Magyar Telekom Telecommunications Plc · BET:MTELEKOM

Magyar Telekom Telecommunications — Magyar Telekom — Q2 2011 Earnings Presentation

27 slides from Magyar Telekom Telecommunications's earnings presentation, September 2011

  1. Slide 1: Roadshow presentation Magyar Telekom Group – September 2011

    Roadshow presentation M Magyar Telekom T l k Group G – September S b 2011 Growth in underlying margins, reflecting continued focus p on cost discipline 1

  2. Slide 2: Strategy, Outlook and Guidance

    Strategy, Outlook and Guidance 2

  3. Slide 3: Overview – Magyar Telekom Group at a glance

    Overview – Magyar Telekom Group at a glance International presence Overview Integrated operations in Hungary, Macedonia and Montenegro „ leading telecommunications service provider in all three Moldova countries Hungary Slovenia Croatia Croatia Romania „ leading SI/IT service provider in Hungary BiH

  4. Slide 4: Market trends

    Market trends Revenue based market shares in Hungary in 2010 (HUF bn) Magyar Telekom’s market share development (%) 333 35 116 95 108 31 100 90 23% 38% 80 48% 51% 54% 70 69% 29% 60 18% 50 1% 21% 4% 17% 40 23% 13% 26% 1% 30 7% 1% 20 31% 26% 17% 28% 31% 20% 10 5% 0 Mobile voice Mobile BB Fixed voice F

  5. Slide 5: Change in revenue trends

    Change in revenue trends Hungarian ICT market development (HUF bn) Change in Magyar Telekom’s Hungarian revenue mix +1 4% +1,4% 1.391 100% 1.342 1.280 1.295 1.299 1.263 1.209 1.215 1.209 1.229 1.206 New New New 80% revenue revenue revenue IT sources sources sources ca 30% ca.30% ca 40% ca.40% ca 50%

  6. Slide 6: Continued efficiency improvements in core operations

    Continued efficiency improvements in core operations Cost saving Stable underlying margin and CAPEX spending HUF billion -5% 150 60 % 131 121 126 116 116 50 % 106 105 40,7 % 40,8 % 40,7 % ca. 40% 100 40 % 30 % 50 20 % 16,0 % 15,8 % 15,1 % ca. 15% Total workforce 10 % Und. EBITDA margin Net other ope

  7. Slide 7: Free cash flow generation and dividend policy

    Free cash flow generation and dividend policy Free cash flow* generation Dividend payment HUF million Net debt ratio* DPS (HUF) 90 000 82 043 14 504 50% 74 74 80 80 000 122 30 301 2 473 77 495 70 70 000 27 746 40 % 22 928 35.1 % 60 32.7 % Target 60 000 30.8 % 30 % 50 50 50 000 40 40 000 20 % 30 30 0

  8. Slide 8: Results and Hungarian macro-economy trends 2009-2011

    Results and Hungarian macro-economy trends 2009-2011 Growth structure and wages Contribution to GDP growth (%) 10 5 Macro effects 0 Economic recovery still doubtful and -5 hurts MT results - 10 „ MT results are most sensitive - 15 to developments in internal Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 demand 2009

  9. Slide 9: Public targets for 2011

    Public targets for 2011 2011 Public targets 2011 H1 Results Revenue Revenue 3 5% decline 3-5% -3.9% 3 9% „ intense competition, slow recovery of „ intense competition and recessionary economy impacts „ further decrease in governmental revenues „ restrictive governmental measures to hit „ 2010 compar

  10. Slide 10: Q2 2011 Results

    Q2 2011 Results 10

  11. Slide 11: Q2 highlights

    Q2 highlights ƒ slowing economic recovery, unemployment still flat at 11% Revenues under R d pressure, ƒ fixed fi d voice i andd internet i t t revenues ddeclined li d ddriven i bby ffalling lli price i levels l l down by 4.6% ƒ SI/IT revenues down due to government budget constraints ƒ increasing T

  12. Slide 12: Q2 2011 Group results

    Q2 2011 Group results Group revenues Group EBITDA HUF million HUF million Special Influence Underlying performance 152 000 4 242 64 000 61 840 6 345 150 460 150 000 10 400 148 000 56 000 4 007 146 000 1 215 443 143 566 144 000 983 48 000 400 4 969 2 850 44 557 142 000 1 581 140 000 40 000 Q2 2010 F.

  13. Slide 13: Hungary – Q2 2011 Financial performance

    Hungary – Q2 2011 Financial performance Fixed line revenues Mobile revenues -1% HUF million -6% HUF million 47 887 59 335 58 536 50 000 45 213 60 000 7 838 7 745 10 413 50 000 40 000 10 191 10 025 10 997 6 095 40 000 30 000 6 942 10 502 30 000 10 233 20 000 Other 20 000 41 472 39 794 TV Other 10 000

  14. Slide 14: Fixed voice market – focus on retention

    Fixed voice market – focus on retention Hungary fixed voice subscribers Hungary fixed voice churn Subscribers -8% 2000 000 1 772 962 1 633 276 Fixed voice 1500 000 ƒ declining trend in fixed voice churn 1000 000 (down to 8% in Q2 2011 from 9% in Q1 2011) thanks to the retention effect of the VoCa V

  15. Slide 15: Fixed broadband market – stable market position

    Fixed broadband market – stable market position Fixed broadband market developments in Hungary T-Home retail fixed BB market share 34.6% 35.7% Subscribers +10% Fixed broadband 800 000 706 626 640 307 ƒ market growth driven by cable and fiber, 600 000 while ADSL market growth has slowed down 400 000

  16. Slide 16: TV market – significant growth achieved

    TV market – significant growth achieved TV market growth in Hungary Subscribers +6% 3500 000 3 173 000 3 005 000 TV customer growth 3000 000 27 6% 27.6% 2500 000 31.1% ƒ growth mainly driven by IPTV service 2000 000 23.0% offered on EuroDocsis 3-enabled cable 19.8% 1500 000 network Other 23.6% 1000

  17. Slide 17: Mobile voice market – Stable market share

    Mobile voice market – Stable market share Mobile voice market shares (based on total SIM cards) -1% Subscribers 11 864 337 11 703 221 12000 000 21.9 % 22.6 % Mobile voice 10000 000 8000 000 ƒ population-based penetration at 117% 34.9 % 32.9 % 6000 000 ƒ stable market share, slight growth in customer

  18. Slide 18: Mobile broadband market – major growth driver

    Mobile broadband market – major growth driver M bil bbroadband Mobile db d market k t ddevelopments l t (b (basedd on total t t l SIM cards) d ) +47% Mobile broadband Subscribers 1 190 167 ƒ 3G/HSDPA network coverage of ca. 75% 1200 000 1000 000 27% ƒ 300 HSPA+ base stations offering 21 Mbps, 808 85

  19. Slide 19: T-Systems – Financial performance

    T-Systems – Financial performance Revenues T-Systems HUF million -10% 30 000 29 068 Falling voice and data revenues 26 229 25 000 „ corporate clients remain very cautious, 42.6% 39.9% while public sector clients are still facing 20 000 budget cuts 15 000 29.9% „ high fixed churn, churn continued pre

  20. Slide 20: Macedonia – Financial performance

    Macedonia – Financial performance Revenues Macedonia HUF million -13% 20 000 19 593 Declining fixed line revenues 9 5% 9.5% 17 023 „ decreasing fixed retail voice revenues 11.0% 15 000 due to cable competition and strong 45.4% mobile substitution 41.5% 10 000 „ higher wholesale voice revenues and 14

  21. Slide 21: Montenegro – Financial performance

    Montenegro – Financial performance Revenues 0% Montenegro HUF million 8 000 7 764 7 746 Fixed voice revenues under pressure 5 6% 5.6% 7 000 10.4% „ deterioration in retail voice revenues 6 000 driven by strong mobile substitution 39.1% 36.1% 5 000 „ growing internet and TV revenues 4 000 „ #1 positi

  22. Slide 22: Back-up

    Back-up 22

  23. Slide 23: Magyar Telekom - Consolidated Income Statement

    Magyar Telekom - Consolidated Income Statement HUF million Jun 30, 2010 Jun 30, 2011 Change Fixed line revenues 61 617 58 470 -5.1% Mobile revenues 78 252 75 798 -3.1% System Integration/Information Technology revenues 10 591 9 298 -12.2% Revenues 150 460 143 566 -4.6% Direct costs (36 785) (34 860)

  24. Slide 24: Magyar Telekom - Consolidated Balance Sheet

    Magyar Telekom - Consolidated Balance Sheet HUF million Dec 31, 2011 Jun 30, 2011 Change Current assets 200 574 176 270 -12,1% 12,1% Cash and cash equivalents 15 841 15 727 -0,7% Other current financial assets 56 560 38 120 -32,6% Non current assets 908 432 877 928 -3,4% Property plant and equipment

  25. Slide 25: Magyar Telekom - Consolidated Cashflow Statement

    Magyar Telekom - Consolidated Cashflow Statement HUF million Jun, 2010 Jun, 2011 Change Net cash generated from operating activities 92 353 95 464 3,4% Investments in tangible and intangible assets (36 176) (26 656) -26,3% Adjustments to cash purchases (3 797) (7 948) 109,3% P h off subsidiaries Pur

  26. Slide 26: Investigations into certain consultancy contracts

    Investigations into certain consultancy contracts As previously disclosed, the Company’s Audit Committee conducted an internal investigation regarding certain contracts relating to the activities of the Company and/or its affiliates in Montenegro and Macedonia that totaled more than EUR 31 million.

  27. Slide 27: For further questions please contact the IR department

    For further questions please contact the IR department: Investor Relations Phone: +36 1 458-0423 Fax: +36 1 458-0443 e-mail: investor.relations@telekom.hu Abbreviations: 3G: third generation, ARPU: average revenue per user, BB: broadband, CBC: call-by-call, CPS: carrier pre-selection, HQ: headquarte

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