Telekom Austria Ag · VIE:TKA
Telekom Austria — Q1 2015 Earnings Presentation
47 slides from Telekom Austria's earnings presentation, Apr 22, 2015
Slide 1: Results for the first quarter 2015
Results for the first quarter 2015 Vienna, 22 April 2015
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 2015
Operational and financial highlights for the first quarter 2015 Results for the first quarter 2015 3
Slide 4: Q1 2015: Challenging mobile markets, strong fixed-line trends and BYR devaluation drive revenues
Q1 2015: Challenging mobile markets, strong fixed- line trends and BYR devaluation drive revenues > Reduced revenue decline of 2.0% driven by better trends in Austria and Bulgaria and revenue growth in Croatia, 10.0% FX devaluation impacts revenues in Belarus > EUR 10.9 mn OPEX reduction achieved wi
Slide 5: Q1 2015: Challenging mobile markets, strong fixed-line trends and BYR devaluation drive revenues
Q1 2015: Challenging mobile markets, strong fixed- line trends and BYR devaluation drive revenues > 1.6% revenue growth in Croatia offset by higher spectrum fee imposed by government > Belarus: Financial performance remains on track despite FX devaluation reducing customer demand > Additional market
Slide 6: Key financial developments in the first quarter 2015
Key financial developments in the first quarter 2015 Results for the first quarter 2015 6
Slide 7: Q1 2015: OPEX savings drive EBITDA comparable trend as revenue decline slows down
Q1 2015: OPEX savings drive EBITDA comparable trend as revenue decline slows down (in EUR million) Q1 2015 Q1 2014 % change > Reduced revenue decline of 2.0% Revenues 956.0 975.9 -2.0% driven by better trends in Austria and Bulgaria and revenue growth in EBITDA comparable* 338.5 319.9 5.8% Croatia,
Slide 8: Group revenues: Improving trend driven by Austria and Croatia
Group revenues: Improving trend driven by Austria 1,100 and Croatia 1,080 1,060 1,040 Quarterly revenue development (in EUR million) 1,020 -2.0% 1,000 975.9 -4.6 980 -3.7 1.3 -3.8 -10.1 956.0 0.9 960 940 920 900 Revenues Austria Bulgaria Croatia Belarus Additional Others Revenues Q1 2014 Markets Q1
Slide 9: 2.7% clean EBITDA comparable growth
2.7% clean EBITDA comparable growth* Quarterly EBITDA comparable development (in EUR million) +5.8% Clean EBITDA: +2.7%* -2.3 1.8 12.6 -2.2 338.5 319.9 12.3 -3.6 EBITDA comp. Austria Bulgaria Croatia Belarus Additional Others EBITDA comp. Q1 2014 Markets Q1 2015 Segment Austria International Segment
Slide 10: Free cash flow increases four times due to lower working capital needs
Free cash flow increases four times due to lower working capital needs (in EUR million) Q1 2015 Q1 2014 % change Gross cash flow 303.7 284.0 6.9% Change in working capital -31.5 -135.1 n.m. Cashflow from operating activities 272.2 148.9 82.8% Ordinary capital expenditures -121.1 -99.4 n.m. Proceeds
Slide 11: Focus points
Focus points Results for the first quarter 2015 11
Slide 12: Austria: New MVNOs result in increased competition; growth target remains intact
Austria: New MVNOs result in increased competition; growth target remains intact Total subscribers Mobile service revenues (in ‘000) (in EUR million) 5,000 -4.4% 300 4,000 280 3,000 260 -5.8% 2,000 240 1,000 220 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Contract Prepaid ARPU-releva
Slide 13: Increasing trend towards data and ICT solutions – Recent transactions in Austria
Increasing trend towards data and ICT solutions – Recent transactions in Austria IT Outsourcing for EGLO Thalia Cisco Meraki E-Care Terminal > Outsourcing of all IT > Distribution and service > Service screen for hospital applications partner for Cisco Meraki beds: information, > Managed and hosted
Slide 14: Bulgaria: Initiatives implemented to achieve EBITDA stabilisation
Bulgaria: Initiatives implemented to achieve EBITDA stabilisation Mobile residential Mobile business Fixed-line retail customers customers segment Optimise customer Increase contract value development Increase homes Targets customer base connected Stabilise market share > Churn reduction > Enhanceme
Slide 15: Bulgaria: Customer KPIs improving but revenues reflect negative pricing trends
Bulgaria: Customer KPIs improving but revenues reflect negative pricing trends Mobile residential contract net additions Revenues > Positive net additions in last two in EUR million consecutive quarters 30,000 100 95 10,000 90 -10,000 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 85 -30,000 80 Q1 14 Q2 14 Q3 14 Q4
Slide 16: Belarus: Financial performance on track despite macro and FX challenges
Belarus: Financial performance on track despite macro and FX challenges EURBYR development Macro challenges but FX improvements 20,000 > GDP forecast lowered to 2-4%* decline for 2015 18,000 > Higher oil price, tight monetary and price control lead to 16.4% BYR appreciation since its low in 16,000 m
Slide 17: Outlook for the full year 2015
Outlook for the full year 2015 Results for the first quarter 2015 17
Slide 18: Telekom Austria Group outlook for the full year 2015 unchanged
Telekom Austria Group outlook for the full year 2015 unchanged 22 April 2015 10 February 2015 Revenues Revenues Approx. +2% Approx. +2% CAPEX* CAPEX* EUR 700-750 mn EUR 700-750 mn Proposed ProposedDividend** dividend** EUR 0.05 EUR 0.05 On a constant currency basis with the exception of Belarus; ass
Slide 19: Appendix 1
Appendix 1 Results for the first quarter 2015 19
Slide 20: The leading regional communications player providing convergent telecommunication services
The leading regional communications player providing convergent telecommunication services as of 31 March 2015 (in ‘000, in %) Austria Slovenia Belarus Mobile: Mobile: Mobile: > Market share: 40.4% (Q1 2014: 42.1%) > Market share: 29.2% (Q1 2014: 29.9%) > Market share: 42.6% (Q1 2014: 42.9%) > Subsc
Slide 21: Telekom Austria Group – Revenue breakdown
Telekom Austria Group – Revenue breakdown Revenue Split - Segment Austria (in EUR million) Q1 2015 Q1 2014 % change Monthly fee and traffic 447.8 446.4 0.3% Data and ICT solutions 55.2 54.4 1.5% Wholesale (incl. Roaming) 33.1 40.7 -18.6% Interconnection 43.3 44.9 -3.6% Equipment 24.5 23.0 6.5% Other
Slide 22: Telekom Austria Group – Expense breakdown
Telekom Austria Group – Expense breakdown Operating Expense - Segment Austria (in EUR million) Q1 2015 Q1 2014 % change Material expense 56.2 52.3 7.5% Employee costs 179.4 176.7 1.5% Interconnection 40.1 42.1 -4.6% Maintenance and repairs 22.5 22.7 -0.9% Services received 26.1 27.6 -5.4% Other supp
Slide 23: Telekom Austria Group – Headcount development
Telekom Austria Group – Headcount development FTE (Average period) Q1 2015 Q1 2014 % change Austria 8,724 8,866 -1.6% International 7,362 7,073 4.1% Telekom Austria Group* 16,270 16,111 1.0% FTE (End of period) Q1 2015 Q1 2014 % change Austria 8,746 8,895 -1.7% International 7,365 7,020 4.9% Telekom
Slide 24: Telekom Austria Group – Capital expenditures split
Telekom Austria Group – Capital expenditures split Capital Expenditures (in EUR million) Q1 2015 Q1 2014 % change Segment Austria 68.5 61.5 11.4% Segment Bulgaria 13.6 6.6 105.5% Segment Croatia 9.4 12.6 -25.8% Segment Belarus 7.6 8.3 -7.8% Segment Additional Markets 22.0 10.4 111.1% Slovenia 4.3 3.
Slide 25: Telekom Austria Group – Net debt
Telekom Austria Group – Net debt Net debt* (in EUR million) 31 March 2015 31 December 2014 % change Long-term debt 2,634.3 3,385.0 -22.2% Short-term borrowings** 1,054.1 340.8 209.3% Cash and cash equivalents and short-term investments -1,110.8 -1,032.5 n.m. Net Debt** of Telekom Austria Group 2,577
Slide 26: Telekom Austria Group – Debt maturity profile
Telekom Austria Group – Debt maturity profile Debt Maturity Profile (Including accrued interest)* (in EUR million) 816.1 743.0 741.9 546.2 290.7 297.9 205.3 47.3 0.0 2015 2016 2017 2018 2019 2020 2021 2022 2023 > EUR 3,688.4 mn of short- and long-term borrowings as of 31 March 2015 > Average cost of
Slide 27: Telekom Austria Group – Debt profile
Telekom Austria Group – Debt profile Overview debt instruments Fixed-floating mix 16.4% 83.6% 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 28: 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) 2,288 2,275 2,275 2,287 2,289 30.6 30.3 30.2 30.5 29.5 11.6 3.8 0.4 1.8 210.2 207.4 206.0 208.5 202.7 -12.6 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q1 14
Slide 29: Segment Austria – Mobile key performance indicators
Segment Austria – Mobile key performance indicators ARPU & ARPU-relevant revenues* MoU per subscriber** (in EUR) (in min) 16.2 16.9 16.5 15.7 15.2 141.0 138.1 137.8 139.0 137.6 277.4 270.2 268.6 259.2 254.1 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 ARPU ARPU relevant revenues Mobil
Slide 30: Segment Austria – Broadband market split
Segment Austria – Broadband market split Market share total broadband Market share mobile broadband (in %) (in %) 7.1% 6.4% 14.8% Tele.ring 17.3% T-mobile 41.6% 44.1% Hutchison 30.2% Mobile Broadband 32.5% Other Operations A1 Unbundled Lines 36.5% 31.2% 4.8% 4.4% Cable Q1 14 Q1 15 16.3% 16.8% Market
Slide 31: Segment Austria – Voice market split
Segment Austria – Voice market split Market share total minutes Market share fixed-line minutes (in %) (in %) 14.0% 13.2% 3.9% 3.5% 21.8% 22.7% 86.2% 87.0% 60.3% 60.6% 5.3% 5.0% 8.5% 8.1% Q1 14 Q1 15 Q1 14 Q1 15 Fixed Line Telekom Austria Fixed Line Others Mobile A1 Tele2/UTA UPC Others Results for
Slide 32: 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) 14.3 14.5 14.4 14.4 13.4 170.4 154.4 153.0 151.3 153.6 6.8 6.7 6.6 6.6 6.5 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 ARPL ARPL-relevant
Slide 33: Segment Bulgaria – Mobile key performance indicators
Segment Bulgaria – Mobile key performance indicators ARPU MoU per subscriber (in EUR) (in min) 129.6 129.7 129.6 127.5 125.2 6.2 6.2 6.0 5.9 5.5 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Mobile broadband customers Mobile penetration (in ‘000) (in %) 217.1 227.8 248.9 271.2 152.7% 2
Slide 34: 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) 21.6 21.3 21.1 21.4 21.2 202.1 208.0 212.3 219.9 228.9 13.9 14.3 12.8 13.2 13.3 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 ARPL ARPL-rele
Slide 35: Segment Croatia – Mobile key performance indicators
Segment Croatia – Mobile key performance indicators ARPU MoU per subscriber (in EUR) (in min) 136.4 146.6 145.0 150.7 154.4 11.4 11.2 11.1 10.5 10.7 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Mobile broadband customers Mobile penetration (in ‘000) (in %) 173.6 178.4 160.3 144.2 140.
Slide 36: Segment Belarus – Mobile key performance indicators
Segment Belarus – Mobile key performance indicators ARPU MoU per subscriber* (in EUR) (in min) 5.0 6.2 201.4 197.7 198.8 4.7 4.6 184.6 187.8 4.5 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Mobile broadband customers Mobile penetration (in ‘000) (in %) 122.8% 123.1% 123.3% 284.1 282.9
Slide 37: Segment Additional Markets – Mobile key performance indicators
Segment Additional Markets – Mobile key performance indicators Slovenia - ARPU Slovenia - MoU per subscriber (in EUR) (in min) 190.7 192.2 188.0 190.4 190.3 19.8 19.8 19.6 17.3 15.8 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Republic of Serbia - ARPU Republic of Macedonia - ARPU (in
Slide 38: Appendix 2 – Regulatory topics
Appendix 2 – Regulatory topics Results for the first quarter 2015 38
Slide 39: 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 2014 2014 2014 2015 2015 Austria (EUR) 0.008049 0.008049 0.008049 0.008049 0.008049 Bulgaria (BGN) 0.02 0.02 0.02 0.019 0.019 Croatia (HRK) 0.1282* 0.1282* 0.1282* 0.06
Slide 40: EU Roaming Price Regulation
EU Roaming Price Regulation RETAIL (in EURc) July 2013 July 2014 Data (per MB) 45 20 Voice-calls made (per minute) 24 19 Voice-calls received (per minute) 7 5 SMS (per SMS) 8 6 WHOLESALE (in EURc) July 2013 July 2014 Data (per MB) 15 5 Voice (per minute) 10 5 SMS (per SMS) 2 2 Results for the first
Slide 41: Upcoming spectrum tenders/prolongations/assignments
Upcoming spectrum tenders/prolongations/assignments Planned/Expected Comments Austria 2019 (2100 MHz) - 2600 MHz band planned to be free from 1st Sept. 2015; Bulgaria 2015 (1800 MHz) allocation procedure currently undecided 2015 (1800 MHz) 2100 MHz: dependent on LTE roll out dynamics and Croatia 201
Slide 42: Appendix 3 – Personnel restructuring in Austria
Appendix 3 – Personnel restructuring in Austria Results for the first quarter 2015 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 Q1 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 FTE effect 76.9 274.3 49.9 149.0 86.4* 4.5 Transfer to 158 106 44 22 52 10 government Servicekom 0.0 -40.6
Slide 44: 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 old 2010 57.9 2011 93.4 and new programmes 2012 104.0 > Cash flow impact for Q1 2015 of 2013 108.0 2014 107.1 EUR 25.2 mn Q1 2015 25.2 > Total expected c
Slide 45: Appendix 4 – Corporate sustainability
Appendix 4 – Corporate sustainability Results for the first quarter 2015 45
Slide 46: 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 2015 46
Slide 47: Key figures
Key figures Selected Group-wide KPIs Ratings Products: Providing Responsible Products 2013 Customer contacts in customer service ('000) 40.640 Employees in customer service (in FTE) 3.627 › Classification: B › Classification: C+ (93 points out of 100) Environment: Living Green* 2013 Total CO2 Emissi
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