Telekom Austria Ag · VIE:TKA
Telekom Austria — Q3 2017 Earnings Presentation
48 slides from Telekom Austria's earnings presentation, Oct 24, 2017
Slide 1: Results for the first nine months and third quarter 2017
Results for the first nine months and third quarter 2017 Vienna, 24 October 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 nine months and third quarter 2017
Key financial developments for the first nine months and third quarter 2017 Results for the first nine months and third quarter 2017 3
Slide 4: Q3 2017: Adjusted EBITDA growth due to higher service revenues despite roaming
Q3 2017: Adjusted EBITDA growth due to higher service revenues despite roaming Reported Proforma Group (in EUR million) Q3 2017 Q3 2016 % change Total revenues 1,110.7 1,085.3 2.3% EBITDA 410.1 421.0 -2.6% CAPEX 147.1 198.6 -25.9% > Group total revenues rose by 2.3% y-o-y on a proforma basis (+1.9%
Slide 5: Austria: Solid performance in fixed-line business mitigates roaming losses
Austria: Solid performance in fixed-line business mitigates roaming losses ARPU ARPL Operational data (in EUR) (in EUR) > 1.6% decline in subscriber base, mainly driven by the Δ: +6.5% decrease in prepaid customers Δ: -1.5% 27.9 29.7 > Excl. roaming, stable operative ARPU as increased mobile broadba
Slide 6: CEE: EBITDA growth in all CEE markets except for Slovenia
CEE: EBITDA growth in all CEE markets except for Slovenia Highlights CEE EBITDA (proforma, in EUR mn) Bulgaria: > Ongoing improving trends in service revenues (+1.1% yoy excl. one-off effect) EUR 42.8 mn EUR 41.7 mn EUR 46.7 mn > EBITDA benefits from lower cost of equipment Δ: +6.7 mn* Δ: +7.0 mn Δ:
Slide 7: Higher free cash flow driven by less CAPEX paid, better operational performance, lower interest paid
Higher free cash flow driven by less CAPEX paid, better operational performance, lower interest paid (in EUR million) Q3 2017 Q3 2016 % change 1-9 M 2017 1-9 M 2016 % change Net cash flow from operating activities 333.9 305.6 9.3% 910.1 867.8 4.9% Capital expenditures paid -142.9 -205.1 -30.3% -521.
Slide 8: Focus points
Focus points Results for the first nine months and third quarter 2017 8
Slide 9: Austria: Retail fixed-line service revenues back to growth due to price adjustments and upselling
Austria: Retail fixed-line service revenues back to growth due to price adjustments and upselling Retail fixed-line service revenues in Q3 Tariff Old New 2017: +3.2% yoy adjustments Price adjustments for existing customers Basic - existing EUR 19.90 EUR 22.90 effective as of 1 August 2017 custom
Slide 10: Bulgaria: Measures taken during the last years led to EBITDA increase after years of decline
Bulgaria: Measures taken during the last 2 years led to EBITDA increase after years of decline Revenues (yoy-change) Improving trends in mobile corporate and fixed-line segment EBITDA Q1: -16.0% Q2: +8.6% Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q3: +18.5% (clean*: +2.5%) Fixed-line (
Slide 11: Roaming: Higher than expected usage elasticities in all EU markets
Roaming: Higher than expected usage elasticities in all EU markets Customer Roaming - Data* Visitor Roaming - Data* Austria Bulgaria Croatia Slovenia Jan Feb Mar Apr May Jun Jul Aug Sep Jan Feb Mar Apr May Jun Jul Aug Sep • Main EBITDA losses from roaming in 1-9M 2017 stem from Austria and to some e
Slide 12: Successful strategy execution: Rebranding and further enlargement of digital footprint
Successful strategy execution: Rebranding and further enlargement of digital footprint A1 Rebranding A1 Digital > Group and all markets will be > New services with the acquisition of rebranded into A1 in a gradual exoscale; allowing the provision of manner > Infrastructure as a Service > Strengthen
Slide 13: Outlook for the full year 2017
Outlook for the full year 2017 Results for the first nine months and third quarter 2017 13
Slide 14: Telekom Austria Group outlook for the full year
Telekom Austria Group outlook for the full year 2017 25 July 2017 24 October 2017 Consensus 2017 Total revenues approx. +1% approx. +3% EUR 4,328 mn CAPEX approx. EUR 725 mn approx. EUR 745 mn EUR 744 mn Proposed dividend EUR 0.20 / share EUR 0.20 / share - > Outlook based on reported figures and co
Slide 15: Appendix
Appendix 1 Results for the first nine months and third quarter 2017 15
Slide 16: The leading regional communications player providing convergent telecommunication services
The leading regional communications player providing convergent telecommunication services as of 30 September 2017 (in ‘000) Austria* Slovenia Belarus Mobile market position #1 Mobile market position #2 Mobile market position #2 Mobile subscriber: Mobile subscriber: Mobile subscriber: > 5,357 (Q3 20
Slide 17: Telekom Austria Group – Profit and Loss
Telekom Austria Group – Profit and Loss (in EUR million) Q3 2017 Q3 2016 % change Service Revenues 987.1 961.6 2.7% Equipment Revenues 123.5 111.6 10.7% Total Revenues 1,110.7 1,073.2 3.5% Cost of Service -344.8 -329.0 -4.8% Cost of Equipment -143.7 -126.3 -13.8% Selling, General & Administrative Ex
Slide 18: Telekom Austria Group – Total revenues & costs and expenses per segment
Telekom Austria Group – Total revenues & costs and expenses per segment Telekom Austria Group - Total Revenue Split Total Revenues (in EUR million) Q3 2017 Q3 2016 % change Austria* 655.3 647.7 1.2% Bulgaria 112.3 106.4 5.5% Croatia 121.0 108.1 12.0% Belarus 99.8 85.4 16.9% Slovenia 55.5 55.0 1.0% R
Slide 19: Telekom Austria Group – Headcount development
Telekom Austria Group – Headcount development FTE (Average Period) Q3 2017 Q3 2016 % change Austria 8,287 8,437 -1.8% International 10,124 9,023 12.2% Corporate 283 219 29.2% Telekom Austria Group 18,694 17,679 5.7% FTE (End of Period) Q3 2017 Q3 2016 % change Austria 8,278 8,422 -1.7% International
Slide 20: Telekom Austria Group – Capital expenditure split
Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q3 2017 Q3 2016 % change Austria* 85.5 132.4 -35.4% Bulgaria 15.5 13.8 12.4% Croatia 15.8 19.3 -18.3% Belarus 14.2 14.3 -0.5% Slovenia 3.9 6.2 -38.2% Republic of Serbia 7.6 6.7 13.3% Republic of Macedonia 4.2 5.7
Slide 21: Telekom Austria Group – Net debt
Telekom Austria Group – Net debt Net Debt* (in EUR million) 30 September 2017 31 December 2016 % change Long-term Debt 2,532.8 2,303.5 10.0% Short-term Borrowings 0.7 500.1 -99.9% Cash and Cash Equivalents and Short-term Investments -273.2 -464.2 41.1% Net Debt of Telekom Austria Group 2,260.4 2,339
Slide 22: Telekom Austria Group – Debt maturity profile
Telekom Austria Group – Debt maturity profile Debt maturity profile* (in EUR million) 745.7 744.8 743.5 298.5 0.2 0.5 0.1 0.1 0.0 0.0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 > EUR 2,533.6 mn short-and long-term borrowings as of 30 September 2017 > Average cost of debt of approximately 2.95
Slide 23: Telekom Austria Group – Debt profile
Telekom Austria Group – Debt profile Overview debt instruments Fixed/floating mix 100.0% 100.0% Loans Bonds Fixed Floating Lines of credit Ratings > Undrawn committed credit lines > S&P: BBB (positive outlook) amounting to EUR 1,265 mn > Moody’s: Baa2 (positive outlook) > Average term to maturity of
Slide 24: 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) 28.2 28.3 28.6 29.7 3,501.4 3,495.5 3,476.8 3,435.1 3,396.6 27.9 190.6 184.9 186.3 186.7 186.5 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 ARPL ARPL-rel
Slide 25: 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 1.8 1.7 1.7 1.8 16.1 15.7 15.6 15.5 15.9 263.5 255.3 252.7 255.6 249.7 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 ARPU Service Revenues Subsidies Mobi
Slide 26: Segment Austria – Broadband market split
Segment Austria – Broadband market split Market share total broadband Market share mobile broadband (in %) (in %) 0.4 2.1 3.6 4.0 21.3 21.8 Others Hofer T-Mobile 40.6 38.8 33.9 34.9 Mobile Broadband Hutchison Other Operators A1 Unbundled Lines 3.8 34.1 33.3 3.6 Cable 16.1 16.4 Q3 16 Q3 17 A1 Mobile
Slide 27: Segment Austria – Voice market split
Segment Austria – Voice market split Market share voice RGUs (in %) 13.0 13.0 3.2 3.2 23.2 23.3 Others UPC Tele2/UTA A1 60.5 60.5 Q3 16 Q3 17 Results for the first nine months and third quarter 2017 27
Slide 28: 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) 1,019.3 1,018.9 1,006.8 1,002.0 994.4 10.9 10.8 10.9 11.3 11.7 17.7 17.6 17.7 18.3 18.6 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 ARPL ARPL-relevant
Slide 29: Segment Bulgaria – Mobile key performance indicators
Segment Bulgaria – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 2.4 2.2 2.1 2.0 5.8 5.5 5.3 5.4 5.7 1.6 71.1 67.4 70.1 64.8 66.4 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 ARPU Service Revenues Subsidies Mobile penetra
Slide 30: 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) 28.3 28.6 26.5 23.6 23.8 620.1 662.3 667.2 659.9 607.4 26.0 25.9 23.7 19.7 20.3 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 ARPL ARPL-relevant revenues
Slide 31: 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 14.1 4.4 12.2 11.3 11.3 2.7 2.4 2.4 1.8 71.5 60.0 57.9 63.5 76.9 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 ARPU Service Revenues Subsidies Mobile pen
Slide 32: Segment Belarus – Mobile key performance indicators
Segment Belarus – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 5.0 1.8 4.6 4.6 4.7 1.6 1.7 1.6 1.7 4.3 67.6 73.6 67.8 68.1 63.2 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 ARPU Service Revenues Subsidies Mobile penetrat
Slide 33: 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) 172.0 172.0 176.4 177.1 179.8 34.2 34.6 36.2 35.3 35.0 7.3 7.3 7.7 7.5 7.4 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 ARPL ARPL-relevant revenues Fixe
Slide 34: 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 1.7 1.7 1.7 15.4 15.5 15.7 16.0 1.6 1.3 35.9 33.0 34.3 33.1 33.7 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 ARPU Service Revenues Subsidies Mobile pe
Slide 35: Segment Serbia – Mobile key performance indicators
Segment Serbia – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 5.7 5.3 5.7 5.3 3.4 4.8 3.4 3.2 3.0 2.9 35.8 34.0 34.0 37.4 31.0 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 ARPU Service Revenues Subsidies Mobile penetrati
Slide 36: 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) 12.5 12.2 12.3 12.4 12.3 307.1 314.3 314.5 316.9 322.4 5.3 5.2 5.3 5.3 5.3 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 ARPL ARPL-relevant revenues Fix
Slide 37: Segment Macedonia – Mobile key performance indicators
Segment Macedonia – Mobile key performance indicators ARPU & Wireless service revenues Churn rate (in EUR, in EUR million) (in %) 6.4 6.5 6.0 5.8 6.1 3.0 2.6 2.3 1.7 1.6 21.8 20.1 21.6 19.2 20.0 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 ARPU Service Revenues Subsidies Mobile penetr
Slide 38: Appendix – Regulatory topics
Appendix 2 – Regulatory topics Results for the first nine months and third quarter 2017 38
Slide 39: Glide Path of Mobile Termination Rates
Glide Path of Mobile Termination Rates Jul Jan Jul Jan Jul Jan 2015 2016 2016 2017 2017 2018 Austria (EUR) 0.008049 0.008049 0.008049 0.008049 0.008049 0.008049 Bulgaria (BGN) 0.019 0.019 0.019 0.014 0.014 0.014 Croatia (HRK) 0.063* 0.063* 0.063* 0.063* 0.047* 0.047* MTS 250/125 MTS 250/125 MTS 250/
Slide 40: Upcoming spectrum tenders/prolongations/assignments
Upcoming spectrum tenders/prolongations/ assignments* Expected Comments 2018 (3400-3800 MHz) Austria - 2019 (700, 2100 MHz) 2018-2019 (800 MHz) 2018-2019 (1800 MHz) An agreement between mobile operators, NRA and Ministry of defense will be Bulgaria 2018 (2600 MHz) signed in order to start test in 80
Slide 41: 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 42: Appendix – Personnel restructuring in Austria
Appendix 3 – Personnel restructuring in Austria Results for the first nine months and third quarter 2017 42
Slide 43: Quarterly Overview – Restructuring charges and provision vs. FTE
Quarterly Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) Q1 Q2 Q3 Q1 Q2 Q3 FTE reduction 1.4 1.7 5.3 Transfer to government 2 2 0 Servicekom contribution -1.5 -1.5 -18.6 Social plans 5 4 16 Interest rate adjustments 0.0 0.0 0.0 S
Slide 44: 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) 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 FTE reduction 49.9 149.0 86.4* 69.5** 95.0 Transfer to government 44 22 52 49 6 Servicekom contribution -76.7 -103.8 -39.4
Slide 45: 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 Q3 2017 of 2014 107.1 EUR 24.8 mn 2015 101.9 2016 105.5 > Expected cash flow impact fo
Slide 46: Appendix – Corporate sustainability
Appendix 4 – Corporate sustainability Results for the first nine months and third quarter 2017 46
Slide 47: Alignment with core business and materiality analysis define sustainability strategy
Alignment with core business and materiality analysis define sustainability strategy Results for the first nine months and third quarter 2017 47
Slide 48: Key figures – Corporate Sustainability
Key figures – Corporate Sustainability Selected Group-wide KPIs Ratings Network & Customers 2016 Number of customers (in thou.) 24.129 ›Classification: B- ›Classification: B- Environment 2016 Total CO2 emissions (Scope 1+2 market-based in tonnes) 205.457 Energy efficiency index (in Mwh/terabyte) 0.3
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