Magyar Telekom Telecommunications Plc · BET:MTELEKOM

Magyar Telekom Telecommunications — Magyar Telekom — Q3 2016 Earnings Presentation

31 slides from Magyar Telekom Telecommunications's earnings presentation, November 2016

  1. Slide 1: Magyar Telekom Group Investor Presentation

    MAGYAR TELEKOM GROUP INVESTOR PRESENTATION NOVEMBER, 2016

  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 (FY2015) 8% Czech Republic 5% Slovakia Austria Moldova Hungary Hungary 87% Slovenia Croatia Budapest Croatia Romania Romania EBITDA (FY2015) BiH Serbia Serbia 11% Montenegro Kosovo Bulgaria Bulgaria 6% Macedonia Macedonia A

  4. Slide 4: Market Position in Hungary

    MARKET POSITION IN HUNGARY Total mobile market* Fixed voice market** Vodafone Other Subscribers -1.0% Subscribers 12,000,000 Telenor 3,500,000 +1.2% Invitel MT DIGI 22.9% 24.3% 24.7% 3,000,000 3.9% 3.1% 3.2% 13.1% UPC 9,000,000 12.9% 13.0% 2,500,000 MT 10.0% 10.8% 11.5% 30.0% 27.9% 28.1% 6,000,000 2

  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 Hungarian IT services market Revenue based SYSTEM INTEGRATION IT INFRASTRUCTURE SI & IT market shares* Package Custom System IT App. OS & Infra. OS & Infra. proj. Hosting Cloud (201

  6. Slide 6: Strategy Overview: Building a Growing ICT Company

    STRATEGY OVERVIEW: WITH OUR ENGAGED PEOPLE WE ARE BUILDING A GROWING ICT COMPANY SERVING SATISFIED CUSTOMERS Strategic pillars Strategic goals Main KPIs for 2016 1 We all listen to our customers Improve customer satisfaction  Cut number of complaints  Improve customer satisfaction index (TRIM) and

  7. Slide 7: Q3 2016 Strategic Highlights: Hungarian Segment

    Q3 2016 STRATEGIC HIGHLIGHTS: HUNGARIAN SEGMENT CONTINUES TO DRIVE GROUP PERFORMANCE  Decline due to partial exit from energy business and lower SI/IT revenues; excl. energy REVENUE and SI/IT, revenues up by 1.2% driven by growth in mobile revenues  EBITDA up by 10.0% as lower employee related and

  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 Topline rev

  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 6%  Domestic demand improved as economy 4% 3.6 recovers 3.0 2.8 3.0 1.8 1.5  Governmental measures support consumer 2% spending 0%  Investment levels show strong volatility due to -1.5 EU fund cycles -2%  MT is expected to benefit f

  11. Slide 11: Hungarian Mobile Spectrum Situation

    HUNGARIAN MOBILE SPECTRUM SITUATION Current spectrum situation (MHz) BAND Magyar Telekom Telenor 800 MHz 2x10 2x10 2x10 Vodafone U R Digi B A 900 MHz 2x11.8 2x11 2x12 N A R 1800 MHz 2x15 2x5 2x25 2x30 E A 2100 MHz 2x15 2x15 2x15 R U R 2600 MHz 2x30 2x20 + 1x25 2x20 A L A 3.4 - 3.8 GHz* 2x30 1x20 R E

  12. Slide 12: Dividend and Guidance

    DIVIDEND AND GUIDANCE

  13. Slide 13: Dividend Policy

    DIVIDEND POLICY Dividend payment and net debt ratio developments Highlights Net debt ratio* Dividend per share (HUF) 50% 70  Aiming to maintain net debt ratio (net 45.7% debt/total capital) target of 30% - 40% 43.8% 42.9% 41.6% 60 40%  HUF 15 dividend paid on 2015 earnings 34.1% 34.3% in May 2016

  14. Slide 14: Public Guidance: Continues Growth

    PUBLIC GUIDANCE: CONTINUES GROWTH 2015 RESULTS 2016 NEW TARGETS 2017 TARGETS REVENUE HUF 656 bn1 (+4.8%) around HUF 595 bn2 HUF 585 – 595 bn EBITDA HUF 187 bn (+3.4%) around HUF 193 bn3 HUF 189 – 193 bn CAPEX4 HUF 110 bn ca. 10% yoy decline ca. 10% yoy decline FCF HUF 27 bn surpassing HUF 50bn5 DIVI

  15. Slide 15: 9M 2016 Financial Highlights and Revised Targets for 2016

    9M 2016 FINANCIAL HIGHLIGHTS AND REVISED TARGETS FOR 2016 9M 2016 RESULTS vs. 9M 2015 2016 NEW TARGETS 2017 TARGETS REVENUE HUF 443.8 bn (-6.3%) around HUF 595 bn1 HUF 585 – 595 bn  Decline due to partial exit from energy business and lower SI/IT revenues  Excluding energy and SI/IT, revenues up b

  16. Slide 16: Q3 2016 Results

    Q3 2016 RESULTS

  17. Slide 17: Hungary

    HUNGARY Revenue* EBITDA HUF bn HUF bn +12.8% 140 -4.7% 46 4.3 -0.9 5.5 0.0 45.1 0.0 0.4 -0.5 138 -0.6 -8.0 44 136 135.3 -1.6 0.6 42 134 40.0 -0.8 132 40 0.4 130 129.0 38 128 0 0 3Q Mobile Mobile Mobile Fixed Fixed TV Fixed SI/IT Energy 3Q 3Q 2015 Gross Special tax Employee Other op. 3Q 2016 2015 voi

  18. Slide 18: Hungary – Mobile

    HUNGARY – MOBILE Mobile SIMs Mobile ARPU „000 HUF 6,000 5,482 5,504 5,372 5,344 5,301 Prepaid 3Q 2015 3,324 5,000 Postpaid Blended +0.9% 3Q 2016 3,354 44.0% 43.6% 42.3% 41.8% 41.1% 4,000 1,206 3,000 +53 Prepaid -0.8% 1,197 2,000 56.0% 56.4% 57.7% 58.2% 58.9% 4,993 1,000 Postpaid -2.2% 4,882 0 3Q 201

  19. Slide 19: Hungary – Mobile Broadband

    HUNGARY – MOBILE BROADBAND Mobile broadband development Smartphone penetration „000 LTE cov.* % 2.5% Non-LTE 95% 97% 97% 98% 98% 75 3,000 100 LTE 61 2,360 2,366 2,423 2,469 60 55 2,500 2,315 80 47 2,000 45 60 38 1,500 40 30 26 1,000 +493 500 40% 44% 47% 51% 20 15 33% 0 0 0 3Q 2015 4Q 2015 1Q 2016 2Q

  20. Slide 20: Hungary – Fixed Broadband and TV

    HUNGARY – FIXED BROADBAND AND TV Fixed BB customer number Pay TV customer number „000 „000 2.9% 3.5% 952 962 964 971 979 1,200 1,000 984 996 1,009 1,009 1,019 <10Mbps Sat 1,000 7% 6% 6% 5% 5% 10Mbps -30Mbps 800 32% 32% 32% 31% 31% Cable 800 >30Mbps IPTV 600 16% 15% 15% 14% 65% 64% 62% 17% 600 68% 66

  21. Slide 21: Hungary – Fixed Voice and Energy

    HUNGARY – FIXED VOICE AND ENERGY Fixed voice customer number Fixed voice ARPU „000 -2.0% HUF 1,467 1,461 1,448 1,441 1,437 PSTN 1,500 16% 10% IP based* 2,750 32% 27% 23% Blended -7.9% 2,533 1,000 84% 90% 3Q 2015 500 68% 73% 77% 3Q 2016 0 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 Energy revenues Highli

  22. Slide 22: Hungary – Multiplay

    HUNGARY – MULTIPLAY Fixed line multiplay residential subs. development Fixed line multiplay residential ARPU development „000 1Play HUF 2Play 5,702 3Q 2015 1,500 1,409 1,406 1,395 1,391 1,382 3Play Blended +2.5% 3Q 2016 5,844 36% 35% 34% 33% 32% 2,969 1,000 1Play +3.4% 3,071 30% 30% 30% 30% 29% 5,83

  23. Slide 23: Hungary – SI/IT

    HUNGARY – SI/IT Total Hungarian IT services market development* Market share** HUF bn % +4.6% Telekom 300 274 262 IT Infrastructure 14% HP 249 250 223 233 NISZ 219 services 40% 40% 7% 200 41% System Integration / Microsoft 42% 42% 41% 4% IT Application services IBM 150 3% 2% 2% MVMI 100 63% 2% 2% 59

  24. Slide 24: Macedonia

    MACEDONIA Financials Mobile KPIs Revenues (HUF bn) EBITDA (HUF bn) Subscribers One (T. Slovenia)* -3.0% 2,500,000 -0.5% VIP (T. Austria) +1.9% One.Vip 15.0 6.0 26.1% 0.3 -0.5 2,000,000 25.0% 0.0 5.9 50.4% Telekom 0.1 14.4 1,500,000 27.0% 14.5 -0.3 28.4% 5.9 1,000,000 14.0 5.8 49.6% 14.0 500,000 46.9

  25. Slide 25: Montenegro

    MONTENEGRO Financials Mobile KPIs Revenues (HUF bn) EBITDA (HUF bn) Subscribers +0.5% 1,200,000 -8.2% -3.8% 1,000,000 Telenor 8.6 8.4 -0.1 2.9 38.2% 39.3% 38.3% -0.5 2.8 -0.2 800,000 m:tel (T. Serbia) 8.4 2.8 T-Mobile 8.2 0.1 2.7 600,000 28.9% 28.5% 29.0% 8.0 -0.1 2.7 400,000 7.8 7.7 200,000 33.0% 3

  26. Slide 26: Appendix

    APPENDIX

  27. Slide 27: Q3 2016 Group Segmental Revenue and EBITDA

    Q3 2016 GROUP SEGMENTAL REVENUE AND EBITDA Group segmental revenues Group segmental EBITDA HUF bn HUF bn +10.0% 160 -4.7% 55 5.1 0.1 -0.1 -0.2 158.0 -6.3 53.8 158 54 53 156 52 154 51 152 -0.4 -0.7 50 0.0 150.6 48.9 150 49 0 0 3Q 2015 Hungary Macedonia Montenegro Elimination 3Q 2016 3Q 2015 Hungary M

  28. Slide 28: Magyar Telekom – Consolidated Income Statement

    MAGYAR TELEKOM – CONSOLIDATED INCOME STATEMENT HUF million Q3 2015 Q3 2016 Change Mobile revenues 79,105 82,659 4.5% Fixed line revenues 52,702 50,752 -3.7% System Integration/Information Technology revenues 16,781 15,736 -6.2% Revenue from energy services 9,418 1,459 -84.5% Revenues 158,006 150,606

  29. Slide 29: Magyar Telekom – Consolidated Balance Sheet

    MAGYAR TELEKOM – CONSOLIDATED BALANCE SHEET HUF million December 31, 2016 Sept 30, 2016 Change Current assets 210,178 182,064 -13.4% Cash and cash equivalents 17,558 8,410 -52.1% Other current financial assets 11,052 3,663 -66.9% Non current assets 996,846 966,968 -3.0% Property, plant and equipment

  30. Slide 30: Magyar Telekom – Consolidated Cash Flow Statement

    MAGYAR TELEKOM – CONSOLIDATED CASH FLOW STATEMENT HUF million 1-9 months 2015 1-9 months 2016 Change Net cash generated from operating activities 106,993 104,473 -2.4% Investments in tangible and intangible assets (59,929) (67,804) -13.1% Adjustments to cash purchases (3,754) (13,070) 248.2% Purchas

  31. Slide 31: For further questions please contact the IR department

    For further questions please contact the IR department: Investor Relations Márton Lennert Phone: +36 1 458-0424 Head of Investor Relations Fax : +36 1 458-0443 Phone: +36 1 457-6084 e-mail: investor.relations@telekom.hu e-mail: lennert.marton@telekom.hu Linda László Gerda Gáti Investor Relations Con

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