Telekom Austria Ag · VIE:TKA
Telekom Austria — Q1 2017 Earnings Presentation
46 slides from Telekom Austria's earnings presentation, Apr 24, 2017
Slide 1: Results for the first quarter 2017
Results for the first quarter 2017 Vienna, 24 April 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 quarter 2017
Key financial developments for the first quarter 2017 Results for the first quarter 2017 3
Slide 4: Q1 2017: Better service revenue trends cushion impact from roaming and higher equipment costs
Q1 2017: Better service revenue trends cushion impact from roaming and higher equipment costs Reported Proforma Group (in EUR million) Q1 2017 Q1 2016 % change Total revenues 1,058.9 1,017.5 4.1% EBITDA 339.5 337.4 0.6% CAPEX 180.0 136.0 32.3% > Group total revenues rose by 4.1% y-o-y on a proforma
Slide 5: Austria: Almost stable service revenues on adjusted basis despite roaming regulation impact
Austria: Almost stable service revenues on adjusted basis despite roaming regulation impact ARPU ARPL Operational data (in EUR) (in EUR) > 0.9% decline in subscriber base driven by Δ: -1.6% Δ: +0.9% decrease in prepaid customers 28.1 28.3 > Excl. roaming, higher operative ARPU due to 15.8 15.6 incre
Slide 6: CEE: Strong EBITDA performance in Belarus and Croatia offset losses in other CEE markets
CEE: Strong EBITDA performance in Belarus and Croatia offset losses in other CEE markets EBITDA Highlights CEE (proforma, in EUR mn) Bulgaria: > 6.7% growth in revenues benefits from higher equipment EUR 28.2 mn EUR 21.2 mn EUR 45.9 mn and ongoing improving trends in service revenues Δ: -5.4 mn Δ: +
Slide 7: Higher free cash flow due to less CAPEX paid and interest paid
Higher free cash flow due to less CAPEX paid and interest paid (in EUR million) Q1 2017 Q1 2016 % change Net cash flow from operating activities 261.9 307.1 -14.7% Capital expenditures paid -208.9 -245.2 -14.8% Proceeds from sale of plant, property and equipment 8.5 4.7 80.7% Interest paid -23.9 -73
Slide 8: Focus points
Focus points Results for the first quarter 2017 8
Slide 9: Austria: Customer-oriented fixed-line propositions serve growing demand for bandwidth
Austria: Customer-oriented fixed-line propositions serve growing demand for bandwidth > Pricing independent from Priorities technology 1. Fixed-line: Own, exclusive line > Standard product: Unlimited data, 40 Mbps for EUR 32.90/month 2. Hybrid: Increase in speed and coverage > Up to 150 Mbps downloa
Slide 10: Belarus: First signs of macroeconomic improvement but headwinds remain
Belarus: First signs of macroeconomic improvement but headwinds remain Oil price and FX development CPI, real GDP and earnings development (%-change) 140 1.0 60 2 120 121.5 0.8 50 1 100 116.4 40 0 80 0.6 30 101.3 -1 60 97.7 96.0 0.4 20 -2 40 0.2 10 -3 20 correlation = 0.92 0 0.0 0 -4 01/12 01/13 01/
Slide 11: Continuous network evolution to improve customer experience in a CAPEX- and cost-efficient way
Continuous network evolution to improve customer experience in a CAPEX- and cost-efficient way Triple Carrier What 256 QAM* 4x4 MiMo* Aggregation Software upgrade Spectrum aggregation Hardware and How software upgrade 150 200 Mbps 300 450 Mbps 200 400 Mbps Why Increase spectral efficiency –> m
Slide 12: Outlook for the full year 2017
Outlook for the full year 2017 Results for the first quarter 2017 12
Slide 13: Telekom Austria Group outlook for the full year 2017 unchanged
Telekom Austria Group outlook for the full year 2017 unchanged 24 April 2017 Consensus 2017 Total revenues approx. +1% EUR 4,232 mn CAPEX approx. EUR 725 mn EUR 748 mn Proposed dividend EUR 0.20 / share - > Outlook based on reported figures and constant currencies except for Belarus (assumed devalua
Slide 14: Appendix 1
Appendix 1 Results for the first quarter 2017 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 2017 (in ‘000) Austria* Slovenia** Belarus Mobile market position #1 Mobile market position #2 Mobile market position #2 Mobile subscriber: Mobile subscriber: Mobile subscriber: > 5,399 (Q1 2016
Slide 16: Telekom Austria Group – Profit and Loss
Telekom Austria Group – Profit and Loss (in EUR million) Q1 2017 Q1 2016 % change Service Revenues 956.1 913.5 4.7% Equipment Revenues 102.8 95.9 7.2% Total Revenues 1,058.9 1,009.4 4.9% Cost of Service -341.1 -326.0 n.m. Cost of Equipment -127.7 -104.0 n.m. Selling, General & Administrative Expense
Slide 17: Telekom Austria Group – Total revenues & costs and expenses per segment
Telekom Austria Group – Total revenues & costs and expenses per segment Total Revenues (in EUR million) Q1 2017 Q1 2016 % change Austria* 643.3 631.2 1.9% Bulgaria 103.5 97.0 6.7% Croatia 98.4 88.4 11.2% Belarus 92.9 68.9 34.8% Slovenia 52.9 51.7 2.3% Republic of Serbia 51.0 52.3 -2.6% Republic of M
Slide 18: Telekom Austria Group – Headcount development
Telekom Austria Group – Headcount development FTE (Average Period) Q1 2017 Q1 2016 % change Austria 8,314 8,499 -2.2% International 9,811 8,908 10.1% Corporate 242 212 14.3% Telekom Austria Group 18,367 17,619 4.2% FTE (End of Period) Q1 2017 Q1 2016 % change Austria 8,322 8,482 -1.9% International
Slide 19: Telekom Austria Group – Capital expenditure split
Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q1 2017 Q1 2016 % change Austria* 118.5 79.7 48.7% Bulgaria 14.7 13.3 10.3% Croatia 17.0 14.5 17.3% Belarus 4.1 13.5 -69.9% Slovenia 21.7 3.6 n.m. Republic of Serbia 6.5 3.7 76.2% Republic of Macedonia 1.5 6.4 -7
Slide 20: Telekom Austria Group – Net debt
Telekom Austria Group – Net debt Net Debt* (in EUR million) 31 March 2017 31 December 2016 % change Long-term Debt 2,304.9 2,303.5 0.1% Short-term Borrowings 166.1 500.1 -66.8% Cash and Cash Equivalents and Short-term Investments -61.1 -464.2 n.m. Net Debt of Telekom Austria Group 2,409.8 2,339.4 3.
Slide 21: Telekom Austria Group – Debt maturity profile
Telekom Austria Group – Debt maturity profile Debt maturity profile* (in EUR million) 745.2 744.2 494.4 298.4 165.9 22.6 0.1 0.1 0.0 0.0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 > EUR 2,471.0** mn short-and long-term borrowings as of 31 March 2017 > Average cost of debt of approximately 2.9
Slide 22: 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 (outlook stable) amounting to EUR 1,250 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) 3,530.8 3,513.2 3,501.4 3,495.5 3,476.8 28.1 28.0 27.9 28.2 28.3 186.3 186.7 186.9 184.9 188.3 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 ARPL ARPL-rel
Slide 24: 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 1.7 1.8 1.7 15.8 15.6 16.1 15.7 15.6 1.5 263.5 258.5 254.7 252.7 255.3 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 ARPU Service Revenues Subsidies Mobi
Slide 25: Segment Austria – Broadband market split
Segment Austria – Broadband market split Market share total broadband Market share mobile broadband (in %) (in %) 0.3 1.2 3.6 3.8 21.6 21.2 Others Hofer T-Mobile 41.6 39.6 34.1 34.2 Mobile Broadband Hutchison Other Operators A1 Unbundled Lines 4.0 3.7 32.9 34.2 Cable 16.0 16.2 Q1 16 Q1 17 A1 Mobile
Slide 26: Segment Austria – Voice market split
Segment Austria – Voice market split Market share voice RGUs (in %) 13.0 13.0 3.6 3.2 23.3 23.7 Others UPC Tele2/UTA A1 60.1 60.1 Q1 16 Q1 17 Results for the first quarter 2017 26
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) 1,019.1 1,025.5 1,019.3 1,018.9 1,006.8 10.8 10.8 10.9 10.8 10.9 17.4 17.6 17.7 17.6 17.7 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 ARPL ARPL-relevan
Slide 28: Segment Bulgaria – Mobile key performance indicators
Segment Bulgaria – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 2.1 2.2 2.1 2.0 5.3 5.5 5.8 5.5 5.3 1.6 65.9 67.5 71.1 67.4 64.8 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 ARPU Service Revenues Subsidies Mobile penetra
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) 26.5 23.3 23.6 23.6 23.8 620.1 662.3 576.8 593.7 607.4 23.7 18.4 19.4 19.7 20.3 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 ARPL ARPL-relevant revenues
Slide 30: 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 11.1 11.9 11.3 11.3 2.4 2.7 2.4 71.5 2.0 61.3 60.0 57.1 57.9 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 ARPU Service Revenues Subsidies Mobile pen
Slide 31: Segment Belarus – Mobile key performance indicators
Segment Belarus – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 4.6 4.6 1.8 4.1 4.3 1.6 1.6 1.6 1.7 3.5 63.2 67.8 67.6 59.6 52.0 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 ARPU Service Revenues Subsidies Mobile penetrat
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) 170.7 172.0 172.0 176.4 36.5 36.6 34.6 36.2 159.7 34.2 7.4 7.7 7.3 7.3 7.7 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 ARPL ARPL-relevant revenues Fixe
Slide 33: 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 1.6 1.7 15.3 15.9 15.4 15.5 1.5 1.6 1.3 32.6 34.2 35.9 33.1 33.0 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 ARPU Service Revenues Subsidies Mobile pe
Slide 34: Segment Serbia – Mobile key performance indicators
Segment Serbia – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 5.5 5.7 5.7 5.3 4.8 3.6 3.4 3.1 3.0 3.2 34.7 35.5 35.8 34.0 31.0 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 ARPU Service Revenues Subsidies Mobile penetrati
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) 12.3 12.4 12.5 12.2 12.3 307.2 305.7 307.1 314.3 314.5 5.3 5.3 5.3 5.2 5.3 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 ARPL ARPL-relevant revenues Fix
Slide 36: 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 3.0 5.8 5.8 2.6 2.4 2.2 1.7 20.2 20.8 21.8 20.1 19.2 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 ARPU Service Revenues Subsidies Mobile penetr
Slide 37: Appendix 2 – Regulatory topics
Appendix 2 – Regulatory topics Results for the first quarter 2017 37 37
Slide 38: 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 39: Upcoming spectrum tenders/prolongations/assignments
Upcoming spectrum tenders/prolongations/ assignments Expected Comments 2018 (3400-3800 MHz) Austria - 2019 (700, 2100 MHz) 2017 (800 MHz) Bulgaria 2018 (2600 MHz) - 2019 (2100 MHz) Croatia 2020 (700 MHz) - Belarus 2017 (2100 MHz) - 2017 (3500 MHZ) Slovenia 3500 MHz: 20 MHz only on a regional basis.
Slide 40: 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 41: Appendix 3 – Personnel restructuring in Austria
Appendix 3 – Personnel restructuring in Austria Results for the first quarter 2017 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) 2012 2013 2014 2015 2016 Q1 2017 2012 2013 2014 2015 2016 Q1 2017 FTE reduction 49.9 149.0 86.4* 69.5** 95.0 1.4 Transfer to government 44 22 52 49 6 2 Servicekom contribution -76.7
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 2012 104.0 old and new programmes 2013 108.0 > Cash flow impact for Q1 2017 of 2014 107.1 EUR 26.1 mn 2015 101.9 2016 105.5 > Expected cash flow impact fo
Slide 44: Appendix 4 – Corporate sustainability
Appendix 4 – Corporate sustainability Results for the first quarter 2017 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 2017 45
Slide 46: Key figures – Corporate Sustainability
Key figures – Corporate Sustainability Selected Group-wide KPIs Ratings Products: Providing Responsible Products 2015 Customer contacts in customer service ('000) 38,175 Environment 2015 › Classification: B › Classification: B- Total CO2 Emissions (Scope 1+2 in tonnes) 187,383 (99 points out of 100)
Telekom Austria Group — Q1 2017 Earnings Presentation on 6ix