Telekom Austria Ag · VIE:TKA
Telekom Austria — A1 Telekom Austria Group — FY2017 Earnings Presentation
55 slides from Telekom Austria's earnings presentation, Feb 13, 2018
Slide 1: Results for the full year and fourth quarter 2017
Results for the full year and fourth quarter 2017 13th February 2018, Vienna
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
Slide 3: Operational and financial highlights for the full year 2017
Operational and financial highlights for the full year 2017
Slide 4: FY 2017 – Solid revenue growth; EBITDA increase on reported basis
FY 2017 – Solid revenue growth due to improved operations; EBITDA increase on reported basis Revenues (proforma*) EUR 4,382.5 mn 3.0% y-o-y EBITDA (proforma*) EUR 1,397.3 mn 2.0% y-o-y Net income (reported) EUR 345.5 mn -16.4% y-o-y Capex (proforma*) EUR 736.9 mn -4.2% y-o-y Revenue increase drive
Slide 5: Operational highlights 2017 & Outlook 2018
Operational highlights 2017 & Outlook 2018 Operations in 2017 Outlook 2018* Mobile customer base declines slightly due to a shift to postpaid offers which benefits service revenues Revenues: +1-2% CAPEX: ~EUR 750 mn Fixed-line profits from strong BB and TV trends while RGUs decline by 0.6% y-o-y
Slide 6: EBITDA: Higher service revenues and cost cutting offset cost increases & roaming
EBITDA: Higher service revenues and ongoing cost cutting efforts offset revenue related cost increases & roaming Non-operating Equipment Service revenues Other OPEX effects margin 128.5 -142.8 14.5 -5.1 8.4 -8.5 -20.3 24.4 25.5 -21.4 27.1 -20.3 17.2 Proforma 1,397.3 1,370.4 2016 One-offs One-offs &
Slide 7: Ongoing benefits from cost savings initiatives in 2017
Ongoing benefits from cost savings initiatives in 2017; positive impact expected from simplification and digitalisation Core OPEX development 2017 Savings initiatives 2018 Ongoing lift-up of potential cost savings by 35.1 -128.5 ‘Sourcing 4 Success’ program 16.5 9.7 Examples: 16.7 20.3 Re-negoti
Slide 8: Key financial developments for the fourth quarter 2017
Key financial developments for the fourth quarter 2017
Slide 9: Q4 2017: Revenue growth but lower adjusted EBITDA
Q4 2017: Revenue growth but lower adjusted EBITDA due to higher investments into the market and non-recurring OPEX Reported Proforma Group (in EUR million) Q4 2017 Q4 2016 % change Total revenues 1,130.0 1,110.8 1.7% EBITDA 288.3 278.7 3.5% CAPEX 238.5 226.1 5.5% Proforma Group revenues rose by 1.
Slide 10: Austria: Roaming losses and product costs led to lower adjusted EBITDA
Austria: Roaming losses and product-related costs led to lower adjusted EBITDA despite solid revenue growth ARPU ARPL Operational data (in EUR) (in EUR) Subscriber base decline entirely driven by prepaid; postpaid grew due to Δ: -1.1% Δ: +8.6% high demand for mobile WiFi routers and high-value tar
Slide 11: Mixed Q4 results in CEE
Mixed Q4 results in CEE; increases in Serbia, Bulgaria and Macedonia; declines driven by OPEX increases EBITDA Highlights CEE (proforma, in EUR mn) Bulgaria: EUR 25.8 mn EUR 19.6 mn EUR 36.5 mn 3.1% growth in total revenues due to higher fixed-line service and Δ: +0.6 mn Δ: -1.2 mn* Δ: -5.9 mn* eq
Slide 12: FY 2017: Strong FCF generation
FY 2017: Strong FCF generation driven by less CAPEX paid and interest paid; positive impact from operational performance (in EUR million) Q4 2017 Q4 2016 % change FY 2017 FY 2016 % change Net cash flow from operating activities 264.7 327.7 -19.2% 1,174.8 1,195.5 -1.7% Capital expenditures paid -184.
Slide 13: Focus Points
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Slide 14: Austrian mobile: Shielding high-value with best network and free streaming
Austrian mobile: Shielding high-value with best network and free streaming while staying competitive in optimiser segment High-value segment Optimiser & youth segment A1 Go! XL A1 Go! L A1 Go! M A1 Go! S 60 GB 24 GB 16 GB 8 GB Bob: subsidised hardware to compete in EUR 15-20 300 Mbps 300 Mbps 150 Mb
Slide 15: Smart fibre rollout in Austria – coverage target adjusted
Smart fibre rollout in Austria – coverage target adjusted with hybrid as complimentary product Households passed Year-end 2017 Target 2018 Target 2019 (coverage in %; fixed-line technologies) Fixed-line Fixed-line Fixed-line Hybrid technologies technologies technologies 40 Mbps product ~55% New targ
Slide 16: Digitalisation is core to A1 Telekom Austria Group's strategy
Digitalisation is core to A1 Telekom Austria Group‘s strategy Empowering Digital Life Digitalising B2B. Digitalising B2C. Consumer Trends MARKETING ROBOTISATION AUTOMATION & PROCESSES Enabling companies to translate digital potential into business results From traditional legacy platforms to cloud C
Slide 17: Digitalising B2C: Savings potential, new processes and products
Digitalising B2C: Medium- to long-term savings potential, new processes and products Marketing Customer service Robotisation & Digital products automation digitalisation processes –20% Interactions Automation of customer Interaction steering to Agile processes to adjust Full digital ecosystem
Slide 18: Digitalising B2B: First customer wins in Germany
Digitalising B2B: First customer wins in Germany herald fertile ground for A1 Digital Meeting customer demand Focus industries and target groups A1 Digital solutions Focus on the vertical industries: Fleet management - Asset tracking solutions Construction Excellent customer feedback on maturity
Slide 19: Internet of Things enables massive machine type communication
Internet of Things (IoT) enables massive machine type communication for customer-centred applications Fleet Management Managed Corporate Car Enterprise Mobility Development of NB-IoT* network & Asset Tracking Connectivity Sharing for future product solutions 4,400 machines Use what Use what in 3 cou
Slide 20: Outlook for the full year 2018
Outlook for the full year 2018
Slide 21: A1 Telekom Austria Group outlook for the full year 2018
A1 Telekom Austria Group outlook for the full year 2018 30 January 2018 Consensus 2018 Total revenues +1-2% EUR 4,401 mn CAPEX ~ EUR 750 mn EUR 742 mn Proposed dividend EUR 0.20 / share - Outlook based on reported figures; assumed devaluation of BYN vs. EUR: ~10% CAPEX: does not include investme
Slide 22: Appendix 1
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Slide 23: The leading regional communications player providing convergent telecommunication services
The leading regional communications player providing convergent telecommunication services as of 31 December 2017 (in ‘000) Austria* Bulgaria Croatia Mobile market position #1 Mobile market position: #1 Mobile market position #2 Mobile subscriber: Mobile subscriber: Mobile subscriber: 5,335 (Q4 20
Slide 24: A1 Telekom Austria Group – Profit and Loss
A1 Telekom Austria Group – Profit and Loss (in EUR million) Q4 2017 Q4 2016 % change Service Revenues 940.2 929.8 1.1% Equipment Revenues 161.5 141.4 14.2% Other operating income 28.2 27.1 4.4% Total Revenues 1,130.0 1,098.2 2.9% Cost of Service -365.6 -358.3 -2.0% Cost of Equipment -183.9 -166.2 -1
Slide 25: 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 2017 Q4 2016 % change Austria* 676.2 660.9 2.3% Bulgaria 112.1 108.7 3.1% Croatia 106.9 103.2 3.6% Belarus 95.9 90.6 5.8% Slovenia 54.1 55.1 -1
Slide 26: A1 Telekom Austria Group – Headcount development
A1 Telekom Austria Group – Headcount development FTE (Average Period) Q4 2017 Q4 2016 % change Austria 8,263 8,389 -1.5% International 10,377 9,290 11.7% Corporate 335 234 42.7% A1 Telekom Austria Group 18,974 17,913 5.9% FTE (End of Period) Q4 2017 Q4 2016 % change Austria 8,246 8,352 -1.3% Interna
Slide 27: A1 Telekom Austria Group – Capital expenditure split
A1 Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q4 2017 Q4 2016 % change Austria* 131.3 132.1 -0.6% Bulgaria 25.9 23.9 8.0% Croatia 31.8 26.6 19.4% Belarus 18.5 17.3 7.2% Slovenia 11.6 9.4 23.9% Republic of Serbia 11.8 8.3 42.9% Republic of Macedonia 11.5 1
Slide 28: A1 Telekom Austria Group – Net debt
A1 Telekom Austria Group – Net debt per 31 December 2017 Net Debt* (in EUR million) 31 December 2017 31 December 2016 % change Long-term Debt 2,533.6 2,303.5 10.0% Short-term Borrowings 0.6 500.1 -99.9% Cash and Cash Equivalents and Short-term Investments -202.4 -464.2 56.4% Net Debt of A1 Telekom A
Slide 29: A1 Telekom Austria Group – Debt maturity profile
A1 Telekom Austria Group – Debt maturity profile per 31 December 2017 746.0 745.1 743.7 298.6 0.0 0.6 0.1 0.1 0.0 0.0 0.0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 EUR 2,534.2* mn short-and long-term borrowings as of 31 December 2017 Average cost of debt of approximately 2.95% Cas
Slide 30: A1 Telekom Austria Group – Debt profile
A1 Telekom Austria Group – Debt profile per 31 December 2017 Overview debt instruments Fixed/floating mix Bonds Loans Fixed Floating Lines of credit Ratings Undrawn committed credit lines S&P: BBB (positive outlook) amounting to EUR 1,265 mn Moody’s: Baa2 (positive outlook) Average term to m
Slide 31: 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) 30.6 29.7 28.3 28.6 3,495.5 3,476.8 3,435.1 3,396.6 3,390.4 28.2 194.7 190.6 186.3 186.7 186.5 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 ARPL ARPL-rel
Slide 32: 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 1.8 1.8 15.7 15.6 15.5 15.9 15.5 1.7 1.7 255.3 252.7 255.6 249.7 248.1 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 ARPU Service revenues Subsidies Mobile penetr
Slide 33: 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 %) 0.8 2.0 3.6 4.2 34.3 35.3 Mobile Broadband Other Operators 21.3 22.1 15.9 16.8 Unbundled Lines 3.7 3.5 22.3 22.7 Cable 40.3 38.6 4.3 4.2 16.0 16
Slide 34: Segment Austria – Voice market split
Segment Austria – Voice market split Market share voice RGUs (in %) 13.3 13.7 3.4 3.3 22.8 23.1 Others UPC Tele2/UTA 60.5 59.9 A1 Q4 16 Q4 17 Results for the full year and fourth quarter 2017 34
Slide 35: 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) 11.9 1,018.9 1,006.8 1,002.0 994.4 1,005.0 11.7 11.3 10.9 18.9 10.8 18.6 18.3 17.6 17.7 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 ARPL ARPL-relevant
Slide 36: 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 2.2 2.1 2.0 5.5 5.3 5.4 5.7 5.5 67.4 70.1 64.8 66.4 65.8 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 ARPU Service revenues Subsidies Mobile penetration (in
Slide 37: 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) 28.3 28.6 28.5 662.3 667.2 659.9 26.5 654.1 23.8 620.1 26.0 25.9 25.6 23.7 20.3 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 ARPL ARPL-relevant revenues
Slide 38: Segment Croatia – Mobile key performance indicators
Segment Croatia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 4.4 14.1 3.6 12.2 11.3 11.3 11.2 2.7 2.4 76.9 1.8 60.0 63.5 60.5 57.9 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 ARPU Service revenues Subsidies Mobile penetration
Slide 39: 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 4.6 4.7 1.7 4.4 1.7 1.7 1.6 73.6 67.8 67.6 68.1 63.7 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 ARPU Service revenues Subsidies Mobile penetration (in E
Slide 40: 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) 36.2 35.3 35.0 183.0 34.6 34.9 179.8 176.4 177.1 7.7 172.0 7.5 7.4 7.4 7.3 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 ARPL ARPL-relevant revenues Fixe
Slide 41: 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 15.5 15.7 1.6 1.7 15.4 15.0 34.3 33.7 33.0 33.1 31.8 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 ARPU Service revenues Subsidies Mobile penetration
Slide 42: 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 3.4 5.7 5.7 3.2 5.3 5.3 2.9 4.8 37.4 37.2 34.0 34.0 31.0 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 ARPU Service revenues Subsidies Mobile penetration (in EU
Slide 43: 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) 340.7 12.2 12.3 12.4 12.3 12.1 322.4 314.3 314.5 316.9 5.3 5.3 5.3 5.3 5.2 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 ARPL ARPL-relevant revenues Fix
Slide 44: 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 3.0 2.9 6.0 6.1 6.1 2.3 5.8 1.7 1.6 21.6 20.0 20.1 19.9 19.2 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 ARPU Service revenues Subsidies Mobile penetration (in
Slide 45: Appendix 2 – Regulatory topics
Appendix 2 – Regulatory topics
Slide 46: 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
Slide 47: Upcoming spectrum tenders/prolongations/assignments
Upcoming spectrum tenders/prolongations/ assignments* Expected Comments 2018 (3400-3800 MHz) Austria 2019 (700, 1500, 2100 MHz) Beginning of 3400–3800 Mhz auction is not expected before Q2 2018. 2020 (1500, 2300 MHz) 2018-2019 (800, 1800, 2100 MHz) An agreement between mobile operators, NRA and mini
Slide 48: 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
Slide 49: Appendix 3 – Personnel restructuring in Austria
Appendix 3 – Personnel restructuring in Austria
Slide 50: Quarterly Overview – Restructuring charges and provision vs. FTE
Quartely Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FTE reduction 1.4 1.7 5.3 0.7 Transfer to government 2 2 0 -1 Servicekom contribution -1.5 -1.5 -18.6 -5.7 Social plans 5 4 16 6 Interest rate adjust
Slide 51: 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
Slide 52: 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 Q4 2017 of EUR 25.6 mn 2016 105.5 Total cash flow impact for 2
Slide 53: Appendix 4 – Corporate sustainability
Appendix 4 – Corporate sustainability
Slide 54: Alignment with core business and materiality analysis define sustainability strategy
Alignment with core business and materiality analysis define sustainability strategy Results for the full year and fourth quarter 2017 54
Slide 55: 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) 216,887 ›Classification: ›Classification: B- Energy efficiency index (in Mwh/terabyte) 0,2 B- Paper consumption (in tonnes) 1,694,041 Collected old mobile p
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