Magyar Telekom Telecommunications Plc · BET:MTELEKOM

Magyar Telekom Telecommunications — Magyar Telekom — Q3 2015 Earnings Presentation

34 slides from Magyar Telekom Telecommunications's earnings presentation, November 2015

  1. Slide 1: Magyar Telekom Group Investor Presentation

    MAGYAR TELEKOM GROUP INVESTOR PRESENTATION NOVEMBER, 2015

  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 (FY2014) Czech Republic 17% Slovakia 8% Austria Moldova 5% Hungary Hungary 70% Slovenia Croatia Croatia Romania Romania BiH EBITDA (FY2014) Serbia Serbia Kosovo Bulgaria Bulgaria 7% Montenegro Macedonia 13% Macedonia Albani

  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 +0.5% Telenor Invitel 10,000,000 22.8% 22.7% Telekom 3,000,000 5.8% 5.8% 4.9% DIGI 13.0% 12.7% 12.7% 2,500,000 UPC 8,000,000 9.3% 9.8% 10.6% 30.9% 30.5% MT 2,000,000 13.8%

  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 SI/IT market Revenue based SYSTEM INTEGRATION IT INFRASTRUCTURE SI & IT market shares* Package Custom System IT App. OS & Infra. OS & Infra. proj. Hosting Cloud (2014) application a

  6. Slide 6: Strategy Overview: Best Customer Experience

    STRATEGY OVERVIEW Telekom 2017 strategy and EoY 2015 targets 1  Increase the awareness of the Telekom brand to the 1 LEADING INTEGRATED QUALITY BRAND level of our previous brands BEST CUSTOMER EXPERIENCE 2  Cut billable / sellable products by 50% 2 EFFORTLESS PRODUCTS & SIMPLIFIED PROCESSES 3  Cu

  7. Slide 7: Strategic Highlights

    STRATEGIC HIGHLIGHTS  After turning around revenue and EBITDA in recent years, we have managed to return to positive Free Cash Flow generation as the basis for the resumption of dividend payments TURNAROUND  Consolidated our market positions through an integrated T brand and network developments 

  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 „turn Topli

  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 8%  Domestic demand improved as economy 6% recovers 4%  Governmental measures support consumer 2% spending 0%  Investment levels show strong volatility due to EU fund cycles -2%  MT is expected to benefit from positive trends -4% 20

  11. Slide 11: Hungarian Mobile Spectrum Situation

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

  12. Slide 12: Guidance and Outlook

    GUIDANCE AND OUTLOOK

  13. Slide 13: Financial Highlights and Targets

    FINANCIAL HIGHLIGHTS AND TARGETS 2014 RESULTS 2015 TARGETS 2017 TARGETS roughly stable excluding REVENUE HUF 626.4bn (-1.7%) roughly stable energy compared to 2014 EBITDA HUF 181.2bn (+1.0%) roughly stable surpassing HUF 185bn CAPEX* HUF 86.8bn around HUF 105bn around HUF 80bn FCF** HUF -19.9bn surp

  14. Slide 14: Roughly Stable Revenues Excluding Energy

    ROUGHLY STABLE REVENUES EXCLUDING ENERGY Group revenue developments Highlights HUF bn 750  Roughly stable revenue anticipated for 2015 vs. 2014  2017 revenues to be roughly stable 600 compared to the 2014 level due to the fall out of energy revenues 450  Mobile broadband cannot fully compensate f

  15. Slide 15: Increasing EBITDA Margin

    INCREASING EBITDA MARGIN EBITDA and cost developments (relative to revenues) Highlights 100%  2015 EBITDA to remain roughly stable on 2014 level 80% 37% 36% 37% 35%  2017 EBITDA expected to surpass HUF 185 billion  2015 indirect costs include the 60% expected ca. HUF 8 billion severance 30% 28% 2

  16. Slide 16: Efficiency Investments Free Up Capex for Access Developments

    EFFICIENCY INVESTMENTS FREE UP CAPEX FOR ACCESS DEVELOPMENTS Capex developments* Highlights HUF bn 120  Ca. HUF 105 billion Capex earmarked 14% 14% 16% 13% for 2015 100  Fixed access: focus on increasing HSI coverage 80  Mobile access: 4G population coverage to reach 97% by end 2015 60  Efficien

  17. Slide 17: Dividend Policy

    DIVIDEND POLICY Dividend payment and net debt ratio developments Highlights Net debt ratio* Dividend per share (HUF) 50% 70  Maintain net debt ratio (net debt/total 45.7% capital) target of 30% - 40% 43.8% 43.9% 60  Board of Directors proposed no 40% 34.1% 34.3% dividend payment on 2014 earnings f

  18. Slide 18: Q3 2015 Results

    Q3 2015 RESULTS

  19. Slide 19: Strategic Highlights in Q3

    STRATEGIC HIGHLIGHTS IN Q3  Underlying mobile growth thanks to strong 4G push but wholesale revenue loss due to MTR cut  Organic growth in both fixed broadband and TV, ex-acquisition effect of GTS Hungary TELCO  Introduced quad-play offer, Magenta1 to maximize share of wallet in household spendin

  20. Slide 20: Financial Highlights and Targets

    FINANCIAL HIGHLIGHTS AND TARGETS 9M 2015 RESULTS 2015 TARGETS 2017 TARGETS roughly stable REVENUE +2.7% roughly stable excluding energy compared to 2014  Group wide mobile data growth due to 4G push offset by Hungarian MTR cuts  Revenue growth in fixed line  Increased SI/IT revenues across all se

  21. Slide 21: Group Segmental Revenue and EBITDA

    GROUP SEGMENTAL REVENUE AND EBITDA Group segmental revenue Group segmental EBITDA HUF bn HUF bn -0.6% 158,5 0,3% 51.0 1.1 -1.2 0,5 -0,3 50.5 0,6 158,0 158,0 -0,5 50.0 0.6 -0.8 0,2 49.5 49.2 157,5 157,5 49.0 0.1 48.9 0,0 0.0 3Q 2014 T-HU T-Systems Maced. Monten. Elim. 3Q 2015 3Q 2014 T-HU T-Systems M

  22. Slide 22: Segmental Overview

    SEGMENTAL OVERVIEW

  23. Slide 23: T-Hungary

    T-HUNGARY T-Hungary revenue T-Hungary EBITDA HUF bn HUF bn +0.2% +1.5% 116 0.7 115.7 39.0 0.2 -1.7 115.5 -3.7 2.1 0.0 0.4 38.5 115 0.4 38.0 0.7 114 37.5 1.2 36.9 1.4 -0.3 37.0 113 -0.7 36.5 36.4 112 36.0 0.5 0 0.0 3Q Mobile Mobile Mobile Fixed Fixed TV Fixed SI/IT Energy 3Q 3Q 2014 Gross Special tax

  24. Slide 24: T-Hungary – Mobile

    T-HUNGARY – MOBILE Mobile RPC Mobile ARPU (HUF) „000 HUF +0.1% 4,933 4,964 4,948 4,938 4,935 5,000 Prepaid 3Q 2014 3,598 Postpaid Blended -3.6% 3Q 2015 4,000 3,470 50.4% 50.0% 49.6% 49.0% 48.9% 3,000 1,361 +77 Prepaid -11.9% 1,200 2,000 49.6% 50.0% 50.4% 51.0% 51.1% 5,888 1,000 Postpaid -4.2% 5,643

  25. Slide 25: T-Hungary – Fixed Broadband and TV

    T-HUNGARY – FIXED BROADBAND AND TV Fixed BB RPC Pay TV RPC „000 +9.7% „000 +4.2% 1,000 940 961 973 1,000 934 939 950 887 922 911 925 8% 8% 7% <10Mbps Sat 9% 8% 800 10Mbps -30Mbps 800 34% 33% 33% 33% 32% Cable >30Mbps IPTV 600 68% 68% 600 17% 69% 69% 19% 19% 19% 18% 69% +49 400 400 +54 47% 48% 49% 50

  26. Slide 26: T-Hungary – Fixed Voice, Multiplay and Energy

    T-HUNGARY – FIXED VOICE, MULTIPLAY AND ENERGY Fixed voice RPC Multiplay development among residential customers „000 „000 1Play -1.0% 2Play 1,500 1,417 1,418 1,408 1,408 1,404 2,000 -0.2% PSTN 3Play 1,524 1,538 1,546 1,529 1,521 Annual churn rate 36% 31% IP based* 48% 44% 1,500 57% 1,000 39% 38% 38%

  27. Slide 27: T-Systems

    T-SYSTEMS Financials SI/IT revenue and margin Revenues (HUF bn) EBITDA (HUF bn) HUF bn +1.7% +21.1% +53.8% 27.5 1.7 27.1 3.5 +11.7% 27.0 1.0 0.1 3.1 20 26.6 -0.4 3.0 16.4 Revenue 26.5 -0.9 14.7 2.5 15 Gross margin* 26.0 25.5 2.0 10 2.0 6.5 25.0 5.3 5 0.0 0.0 0 3Q Mobile Fixed SI/IT 3Q 3Q Gross Other

  28. Slide 28: Macedonia

    MACEDONIA Financials Mobile KPIs Revenues (HUF bn) EBITDA (HUF bn) Subscribers -16.6% +0.5% 2,500,000 One (T. Slovenia)* -1.8% 7.0 -1.1 15.0 7.0 26.1% 14.7 -0.5 2,000,000 23.5% 25.0% VIP (T. Austria) 14.5 0.7 14.4 1,500,000 T-Mobile 6.5 28.6% 27.0% 27.8% -0.4 -27,068 1,000,000 14.0 6.0 0.0 5.8 500,0

  29. Slide 29: Montenegro

    MONTENEGRO Financials Mobile KPIs Revenues (HUF bn) EBITDA (HUF bn) Subscribers -0.3% -5.2% -23.0% 1,200,000 9.0 4.0 Telenor 8.9 -0.4 1,000,000 3.7 -0.6 38.5% 38.2% 39.3% m:tel (T. Serbia) 8.8 800,000 3.5 T-Mobile 8.6 -0.2 600,000 26.3% 0.1 8.4 -0.2 28.9% 28.5% 8.4 3.0 400,000 -7,524 2.8 200,000 35.

  30. Slide 30: Financials

    FINANCIALS

  31. Slide 31: Magyar Telekom – Consolidated Income Statement

    MAGYAR TELEKOM – CONSOLIDATED INCOME STATEMENT HUF million Q3 2014 Q3 2015 Change Mobile revenues 82 718 79 105 -4,4% Fixed line revenues 51 656 52 702 2,0% System Integration/Information Technology revenues 14 404 16 781 16,5% Revenue from energy services 8 726 9 418 7,9% Revenues 157 504 158 006 0

  32. Slide 32: Magyar Telekom – Consolidated Balance Sheet

    MAGYAR TELEKOM – CONSOLIDATED BALANCE SHEET HUF million Sept 30, 2014 Sept 30, 2015 Change Current assets 191 891 204 194 6,4% Cash and cash equivalents 12 460 17 113 37,3% Other current financial assets 18 137 14 849 -18,1% Non current assets 941 659 980 121 4,1% Property, plant and equipment - net

  33. Slide 33: Magyar Telekom – Consolidated Cash Flow Statement

    MAGYAR TELEKOM – CONSOLIDATED CASH FLOW STATEMENT HUF million Sept 30, 2014 Sept 30, 2015 Change Net cash generated from operating activities 98 094 106 993 9,1% Investments in tangible and intangible assets (53 633) (59 929) 11,7% Adjustments to cash purchases (5 791) (3 754) -35,2% Purchase of sub

  34. Slide 34: For further questions please contact the IR department

    For further questions please contact the IR department: Investor Relations Phone: +36 1 458-0424 Fax: +36 1 458-0443 e-mail: investor.relations@telekom.hu DISCLAIMER This investor presentation contains forward-looking statements. Statements that are not historical facts, including statements about o

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