Telekom Austria AG · VIE:TKA

Telekom Austria — A1 Telekom Austria Group — Q3 2020 Earnings Presentation

39 slides from Telekom Austria's earnings presentation, Oct 20, 2020

  1. Slide 1: Results for the first nine months and third quarter 2020

    Results for the first nine months and third quarter 2020 Vienna, October 20, 2020

  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: A1 Telekom Austria Group key facts

    A1 Telekom Austria Group key facts Revenues by segment(a) 10.5% Bulgaria Austria 57.5% 9.4% Croatia 9.2% Belarus 4.5% Slovenia North Macedonia 6.2% 2.7% Serbia EBITDA by segment(a) 11.1% Bulgaria Austria 8.9% 56.8% Croatia 11.8% Belarus Slovenia 3.6% Serbia North Macedonia 2.7% 5.1% Results for the

  4. Slide 4: The leading regional communications player providing convergent telecommunication services

    A1 Telekom Austria Group: The leading regional communications player providing convergent telecommunication services as of September 30, 2020 (in ‘000) Austria Bulgaria Croatia Mobile market position #1 Mobile market position: #1 Mobile market position #2 Mobile subscribers: Mobile subscribers: Mobi

  5. Slide 5: Shareholder structure as of December 31, 2019

    Shareholder structure as of December 31, 2019 Two strong core shareholders Freefloat by nationality United Kingdom Rest of Europe Switzerland 2.7% 2.2% 1.2% Unidentified Free Float 3.5% 20.58% France United States 4.1% 34.9% Rest of World 4.3% Nordics 5.1% América Movil 51.00% Germany 20.6% ÖBAG* Au

  6. Slide 6: Strong balance sheet is acknowledged by rating upgrades

    Strong balance sheet is acknowledged by rating upgrades Debt ratio sharply Equity ratio Rating improved reduced significantly increased Net Debt / EBITDA (pre IFRS 16) Reimbursement of hybrid bond Baa1/BBB+ 3.4 0.5 2.6 38.5 Baa2/BBB 2.2 2.1 2.0 34.9 32.6 31.2 (positive outlook) 0.5 26.7 29.2 0.4 0.4

  7. Slide 7: A1 Peer Group comparison: Consequent implementation of strategy led back to growth path

    A1 Peer Group comparison: Consequent implementation of strategy led back to growth path Revenue growth EBITDA adj. growth Net debt/EBITDA* CAGR, 2016-2019 CAGR, 2016-2019 2019YE** * without IFRS 16 adoption 7 Results for the first nine months and third quarter 2020 ** source: Barclays

  8. Slide 8: Operational and financial highlights for the first nine months and third quarter 2020

    Operational and financial highlights for the first nine months and third quarter 2020 8

  9. Slide 9: Highlights Q3 2020

    Highlights Q3 2020  Group total revenues decline of -0.9% (excl. FX and one-off effects: +1.7%) and EBITDA before restructuring growth of +0.5% (excl. FX and one-off effects: +4.3%)  Roaming losses as the main negative Covid-19 impact in Q3 2020 (~ -2% on total revenues; ~ -5% on EBITDA) and also

  10. Slide 10: EBITDA growth due to continued operational efficiencies outweighing roaming losses and negative FX effects

    EBITDA growth due to continued operational efficiencies outweighing roaming losses and negative FX effects Group (in EUR million) Q3 2020 Q3 2019 % change Total revenues 1,142.1 1,152.7 -0.9% Service revenues 953.8 974.7 -2.1% EBITDA before restructuring* 462.5 460.0 0.5% CAPEX 125.0 185.5 -32.6% 

  11. Slide 11: Austria and CEE markets in Q3 2020

    Austria and CEE markets in Q3 2020 Total revenues Service revenues EBITDA before restructuring (in EUR mn) (in EUR mn) (in EUR mn) 1,152.7 -0.6 -11.9 1,142.1 974.7 -6.7 +18.1 excl. FX -17.9 953.8 +0.5% -0.9% +3.7 excl. FX 13.0 -10.7 -2.1% 460.0 462.5 +2.6 excl. FX Revenues Austria CEE markets Revenu

  12. Slide 12: Austria: EBITDA growth despite roaming losses, due to increased operational efficiencies

    Austria: EBITDA growth despite roaming losses, due to increased operational efficiencies ARPU ARPL Operational data (in EUR) (in EUR)  +1.0% contract subscribers which were again driven by ongoing strong Δ: +3.7% Δ: +4.4% demand for mobile WiFi routers and high-value tariffs 32.5 31.1  Strong dema

  13. Slide 13: CEE: Negative FX effect and roaming losses mitigated by fixed-line service revenue growth

    CEE: Negative FX effect and roaming losses mitigated by fixed- line service revenue growth and operational efficiencies EBITDA Highlights CEE (in EUR mn; Q3 %-change vs. PY) Bulgaria:  Service revenue growth (+3.0%) was driven by the fixed-line business owing to customized corporate solutions and u

  14. Slide 14: 1-9M 2020: Strong free cash flow generation

    1-9M 2020: Strong free cash flow generation (in EUR million) Q3 2020 Q3 2019 % change 1-9 M 2020 1-9 M 2019 % change EBITDA 441,6 439,0 0,6% 1.212,3 1.205,2 0,6% Restructuring charges and cost of labor obligations 25,0 21,8 14,4% 68,3 67,9 0,6% Lease principal and interest paid -37,7 -37,4 -0,8% -13

  15. Slide 15: Focus Points

    Focus Points Results for the first nine months and third quarter 2020 15

  16. Slide 16: Multiband auction in Austria: Securing and expanding the excellent frequency spectrum

    Multiband auction in Austria: Securing and expanding the excellent frequency spectrum  The multiband auction in Austria ended in September with a result of EUR 65.6 mn for A1  30 MHz in the new 1500 MHz TDD band  Increase of the spectrum in the existing 2100 MHz FDD band from 20 to 25 MHz Total s

  17. Slide 17: Austria: Increasing share of higher bandwidth products and ongoing strong demand for mobile WiFi routers

    Austria: Increasing share of higher bandwidth products and ongoing strong demand for mobile WiFi routers Increased share of high bandwidth Stable mobile service revenues Fixed Mobile products despite heavy roaming losses Gross Adds Speed distribution in the base 69% 61%  Strong demand for mobile Wi

  18. Slide 18: Belarus: Political crisis weighs on FX; increasing macroeconomic risks

    Belarus: Political crisis weighs on FX; increasing macroeconomic risks and negative outlook revision of the country’s credit rating Service revenue growth continues in local Operations currency  Successful redesign of tariff plans  Stable mobile subscriber base year-on-year 16,9% 14,0%  Service r

  19. Slide 19: Q3 2020: Update of Covid-19 impact on key financials and KPIs

    Q3 2020: Update of Covid-19 impact on key financials and KPIs Gross adds Roaming CAPEX/OPEX Bad debt Churn  Traffic decline, but impact  Delivering on CAPEX  Gross adds improved for  No observed deterioration in Q3 slightly lower than guidance Internet@home products in collection anticipated  S

  20. Slide 20: Outlook for the full year 2020

    Outlook for the full year 2020 Results for the first nine months and third quarter 2020 20

  21. Slide 21: Outlook for the full year 2020 unchanged

    Outlook for the full year 2020 unchanged October 20, 2020 Consensus 2020 Total revenues ~ -2% -1.6% CAPEX ~ -25% EUR 599 mn* (vs. initial outlook) *CAPEX consensus excl. spectrum  Outlook based on reported figures; assumed devaluation of > 15% avg. BYN vs. EUR FX rate, with an especially strong adv

  22. Slide 22: Appendix 1: Additional information on KPIs and financials

    Appendix 1 Additional information on KPIs and financials 22

  23. Slide 23: The leading regional communications player providing convergent telecommunication services

    A1 Telekom Austria Group: The leading regional communications player providing convergent telecommunication services as of September 30, 2020 (in ‘000) Austria Bulgaria Croatia Mobile market position #1 Mobile market position: #1 Mobile market position #2 Mobile subscribers: Mobile subscribers: Mobi

  24. Slide 24: A1 Telekom Austria Group: Profit and Loss

    A1 Telekom Austria Group: Profit and Loss (in EUR million) Q3 2020 Q3 2019 % change Service Revenues 953.8 974.7 -2.1% Equipment Revenues 168.9 157.6 7.2% Other operating income 19.4 20.4 -5.0% Total Re ve nu e s 1,142.1 1,152.7 -0.9% Cost of Service -316.6 -324.8 2.5% Cost of Equipment -165.6 -154.

  25. Slide 25: Total revenues & costs and expenses per segment

    A1 Telekom Austria Group: Total revenues & costs and expenses per segment Total Re ve nu e s (in E UR million) Q3 2020 Q3 2019 % change Austria 657.1 657.7 -0.1% Bulgaria 127.9 122.0 4.8% Croatia 111.8 114.9 -2.7% Belarus 99.0 113.2 -12.6% Slovenia 52.7 52.5 0.4% Serbia 73.7 73.9 -0.2% North Macedon

  26. Slide 26: A1 Telekom Austria Group: Workforce development

    A1 Telekom Austria Group: Workforce development FTE (Average Period) Q3 2020 Q3 2019 % change Austria 7,424 7,793 -4.7% International 10,334 10,263 0.7% Corporate 365 384 -4.8% A 1 Te le kom A u s tria G rou p 18,123 18,439 -1.7% FTE (End of Period) Q3 2020 Q3 2019 % change Austria 7,414 7,787 -4.8%

  27. Slide 27: A1 Telekom Austria Group: Capital expenditure split

    A1 Telekom Austria Group: Capital expenditure split Capital Expenditures (in EUR million) Q3 2020 Q3 2019 % change Austria 85.3 119.5 -28.6% Bulgaria 10.4 20.7 -49.7% Croatia 7.7 15.0 -48.9% Belarus 4.9 8.4 -41.4% Slovenia 4.2 5.7 -25.8% Serbia 8.6 9.5 -9.5% North Macedonia 2.8 6.1 -53.3% Corporate

  28. Slide 28: A1 Telekom Austria Group: Net debt

    A1 Telekom Austria Group: Net debt as of September 30, 2020 Net Debt (excl. Leases) (in EUR million) 30 Se pte mbe r 2020 31 De ce mbe r 2019 % change Long-term Debt 2.541,9 2.539,6 0,1% Short-term Borrowings 0,0 123,0 -100,0% Cash and Cash Equivalents -306,5 -50,2 n.m. Ne t De bt (e xcl. Le as e s

  29. Slide 29: A1 Telekom Austria Group: Financial debt maturity profile

    A1 Telekom Austria Group: Financial debt maturity profile as of September 30, 2020 (in EUR mn) 748.8 748.3 745.6 299.3 0.0 0.0 0.0 2020 2021 2022 2023 2024 2025 2026  EUR 2,541.9 mn short- and long-term Lines of credit Ratings debt as of September 30, 2020  Undrawn committed  S&P: BBB+ (stable 

  30. Slide 30: Appendix 2: Reconciliation of Free Cash Flow

    Appendix 2 Reconciliation of Free Cash Flow Results for the first nine months and third quarter 2020 30

  31. Slide 31: 1-9 M 2020: Reconciliation free cash flow - operating view

    1-9 M 2020: Reconciliation free cash flow - operating view 1-9 M 2020 1-9 M 2019 % change FCF after social plans new 429.2 253.8 69.1% Social plans new funded 77.4 67.9 Total social plans paid* -74.3 -70.4 FCF - previously reported 432.3 251.2 72.0% *In the previous view all payments for all social

  32. Slide 32: Appendix 3: Regulatory Topics

    Appendix 3 Regulatory Topics Results for the first nine months and third quarter 2020 32

  33. Slide 33: Glide Path of Mobile Termination Rates

    Glide Path of Mobile Termination Rates Jul Jan Jul Jan Jul Jan Mar Jan April 2015 2016 2016 2017 2017 2018 2019 2020 2020 **** Austria (EUR) 0.008049 0.008049 0.008049 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 0.014 0.014 0.014 Croatia (

  34. Slide 34: Upcoming spectrum tenders/prolongations/assignments

    Upcoming spectrum tenders/prolongations/assignments* Expected Comments Austria Bulgaria 2021 (700, 800, 2600, 3400-3800 MHz) NRA opened the public consultation regarding the allocation of 700 MHz. 2021 (3500/700 MHz, 26GHz) Croatia NRA postponed auction for 5G spectrum to the first half of 2021. 202

  35. Slide 35: EU roaming price regulation

    EU roaming price regulation RETAIL (in EURc) July 2014 April 30, 2016 June 15, 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 +

  36. Slide 36: Appendix 4: Personnel restructuring in Austria

    Appendix 4 Personnel restructuring in Austria 36

  37. Slide 37: 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 2018 2019 Q1 20 Q2 20 Q3 20 2013 2014 2015 2016 2017 2018 2019 Q1 20 Q2 20 Q3 20 FTE reduction 149.0 86.4 69.5 95.0 9.1 70.1 100.2 17.7 36.6 19.5 Transfer to

  38. Slide 38: Appendix 5: ESG

    Vv / Vz Appendix 5 7 ESG At |

  39. Slide 39: ESG: Key figures

    ESG: Key figures Selected group-wide KPIs Ratings E nvironme nt 2019 Total CO2 emissions (Scope 1+2 market-based in tonnes) 215,981 Energy efficiency index (in MWh/terabyte) 0.17 Collected old mobile phones (in pcs) 64,504 Social 2019 Participations in trainings on media literacy G ove rnance 2019 I

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