Magyar Telekom Telecommunications Plc · BET:MTELEKOM

Magyar Telekom Telecommunications — Magyar Telekom — Q1 2012 Earnings Presentation

27 slides from Magyar Telekom Telecommunications's earnings presentation, Jun 1, 2012

  1. Slide 1: Investor presentation – Magyar Telekom Group – June 2012

    Investor presentation M Magyar Telekom T l k Group G – June J 2012 New revenue sources improve top-line but dilute margins 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 Czech Republic „ leading telecommunications service provider in all three Slovakia Austria Moldova countries Hungary Slovenia Croatia Croatia Romania „ leading SI/IT

  4. Slide 4: Market trends

    Market trends Revenue based market shares in Hungary in 2011 (HUF bn) Evolution of Magyar Telekom’s market share since 2006 321 44 99 98 111 29 100 % 25% 80 % 38% 49% 50% 56% 67% 60 % 28% 18% 40 % 1% 21% 22% 6% 19% 13% 24% 9% 3% 20 % 2% 30% 27% 17% 25% 26% 19% 0% 2% 5% 2006 2007 2008 2009 2010 2011

  5. Slide 5: Change in revenue trends

    Change in revenue trends Hungarian ICT market development (HUF bn) Change in Magyar Telekom Telekom’ss Hungarian revenue mix 1.7% 100% 1,256 1,279 1,210 1,233 1 159 1,159 , 1,171 1,186 New 80% New revenue revenue sources New sources IT ca.30% revenue ca.40% 60% sources ca.55% Fixed data TV 40% Voice

  6. Slide 6: Continued efficiency improvements in core operations

    Continued efficiency improvements in core operations Cost saving S bl underlying Stable d l i margin i andd CAPEX-to-Sales CAPEX S l HUF bn 60 % -5% 150 131 50 % 126 121 116 116 40.7 % 40.8 % 40.7 % 41.0 % 106 103 106 40 % 100 30 % 50 20 % 16.0 % 15.8 % 15.1 % 14.0 % 10 % 0 0% 2008 2009 2010 2011 20

  7. Slide 7: Capex

    Capex C Capex trendd C Capex b kd breakdown HUF bn HUF million 150 100 000 -9% 108 -8% 80 000 33% 102 32% 100 92 84 60 000 33% 40 000 36% 50 9% 20 000 10% 25% 22% 0 0 2008 2009 2010 2011 2010 2011 CAPEX Maintenance New services Efficiency Subsidiaries Capex cuts match revenue decline Efficiency impr

  8. Slide 8: Free cash flow and dividends

    Free cash flow and dividends Free cash flow* flow generation Dividend payment HUF bn Net debt ratio** DPS (HUF) 120 50 % 74 80 26 70 100 17 40 % 28 34.1 % 33.6 % 60 14 32.7 % 50 Target 80 14 30 % 50 50 12 60 40 20 % 30 40 84 78 69 65 20 10 % 20 10 0 0% 0 2008 2009 2010 2011 2010 2011 1Q 2012 Telecom

  9. Slide 9: Results and Hungarian macro-economy trends 2010-2011

    Results and Hungarian macro-economy trends 2010-2011 Growth structure and wages g Contribution to GDP growth (%) 8 6 4 Macro effects 2 0 Economic downturn impacting MT -2 results -4 „ MT results are very sensitive Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 to fluctuations in domestic 2010 2011 2012 demand Consumpti

  10. Slide 10: 2012 targets and Q1 2012 results

    2012 targets and Q1 2012 results 2012 targets Q1 2012 results Revenue Flat to -2% 2% +2 9% +2.9% s results vs results „ changing revenue mix and energy resale „ energy resale revenue increase of HUF enable revenue turnaround 5.3 bn Q1-o-Q1 „ recessionary pressure and declining „ performance also sup

  11. Slide 11: Q1 2012 Results

    Q1 2012 Results 11

  12. Slide 12: 2012 Q1 Group results – Revenues and EBITDA

    2012 Q1 Group results – Revenues and EBITDA Group revenues Group EBITDA HUF million HUF million 148 000 55 500 1 688 1 690 Underlying performance 394 146 648 711 5 275 54 000 53 246 62 1 328 144 000 142 507 3 063 52 500 278 51 576 784 51 000 140 000 1 191 593 638 136 000 Q1 F. voice M. voice M. non-

  13. Slide 13: Telekom Hungary – significant contribution from energy resale

    Telekom Hungary – significant contribution from energy resale Fixed line and Energy resale revenues Mobile revenues HUF million HUF million 60 000 +9% 80 000 49 487 -2% 2% 45 211 45 000 10 062 60 000 55 921 55 023 9 531 7 646 6 730 682 5 957 30 000 6 888 7 434 Other 10 682 11 244 40 000 9 888 Energy

  14. Slide 14: Hungary -- improvement in fixed voice churn

    Hungary -- improvement in fixed voice churn Telekom Hungary fixed voice subscribers Subscribers Hungary fixed voice churn 2500 000 -4% 2000 000 Fixed voice 1 655 692 1 585 092 1500 000 ƒ significant reduction in fixed voice churn thanks to the retention effect of: 1000 000 VoCa ƒ Hoppá package: flat

  15. Slide 15: Hungary – Energy resale business as major growth driver

    Hungary – Energy resale business as major growth driver Gas and electricity points of delivery (POD) PODs 75 000 61 516 60 000 45 000 Energy resale 35 262 30 000 24 628 ƒ soft launch in 2010, nationwide from April 15 226 2012 15 000 11 080 Gas Electricity ƒ customers get 5-8% discounts on their 0 en

  16. Slide 16: Hungary -- Fixed broadband: stable market position

    Hungary -- Fixed broadband: stable market position Fixed broadband market shares shares* Subscribers +6% 2500 000 2 105 000 1 980 000 2000 000 20.7% 19 9% 19.9% Fi d broadband Fixed b db d 1500 000 10.0% Other 10.1% 12.9% market growth driven by cable and fiber, 12.2% Invitel ƒ 1000 000 20.7% 20.6%

  17. Slide 17: Hungary -- TV market: further growth achieved

    Hungary -- TV market: further growth achieved TV market shares shares* Subscribers 4000 000 +3% 3 133 000 3 214 000 3000 000 26.1% 28.3% TV customer growth 2000 000 23.1% 23.0% ƒ significant migration from cable to IPTV Other 23 8% 23.8% 25 0% 25.0% DIGI driven by ED3 ED3-enabled enabled cable netwo

  18. Slide 18: Hungary -- Mobile voice: increased market share

    Hungary -- Mobile voice: increased market share Mobile voice market shares (based on total SIM cards) Subscribers 15000 000 -2% 11 893 476 11 633 993 12000 000 Mobile voice 22.5% 22.9% 9000 000 ƒ population-based penetration at 117% 33.7% 31.8% 6000 000 ƒ higher market share, slight growth in custom

  19. Slide 19: Hungary -- Mobile broadband: continued dynamic growth

    Hungary -- Mobile broadband: continued dynamic growth Mobile broadband market shares (based on total SIM cards) Subscribers +68% 2500 000 2 342 018 23.9% 2000 000 Mobile broadband 1500 000 1 394 262 28.0% 25.3% ƒ already 600 HSPA+ base stations offering 21 1000 000 26.4% Mbps download speed Vodafone

  20. Slide 20: T-Systems Hungary – SI/IT revenue growth and healthy margin

    T-Systems Hungary – SI/IT revenue growth and healthy margin Revenues HUF million -1% T-Systems Hungary 30 000 28 071 27 833 Falling voice and data revenues 25 000 44.1% 47.5% „ lower usage and high fixed churn, principally 20 000 caused by mobile substitution 15 000 „ continued pressure on mobile ta

  21. Slide 21: Macedonia – Financial performance

    Macedonia – Financial performance Revenues Macedonia HUF million -5% Significant FX impact: HUF weakened by 8.6% 18 000 17 126 Q1-o-Q1 against MKD 16 329 15 000 10.9% 10 9% 10.9% Declining fixed line revenues in MKD „ cable competition and strong mobile 12 000 40.2% 39.0% substitution 9 000 Mobile c

  22. Slide 22: Montenegro – Financial performance

    Montenegro – Financial performance Revenues Montenegro HUF million Significant FX impact: HUF weakened by 8.4% Q1-o- 10 000 +7% Q1 against EUR 7 870 8 000 7 359 Flat fixed revenues in EUR 10.8% 10.5% „ strong mobile substitution 6 000 32.2% 33.8% „ growing internet and TV revenues 4 000 Mobile other

  23. Slide 23: Financials

    Financials 23

  24. Slide 24: Magyar Telekom – Consolidated Income Statement

    Magyar Telekom – Consolidated Income Statement HUF million March 31, 2011 March 31, 2012 Change Mobile revenues 72,449 72 449 72,614 72 614 00.2% 2% Fixed line revenues 58,431 56,421 -3.4% System Integration/Information Technology revenues 10,945 11,656 6.5% Revenue from Energy Services 682 5,957 Re

  25. Slide 25: Magyar Telekom - Consolidated Balance Sheet

    Magyar Telekom - Consolidated Balance Sheet HUF million Dec 31, 2011 March 31, 2012 Change Current assets 220,396 220 396 223,028 223 028 11.2% 2% Cash and cash equivalents 14,451 41,364 186.2% Other current financial assets 65,286 38,259 -41.4% o cu Non current e asse assetss 8 ,6 877,632 86 , 0 86

  26. Slide 26: Magyar Telekom - Consolidated Cashflow Statement

    Magyar Telekom - Consolidated Cashflow Statement HUF million March 31, 2011 March 31, 2012 Change Net cash generated from operating activities 44,620 22,255 -50.1% Investments in tangible and intangible assets (12,314) (23,841) 93.6% Adjustments to cash purchases (8,097) (13,974) 72.6% P h off subsi

  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, 4G: fourth generation, ARPU: average revenue per user, BB: broadband, CBC: call-by-call, CPS: carrier pre-se

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