Telekom Austria Ag · VIE:TKA
Telekom Austria — Q1 2016 Earnings Presentation
46 slides from Telekom Austria's earnings presentation, Apr 27, 2016
Slide 1: Results for the first quarter 2016
Results for the first quarter 2016 Vienna, 27 April 2016
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: Operational and financial highlights for the first quarter 2016
Operational and financial highlights for the first quarter 2016 Results for the first quarter 2016 3
Slide 4: Q1 2016: Results driven by Austria and M&A transactions
Q1 2016: Results driven by Austria and M&A transactions Reported Proforma* Group (in EUR million) Q1 16 Q1 15 % change Total revenues 1.009,4 1.032,6 -2,2% EBITDA 334,4 343,0 -2,5% CAPEX 134,5 130,4 3,1% > Telekom Austria Group results driven by moderate growth in Austria and M&A transactions in CEE
Slide 5: Austria: EBITDA growth driven by stable service revenues and focus on cost efficiency
Austria: EBITDA growth driven by stable service revenues and focus on cost efficiency ARPU ARPL Operational data (in EUR) (in EUR) > 1.3% mobile subscriber growth (excl. M2M): Increase in Δ: -1.1% no-frills and high-value segments, ongoing decline in Δ: -3.6% 28.4 28.1 mobile broadband subscribers >
Slide 6: CEE driven by M&A, negative FX effects and fierce competition
CEE driven by M&A, negative FX effects and fierce competition EBITDA Highlights CEE (reported, in EUR mn) Bulgaria: EUR 34.6 mn > Proforma EBITDA decline of 13.7% and underlying EUR 33.6 mn Δ: -7.1 mn decline of 9.8% Δ: -1.3 mn > Continued fierce competition in business segment EUR 17.4 mn Croatia:
Slide 7: Free cash flow falls due to high CAPEX paid
Free cash flow falls due to high CAPEX paid (in EUR million) 1-3 M 2016 1-3 M 2015 % change Net cash flow from operating activities 307.1 395.8 -22.4% Capital expenditures paid -245.2 -206.9 n.m. Proceeds from sale of plant, property and equipment 4.7 2.4 96.9% Interest paid -73.5 -73.8 n.m. Free Ca
Slide 8: Focus points
Focus points Results for the first quarter 2016 8
Slide 9: Austria: Safeguarding high-value customers with data- and roaming-centric propositions
Austria: Safeguarding high-value customers with data- and roaming-centric propositions High value fixed-mobile bundles Unlimited fibre broadband + TV + mobile SIM-only tariff Tariff range: EUR 30 – EUR 100 A1 One! Mobile WIFI for mobile-only households Unlimited data on 4G network Tariff range: EUR
Slide 10: CEE: Convergent bundle offers present opportunities for up- and cross-selling
CEE: Convergent bundle offers present opportunities for up- and cross-selling Republic Bulgaria Croatia Slovenia of Macedonia Combine & Save Combine & Save Combine & Save Vip Combo M BGN 39.9 (~EUR 20) KN 420 (~EUR 56) EUR 19.9 MKD 2,399 (~EUR 39) Discount: BGN 10 Discount: KN 50 Discount: EUR 11.00
Slide 11: Belarus: Market and OPEX activities address increasing macro challenges
Belarus: Market and OPEX activities address increasing macro challenges Challenges Activities > 10.9% BYR devaluation in Q1 16 > Price increases: 8% for retail (-27.4% y-o-y*) as oil price remains customers (Dec 15); 7% for corporate highly volatile tariffs (Apr 16) > Falling exports to Russia drive
Slide 12: Outlook for the full year 2016
Outlook for the full year 2016 Results for the first quarter 2016 12
Slide 13: Outlook for the full year 2016 unchanged
Outlook for the full year 2016 unchanged 27 April 2016 Consensus Revenues Revenues approx. +1% EUR 4,101.4 mn CAPEX* CAPEX approx. EUR 750 mn EUR 752.9 mn Proposed Proposed Dividend** dividend EUR 0.05 / share - > Outlook based on constant currencies except for Belarus (assumed 20%, in line with inf
Slide 14: Appendix 1
Appendix 1 Results for the first quarter 2016 14
Slide 15: The leading regional communications player providing convergent telecommunication services
The leading regional communications player providing convergent telecommunication services as of 31 March 2016 (in ‘000) Austria Slovenia Belarus Mobile market position #1 Mobile market position #2 Mobile market position #2 Mobile subscriber: Mobile subscriber: Mobile subscriber: > 5,831 (Q1 2015: 5
Slide 16: Telekom Austria Group – Profit and Loss
Telekom Austria Group – Profit and Loss (in EUR million) Q1 2016 Q1 2015 % change Service Revenues 913.5 918.6 -0.6% Equipment Revenues 95.9 78.8 21.7% Total Revenues 1,009.4 997.4 1.2% Cost of Service -326.0 -315.4 n.m. Cost of Equipment -104.0 -92.4 n.m. Selling, General & Administrative Expenses
Slide 17: Telekom Austria Group – Revenues and OPEX per segment
Telekom Austria Group – Revenues and OPEX per segment Revenues (in EUR million) Q1 2016 Q1 2015 % change Austria 632.0 624.4 1.2% Bulgaria 97.0 92.3 5.1% Croatia 88.4 84.1 5.2% Belarus 68.9 78.3 -12.1% Slovenia 51.7 64.2 -19.4% Republic of Serbia 52.3 46.4 12.7% Republic of Macedonia 29.1 16.1 81.1%
Slide 18: Telekom Austria Group – Headcount development
Telekom Austria Group – Headcount development FTE (Average Period) Q1 2016 Q1 2015 % change Austria 8,499 8,724 -2.6% International 8,908 7,363 21.0% Corporate 212 185 14.6% Telekom Austria Group 17,619 16,271 8.3% FTE (End of Period) Q1 2016 Q1 2015 % change Austria 8,482 8,746 -3.0% International
Slide 19: Telekom Austria Group – Capital expenditure split
Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q1 2016 Q1 2015 % change Austria 79.7 73.4 8.6% Bulgaria 13.3 13.6 -1.7% Croatia 14.5 9.4 54.2% Belarus 13.5 7.6 76.6% Slovenia 3.6 4.3 -15.7% Republic of Serbia 3.7 15.5 -76.3% Republic of Macedonia 6.4 2.4 167.
Slide 20: Telekom Austria Group – Net debt
Telekom Austria Group – Net debt Net Debt* (in EUR million) 31 March 2016 31 December 2015 % change Long-term Debt 2,082.7 2,584.1 -19.4% Short-term Borrowings 554.9 810.4 -31.5% Cash and Cash Equivalents and Short-term Investments -110.5 -911.5 n.m. Net Debt of Telekom Austria Group 2,527.1 2,483.0
Slide 21: Telekom Austria Group – Debt maturity profile
Telekom Austria Group – Debt maturity profile Debt maturity profile* (in EUR million) 744.1 743.1 546.9 298.2 205.3 52.8 47.3 0.0 2016 2017 2018 2019 2020 2021 2022 2023 > EUR 2,637.7** mn short- and long-term borrowings as of 31 March 2016 > Average cost of debt of approximately 3.73% > Cash and ca
Slide 22: Telekom Austria Group – Debt profile
Telekom Austria Group – Debt profile Overview debt instruments Fixed/floating mix 13.3% 86.7% 100.0% Loans Bonds Fixed Lines of credit Ratings > Undrawn committed credit lines > S&P: BBB (outlook stable) amounting to EUR 1,000 mn > Moody’s: Baa2 (outlook stable) > Average term to maturity of approx.
Slide 23: 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) 3,513 3,531 28.4 28.1 191.0 188.3 Q1 15 Q1 16 Q1 15 Q1 16 ARPL ARPL-relevant revenues Broadband RGUs/unbundles lines TV RGUs (in ‘000) (in ‘000) 1417 1469 255.7 274 240
Slide 24: Segment Austria – Mobile key performance indicators
Segment Austria – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 15.4 14.9 1.45 1.59 259.8 259.1 Q1 15 Q1 16 Q1 15 Q1 16 ARPU Service Revenues Subsidies Mobile penetration (in EUR million) (in %) 7.9 155.3 159.1 3.1 Q1 15 Q1 16 Q1 15 Q1 16 Subsid
Slide 25: Segment Austria – Broadband market split
Segment Austria – Broadband market split Market share total broadband Market share mobile broadband (in %) (in %) 0.8 3.6 21.7 21.6 Hofer T-Mobile Mobile 40.3 41.6 31.3 34.1 Broadband Other Hutchison Operators Unbundled Lines A1 37.2 32.9 4.2 4.0 Cable 16.2 Q1 15 Q1 16 16.0 A1 Mobile 18.5 Broadband
Slide 26: Segment Austria – Voice market split
Segment Austria – Voice market split Market share total minutes Market share voice RGUs (in %) (in %) 13.2 13.0 3.5 3.6 Mobile 22.7 23.3 Others 87.7 88.7 Fixed Line Others UPC Tele2/UTA Fixed Line Telekom A1 Austria 60.6 60.1 4.8 4.5 7.4 6.8 Q1 15 Q1 16 Q1 15 Q1 16 Results for the first quarter 2016
Slide 27: 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) 13.4 1,019.1 10.8 17.4 248.1 5.9 Q1 15 Q1 16 Q1 15 Q1 16 ARPL ARPL-relevant revenues Fixed broadband RGUs TV RGUs (in ‘000) (in ‘000) 466.6 418.1 150.8 97.3 Q1 15 Q1 1
Slide 28: Segment Bulgaria – Mobile key performance indicators
Segment Bulgaria – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 5.3 5.3 2.1 2.1 68 66 Q1 15 Q1 16 Q1 15 Q1 16 ARPU Service Revenues Subsidies Mobile penetration (in EUR million) (in %) 2.3 149.8 145.8 1.4 3.9 2.6 Q1 15 Q1 16 Q1 15 Q1 16 Subsidy
Slide 29: 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) 22.9 23.3 576.8 442.2 18.4 13.8 Q1 15 Q1 16 Q1 15 Q1 16 ARPL ARPL-relevant revenues Fixed broadband RGUs TV RGUs (in ‘000) (in ‘000) 211.6 194.3 171.5 145.5 Q1 15 Q1 16
Slide 30: Segment Croatia – Mobile key performance indicators
Segment Croatia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 11.1 2.4 2.4 10.5 57 54 Q1 15 Q1 16 Q1 15 Q1 16 ARPU Service Revenues Subsidies Mobile penetration (in EUR million) (in %) 2.0 110.9 112.5 1.3 2.7 1.7 Q1 15 Q1 16 Q1 15 Q1 16 Subsid
Slide 31: Segment Belarus – Mobile key performance indicators
Segment Belarus – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 4.5 1.63 3.5 1.40 67 52 Q1 15 Q1 16 Q1 15 Q1 16 ARPU Service Revenues Subsidies Mobile penetration (in EUR million) (in %) Q1 15 Q1 16 121.9 120.2 -0.4 -0.5 -1.0 -1.4 Q1 15 Q1 16 Re
Slide 32: 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) 36.5 159.7 7.4 n.a. n.a. Q1 0.015 Q1 16 Q1 15 Q1 16 ARPL ARPL-relevant revenues Fixed broadband RGUs TV RGUs (in ‘000) (in ‘000) 68.8 42.6 n.a. n.a. Q1 15 Q1 16 Q1 15
Slide 33: Segment Slovenia – Mobile key performance indicators
Segment Slovenia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 15.7 1.5 15.3 1.4 32 33 Q1 15 Q1 16 Q1 15 Q1 16 ARPU Service Revenues Subsidies Mobile penetration (in EUR million) (in %) 0.5 112.2 116.0 0.3 1.9 1.5 Q1 15 Q1 16 Q1 15 Q1 16 Subsi
Slide 34: Segment Serbia – Mobile key performance indicators
Segment Serbia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 5.5 3.9 5.1 3.6 33 35 Q1 15 Q1 16 Q1 15 Q1 16 ARPU Service Revenues Subsidies Mobile penetration (in EUR million) (in %) 2.5 2.4 131.7 129.3 4.8 6.0 Q1 15 Q1 16 Q1 15 Q1 16 Subsidy f
Slide 35: 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) 14.0 12.3 307.2 167.1 5.3 2.7 Q1 15 Q1 16 Q1 15 Q1 16 ARPL ARPL-relevant revenues Fixed broadband RGUs TV RGUs (in ‘000) (in ‘000) 100.7 126.3 54.6 69.9 Q1 15 Q1 16 Q
Slide 36: Segment Macedonia – Mobile key performance indicators
Segment Macedonia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 6.1 5.8 2.5 2.4 20 11 Q1 15 Q1 16 Q1 15 Q1 16 ARPU Service Revenues Subsidies Mobile penetration (in EUR million) (in %) 106.7 0.5 104.8 0.3 1.4 2.0 Q1 15 Q1 16 Q1 15 Q1 16 Subsid
Slide 37: Appendix 2 – Regulatory topics
Appendix 2 – Regulatory topics Results for the first quarter 2016 37
Slide 38: Glide Path of Mobile Termination Rates
Glide Path of Mobile Termination Rates EU Pressure on National Regulatory Authorities to Further Decrease Rates Jan Jul Sep Jan Jul Jan 2014 2014 2014 2015 2015 2016 Austria (EUR) 0.008049 0.008049 0.008049 0.008049 0.008049 0.008049 Bulgaria (BGN) 0.02 0.02 0.02 0.019 0.019 0.019 Croatia (HRK) 0.12
Slide 39: EU roaming price regulation
EU roaming price regulation RETAIL (in EURc) Before July 2012 July 2013 July 2014 30 April 2016 15 July 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 domestic
Slide 40: Upcoming spectrum tenders/prolongations/assignments
Upcoming spectrum tenders/prolongations/ assignments Expected Comments Austria 2019 (2100 MHz) - 2016 (1800 MHz) Bulgaria 2600 MHz available since 2015 but market players not interested yet. 2019 (2100 MHz) Croatia 2017 (2100, 2600 MHz) - LTE license only awarded to B-cloud, allocation to other oper
Slide 41: Appendix 3 – Personnel restructuring in Austria
Appendix 3 – Personnel restructuring in Austria Results for the first quarter 2016 41
Slide 42: Overview – Restructuring charges and provision vs. FTE
Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) Q1 Q1 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 FTE Transfer to 76.9 274.3 49.9 149.0 86.4* 69.5** 9.2 158 106 44 22 52 49 0 reduction government Servicek
Slide 43: 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 2010 57.9 old and new programms 2011 93.4 > Cash flow impact for Q1 2016 of 2012 104.0 EUR 26.5 mn 2013 108.0 2014 107.1 > Total expected cash flow impac
Slide 44: Appendix 4 – Corporate sustainability
Appendix 4 – Corporate sustainability Results for the first quarter 2016 44
Slide 45: Alignment with core business and materiality analysis define sustainability strategy
Alignment with core business and materiality analysis define sustainability strategy Results for the first quarter 2016 45
Slide 46: Key figures
Key figures Selected Group-wide KPIs Ratings Environment: Living Green 2014 Total CO2 Emissions (Scope 1+2 in tonnes) 170.842 Energy efficiency index (in Mwh/terabyte) 0,8 › Classification: B › Classification: B- Paper consumption (in tonnes) 1.771 (99 points out of 100) Collected old mobile phones