in  Promotion of 3-months free unlimited Q1 2019 data add-ons resulted in up to 85% conversion

  18. Slide 18: Outlook for the full year 2020

    Outlook for the full year 2020

  19. Slide 19: A1 Telekom Austria Group outlook for the full year 2020

    A1 Telekom Austria Group outlook for the full year 2020 February 11, 2020 Consensus 2020 Total revenues +1-2% +1.6% CAPEX ~ EUR 770 mn EUR 770 mn* Proposed dividend EUR 0.23 / share - *CAPEX consensus excl. spectrum  Outlook based on reported figures; assumed devaluation of 5% avg. BYN vs. EUR FX r

  20. Slide 20: Appendix 1

    Appendix 1 All figures are stated according to IFRS 16 on a reported basis

  21. Slide 21: The leading regional communications player providing convergent telecommunication services

    The leading regional communications player providing convergent telecommunication services as of December 31, 2019 (in ‘000) Austria Bulgaria Croatia Mobile market position #1 Mobile market position: #1 Mobile market position #2 Mobile subscribers: Mobile subscribers: Mobile subscribers:  5,115 (Q4

  22. Slide 22: A1 Telekom Austria Group – Profit and Loss

    A1 Telekom Austria Group – Profit and Loss (in EUR million) Q4 2019 Q4 2018 % change Service Revenues 962.7 929.6 3.6% Equipment Revenues 212.9 202.1 5.3% Other operating income 24.8 21.5 15.4% Total Revenues 1,200.4 1,153.2 4.1% Cost of Service -336.3 -335.0 -0.4% Cost of Equipment -213.1 -196.8 -8

  23. Slide 23: 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) Q4 2019 Q4 2018 % change Austria 685.2 683.8 0.2% Bulgaria 137.7 118.0 16.7% Croatia 109.3 109.6 -0.3% Belarus 114.0 100.3 13.7% Slovenia 54.2 56.

  24. Slide 24: A1 Telekom Austria Group – workforce development

    A1 Telekom Austria Group – workforce development FTE (Average Period) Q4 2019 Q4 2018 % change Austria 7,695 8,062 -4.5% International 10,345 10,329 0.2% Corporate 374 375 -0.2% A1 Telekom Austria Group 18,414 18,765 -1.9% FTE (End of Period) Q4 2019 Q4 2018 % change Austria 7,625 8,010 -4.8% Intern

  25. Slide 25: A1 Telekom Austria Group – Capital expenditure split

    A1 Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q4 2019 Q4 2018 % change Austria 117.0 135.0 -13.3% Bulgaria 31.4 35.6 -11.9% Croatia 25.2 31.7 -20.3% Belarus 69.5 23.0 202.8% Slovenia 12.7 16.4 -22.5% Serbia 15.8 16.1 -1.9% North Macedonia 7.7 9.8 -21.5% C

  26. Slide 26: A1 Telekom Austria Group – Net debt

    A1 Telekom Austria Group – Net debt as of December 31, 2019 Net Debt (excl. Leases) (in EUR million) 31 December 2019 31 December 2018 % change Long-term Debt 2,539.6 2,536.5 0.1% Short-term Borrowings 123.0 245.3 -49.8% Cash and Cash Equivalents and Short-term Investments -140.3 -63.6 -120.5% Net D

  27. Slide 27: Financial debt maturity profile

    A1 Telekom Austria Group – Financial debt maturity profile as of December 31, 2019 748.0 747.4 745.1 299.1 123.0 0.0 0.0 2020 2021 2022 2023 2024 2025 2026  EUR 2,662.6 mn short- and long-term borrowings as of December 31, 2019  Average cost of debt of 2.8%  Cash and cash equivalents and short-te

  28. Slide 28: A1 Telekom Austria Group – Debt profile

    A1 Telekom Austria Group – Debt profile as of December 31, 2019 Overview debt instruments Fixed/floating mix 5% 5% 95% 95% Bonds Loans Fixed Floating Lines of credit Ratings  Undrawn committed credit lines  S&P: BBB+ (stable outlook) amounting to EUR 1,165 mn  Moody’s: Baa1 (stable outlook)  Ave

  29. Slide 29: 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) 31.1 31.2 31.2 31.1 31.6 3,327.7 3,303.3 3,283.7 3,260.3 3,247.0 192.1 190.6 189.0 187.2 186.4 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPL ARPL-rel

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

    Segment Austria – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 1.8 14.5 15.2 14.8 14.2 14.4 1.6 1.5 1.5 237.3 1.4 230.9 229.9 228.1 226.8 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPU Service revenues Subsidies (incl. promoti

  31. Slide 31: 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 %) 2.8 2.3 4.6 5.6 36.6 37.3 Mobile Broadband Other Operators 25.5 26.0 17.3 19.1 Unbundled Lines 23.1 23.4 3.0 3.1 Cable 34.9 35.2 4.0 2.7 16.5 1

  32. Slide 32: 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) 13.4 13.5 1,029.0 1,028.7 1,040.5 1,043.5 1,060.0 12.8 12.9 13.2 21.7 21.9 20.8 21.1 20.6 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPL ARPL-relevan

  33. Slide 33: 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 2.2 5.6 5.9 5.7 2.0 5.2 5.4 1.4 1.4 68.6 65.7 61.8 61.8 64.5 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPU Service revenues Subsidies (incl. promotional deal

  34. Slide 34: 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) 32.0 703.6 681.8 694.9 687.9 685.8 30.4 30.5 30.8 30.0 27.0 27.2 26.9 27.3 27.8 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPL ARPL-relevant revenues

  35. Slide 35: Segment Croatia – Mobile key performance indicators

    Segment Croatia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 12.0 3.2 2.9 3.0 10.9 10.4 2.1 10.1 9.9 1.8 68.3 56.6 59.8 58.3 53.8 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPU Service revenues Subsidies (incl. promotional d

  36. Slide 36: 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) 6 5 7 .3 6 4 0 .2 6 2 4 .4 6 1 8 .7 6 1 6 .9 6 .5 6 .6 5 .6 5 .9 5 .4 7 .0 7 .1 7 .4 7 .8 7 .7 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPL ARPL-rel

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

    Segment Belarus – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 5.0 4.9 4.6 1.7 4.2 4.2 72.5 71.4 1.5 1.4 1.4 67.6 1.4 60.9 61.0 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPU Service revenues Subsidies (incl. promotional deals

  38. Slide 38: 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) 36.4 200.1 34.8 35.3 34.9 193.9 34.2 190.4 186.6 182.1 8.2 8.2 8.2 8.3 7.6 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPL ARPL-relevant revenues Fixe

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

    Segment Slovenia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 14.9 14.4 14.4 1.3 14.0 13.8 1.3 1.3 1.3 31.2 1.2 30.1 29.4 30.2 29.3 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPU Service revenues Subsidies Mobile penetration

  40. Slide 40: Segment Serbia – Mobile key performance indicators

    Segment Serbia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 7.2 7.5 7.3 3.5 6.5 6.8 3.2 3.0 51.9 2.7 2.7 51.0 48.7 44.6 43.1 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPU Service revenues Subsidies (incl. promotional deals)

  41. Slide 41: Segment North Macedonia – Fixed-line key performance indicators

    Segment North Macedonia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues* Total RGUs* (in EUR, in EUR million) (in ‘000) 324.9 327.9 329.3 330.4 333.6 11.0 10.9 10.8 10.9 10.7 4.9 4.9 4.9 4.9 5.0 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPL ARPL-relevant reve

  42. Slide 42: Segment North Macedonia – Mobile key performance indicators

    Segment North Macedonia – Mobile key performance indicators ARPU & Service revenues* Churn rate* (in EUR, in EUR million) (in %) 2.8 6.0 2.5 5.9 5.6 1.4 1.5 5.3 5.3 1.3 19.4 19.6 18.7 17.3 17.2 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 ARPU Service revenues Subsidies (incl. promoti

  43. Slide 43: Appendix 2 – Adoption of IFRS 16

    Appendix 2 – Adoption of IFRS 16

  44. Slide 44: Adoption of IFRS 16 – impact on the balance sheet

    Adoption of IFRS 16 – impact on the balance sheet IAS 17 IFRS 16 Operating Finance Lease All leases Lease Assets  Discounted future payments of all lease contracts are capitalized resulting in RoU assets of EUR 1,011 mn and lease liabilities of EUR 1,003 mn Liabilities  Optional exceptions for low

  45. Slide 45: Adoption of IFRS 16 – impact on the income statement

    Adoption of IFRS 16 – impact on the income statement IAS 17 IFRS 16 Operating Finance Lease All Leases Lease Revenues  Elimination of operating lease expense Lease (OPEX) and booking as depreciation and OPEX Expenses interest expenses under IFRS 16 EBITDA  IFRS 16 impact on earnings ratios FY Depr

  46. Slide 46: Adoption of IFRS 16 – impact on net debt

    Adoption of IFRS 16 – impact on net debt Dec 31, Dec 31, Dec 31, Dec 31, 2018 2019 2018 2019 pre IFRS 16 pre IFRS 16 IFRS 16 IFRS 16 in EUR mn based Gross debt 2,782.0 2,662.6 3,784.4 3,603.4 - Cash & cash equivalents -63.6 -140.3 -63.6 -140.3  Significant increase in financial Net debt 2,718.4 2,5

  47. Slide 47: Appendix 3 – Regulatory topics

    Appendix 3 – Regulatory topics

  48. Slide 48: Glide Path of Mobile Termination Rates

    Glide Path of Mobile Termination Rates No further reductions expected in 2019 Jul Jan Jul Jan Jul Jan Mar**** 2015 2016 2016 2017 2017 2018 2019 Austria (EUR) 0.008049 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 0.014 Croatia (HRK)* 0.063

  49. Slide 49: Upcoming spectrum tenders/prolongations/assignments

    Upcoming spectrum tenders/prolongations/ assignments* Expected Comments 2020 (700, 1500, 2100 MHz) Austria 700/1500/2100 MHz auction planned for spring 2020 2020 (2300 MHz) 2020 (2100, 2600, 3400-3800 MHz) Bulgaria 2021 (800 MHz) Croatia 2020 (700, 3500 MHz) 2020 (3500 MHz) Belarus 2021/22 (700 MHz)

  50. Slide 50: EU roaming price regulation

    EU roaming price regulation RETAIL (in EURc) July 2014 April 30, 2016 June 15, 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 +

  51. Slide 51: Appendix 4 – Personnel restructuring in Austria

    Appendix 4 – Personnel restructuring in Austria

  52. Slide 52: Quarterly Overview – Restructuring charges and provision vs. FTE

    Quarterly Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) Q1 19 Q2 19 Q3 19 Q4 19 Q1 19 Q2 19 Q3 19 Q4 19 FTE reduction 19.6 21.0 29.2 30.2 Transfer to government 0 0 0 0 Servicekom contribution 0.5 -3.0 -10.8 -6.1 Social plans 66

  53. Slide 53: 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) 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 149.0 86.4 69.5 95.0 9.1 70.1 100.2 Transfer to government 22 52 49 6 3 0 0 FTE reduction Servicekom c

  54. Slide 54: Overview – Cash flow impact of restructuring

    Overview – Cash flow impact of restructuring Restructuring cash flow impact Restructuring outlook 2020f Cash flow impact (in EUR million)  Restructuring charges of ~EUR 80 mn p.a. 2013 108.0 expected for the next few years addressing 2014 107.1 2015 101.9 civil servants 2016 105.5  Target: decreas

  55. Slide 55: Appendix 5 – Corporate sustainability

    Appendix 5 – Corporate sustainability

  56. Slide 56: Key figures – Corporate Sustainability

    Key figures – Corporate Sustainability Selected group-wide KPIs Ratings Environment 2019 Total CO2 emissions (Scope 1+2 market-based in tonnes) 215.981 Energy efficiency index (in Mwh/terabyte) 0,17 Paper consumption (in kg) 1.273.562 Collected old mobile phones (in pcs) 64.504 Employees 2019 Share

A1 Telekom Austria Group — FY2019 Earnings Presentation on 6ix