Magyar Telekom Telecommunications Plc · BET:MTELEKOM

Magyar Telekom Telecommunications — Magyar Telekom — Q1 2016 Earnings Presentation

31 slides from Magyar Telekom Telecommunications's earnings presentation, May 2016

  1. Slide 1: Magyar Telekom Group Investor Presentation

    MAGYAR TELEKOM GROUP INVESTOR PRESENTATION MAY, 2016

  2. Slide 2: Strategy and Market Position

    STRATEGY AND MARKET POSITION

  3. Slide 3: Overview – Magyar Telekom at a Glance

    OVERVIEW – MAGYAR TELEKOM AT A GLANCE International presence Hungary Revenue (FY2015) 8% Czech Republic 5% Slovakia Austria Moldova Hungary Hungary 87% Slovenia Croatia Budapest Croatia Romania Romania EBITDA (FY2015) BiH Serbia Serbia 11% Montenegro Kosovo Bulgaria Bulgaria 6% Macedonia Macedonia A

  4. Slide 4: Market Position in Hungary

    MARKET POSITION IN HUNGARY Total mobile market* Fixed voice market** Subscribers Vodafone Subscribers Other 12,000,000 3,500,000 0.0% Telenor Invitel 10,000,000 22.8% 22.7% MT 3,000,000 5.8% 5.8% 3.1% DIGI 12.6% 12.6% 13.3% 2,500,000 UPC 8,000,000 9.7% 10.1% 11.1% 30.9% 30.5% MT 2,000,000 14.7% 15.8

  5. Slide 5: Market Leader in IT Services in Hungary

    MARKET LEADER IN IT SERVICES IN HUNGARY DUE TO WIDE RANGE OF IT SOLUTIONS BOTH IN IT PROJECTS AND IT OUTSOURCING Total Hungarian IT services market Revenue based SYSTEM INTEGRATION IT INFRASTRUCTURE SI & IT market shares* Package Custom System IT App. OS & Infra. OS & Infra. proj. Hosting Cloud (201

  6. Slide 6: Strategy Overview: Building a Growing ICT Company

    STRATEGY OVERVIEW: WITH OUR ENGAGED PEOPLE WE ARE BUILDING A GROWING ICT COMPANY SERVING SATISFIED CUSTOMERS Strategic pillars Strategic goals Main KPIs for 2016 1 We all listen to our customers Improve customer satisfaction  Cut number of complaints  Improve customer satisfaction index (TRIM) and

  7. Slide 7: Strategic Highlights: Continuation of 2015 Positive Performance

    STRATEGIC HIGHLIGHTS: CONTINUATION OF 2015 POSITIVE PERFORMANCE, BOOSTED BY ONE-OFFS  Revenue declined primarily as a result of the exit from the energy business (excl. REVENUE energy, revenues up by 1.8%)  EBITDA growth accelerated to 13.6% year-on-year due to underlying revenue EBITDA growth, bo

  8. Slide 8: Turnaround Story of Magyar Telekom

    TURNAROUND STORY OF MAGYAR TELEKOM Major financial and strategic milestones Integrated Telco Multiplay ICT provider Diversified service provider Digital service company and SI/IT operator 2007-2009 2010 2011 2012 2013 2014 2015 2016-2018 Continuous decline Change in strategy Execution of Topline rev

  9. Slide 9: Telekom as the Leading Operator and Brand in Hungary

    TELEKOM AS THE LEADEING OPERATOR AND BRAND IN HUNGARY Our vision Our mission OUR MISSION IS TO MAKE THE DIGITAL FIRST NOW FIRST FOREVER WORLD MORE UNDERSTANDABLE AND ACCESSIBLE FOR EVERYONE. WE ENABLE PEOPLE TO HAVE A MORE EFFORTLESS, COLOURFUL AND SUCCESSFUL LIFE. Brand awareness* and brand values

  10. Slide 10: Hungarian Economic Environment

    HUNGARIAN ECONOMIC ENVIRONMENT Growth strucutre Domestic demand 6%  Domestic demand improved as economy 4% 3.6 recovers 3.0 3.0 2.5 1.8 1.5  Governmental measures support consumer 2% spending 0%  Investment levels show strong volatility due to -1.5 EU fund cycles -2%  MT is expected to benefit f

  11. Slide 11: Hungarian Mobile Spectrum Situation

    HUNGARIAN MOBILE SPECTRUM SITUATION Current spectrum situation after auction in 2014 FDD (2x1 MHz) BAND Magyar Telekom 800 MHz 10 10 10 Telenor Vodafone Digi 900 MHz 2 10 1 10 2 10 1800 MHz 15 5 5 5 15 30 2100 MHz 15 15 15 2600 MHz 30 20 20 11

  12. Slide 12: Dividend and Guidance

    DIVIDEND AND GUIDANCE

  13. Slide 13: Dividend Policy

    DIVIDEND POLICY Dividend payment and net debt ratio developments Highlights Net debt ratio* Dividend per share (HUF) 50% 70  Aiming to maintain net debt ratio (net 45.7% debt/total capital) target of 30% - 40% 43.8% 42.9% 41.8% 60  AGM approved HUF 15 dividend 40% 34.1% 34.3% payment on 2015 earni

  14. Slide 14: Public Guidance: Continues Growth

    PUBLIC GUIDANCE: CONTINUES GROWTH 2015 RESULTS 2016 TARGETS 2017 TARGETS REVENUE HUF 656bn* (+4.8%) HUF 580 - 590bn HUF 585 - 595bn EBITDA HUF 187bn (+3.4%) HUF 187 - 191bn HUF 189 - 193bn CAPEX** HUF 110bn ca. 10% yoy decline ca. 10% yoy decline FCF HUF 27bn Surpassing HUF 50bn*** DIVIDEND HUF 15 p

  15. Slide 15: Financial Highlights and Targets

    FINANCIAL HIGHLIGHTS AND TARGETS Q1 2016 RESULTS vs. Q1 2015 2016 TARGETS 2017 TARGETS REVENUE HUF 145.1 (-7.6%) HUF 580 - 590bn HUF 585 - 595bn  Decline due to exit from energy business (excl. energy total revenues up by 1.8%)  Group wide mobile data growth due to 4G push offset by Hungarian MTR

  16. Slide 16: Q1 2016 Results

    Q1 2016 RESULTS

  17. Slide 17: Hungary

    HUNGARY Revenue* EBITDA HUF bn HUF bn +17.3% -8.6% 142 3.1 -14.5 42 3.9 41.3 140 137.6 -4.0 1.2 40 138 0.8 -1.0 0.8 0.4 136 1.4 134 38 0.7 0.4 132 1.0 130 36 35.2 128 125.8 34 126 0 0 1Q Mobile Mobile Mobile Fixed Fixed TV Fixed SI/IT Energy 1Q 1Q 2016 Gross Special tax Employee Other op. 1Q 2016 20

  18. Slide 18: Hungary – Mobile

    HUNGARY – MOBILE Mobile RPC Mobile ARPU (HUF) ‘000 HUF -1.7% 6,000 5,463 5,476 5,482 5,504 5,372 Prepaid 1Q 2015 3,345 5,000 Postpaid Blended -3.8% 1Q 2016 3,216 44.9% 44.2% 44.0% 43.6% 42.3% 4,000 ARPU w/o MTR 1,195 3,000 +91 Prepaid -10.8% Blended: +3.5% 1,066 Prepaid: +1.3% 2,000 Postpaid: +0.6%

  19. Slide 19: Hungary – Mobile Broadband

    HUNGARY – MOBILE BROADBAND Mobile broadband development Smartphone penetration ‘000 LTE cov. % +8.1% Non-LTE 95% 97% 97% 3,500 91% 100 LTE 100 3,000 80% 80 80 2,500 2,258 2,315 2,360 2,366 2,188 58 2,000 60 60 52 44 1,500 40 40 34 1,000 21 20 +467 20 500 33% 40% 44% 26% 30% 0 0 0 1Q 2015 2Q 2015 3Q

  20. Slide 20: Hungary – Fixed Broadband and TV

    HUNGARY – FIXED BROADBAND AND TV Fixed BB RPC Pay TV RPC ‘000 ‘000 +2.9% +5.4% 964 1,200 1,000 936 941 952 962 972 984 996 1,001 <10Mbps Sat 1,000 950 6% 32% 9% 7% 6% 10Mbps -30Mbps 800 33% 32% 32% 32% Cable 8% 800 >30Mbps IPTV 600 18% 17% 16% 15% 66% 65% 19% 600 68% 67% 68% +56 400 400 +72 49% 50%

  21. Slide 21: Hungary – Fixed Voice and Energy

    HUNGARY – FIXED VOICE AND ENERGY Fixed voice RPC Fixed voice ARPU ‘000 -1.7% HUF 1,473 1,472 1,467 1,461 1,448 1,500 PSTN 2,769 32% 27% 23% Blended -6.4% 46% 37% IP based* 2,592 1,000 +314 77% 1Q 2015 500 68% 73% 54% 63% 1Q 2016 0 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 Energy revenues Highlights HU

  22. Slide 22: Hungary – Multiplay

    HUNGARY – MULTIPLAY Fixed line multiplay residential RPC development Fixed line multiplay residential ARPU development ‘000 -1.1% 1Play HUF 1,394 1,389 1,387 1,385 1,379 2Play 5,708 1Q 2015 1,400 3Play Blended +2.8% 1Q 2016 5,871 1,200 36% 35% 35% 34% 33% 1,000 2,923 1Play +3.5% 3,025 800 29% 30% 30

  23. Slide 23: Hungary – SI/IT

    HUNGARY – SI/IT Total Hungarian IT services market development* Market share* HUF bn % +4.5% Telekom 250 230 218 IT Infrastructure 17% HP 199 208 200 184 193 NISZ services 42% 42% 43% System Integration / 8% Microsoft 150 43% 43% 43% IBM IT Application services 5% 55% 100 4% MVMI 4% Oracle 57% 57% 5

  24. Slide 24: Macedonia

    MACEDONIA Financials Mobile KPIs Revenues (HUF bn) EBITDA (HUF bn) Subscribers One (T. Slovenia)* +0.8% -3.3% -1.3% VIP (T. Austria) 2,500,000 12.8 0.3 -0.2 5.1 5.0 -0.3 One.Vip 2,000,000 24.7% 26.1% Telekom 12.7 5.0 52.1% 1,500,000 28.1% 0.0 12.6 4.9 0.1 4.9 27.9% 12.6 1,000,000 +22,932 12.5 4.8 12

  25. Slide 25: Montenegro

    MONTENEGRO Financials Mobile KPIs Revenues (HUF bn) EBITDA (HUF bn) Subscribers +1.8% -3.5% -5.8% 1,000,000 7.0 7.0 -0.1 2.5 Telenor 2.4 -0.2 800,000 27.5% 37.8% 37.0% m:tel (T. Serbia) -0.1 2.4 6.9 600,000 T-Mobile 0.1 2.3 37.5% 28.0% 29.0% -0.1 2.3 400,000 6.8 +5,467 6.7 2.2 200,000 35.1% 34.2% 34

  26. Slide 26: Appendix

    APPENDIX

  27. Slide 27: Group Segmental Revenue and EBITDA

    GROUP SEGMENTAL REVENUE AND EBITDA Group segmental revenues Group segmental EBITDA HUF bn HUF bn +13.6% 160 -7.6% 49 6.1 -0.2 -0.1 0.0 48.2 158 157.0 -11.8 48 156 47 154 One-offs: 46 152 +5.1 bn HUF 150 45 148 44 146 0.1 -0.2 0.0 145.1 43 42.5 144 42 0 0 1Q 2015 Hungary Macedonia Montenegro Eliminat

  28. Slide 28: Magyar Telekom – Consolidated Income Statement

    MAGYAR TELEKOM – CONSOLIDATED INCOME STATEMENT HUF million Q1 2015 Q1 2016 Change Mobile revenues 76 938 75 294 -2,1% Fixed line revenues 50 649 51 816 2,3% System Integration/Information Technology revenues 12 581 15 628 24,2% Revenue from energy services 16 789 2 313 -86,2% Revenues 156 957 145 05

  29. Slide 29: Magyar Telekom – Consolidated Balance Sheet

    MAGYAR TELEKOM – CONSOLIDATED BALANCE SHEET HUF million Mar 31, 2015 Mar 31, 2016 Change Current assets 197 487 197 391 0,0% Cash and cash equivalents 13 333 12 191 -8,6% Other current financial assets 19 154 15 438 -19,4% Non current assets 971 503 974 590 0,3% Property, plant and equipment - net 4

  30. Slide 30: Magyar Telekom – Consolidated Cash Flow Statement

    MAGYAR TELEKOM – CONSOLIDATED CASH FLOW STATEMENT HUF million Mar 31, 2015 Mar 31, 2016 Change Net cash generated from operating activities 25 240 26 242 4,0% Investments in tangible and intangible assets (12 179) (11 619) 4,6% Adjustments to cash purchases (10 734) (15 274) 42,3% Purchase of subsid

  31. Slide 31: For further questions please contact the IR department

    For further questions please contact the IR department: Investor Relations Márton Lennert Gerda Gáti Phone: +36 1 458-0424 Head of Investor Relations Investor Relations Manager Fax : +36 1 458-0443 Phone: +36 1 457-6084 Phone: +36 1 457-6036 e-mail: investor.relations@telekom.hu e-mail: lennert.mart

Magyar Telekom — Q1 2016 Earnings Presentation on 6ix