Telekom Austria Ag · VIE:TKA

Telekom Austria — A1 Telekom Austria Group — Q1 2018 Earnings Presentation

48 slides from Telekom Austria's earnings presentation, Apr 24, 2018

  1. Slide 1: Results for the first quarter 2018

    Results for the first quarter 2018 24th April 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 quarter 2018

    Key financial developments for the first quarter 2018

  4. Slide 4: Q1 2018: Solid operational trends translate into sound adjusted EBITDA growth

    Q1 2018: Solid operational trends translate into sound adjusted EBITDA growth Reported Proforma Group (in EUR million) Q1 2018 Q1 2017 % change Total revenues 1,075.9 1,062.9 1.2% EBITDA 341.5 340.9 0.2% CAPEX 145.3 180.0 -19.3%  Group total revenues and EBITDA increased by 1.2% and 0.2% respective

  5. Slide 5: Austria: Ongoing strong fixed-line performance and higher mobile service revenues despite roaming

    Austria: Ongoing strong fixed-line performance and higher mobile service revenues despite roaming ARPU ARPL Operational data (in EUR) (in EUR)  Decline in subscriber base still driven by prepaid; postpaid grew due to Δ: +2.7% Δ: +7.6% high demand for mobile WiFi routers and high-value tariffs 30.4

  6. Slide 6: Continuing solid service revenue and EBITDA trends in most CEE countries, results in Belarus

    Continuing solid service revenue and EBITDA trends in most CEE countries, results in Belarus impacted by FX development EBITDA Highlights CEE (proforma, in EUR mn) Bulgaria: EUR 31.2 mn EUR 25.7 mn EUR 38.9 mn  Strong fixed-line performance drove again service revenues Δ: +3.0 mn Δ: +3.5 mn* Δ: -7.

  7. Slide 7: Strong FCF generation driven by less interest and CAPEX paid

    Strong FCF generation driven by less interest and CAPEX paid; positive impact from operational improvement (in EUR million) Q1 2018 Q1 2017 % change Net cash flow from operating activities 269.3 261.9 2.8% Capital expenditures paid -187.7 -208.9 -10.1% Proceeds from sale of plant, property and equip

  8. Slide 8: Focus Points

    Telekom hy 4 Austria E Group ‘Bue AQuy Focus Poit ‘ Ay oa BS , « {Bree # 3 a abe \ r . et gi A s ~

  9. Slide 9: Austria: Increase customer satisfaction with connect PLUS and relaunched A1 app

    Austria: Increase customer satisfaction and strengthen convergent position with ‘connect PLUS’ and relaunched A1 app connect PLUS  New platform for convergent products with the intention to provide an increasing range of services  Exploit ARPU uplift potential  Stimulation of customer engagement

  10. Slide 10: Serbia: Successful re-positioning with new tariffs and mobile Wifi-routers

    Serbia: Successful re-positioning with new tariffs and a sales-push of mobile Wifi-routers  Attractive new NEO tariff scheme as of June 2017: Gross adds mobile residential contract unlimited minutes & SMS, including 2 to 10 GB data. & contract share  NEO provided a strong increase in gross adds in

  11. Slide 11: Slovenia still faces tough competition with ongoing repricing and heavy cost burdens

    Slovenia still faces tough competition with ongoing repricing and heavy cost burdens due to roaming and content Challenges  Ongoing repricing - aggressive full Measures convergent players and MVNO threatening the still high ARPU level  Cost control  Rising content costs and roaming losses led to

  12. Slide 12: Target-group-specific content and tailor-made portfolio

    Target-group-specific content and a tailor-made portfolio allows for selected and OPEX/CAPEX-efficient investments Sports  Bulgaria: Mtel Sport 1, Mtel Sport 2, Edge Sport, based on exclusive (Tennis, UFC – Ultimate Fighting Championship) and non-exclusive content, as well as on extreme sports  Cr

  13. Slide 13: Mobile WiFi router addresses different market environments

    Mobile WiFi router addresses different market environments and complements broadband product offers Austria Slovenia Address market situation Complement fixed-line coverage and meet strong customer demand for and reduce wholesale costs via providing mobile broadband solutions own infrastructure ~176

  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 24 April 2018 Consensus 2018 Total revenues +1-2% EUR 4,419 mn CAPEX ~ EUR 750 mn EUR 758 mn Proposed dividend EUR 0.20 / share -  Outlook based on reported figures; assumed devaluation of BYN vs. EUR: ~10%  CAPEX: does not include

  16. Slide 16: Appendix 1

    > Telekom & 4 Austria z Group Ze Appendix 13

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

    The leading regional communications player providing convergent telecommunication services as of 31 March 2018 (in ‘000) Austria Bulgaria Croatia Mobile market position #1 Mobile market position: #1 Mobile market position #2 Mobile subscriber: Mobile subscriber: Mobile subscriber:  5,307 (Q1 2017:

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

    A1 Telekom Austria Group – Profit and Loss (in EUR million) Q1 2018 Q1 2017 % change Service Revenues 952.2 956.1 -0.4% Equipment Revenues 123.7 102.8 20.3% Other operating income 20.9 23.4 -10.7% Total Revenues 1,075.9 1,058.9 1.6% Cost of Service -340.9 -341.1 0.1% Cost of Equipment -140.6 -127.7

  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) Q1 2018 Q1 2017 % change Austria 654.6 643.3 1.8% Bulgaria 107.0 103.5 3.4% Croatia 103.1 98.4 4.8% Belarus 88.3 92.9 -4.9% Slovenia 49.3 52.9 -6.

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

    A1 Telekom Austria Group – Headcount development FTE (Average Period) Q1 2018 Q1 2017 % change Austria 8,241 8,314 -0.9% International 10,263 9,811 4.6% Corporate 348 242 43.7% A1 Telekom Austria Group 18,852 18,367 2.6% FTE (End of Period) Q1 2018 Q1 2017 % change Austria 8,239 8,322 -1.0% Internat

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

    A1 Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q1 2018 Q1 2017 % change Austria 102.2 118.5 -13.7% Bulgaria 11.1 14.7 -24.7% Croatia 13.8 17.0 -19.0% Belarus 7.3 4.1 80.6% Slovenia 3.1 21.7 -85.6% Republic of Serbia 5.6 6.5 -13.4% Republic of Macedonia 2.4

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

    A1 Telekom Austria Group – Net debt per 31 March 2018 Net Debt (in EUR million) 31 March 2018 31 December 2017 % change Long-term Debt 2,534.4 2,533.6 0.0% Short-term Borrowings 404.0 0.6 n.m. Cash and Cash Equivalents and Short-term Investments -56.8 -202.4 71.9% Net Debt of A1 Telekom Austria Grou

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

    A1 Telekom Austria Group – Debt maturity profile as of 31 March 2018 746.3 745.4 743.8 298.7 240.1 163.9 0.1 0.0 0.0 2018 2019 2020 2021 2022 2023 2024 2025 2026  EUR 2,938.3 mn short-and long-term borrowings as of 31 March 2018  Average cost of debt of approximately 2.54%  Cash and cash equivale

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

    A1 Telekom Austria Group – Debt profile as of 31 March 2018 Overview debt instruments Fixed/floating mix 14% 14% 86% 86% 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: Baa2 (positive outlook)  Av

  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 29.5 28.2 28.5 3,476.8 3,435.1 3,396.6 3,390.4 3,378.7 194.0 192.2 189.1 185.7 185.9 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 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 15.8 16.2 15.9 16.3 1.8 1.8 1.7 1.7 1.7 252.7 255.6 254.6 249.7 248.1 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 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 %) 1.2 2.5 3.8 4.4 34.2 35.2 Mobile Broadband Other Operators 21.2 23.6 15.9 16.8 Unbundled Lines 3.7 3.5 22.4 22.7 Cable 39.6 4.3 4.1 16.2 16.6 36

  28. Slide 28: Segment Austria – Voice market split

    Segment Austria – Voice market split Market share voice RGUs (in %) 13.0 13.9 3.2 3.2 23.7 23.4 Others UPC Tele2/UTA 60.1 59.5 A1 Q1 17 Q1 18 Results for the first 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) 12.2 1,006.8 1,002.0 994.4 1,005.0 1,005.1 12.1 11.8 11.4 19.5 19.3 11.0 18.8 18.3 17.8 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 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 2.1 2.0 5.3 5.4 5.7 5.5 5.4 1.5 70.1 64.8 66.4 65.8 64.6 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 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) 28.6 28.8 28.3 28.5 667.2 662.3 659.9 654.1 655.4 26.5 26.0 25.9 25.6 25.5 23.7 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 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 3.6 12.2 11.3 11.2 11.2 2.7 2.4 2.4 76.9 1.8 63.5 60.5 59.3 57.9 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 ARPU Service revenues Subsidies Mobile penetration

  33. Slide 33: 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 1.8 4.6 4.7 1.7 4.4 1.7 4.1 1.6 73.6 67.6 1.5 68.1 63.7 59.0 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 ARPU Service revenues Subsidies Mobile penetration (in E

  34. Slide 34: 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 36.2 35.3 35.0 183.0 34.9 179.8 176.4 177.1 7.7 7.7 171.4 7.5 7.4 7.4 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 ARPL ARPL-relevant revenues Fixe

  35. Slide 35: 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 1.7 1.7 1.8 15.7 1.7 15.4 1.6 15.0 14.4 33.7 34.3 33.1 31.8 30.2 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 ARPU Service revenues Subsidies Mobile penetration

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

    Segment Serbia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 7.8 7.8 7.8 7.3 3.4 3.4 6.8 3.2 3.2 2.9 37.4 37.2 36.1 34.0 31.0 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 ARPU Service revenues Subsidies Mobile penetration (in EU

  37. Slide 37: 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) 348.6 340.7 12.3 12.4 12.3 12.1 322.4 314.5 316.9 11.7 5.3 5.3 5.3 5.3 5.3 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 ARPL ARPL-relevant revenues Fix

  38. Slide 38: Segment Macedonia – Mobile key performance indicators

    Segment Macedonia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 6.5 6.3 2.9 6.1 6.1 5.8 2.3 1.7 1.6 1.7 21.6 20.0 19.9 20.1 19.2 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 ARPU Service revenues Subsidies Mobile penetration (in

  39. Slide 39: Appendix 2 – Regulatory topics

    Appendix 2 – Regulatory topics

  40. Slide 40: Glide Path of Mobile Termination Rates

    Glide Path of Mobile Termination Rates 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 0.047 MTS 0.025/0.0125 MTS 0.025/0.0125 MTS

  41. Slide 41: Expected spectrum auctions by country

    Expected Comments 2018 (3400-3800 MHz) Austria 2019 (700, 1500, 2100 MHz) Beginning of 3400–3800 Mhz auction not before Q3 2018. 2020 (1500, 2300 MHz) 2018-2019 (800, 1800, 2100 MHz) An agreement between mobile operators, NRA and ministry of defense will be Bulgaria 2020 (2600, 3400-3800 MHz) signed

  42. Slide 42: 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

  43. Slide 43: Appendix 3 – Personnel restructuring in Austria

    Appendix 3 – Personnel restructuring in Austria

  44. Slide 44: Overview – Restructuring charges and provision vs. FTE

    Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) 2013 2014 2015 2016 2017 Q1 18 2013 2014 2015 2016 2017 Q1 18 FTE reduction 149,0 86.4* 69.5** 95,0 9,1 -2,4 Transfer to government 22 52 49 6 3 0 Servicekom contribution -103,8 -39,

  45. Slide 45: Overview – Cash flow impact of restructuring

    Overview – Cash flow impact of restructuring Overview cash flow impact (in EUR million) Total cash flow impact 2012 104.0  Total cash flow impact comprises old and new 2013 108.0 programmes 2014 107.1 2015 101.9  Cash flow impact for Q1 2018 of EUR 24.3 mn 2016 105.5  Expected cash flow impact fo

  46. Slide 46: Appendix 4 – Corporate sustainability

    Appendix 4 – Corporate sustainability

  47. Slide 47: Alignment with core business and materiality analysis define sustainability strategy

    Alignment with core business and materiality analysis define sustainability strategy Results for the first quarter 2018 47

  48. Slide 48: 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 tonnes) 1,614,058 Collected old mobile pho

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