Telekom Austria Ag · VIE:TKA
Telekom Austria — Q2 2017 Earnings Presentation
47 slides from Telekom Austria's earnings presentation, Jul 25, 2017
Slide 1: Results for the first half and second quarter 2017
Results for the first half and second quarter 2017 Vienna, 25 July 2017
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: Key financial developments for the first half and second quarter 2017
Key financial developments for the first half and second quarter 2017 Results for the first half and second quarter 2017 3
Slide 4: Q2 2017: Higher service revenues translated into EBITDA growth
Q2 2017: Higher service revenues translated into EBITDA growth Reported Proforma Group (in EUR million) Q2 2017 Q2 2016 % change Total revenues 1,082.9 1,041.3 4.0% EBITDA 359.3 333.3 7.8% CAPEX 171.3 208.2 -17.7% > Group total revenues rose by 4.0% y-o-y on a proforma basis (+3.2% y-o-y excluding F
Slide 5: Austria: Solid revenue and EBITDA growth while competition remains fierce
Austria: Solid revenue and EBITDA growth while competition remains fierce ARPU ARPL Operational data (in EUR) (in EUR) > 1.4% decline in subscriber base, mainly driven by the Δ: +1.9% decrease in prepaid customers Δ: -0.7% 28.0 28.6 > Excl. roaming, higher operative ARPU due to increased 15.6 15.5 h
Slide 6: CEE: Ongoing strong EBITDA performance in Belarus and growth in Bulgaria and Croatia and Macedonia
CEE: Ongoing strong EBITDA performance in Belarus and growth in Bulgaria and Croatia and Macedonia EBITDA Highlights CEE (proforma, in EUR mn) Bulgaria: > 3.4% growth in revenues benefits from higher EUR 33.4 mn EUR 25.6 mn EUR 52.2 mn equipment and ongoing improving trends in service Δ: +2.6 mn Δ:
Slide 7: Higher free cash flow due to improved operations as well as less CAPEX paid and interest paid
Higher free cash flow due to improved operations as well as less CAPEX paid and interest paid (in EUR million) Q2 2017 Q2 2016 % change 1-6 M 2017 1-6 M 2016 % change Net cash flow from operating activities 314.2 255.1 23.2% 576.1 562.3 2.5% Capital expenditures paid -169.4 -171.7 -1.4% -378.2 -416.
Slide 8: Focus points
Focus points Results for the first half and second quarter 2017 8
Slide 9: Growing optimiser segment remains challenge to be tackled in the Austrian mobile market
Growing optimiser segment remains challenge to be tackled in the Austrian mobile market Top Segment Optimiser Penny Saver > High quality customer > Fitting customer needs > Simple tariffs with service and products with: basic service > Attractive packages incl. • different service levels > SIM-only
Slide 10: Austria: 2nd tranche of broadband subsidy programme launched
Austria: 2nd tranche of broadband subsidy programme launched 1st Tranche 2016 (Total: EUR 300 mn) 2nd Tranche 2017 (Total: EUR 200 mn) EUR 96 mn EUR 96 mn EUR 78 mn EUR 59 mn 67% 60% Decision Decision pending pending Access Backhaul Access Backhaul > Subsidies for expansion/modernisation of existing
Slide 11: Measures taken to address current challenges in Slovenia and the Republic of Serbia
Measures taken to address current challenges in Slovenia and the Republic of Serbia Slovenia: Re-branding Serbia: Re-positioning Challenges: Challenges: > Fierce competition in mobile with high > Mobile-only provider in a competitive discounts on convergent products environment with aggressive conve
Slide 12: A1 digital embarks on selling cloud and IoT in TAG footprint and beyond
A1 digital embarks on selling cloud and IoT in TAG footprint and beyond Enabling companies to translate digital potential into business results. > Offering IoT solutions (focus on construction, logistics and manufacturing industries) with major customer wins > Portfolio will be further increased > M
Slide 13: Outlook for the full year 2017
Outlook for the full year 2017 Results for the first half and second quarter 2017 13
Slide 14: Telekom Austria Group outlook for the full year
Telekom Austria Group outlook for the full year 2017 25 July 2017 Consensus 2017 Total revenues approx. +1% EUR 4,273 mn CAPEX approx. EUR 725 mn EUR 749 mn Proposed dividend EUR 0.20 / share - > Outlook based on reported figures and constant currencies except for Belarus (assumed devaluation of 0-5
Slide 15: Appendix
Appendix 1 Results for the first half and second quarter 2017 15
Slide 16: The leading regional communications player providing convergent telecommunication services
The leading regional communications player providing convergent telecommunication services as of 30 June 2017 (in ‘000) Austria* Slovenia Belarus Mobile market position #1 Mobile market position #2 Mobile market position #2 Mobile subscriber: Mobile subscriber: Mobile subscriber: > 5,364 (Q2 2016: 5
Slide 17: Telekom Austria Group – Profit and Loss
Telekom Austria Group – Profit and Loss (in EUR million) Q2 2017 Q2 2016 % change Service Revenues 966.4 929.2 4.0% Equipment Revenues 116.6 101.5 14.9% Total Revenues 1,082.9 1,030.7 5.1% Cost of Service -342.7 -333.2 -2.8% Cost of Equipment -128.9 -125.3 -2.9% Selling, General & Administrative Exp
Slide 18: Telekom Austria Group – Total revenues & costs and expenses per segment
Telekom Austria Group – Total revenues & costs and expenses per segment Telekom Austria Group - Total Revenue Split Total Revenues (in EUR million) Q2 2017 Q2 2016 % change Austria* 647.4 631.7 2.5% Bulgaria 103.3 99.9 3.4% Croatia 108.6 98.7 10.1% Belarus 101.9 76.1 33.9% Slovenia 53.5 52.3 2.5% Re
Slide 19: Telekom Austria Group – Headcount development
Telekom Austria Group – Headcount development FTE (Average Period) Q2 2017 Q2 2016 % change Austria 8,285 8,468 -2.2% International 10,059 8,971 12.1% Corporate 256 216 18.5% Telekom Austria Group 18,600 17,655 5.4% FTE (End of Period) Q2 2017 Q2 2016 % change Austria 8,274 8,464 -2.2% International
Slide 20: Telekom Austria Group – Capital expenditure split
Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q2 2017 Q2 2016 % change Austria* 100.2 116.0 -13.6% Bulgaria 25.2 22.0 14.6% Croatia 20.2 16.0 26.7% Belarus 10.3 28.6 -64.1% Slovenia 4.6 7.5 -38.4% Republic of Serbia 9.2 7.2 27.8% Republic of Macedonia 4.0 11
Slide 21: Telekom Austria Group – Net debt
Telekom Austria Group – Net debt Net Debt* (in EUR million) 30 June 2017 31 December 2016 % change Long-term Debt 2,283.4 2,303.5 -0.9% Short-term Borrowings 197.9 500.1 -60.4% Cash and Cash Equivalents and Short-term Investments -53.7 -464.2 88.4% Net Debt of Telekom Austria Group 2,427.6 2,339.4 3
Slide 22: Telekom Austria Group – Debt maturity profile
Telekom Austria Group – Debt maturity profile Debt maturity profile* (in EUR million) 745.5 744.5 494.6 298.5 197.4 0.6 0.1 0.1 0.0 0.0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 > EUR 2,481.2 mn short-and long-term borrowings as of 30 June 2017 > Average cost of debt of approximately 2.86% >
Slide 23: Telekom Austria Group – Debt profile
Telekom Austria Group – Debt profile Overview debt instruments Fixed/floating mix 3.1% 96.9% 100.0% Loans Bonds Fixed 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 maturity of appr
Slide 24: 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) 28.6 3,513.2 3,501.4 3,495.5 3,476.8 3,435.1 28.0 27.9 28.2 28.3 186.3 186.7 186.5 186.9 184.9 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 ARPL ARPL-rel
Slide 25: Segment Austria – Mobile key performance indicators
Segment Austria* – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 1.7 1.8 1.7 1.7 15.6 16.1 15.7 15.6 15.5 1.5 263.5 255.3 254.7 252.7 249.7 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 ARPU Service Revenues Subsidies Mobi
Slide 26: Segment Austria – Broadband market split
Segment Austria – Broadband market split Market share total broadband Market share mobile broadband (in %) (in %) 0.4 1.9 3.4 3.8 21.3 21.4 Others Hofer T-Mobile 41.3 39.3 34.0 34.7 Mobile Broadband Hutchison Other Operators A1 Unbundled Lines 3.9 33.7 33.6 3.6 Cable 16.0 16.2 Q2 16 Q2 17 A1 Mobile
Slide 27: Segment Austria – Voice market split
Segment Austria – Voice market split Market share voice RGUs (in %) 13.1 12.8 3.4 3.2 23.1 23.6 Others UPC Tele2/UTA A1 60.4 60.4 Q2 16 Q2 17 Results for the first half and second quarter 2017 27
Slide 28: 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) 1,025.5 1,019.3 1,018.9 1,006.8 1,002.0 10.8 10.9 10.8 10.9 11.3 17.6 17.7 17.6 17.7 18.3 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 ARPL ARPL-relevan
Slide 29: Segment Bulgaria – Mobile key performance indicators
Segment Bulgaria – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 2.2 2.1 2.0 2.0 5.5 5.8 5.5 5.3 5.4 1.6 67.5 71.1 67.4 64.8 66.4 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 ARPU Service Revenues Subsidies Mobile penetra
Slide 30: 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 26.5 23.6 23.6 23.8 607.4 620.1 662.3 667.2 593.7 23.7 26.0 19.4 19.7 20.3 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 ARPL ARPL-relevant revenues
Slide 31: Segment Croatia – Mobile key performance indicators
Segment Croatia – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 13.3 4.4 11.9 11.3 12.2 11.3 2.7 2.4 71.5 2.0 1.8 60.0 61.3 57.9 63.5 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 ARPU Service Revenues Subsidies Mobile pen
Slide 32: Segment Belarus – Mobile key performance indicators
Segment Belarus – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 5.0 1.8 4.6 4.6 1.6 1.6 1.7 1.6 4.1 4.3 67.8 67.6 73.6 63.2 59.6 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 ARPU Service Revenues Subsidies Mobile penetrat
Slide 33: 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) 170.7 172.0 172.0 176.4 177.1 36.6 36.2 35.3 34.2 34.6 7.7 7.3 7.3 7.7 7.5 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 ARPL ARPL-relevant revenues Fixe
Slide 34: Segment Slovenia – Mobile key performance indicators
Segment Slovenia – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 16.7 1.7 1.7 15.9 15.4 15.5 15.7 1.6 1.6 1.3 34.2 35.9 33.7 33.0 33.1 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 ARPU Service Revenues Subsidies Mobile pe
Slide 35: Segment Serbia – Mobile key performance indicators
Segment Serbia – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 5.7 5.7 5.3 5.3 4.8 3.4 3.2 3.1 3.0 2.9 35.5 35.8 34.0 31.0 34.0 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 ARPU Service Revenues Subsidies Mobile penetrati
Slide 36: 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) 12.4 12.5 12.2 12.3 12.4 305.7 307.1 314.3 314.5 316.9 5.3 5.3 5.2 5.3 5.3 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 ARPL ARPL-relevant revenues Fix
Slide 37: Segment Macedonia – Mobile key performance indicators
Segment Macedonia – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 6.1 6.4 6.0 6.1 3.0 5.8 2.6 2.2 2.3 1.7 20.8 21.8 20.1 20.0 19.2 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 ARPU Service Revenues Subsidies Mobile penetr
Slide 38: Appendix 2 – Regulatory topics
Appendix 2 – Regulatory topics Results for the first half and second quarter 2017 38
Slide 39: Glide Path of Mobile Termination Rates
Glide Path of Mobile Termination Rates Jan Jul Jan Jul Jan Jul 2015 2015 2016 2016 2017 2017 No future glide Austria (EUR) 0.008049 0.008049 0.008049 0.008049 0.008049 path set Bulgaria (BGN) 0.019 0.019 0.019 0.019 0.014 0.014 Croatia (HRK) 0.063* 0.063* 0.063* 0.063* 0.063* 0.047* MTS 250/125 MTS
Slide 40: Upcoming spectrum tenders/prolongations/assignments
Upcoming spectrum tenders/prolongations/ assignments* Expected Comments 2018 (3400-3800 MHz) Austria - 2019 (700, 2100 MHz) 2017 (800 MHz) 2017 (1800 MHz) CRC initiated a public consultation procedure on the available spectrum in 1800 Bulgaria 2018 (2600 MHz) MHz. 2019 (2100 MHz) Croatia 2020 (700 M
Slide 41: EU roaming price regulation
EU roaming price regulation RETAIL (in EURc) Before July 2012 July 2013 July 2014 30 April 2016 15 June 2017 domestic tariff Data (per MB) none 70 45 20 domestic tariff + 5* Voice-calls made domestic tariff 35 29 24 19 domestic tariff (per minute) + 5* Voice-calls received weighted 11 8 7 5 0 (per m
Slide 42: Appendix 3 – Personnel restructuring in Austria
Appendix 3 – Personnel restructuring in Austria Results for the first half and second quarter 2017 42
Slide 43: Overview – Restructuring charges and provision vs. FTE
Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) 2012 2013 2014 2015 2016 Q1 17 Q2 17 2012 2013 2014 2015 2016 Q1 17 Q2 17 FTE reduction 49.9 149.0 86.4* 69.5** 95.0 1.4 1.7 Transfer to government 44 22 52 49 6 2 2 Servicekom contr
Slide 44: Overview – Cash flow impact of restructuring
Overview – Cash flow impact of restructuring Overview cash flow impact (in EUR million) Total cash flow impact > Total cash flow impact comprises 2012 104.0 old and new programmes 2013 108.0 > Cash flow impact for Q2 2017 of 2014 107.1 EUR 25.9 mn 2015 101.9 2016 105.5 > Expected cash flow impact fo
Slide 45: Appendix 4 – Corporate sustainability
Appendix 4 – Corporate sustainability Results for the first half and second quarter 2017 45
Slide 46: Alignment with core business and materiality analysis define sustainability strategy
Alignment with core business and materiality analysis define sustainability strategy Results for the first half and second quarter 2017 46
Slide 47: Key figures – Corporate Sustainability
Key figures – Corporate Sustainability Selected Group-wide KPIs Ratings Network & Customers 2016 Number of customers (in thou.) 24.129 ›Classification: B- ›Classification: B- Environment 2016 Total CO2 emissions (Scope 1+2 market-based in tonnes) 205.457 Energy efficiency index (in Mwh/terabyte) 0.3
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