Telekom Austria Ag · VIE:TKA
Telekom Austria — Q2 2013 Earnings Presentation
43 slides from Telekom Austria's earnings presentation, Aug 12, 2013
Slide 1: Results for the First Half and Second Quarter 2013
Results for the First Half and Second Quarter 2013 Vienna, 12 August 2013 1
Slide 2: Cautionary Statement
Cautionary Statement “This document 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 forward-
Slide 3: Agenda
Agenda > Operational and Financial Highlights for the First Half 2013 > Key Financial Developments in the Second Quarter 2013 > Focus Points > Outlook for the Full Year 2013 > Appendix Results for the First Half and Second Quarter 2013 3
Slide 4: Operational and Financial Highlights for the First Half 2013
Operational and Financial Highlights for the First Half 2013 Results for the First Half and Second Quarter 2013 4
Slide 5: H1 2013: EUR 2.1 bn Revenues and EUR 0.7 bn EBITDA Comparable in Line With Expectations
H1 2013: EUR 2.1 bn Revenues and EUR 0.7 bn EBITDA Comparable in Line With Expectations > Group revenues decline by 1.2% year-on-year driven by regulatory burden, fierce competition and macroeconomic headwinds in CEE > EUR 75.5 mn Group gross cost savings help mitigate higher upfront costs for custo
Slide 6: Key Financial Developments in the Second Quarter 2013
Key Financial Developments in the Second Quarter 2013 Results for the First Half and Second Quarter 2013 6
Slide 7: Q2 2013: Higher Net Income Driven by Lower D&A and Improved Financial Result
Q2 2013: Higher Net Income Driven by Lower D&A and Improved Financial Result (in EUR million) Q2 2013 Q2 2012 % change > High-value focus resulting in increased handsets Revenues 1,043.2 1,063.2 -1.9% revenues limits revenue decline to 1.9% EBITDA comparable* 330.3 364.8 -9.5% > Continued growth in
Slide 8: Smartphone Trends and Growth in Belarus and Additional Markets Limit Revenue Decline to 1.9%
Smartphone Trends and Growth in Belarus and Additional Markets Limit Revenue Decline to 1.9% Quarterly Revenue Development (in EUR million) -1.9% 1,063.2 -8.2 -25.8 7.0 6.1 1,043.2 -3.6 4.5 Revenues Austria Bulgaria Croatia Belarus Additional Others* Revenues Q2 2012 Markets Q2 2013 Segment Austria
Slide 9: EUR 45.6 mn Gross Cost Savings Help Mitigate Revenue Pressure on EBITDA Comparable
EUR 45.6 mn Gross Cost Savings Help Mitigate Revenue Pressure on EBITDA Comparable Quarterly EBITDA Comparable Development (in EUR million) -9.5% 364.8 -28.9 -17.9 5.0 0.2 330.3 -1.9 9.0 EBITDA comp. Austria Bulgaria Croatia Belarus Additional Others* EBITDA comp. Q2 2012 Markets Q2 2013 Segment Aus
Slide 10: Lower Working Capital Needs and CAPEX Efficiency Support 17.8% Increase in Free Cash Flow
Lower Working Capital Needs and CAPEX Efficiency Support 17.8% Increase in Free Cash Flow (in EUR million) Q2 2013 Q2 2012 % change 1-6 M 2013 1-6 M 2012 % change Gross cash flow 299.4 304.1 -1.6% 596.5 631.0 -5.5% Change in working capital 2.9 -21.3 n.m. -102.5 -155.7 n.m. Ordinary capital expendit
Slide 11: Focus Points
Focus Points Results for the First Half and Second Quarter 2013 11
Slide 12: Rumoured Draft of EU Single Market Proposal - Overview
Rumoured Draft of EU Single Market Proposal* - Overview > Roaming alliances concept to substitute Roaming III decoupling Roaming > New glide paths – reduced wholesale rates and elimination of inbound retail roaming charges International > Abolition of international call charges within the EU calls >
Slide 13: Croatia: Significant Regulatory Impact on H2 2013 Resulting From EU Accession Included in Outlook
Croatia: Significant Regulatory Impact on H2 2013 Resulting From EU Accession Included in Outlook 1 July 2013 Mobile Termination Rates* Vipnet Strategy: 01.07 – 31.12.2012 EURc 4.00 -35% > Implementation of add-on options and 01.07 – 31.12.2013 EURc 2.61 2H 13 vs. 2H 12 tariff combinations to foster
Slide 14: Austria: Early Indicators Show Success of High Value Strategy
Austria: Early Indicators Show Success of High Value Strategy New Customer Retention High-Value Tariff Share 47% lower tariff migration* Old „Smart“ tariffs New „Go!“ tariffs -47% Smart Go! Q2 2012 Q2 2013 "Smart 3" (EUR 39.9 per month) "Go! M" (EUR 39,9 per month) Other "Smart" Tariffs Other "Go!"
Slide 15: Austria: Lower Churn/Tariff Migration and Selective Customer Acquisition Lead to Margin Improvement
Austria: Lower Churn/Tariff Migration and Selective Customer Acquisition Lead to Margin Improvement Sales & Customer Margin* Development – A1 Tariffs (in EUR million) High-Value Strategy 27% implemented 22% 17% 12% 07% 02% ‐03% ‐08% ‐13% ‐18% ‐23% Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Margin loss
Slide 16: Outlook for the Full Year 2013
Outlook for the Full Year 2013 Results for the First Half and Second Quarter 2013 16
Slide 17: Guidance Revision for CAPEX Based on Strong Focus on Investment Efficiency
Guidance Revision for CAPEX Based on Strong Focus on Investment Efficiency Financial Outlook for 2013 On a constant currency basis for all markets as well as before any effects of hyperinflation accounting for the Belarusian segment As of 12 August 2013 Previous Guidance Revenues approx. EUR 4.1 bn
Slide 18: Appendix
Appendix 1 Results for the First Half and Second Quarter 2013 18
Slide 19: Telekom Austria Group is a Leading Telecom Provider in Fixed and Mobile Markets
Telekom Austria Group is a Leading Telecom Provider in Fixed and Mobile Markets as of 30 June 2013 (in ‘000, in %) Austria* Slovenia Belarus Mobile: Mobile: Mobile: > Market share: 42.5% (Q2 2012: 38.5%) > Market share: 29.9% (Q2 2012 29.9%) > Market share: 43.7% (Q2 2012: 43.0%) > Subscriber base:
Slide 20: Telekom Austria Group – Revenue Breakdown
Telekom Austria Group – Revenue Breakdown Revenue Split - Segment Austria (in EUR million) Q2 2013 Q2 2012 % change Monthly fee and traffic 457.6 476.5 -4.0% Data and ICT solutions 53.0 50.9 4.0% Wholesale (incl. Roaming) 36.3 38.0 -4.4% Interconnection 70.7 81.4 -13.1% Equipment 42.2 23.2 82.0% Oth
Slide 21: Telekom Austria Group – Expense Breakdown
Telekom Austria Group – Expense Breakdown Operating Expense - Segment Austria (in EUR million) Q2 2013 Q2 2012 % change Material expense 81.8 55.0 48.7% Employee costs 174.0 167.6 3.8% Interconnection 65.2 75.4 -13.6% Maintenance and repairs 25.1 28.3 -11.5% Services received 29.7 28.9 2.6% Other su
Slide 22: Telekom Austria Group – Headcount Development
Telekom Austria Group – Headcount Development FTE (Average period) Q2 2013 Q2 2012 % change Austria 9,234 9,308 -0.8% International 7,029 7,443 -5.6% Telekom Austria Group* 16,418 16,908 -2.9% FTE (End of period) Q2 2013 Q2 2012 % change Austria 9,225 9,300 -0.8% International 6,975 7,340 -5.0% Tele
Slide 23: Telekom Austria Group – Capital Expenditures Split
Telekom Austria Group – Capital Expenditures Split Capital Expenditures (in EUR million) Q2 2013 Q2 2012 % change Segment Austria 122.4 121.2 0.9% Segment Bulgaria 12.7 16.2 -21.4% Segment Croatia 14.7 16.8 -12.9% Segment Belarus 7.3 7.4 -0.6% Segment Additional Markets 19.3 23.5 -17.8% Slovenia 3.8
Slide 24: Telekom Austria Group – Net Debt
Telekom Austria Group – Net Debt Net debt (in EUR million) 30 June 2013 31 December 2012 % change Long-term debt 2,785.5 2,832.0 -1.6% Short-term borrowings 1,057.9 1,078.6 -1.9% Cash and cash equivalents, short-term and long term investments, finance lease receivables -986.9 -715.3 n.m. Cash and ca
Slide 25: Telekom Austria Group – Debt Maturity Profile
Telekom Austria Group – Debt Maturity Profile Debt Maturity Profile (including accrued interest)* (in EUR million) 1,008.1 823.5 739.9 565.9 268.8 220.7 138.5 62.7 0.0 15.4 2013 2014 2015 2016 2017 2018* 2019 2020 2021 2022 > EUR 3,843.5 mn of short- and long-term borrowings as of 30 June 2013 > Ave
Slide 26: Telekom Austria Group – Debt Profile
Telekom Austria Group – Debt Profile Overview Debt Instruments Fixed-Floating Mix 27.2% 29.3% 72.8% 70.7% Bonds Loans Floating Fixed Lines of Credit Ratings > Undrawn committed credit lines > S&P: BBB (stable outlook) amounting to EUR 1,060.0 mn > Moody’s: Baa1 (negative outlook) > Average term to m
Slide 27: Segment Austria - Fixed Line Key Performance Indicators
Segment Austria - Fixed Line Key Performance Indicators ARPL & ARPL-Relevant Revenues Total Fixed Access Lines & Net Adds (in EUR, in EUR million) (in ‘000) 40 40 39 39 255 38 38 37 37 36 36 35 35 32.9 245 34 34 32.2 32.2 33 33 32 31.5 30.8 2,288 2,285 2,282 2,281 2,274 32 31 31 2,300 12 235 30 30 2
Slide 28: Segment Austria – Mobile Key Performance Indicators
Segment Austria* – Mobile Key Performance Indicators ARPU & ARPU-Relevant Revenues* MoU per Subscriber* (in EUR) (in min) 340 18.9 18.9 18.2 20 158.2 320 16.1 16.3 153.7 300 15 150.8 280 143.8 260 290.7 290.8 280.3 284.1 283.8 10 141.3 240 05 220 200 00 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q2 12 Q3 12 Q4 1
Slide 29: Segment Austria – Broadband Market Split
Segment Austria – Broadband Market Split Market Share Total Broadband* Market Share Mobile Broadband* (in %) (in %) 8.0% 7.7% Tele.ring 12.9% 13.0% T-mobile 24.1% 40.0% Mobile Broadband Hutchison 31.0% 29.7% 18.6% Other Operations Orange incl. Unbundled Lines YESSS! 5.8% 5.2% 36.3% 39.3% A1 15.3% Ca
Slide 30: Segment Austria – Voice Market Split
Segment Austria – Voice Market Split Market Share Total Minutes Market Share Fixed-Line Minutes (in %) (in %) 13.5% 13.5% 4.3% 4.5% 20.8% 21.4% 84.9% 86.2% 61.4% 60.6% 5.6% 5.2% 9.5% 8.5% Q2 12 Q2 13 Q2 12 Q2 13 Fixed Line Telekom Austria Fixed Line Others Mobile A1 Tele2/UTA UPC Others Results for
Slide 31: Segment Bulgaria – Fixed-Line Key Performance Indicators
Segment Bulgaria – Fixed-Line Key Performance Indicators ARPL & ARPL-Relevant Revenues Total Fixed Access Lines (in EUR, in EUR million) (in ‘000) 17 17 08 16 16 15 15 08 14 14 12.4 13 13 11.5 11.6 11.1 07 12 12 11.0 07 156.4 162.1 162.0 11 11 10 10 5.6 160 12 06 138.0 142.8 09 09 08 5.2 5.4140 07 0
Slide 32: Segment Bulgaria – Mobile Key Performance Indicators
Segment Bulgaria – Mobile Key Performance Indicators ARPU MoU per Subscriber (in EUR) (in min) 98.5 6.6 97.8 5.7 5.4 5.3 97.2 5.0 96.6 95.4 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Mobile Broadband Customers* Mobile Penetration (in ‘000) (in %) 155.1 163.9 159.9% 137.8 147.9 127.4
Slide 33: Segment Croatia – Fixed-Line Key Performance Indicators
Segment Croatia – Fixed-Line Key Performance Indicators ARPL & ARPL-Relevant Revenues Total Fixed Access Lines (in EUR, in EUR million) (in ‘000) 30 29 16 28 27 26 25 23.7 23.8 24.1 23.4 22.7 15 24 23 22 14 21 20 19 13 172.1 179.3 18 17 11.6 11.7 11.9180 12 154.7 158.5 163.0 16 11.1 160 07 12 15 14
Slide 34: Segment Croatia – Mobile Key Performance Indicators
Segment Croatia – Mobile Key Performance Indicators ARPU MoU per Subscriber (in EUR) (in min) 12.8 12.6 130.6 110.8 118.4 12.1 104.3 108.5 12.0 11.4 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Mobile Broadband Customers* Mobile Penetration (in ‘000) (in %) 192.2 123.7% 178.2 119.3% 1
Slide 35: Segment Belarus – Mobile Key Performance Indicators
Segment Belarus – Mobile Key Performance Indicators ARPU MoU per Subscriber (in EUR) (in min) 4.9 4.9 198.5 4.9 4.9 4.8 191.6 193.0 189.8 182.4 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Mobile Broadband Customers* Mobile Penetration (in ‘000) (in %) 227.5 227.6 227.0 226.5 116.6% 1
Slide 36: Segment Additional Markets – Mobile Key Performance Indicators
Segment Additional Markets – Mobile Key Performance Indicators Slovenia - ARPU Slovenia - MoU per Subscriber (in EUR) (in min) 23.0 184.5 184.7 185.8 179.1 21.6 21.7 20.8 167.9 20.3 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Republic of Serbia - ARPU Republic of Macedonia - ARPU (in
Slide 37: Appendix – Regulatory Topics
Appendix 2 – Regulatory Topics Results for the First Half and Second Quarter 2013 37
Slide 38: Negative Impact from Regulation in 2013 - 2016
Negative Impact from Regulation in 2013 - 2016 Telekom Austria Group Roaming Telekom Austria Group Revenues Interconnection Revenues (in EUR million) (in EUR million) Approx. EUR –130 mn* Approx. EUR –160 mn** 2012E 2016E 2012E 2016E Negative regulatory impact for 2013 is included in outlook for 201
Slide 39: Glide Path of Mobile Termination Rates
Glide Path of Mobile Termination Rates EU Pressure on National Regulatory Authorities to Further Decrease Rates (in EURc) Jan 2012 Jun 2012 Jul 2012 Jan 2013 Jul 2013 Aug 2013 Sep 2013 Jan 2014 Austria 2.01 2.01 2.01 2.01 2.01 0.80* 0.80* 0.80* Bulgaria 6.39 6.39 2.70 2.35 1.18 1.18 1.18 1.02 Croati
Slide 40: EU Roaming Price Regulation
EU Roaming Price Regulation RETAIL (in EURc) Before July 2012 July 2013 July 2014 Data (per MB) none 70 45 20 Voice-calls made (per minute) 35 29 24 19 Voice-calls received (per minute) 11 8 7 5 SMS (per SMS) 11 9 8 6 WHOLESALE (in EURc) Before July 2012 July 2013 July 2014 Data (per MB) 50 25 15 5
Slide 41: Appendix – Personnel Restructuring in Austria
Appendix 3 – Personnel Restructuring in Austria Results for the First Half and Second Quarter 2013 41
Slide 42: Full Year Overview – Restructuring Charges and Provision vs. FTE
Full Year Overview – Restructuring Charges and Provision vs. FTE Overview Restructuring Charges FTEs Addressed (in EUR million) Q1 Q2 Q1 Q2 2008 2009 2010 2011 2012 2013 2013 2008 2009 2010 2011 2012 2013 2013 FTE effect 632.1 -10.0 76.9 274.3 49.9 2.7 25.5 Transfer to 0 0 158 106 44 7 2 government
Slide 43: Slide 43
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