Magyar Telekom Telecommunications Plc · BET:MTELEKOM

Magyar Telekom Telecommunications — Magyar Telekom — Q1 2011 Earnings Presentation

30 slides from Magyar Telekom Telecommunications's earnings presentation, 2011

  1. Slide 1: Magyar Telekom Q1 2011 Presentation

    Presentation Magyar Telekom Q1 2011 Slow macro-economic recovery reflected in the underlying business trends 1

  2. Slide 2: Agenda

    Agenda Q1 2011 Results Strategy, Outlook and Guidance Back-up 2

  3. Slide 3: Q1 2011 Results

    Q1 2011 Results 3

  4. Slide 4: New reporting structure from January 1, 2011

    New reporting structure from January 1, 2011 New Hungary T-Systems Macedonia Montenegro structure  residential, Soho, SMB  mid-size business and customers enterprise clients (SMB  wholesale partners moved to Hungary)  media subsidiaries (Internet  key local and public and other content) governm

  5. Slide 5: Q1 highlights

    Q1 highlights  slow economic recovery (GDP up by 2% in Q1 2011, unemployment still Revenues under pressure, flat at 11%) down by 3.3%  fixed voice and internet revenues declined driven by falling price levels  increasing TV and mobile internet revenues  savings in employee-related and other oper

  6. Slide 6: Q1 2011 Group results

    Q1 2011 Group results Group revenues Group reported EBITDA HUF million HUF million 150 000 60 000 57 666 147 374 53 246 3 731 145 000 142 507 - 6 341 1 160 - 3 332 1 335 248 50 000 967 -2 970 140 000 - 3 296 -789 40 000 135 000 130 000 30 000 3.3% revenue decline 7.7% EBITDA decline due to the telec

  7. Slide 7: Magyar Telekom Group and Hungarian macro-economy trends 2009-2011

    Magyar Telekom Group and Hungarian macro-economy trends 2009-2011 6,0% GDP Hungary Revenues Underlying Ebitda 3,8% 4,0% 1,6% 2,0% 0,0% -2,1% -0,6% -2,0% -3,3% -2,0% -2,9% -4,0% -2,4% -3,3% -4,0% -5,6% -4,2% -6,6% -3,9% -6,0% -7,5% -8,0% -7,9% -8,6% -10,0% -11,1% -12,0% 2009 Q1 2009 Q2 2009 Q3 2009 Q

  8. Slide 8: Hungary – Q1 2011 Financial performance

    Hungary – Q1 2011 Financial performance Fixed line revenues Mobile revenues HUF million 48 675 -7% 45 211 HUF million 56 034 no change 55 921 50 000 60 000 -5% +4% 37 500 +13% +14% 40 000 25 000 -7% 20 000 12 500 -4% -14% 0 0 Q1 2010 Q1 2011 Q1 2010 Q1 2011 Voice Internet TV Other Voice Non-voice Ot

  9. Slide 9: Fixed voice market – focus on retention

    Fixed voice market – focus on retention Hungary fixed voice subscribers Hungary fixed voice churn subscribers 10% 9% 2 000 000 Fixed voice 1 500 000  slight decline in fixed voice churn thanks 1 000 000 to retention and bundling offers 500 000  growing importance of VoIP and VoCa solutions 0  HOP

  10. Slide 10: Fixed broadband market – stable market position

    Fixed broadband market – stable market position Fixed broadband market developments in Hungary T-Home retail fixed BB market share subscribers 36% 36% 2 000 000 Fixed broadband 1 500 000  market growth driven by cable and fiber, 1 000 000 while ADSL market growth has slowed down 500 000  stable fi

  11. Slide 11: TV market – significant growth achieved

    TV market – significant growth achieved TV market growth in Hungary T-Home market share subscribers 27% 28% 3 200 000 TV customer growth 3 000 000  TV is the most valuable service for 2 800 000 Hungarian households  number of TV customers exceeded 750k, 2 600 000 stable market position with 28% ma

  12. Slide 12: Mobile voice market – Stable market share

    Mobile voice market – Stable market share Mobile voice market shares (based on total SIM cards) Penetration subscribers 119% 119% 12 000 000 22% 22% Mobile voice 9 000 000 6 000 000 35% 34%  stable market share, slight increase in customer numbers 3 000 000 43% 44%  improving customer mix: postpai

  13. Slide 13: Mobile broadband market – major growth driver

    Mobile broadband market – major growth driver Mobile broadband market developments (based on total SIM cards) Penetration subscribers 7% 10% 1 200 000 Mobile broadband 900 000 26%  3G/HSDPA network covering ca.75% of 24% 25% population 600 000 28%  majority of mobile broadband usage 300 000 48% 49

  14. Slide 14: T-Systems – Financial performance

    T-Systems – Financial performance Revenues T-Systems HUF million 29 375 -4% 30 000 28 071 Falling voice and data revenues -1%  private clients remain very cautious, while 20 000 public sector clients are still facing budget cuts -5% 10 000  high churn among fixed voice, data and internet customers

  15. Slide 15: Macedonia – Financial performance

    Macedonia – Financial performance Revenues Macedonia HUF million 18 384 -7% 17 126 20 000 Increasing fixed line revenues -12% 15 000  decreasing fixed retail voice revenues -5% due to cable competition and strong 10 000 mobile substitution +2% 5 000  higher wholesale voice revenues driven -8% by h

  16. Slide 16: Montenegro – Financial performance

    Montenegro – Financial performance Revenues Montenegro HUF million -1% 7 359 8 000 7 448 Fixed voice revenues under pressure +45% 6 000  deterioration in retail voice revenues driven -12% by strong mobile substitution 4 000  lower international incoming traffic volume +12% affecting wholesale voic

  17. Slide 17: Strategy, Outlook and Guidance

    Strategy, Outlook and Guidance 17

  18. Slide 18: Overview – Magyar Telekom Group at a glance

    Overview – Magyar Telekom Group at a glance International presence Overview Integrated operations in Hungary, Macedonia and Montenegro  leading telecommunications service provider in all three Moldova countries Hungary Slovenia Croatia Croatia Romania  leading SI/IT service provider in Hungary BiH

  19. Slide 19: Strong infrastructure based competition

    Strong infrastructure based competition Competition is characterized by diverse players, technologies and competitive situations Mobile Fixed Technologies 2G/3G Copper DVB-S Cable Fiber Conclusions  no nationwide fixed-line Coverage Country-wide coverage Regional (local) coverage operator, parallel

  20. Slide 20: Market trends

    Market trends Revenue based market shares in Hungary in 2010 (HUF bn) Magyar Telekom’s market share development (%) 333 35 116 95 108 31 100 90 23% 38% 80 48% 51% 54% 70 69% 29% 60 18% 50 1% 21% 4% 17% 40 23% 13% 26% 1% 30 7% 1% 20 31% 26% 17% 28% 31% 20% 10 5% 0 Mobile voice Mobile BB Fixed voice F

  21. Slide 21: Change in revenue trends

    Change in revenue trends Hungarian ICT market development (HUF bn) Change in Magyar Telekom’s Hungarian revenue mix +1,4% 1.391 100% 1.342 1.280 1.295 1.299 1.263 1.209 1.215 1.209 1.229 New 1.206 80% revenue New New sources revenue revenue IT ca.25% sources sources 60% ca.40% ca.50% Fixed data 40%

  22. Slide 22: Continued efficiency improvements in core operations

    Continued efficiency improvements in core operations Cost saving Stable margin and CAPEX spending HUF billion CAGR -5% 150 131 60% 121 126 116 116 106 40,7% 40,8% 40,7% ca. 40% 100 40% 16,0% 15,8% 15,1% ca. 15% 50 20% 0 0% 2008 2009 2010 2011 F 2008 2009 2010 2011 F Total workforce Net other opex EB

  23. Slide 23: Free cash flow generation and dividend policy

    Free cash flow generation and dividend policy Free cash flow* generation Dividend payment HUF million 90 000 Net debt ratio* 82 043 DPS (HUF) 12 301 2 473 77 495 50% 74 74 80 22 928 -14 504 50 60 000 40% 30,8% 32,7% 60 31,0% Target 30% -27 746 40 30 000 20% 20 10% 0 0% 0 2009 EBITDA** Telecom Cash T

  24. Slide 24: Public targets for 2011

    Public targets for 2011 2010 Results 2011 Public targets Revenue Revenue -5.3% 3-5% decline  recessionary impacts, pressure on  intense competition, slow recovery of consumer spending economy  intense competition  further decrease in governmental revenues  saturated core markets  2010 comparab

  25. Slide 25: Back-up

    Back-up 25

  26. Slide 26: Magyar Telekom - Consolidated Income Statement

    Magyar Telekom - Consolidated Income Statement HUF million Mar 31, 2010 Mar 31, 2011 Change Fixed line revenues 62 352 59 113 -5,2% Mobile revenues 74 193 72 449 -2,4% System Integration/Information Technology revenues 10 829 10 945 1,1% Revenues 147 374 142 507 -3,3% Direct costs (36 668) (34 771)

  27. Slide 27: Magyar Telekom - Consolidated Balance Sheet

    Magyar Telekom - Consolidated Balance Sheet HUF million Dec 31, 2010 Mar 31, 2011 Change Current assets 200 574 211 673 5.5% Cash and cash equivalents 15 841 25 968 63.9% Other current financial assets 56 560 59 210 4.7% Non current assets 908 432 888 730 -2.2% Property, plant and equipment - net 54

  28. Slide 28: Magyar Telekom - Consolidated Cashflow Statement

    Magyar Telekom - Consolidated Cashflow Statement HUF million Mar 31, 2010 Mar 31, 2011 Change Net cash generated from operating activities 39 817 44 620 12,1% Investments in tangible and intangible assets (15 669) (12 314) -21,4% Adjustments to cash purchases (6 103) (8 097) 32,7% Purchase of subsid

  29. Slide 29: Investigation note on audit and internal investigation

    In the course of conducting their audit of the Company’s 2005 financial statements, PricewaterhouseCoopers, the Company’s auditors, identified two contracts the nature and business purposes of which were not readily apparent to them. In February 2006, the Company’s Audit Committee retained White & C

  30. Slide 30: 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, ARPU: average revenue per user, BB: broadband, CBC: call-by-call, CPS: carrier pre-selection, HQ: headquarte

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