Telekom Austria Ag · VIE:TKA

Telekom Austria — Q2 2007 Earnings Presentation

48 slides from Telekom Austria's earnings presentation, Aug 22, 2007

  1. Slide 1: Telekom Austria Group Results for the Second Quarter 2007

    Telekom Austria Group Results for the Second Quarter 2007 Vienna, August 22, 2007

  2. Slide 2: Cautionary Statement

    Cautionary Statement “This presentation contains certain forward-looking statements. Actual results may differ materially from those projected or implied in such forward-looking statements. Forward-looking information involves risks and uncertainties that could significantly affect expected results.

  3. Slide 3: Agenda

    Agenda ƒ Key Developments ƒ Fixed Net ƒ Mobile Communication ƒ Financial Overview ƒ Outlook Results for the Second Quarter 2007 3

  4. Slide 4: Key Developments

    Key Developments Results for the Second Quarter 2007 4

  5. Slide 5: Revenues grow by 3.3%, EBITDA Increase of Mobile Communication Partly Offsets Lower Fixed Net

    Revenues grow by 3.3%, EBITDA Increase of Mobile Communication Partly Offsets Lower Fixed Net ƒ Revenues increase by 3.3% with Fixed Net and Mobile Communication contributing to growth ƒ EBITDA declines by 2.7% as a growth in Mobile Communication partly offsets lower Fixed Net EBITDA ƒ Lower contrib

  6. Slide 6: Share Buyback Pushes EPS by 7.1%

    Share Buyback Pushes EPS by 7.1% Revenues EBITDA (in EUR Mio.) (in EUR Mio.) 3.3% -2.7% 1,208.0 1,169.4 464.7 477.5 2Q 07 2Q 06 2Q 07 2Q 06 Net Income Earnings per Share (in EUR Mio.) (in EUR) -0.2% 130.6 130.9 7.1% 0.30 0.28 2Q 07 2Q 06 2Q 07 2Q 06 Results for the Second Quarter 2007 6

  7. Slide 7: Fixed Net

    Fixed Net Results for the Second Quarter 2007 7

  8. Slide 8: Acquisition of eTel Drives Revenue Growth, EBITDA Impacted by Higher Personnel Expenses

    Acquisition of eTel Drives Revenue Growth, EBITDA Impacted by Higher Personnel Expenses Revenues (in EUR Mio.) ƒ Revenues increase by 2.7%, 2.7% with eTel contributing EUR 533.4 519.3 17.5 mn 2Q 07 2Q 06 ƒ EBITDA declines by 4.5% driven by higher personnel EBITDA expenses (in EUR Mio.) -4.5% 186.4 1

  9. Slide 9: Fixed Net Resists Against Overall Market Trend

    Fixed Net Resists Against Overall Market Trend ƒ Voice market share increases Voice Market Shares 2Q 07* due to successful retention. eTel’s market share is 4.1% 4.1% 7.3% 2.2% 2.7% 59.2% ƒ Number of access lines declines 2.2% by 8% 22.3% ƒ Increase in line loss due to Telekom Austria Tele2/UTA Tele

  10. Slide 10: Retail Broadband Share Increases to 42.5% While Unbundling Growth Rate Decelerates

    Retail Broadband Share Increases to 42.5% While Unbundling Growth Rate Decelerates Broadband Market Shares ƒ Telekom Austria’s retail market share rises to 42.5% 42.5% 34.9% ƒ Unbundling takes market share from wholesale & 15.9% cable operators 6.7% 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 ƒ Q-on-Q growth rate

  11. Slide 11: Fixed-to-Mobile Substitution is Maindriver for Acceleration of Fixed Net Lines Loss

    Fixed-to-Mobile Substitution is Maindriver for Acceleration of Fixed Net Lines Loss Net Adds Unbundled Lines (in 000) 36 20 21 16 16 Line Loss 2Q 07 1Q 07 4Q 06 3Q 06 2Q 06 (in 000) 67 …while unbundling net adds remained 59 52 relatively constant over time. 37 38 Net Adds Mobile Broadband 2Q 07 1Q 0

  12. Slide 12: Managing Fixed-to-Mobile Substitution is Key

    Managing Fixed-to-Mobile Substitution is Key ƒ Substitution is not disruption, but evolution of communication business Fixed-to-Mobile Substitution is Maindriver for Acceleration of Fixed Net Lines Loss Net Adds Unbundled Lines (in 000) ƒ Strong position in both 20 36 21 16 16 segments helps to mana

  13. Slide 13: Mobile Communication

    Mobile Communication Results for the Second Quarter 2007 13

  14. Slide 14: All Operations Contribute to EBITDA Growth

    All Operations Contribute to EBITDA Growth ƒ Subscriber base increases by Revenues (in EUR Mio.) 14.2% to 10.8 mn customers 4.0% ƒ Strong international 739.5 710.9 operations lead to increase in 421.9 revenue by 4.0% 2Q 07 2Q 06 ƒ All operations contribute to EBITDA growth of 2.5% EBITDA (in EUR Mio

  15. Slide 15: mobilkom austria Increases Market Share to 39.6%

    mobilkom austria Increases Market Share to 39.6% Revenues ƒ Market share increases from (in EUR Mio.) 38.5% to 39.6% driven by -0.5% mobile broadband & bob 419.9 421.9 ƒ Number of net adds increases by 85% to 66,800 ƒ 210,000 data cards & USB 2Q 07 2Q 06 modems sold until end of June EBITDA ƒ Revenu

  16. Slide 16: Mobiltel's Revenues Increases by 10.3%, Profitability Remains High

    Mobiltel’s Revenues Increases by 10.3%, Profitability Remains High Revenues (in EUR Mio.) ƒ Subscriber base grows by 10.3% 158.9 144.1 18.1% to 4.6 mn customers ƒ Revenues grow by 10.3% to 2Q 07 2Q 06 EUR 158.9 mn EBITDA ƒ EBITDA increases by 8.0% (in EUR Mio.) to EUR 91.5 mn 8.0% 91.5 84.7 ƒ EBITDA

  17. Slide 17: Strong Performance in Croatia and Slovenia

    Strong Performance in Croatia and Slovenia EBITDA Vipnet in Croatia (in EUR Mio.) ƒ Subscriber base increases by 47.8 2.6% 46.6 16.3% ƒ EBITDA increases by 2.6% to Vipnet EUR 47.8 mn 2Q 07 2Q 06 Si.mobil in Slovenia ƒ Subscriber base grows by 109.8% 12.8 18.0% 6.1 ƒ EBITDA more than doubles Si.mobil

  18. Slide 18: Launch in Serbia Within 6 Months is in Top League of the Industry

    Launch in Serbia Within 6 Months is in Top League of the Industry ƒ Brand & promotions launched and Shops opening in June ƒ Launch of full operations in July Austria ƒ National roaming provides coverage from start ƒ Established vip brand Bulgaria successfully implemented in new market, building on e

  19. Slide 19: Financial Overview

    Financial Overview Results for the Second Quarter 2007 19

  20. Slide 20: Revenue & Operating Income Increase in 2Q 07, Start up Costs and Fixed Net Weigh on EBITDA

    Revenue & Operating Income Increase in 2Q 07, Start up Costs and Fixed Net Weigh on EBITDA (EUR million) 2Q 07 2Q 06 % change HY07 HY06 % change Revenues 1,208.0 1,169.4 3.3% 2,353.8 2,328.0 1.1% EBITDA 464.7 477.5 -2.7% 939.6 981.8 -4.3% Operating income 196.7 192.5 2.2% 407.4 414.1 -1.6% Financial

  21. Slide 21: Cash Flow from Operations Increases by 3.2%; Higher Capital Expenditures

    Cash Flow from Operations Increases by 3.2%; Higher Capital Expenditures Primarily due to Greenfield Investments (EUR million) 2Q 07 2Q 06 % change HY 07 HY06 % change Cash Flow from operations before 421.4 435.3 -3.2% 852.3 903.6 -5.7% working capital adjustments Change in working capital -0.5 -29.

  22. Slide 22: Capex of EUR 170.5 mn for Existing Operations and EUR 144.5 mn Spent on Growth Projects

    Capex of EUR 170.5 mn for Existing Operations and EUR 144.5 mn Spent on Growth Projects (EUR million) 2Q 07 2Q 06 % change HY 07 HY 06 % change Fixed Net 64.5 53.2 21.2% 123.9 113.7 9.0% Mobile Communication 106.0 97.9 8.3% 197.1 159.2 23.8% Ordinary capital expenditures 170.5 151.1 12.8% 321.0 272.

  23. Slide 23: Asset Base Remains Almost Stable Compared to Year End 2006

    Asset Base Remains Almost Stable Compared to Year End 2006 (EUR million) June 30, 07 Dec. 31, 06 % change Long-term Assets 6,335.4 6,399.5 -1.0% Current Assets 1,170.1 1,160.2 0.9% Total assets 7,505.5 7,559.7 -0.7% Current liabilities 2,009.4 1,657.3 21.2% Long-term liabilities 2,911.2 3,078.9 -5.4

  24. Slide 24: Intensity of Share Buyback Reaches All-Time High

    Intensity of Share Buyback Reaches All- Time High Share Buyback Treasury shares held (in EUR Mio.) (in % of share capital) Cancellation of 8% of treasury shares held 15.7% 134.1 115.9 7.7% 1.6% 2Q 07 2Q 06 2Q 07 FY 06 Net Debt Net Debt / EBITDA (in EUR Mio.) (annualized) 6.0% 1.8x 1.7x 3,358.2 3,169

  25. Slide 25: Outsourcing of Execution of Share Buyback Program Reduces Closed Period

    Outsourcing of Execution of Share Buyback Program Reduces Closed Period ƒ Beginning 3Q 07 Telekom Austria Group has outsourced the execution of its share buyback program to a bank ƒ Bank has discretion to acquire shares of Telekom Austria within a defined framework ƒ Without direct influence on timi

  26. Slide 26: Outlook

    Outlook Results for the Second Quarter 2007 26

  27. Slide 27: Outlook for FY 2007 reiterated as amended in July

    Outlook for FY 2007 reiterated as amended in July Group ƒ Stable development of revenues ƒ EBITDA is expected to be impacted by start up costs related to the start of operations in the Republic of Serbia and Macedonia as well as the introduction of a comprehensive roaming regulation ƒ Full year EBIT

  28. Slide 28: Appendix

    Appendix Results for the Second Quarter 2007 28

  29. Slide 29: Regulatory Issues – Key Aspects (1)

    Regulatory Issues – Key Aspects (1) ƒ Analysis of wholesale market for mobile termination: Like in the previous market analysis decision, mobilkom austria was found to have significant market power and therefore the following remedies were applied: non-discriminatory obligation, standard offer for m

  30. Slide 30: Regulatory Issues – Key Aspects (2)

    Regulatory Issues – Key Aspects (2) ƒ Analysis wholesale broadband access market: The Austrian Regulatory Authority started in May a market analysis process for the wholesale broadband access market (2nd round). The end of the market analysis process with final decision is not expected before the en

  31. Slide 31: Regulatory Issues – Key Aspects (3)

    Regulatory Issues – Key Aspects (3) ƒ International roaming charges:The roaming regulation came into force on 30. June 2007 containing the following provisions: ƒ Wholesale: The maximum wholesale charge must not exceed 30 Cents in the first year and shall be decreased to 28 Cents in the second year

  32. Slide 32: Fixed Net - Access Lines

    Fixed Net - Access Lines (in 000) 2Q 07 2Q 06 % change PSTN access lines 2,134.3 2,319.0 -8.0% Basic ISDN access lines 375.5 406.2 -7.5% Multi ISDN access lines 6.9 7.3 -5.1% Total access lines in service 2,516.8 2,732.4 -7.9% of these ADSL access lines 724.0 637.6 13.6% thereof ADSL wholesale lines

  33. Slide 33: Fixed Net - Market Shares

    Fixed Net - Market Shares* 65% 60% 55% 50% 45% 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 Local + National long distance traffic Fixed to mobile International Total voice traffic *excluding eTel Results for the Second Quarter 2007 33

  34. Slide 34: ADSL – Revenues and Residential ARPU

    ADSL – Revenues and Residential ARPU* ADSL Revenues (incl. Wholesale) ADSL Residential ARPU (in EUR Mio.) (in EUR) 32.1 63.4 62.7 30.1 29.8 29.8 29.0 59.8 28.5 27.9 28.8 57.2 58.8 58.9 27.3 26.5 53.3 48.4 50.3 45.9 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 1Q 05 2Q 05 3Q 05 4Q 05 1

  35. Slide 35: Fixed Net - Minutes and Average Tariffs

    Fixed Net - Minutes and Average Tariffs (in million minutes) 2Q 07 2Q 06 % change National 792 866 -8.6% Fixed-to-mobile 181 199 -9.1% International 94 101 -6.4% Total voice minutes 1,067 1,166 -8.5% Internet dial-up 177 366 -51.6% Total Fixed Net minutes 1,244 1,532 -18.8% (Average tariffs in EUR)

  36. Slide 36: Mobile Subscribers

    Mobile Subscribers (in 000) 2Q 07 2Q 06 % change Contrac t 2,411.4 2,021.8 19.3% Prepaid 1,352.6 1,451.0 - 6.8% Total Austria 3,764.0 3,472.8 8.4% Market share 39.6% 38.5% Contrac t 1,762.3 1,348.3 30.7% Prepaid 2,791.8 2,506.9 11.4% Total Bulgaria 4,554.1 3,855.2 18.1% Market share 50.6% 55.3% Cont

  37. Slide 37: Operational Data – mobilkom austria

    Operational Data – mobilkom austria MoU per Subscriber ARPU & Data ARPU (in EUR) 174.4 171.0 Blended ARPU Data ARPU 164.6 156.0 32.0 31.7 33.4 34.9 34.9 154.3 6.3 6.2 5.6 5.2 4.9 2Q 07 1Q 07 4Q 06 3Q 06 2Q 06 2Q 07 1Q 07 4Q 06 3Q 06 2Q 06 ARPU Quarterly Churn SRC & SAC* (in EUR Mio.) (in EUR) 53.3 4

  38. Slide 38: mobilkom austria - Mobile Data

    mobilkom austria - Mobile Data Number of Data Cards and USB Number of SMS Modems Sold Cumulated (in Mio.) 210 400 170 372 140 310 109 238 100 207 2Q 07 1Q 07 4Q 06 3Q 06 2Q 06 2Q 07 1Q 07 4Q 06 3Q 06 2Q 06 MMS Users Data in % of Revenues* (in 000) 1,701 1,607 1,488 1,361 1,274 26.4% 20.2% June30, Ma

  39. Slide 39: Headcount Development

    Headcount* Development (average period) 2Q 07 2Q 06 change Fixed Net 9,662 9,507 155 Mobile Communciation 6,292 5,962 330 Telekom Austria Group 15,954 15,469 485 (end of period) 2Q 07 2Q 06 change Fixed Net 9,779 9,496 283 Mobile Communciation 6,282 5,968 314 Telekom Austria Group 16,061 15,464 597

  40. Slide 40: Fixed Net - Revenue Breakdown

    Fixed Net - Revenue Breakdown (EUR million) 2Q 07 2Q 06 % change HY 07 HY 06 % change Switched voice base traffic 85.6 88.5 -3.3% 172.3 189.3 -9.0% Switched voice mo nthly & o ther voice revenues 120.8 129.6 -6.8% 242.2 261.8 -7.5% Payphones & VAS 11.6 11.2 3.6% 22.7 22.0 3.2% Wholesale data & IT-so

  41. Slide 41: Fixed Net – Expense Breakdown

    Fixed Net – Expense Breakdown (EUR million) 2Q 07 2Q 06 % change HY 07 HY 06 % change Material expense 18.4 14.5 26.9% 35.1 31.1 12.9% Employee costs 137.0 126.4 8.4% 274.5 256.1 7.2% Depreciation, amortiz ation and impairment charges 142.8 162.3 -12.0% 281.6 323.0 -12.8% Interconnection 92.1 89.2 3

  42. Slide 42: Mobile Communication - Revenue Breakdown

    Mobile Communication - Revenue Breakdown (EUR million) 2Q 07 2Q 06 % change HY 07 HY 06 % change Traffic revenues 361.0 364.0 -0.8% 697.9 700.1 -0.3% Monthly rental 144.6 117.6 23.0% 283.0 236.6 19.6% Equipment 68.7 55.8 23.1% 123.3 112.1 10.0% Ro aming 56.7 59.6 -4.9% 114.3 125.1 -8.6% Interco nnec

  43. Slide 43: Mobile Communication - Expense Breakdown

    Mobile Communication - Expense Breakdown (EUR million) 2Q 07 2Q 06 % change HY 07 HY 06 % change Material expense 78.0 75.0 4.0% 148.4 149.5 -0.7% Employee costs 59.0 51.3 15.0% 114.3 107.4 6.4% Depreciation, amortiz ation and impairment charges 125.7 122.7 2.4% 250.8 244.9 2.4% Interconnection 87.4

  44. Slide 44: Operating Revenues by Segment

    Operating Revenues by Segment (EUR million) 2Q 07 2Q 06 % change HY 07 HY 06 % change Fixed Net revenues 533.4 519.3 2.7% 1,044.2 1,054.2 -0.9% Mobile Communication revenues 739.5 710.9 4.0% 1,433.6 1,399.1 2.5% Corporate, Other & Eliminations -64.9 -60.8 6.7% -124.0 -125.3 -1.0% Operating revenues

  45. Slide 45: EBITDA and Operating Income by Segment

    EBITDA and Operating Income by Segment (EUR million) 2Q 07 2Q 06 % change HY 07 HY 06 % change Fixed Net EBITDA 186.4 195.1 -4.5% 379.6 410.5 -7.5% Mobile Communciation EBITDA 293.2 286.0 2.5% 580.2 579.4 0.1% Corporate, Other & Eliminations -14.9 -3.6 313.9% -20.2 -8.1 149.4% EBITDA 464.7 477.5 -2.

  46. Slide 46: Capital Expenditure by Segment

    Capital Expenditure by Segment (EUR million) 2Q 07 2Q 06 % change HY 07 HY 06 % change Fixed Net tangible 59.8 51.1 17.0% 108.5 102.1 6.3% Mobile Communication tangible 110.4 81.6 35.3% 183.4 134.3 36.6% Tangible (total) 170.2 132.7 28.3% 291.9 236.4 23.5% Fixed Net intangible 4.7 2.1 123.8% 15.4 11

  47. Slide 47: Net Debt - Telekom Austria Group

    Net Debt - Telekom Austria Group (EUR million) Jun 30, 2007 Dec 31, 2006 % change Long-term debt 2,558.1 2,750.1 -7.0% Short-term debt 923.7 562.1 64.3% - Short-term portion of capital and cross border lease obligations -10.9 -9.4 16.0% + Capital lease obligations 1.2 0.1 1100.0% Cash and cash equiv

  48. Slide 48: Debt Maturity Profile

    Debt Maturity Profile Ratings: ƒ S&P: BBB+ (stable outlook) ƒ Moody‘s: A3 (stable outlook) (in EUR Mio.) Ratio: 1,232 ƒ Net Debt / EBITDA (annualized): 1.8x 631 480 237 215 157 Listed Bonds: 2007 2008 2009 2010 2011 the re a fte r ƒ EUR 750 million 2003 – 2013 ƒ EUR 500 million 2005 – 2010 ƒ EUR 500

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