Telekom Austria Ag · VIE:TKA

Telekom Austria — Q1 2007 Earnings Presentation

42 slides from Telekom Austria's earnings presentation, May 16, 2007

  1. Slide 1: Telekom Austria Group Results for the First Quarter 2007

    Telekom Austria Group Results for the First Quarter 2007 May 16, 2007 1

  2. Slide 2: Cautionary Statement

    Cautionary Statement “This presentation contains certain forward-looking statements. Actual results may differ materially from those projected or implied in such forward-looking statements. Forward-looking information involves risks and uncertainties that could significantly affect expected results.

  3. Slide 3: Agenda

    Agenda ƒ Key Developments ƒ Fixed Net ƒ Mobile Communication ƒ Financial Overview ƒ Outlook 3

  4. Slide 4: Key Developments

    Key Developments 4

  5. Slide 5: EPS Remains Stable as a Result of Increased Share Buybacks

    EPS Remains Stable as a Result of Increased Share Buybacks in 2006 and 1Q 2007 ƒ Revenues decline by 1.1% to EUR 1,145.8 million as growth in international operations almost offset lower revenues in domestic operations ƒ EBITDA decreases by 5.8% and is impacted by lower EBITDA in Fixed Net, higher m

  6. Slide 6: Fixed Net

    Fixed Net 6

  7. Slide 7: Ongoing Fixed-to-Mobile Substitution and Unbundling Weigh on Revenues

    Ongoing Fixed-to-Mobile Substitution and Unbundling Weigh on Revenues 1Q 2007 Results Key Points (EUR million) ƒ Lower traffic and monthly rental Revenues Adj. EBITDA revenues ƒ Higher revenues from Internet -4.5% Access & Media and Data & IT- solutions partly offset decline 534.9 510.8 -10.3% ƒ Sta

  8. Slide 8: Voice Market Share Increases to 58% following Successful Retention Measures

    Voice Market Share Increases to 58% following Successful Retention Measures Voice Market Shares* Key Points ƒ Retention measures help to stem Telekom Austria 2.2% 6.7% 2.8% 58.1% Tele2/UTA effects of fixed-to-mobile migration 4.6% 2.4% Telering ƒ Better retention demonstrated by eTel Telekom Austria

  9. Slide 9: Further Increase in Total xDSL Lines by 17.1% Despite High Competition

    Further Increase in Total xDSL Lines by 17.1% Despite High Competition Broadband Market Shares Year on Year Key Points 1Q 06 1Q 07 ƒ Telekom Austria’s retail market 42.0% 34.6% 41.8% share remains stable 37.8% ƒ Further increase in total xDSL lines 15.0% by 17.1% despite high competition 10.7% 9.5%

  10. Slide 10: Acceleration of Unbundling Hits Cable and Wholesale Operators

    Acceleration of Unbundling Hits Cable and Wholesale Operators Domestic Broadband Market Key Points ƒ Acceleration of unbundling over last quarters ƒ xDSL gross add share normalizes following a period of strong retail xDSL growth 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 05 05 05 05 06 06 06 06 07 ƒ Unbundling eats

  11. Slide 11: Mobile Communication

    Mobile Communication 11

  12. Slide 12: Net Adds Doubled to 326,600 Compared to 1Q 2006

    Net Adds Doubled to 326,600 Compared to 1Q 2006 1Q 2007 Results Key Points (EUR million) ƒ Number of net adds almost Revenues Adj. EBITDA doubled +0.9% -2.2% ƒ Revenue growth from international operations offsets 694.1 688.2 293.4 287.0 lower domestic revenues 26.9 36.2 7.5 11.3 101.1 102.4 34.7 37.

  13. Slide 13: mobilkom austria Continuous to Perform Well Despite Termination Rate Cuts

    mobilkom austria Continuous to Perform Well Despite Termination Rate Cuts Market Shares* Key Points 38.9% ƒ Reduction of mobile termination rate to 7.34 cents accounts for EUR 1.0 in ARPU 22.4% 16.9% decline 11.2% 6.1% Q 1 3 4 0 1 4 0 Q 5 0 Q 5 0 Q 3 0 Q 1 0 Q 3 6 Q 1 6 7 0 4.5% ƒ Stable market shar

  14. Slide 14: Mobiltel's Strong Subscriber Growth Increases Revenues by 11.7%

    Mobiltel’s Strong Subscriber Growth Increases Revenues by 11.7% Market Shares Revenues Adj. EBITDA (EUR million) (EUR million) 9.2% +11.7% +6.2% 51.1% 141.8 126.9 81.8 77.0 39.6% Mobiltel Globul Vivatel 1Q 06 1Q 07 1Q 06 1Q 07 Subcriber Development Key Points in (.000) +21.7% 4,448 ƒ 21.7% growth of

  15. Slide 15: Excellent Performance in Slovenia, Higher EBITDA and Operating Income in Croatia

    Excellent Performance in Slovenia, Higher EBITDA and Operating Income in Croatia Subscribers (EoP) Key Points (in 000) + 18.5% Vipnet (Croatia) 1,969.2 ƒ Strong contract subscriber 1,661.9 growth by 34.1% +19.7% 1Q 06 1Q 07 ƒ Adj. EBITDA increases by 9.2%, 370.9 443.9 operating income by 32.9% ƒ Dat

  16. Slide 16: Financial Overview

    Financial Overview 16

  17. Slide 17: Telekom Austria Group – 1Q 2007 Results Impacted by Domestic Business

    Telekom Austria Group – 1Q 2007 Results Impacted by Domestic Business (EUR million) OPERATING REVENUES ADJ. EBITDA* NET INCOME CAPEX NET DEBT INCOME -1.1% -5.2% -5.8% +37.4% 1,158.6 -4.9% -4.4% 3,169.0 167.3 3,003.6 1,145.8 504.3 474.9 221.6 210.7 121.8 154.0 147.2 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q Dec.

  18. Slide 18: 1Q 2007 Characterized by Start-Up Costs, Lower D&A and Lower Income Tax

    1Q 2007 Characterized by Start-Up Costs, Lower D&A and Lower Income Tax (EUR million) 1Q 07 1Q 06 International operations Total revenues 1,145.8 1,158.6 compensate for domestic Adjusted EBITDA 474.9 504.3 business Depreciation & amortization -264.2 -280.2 Lower revenues in Fixed Net, Impairment cha

  19. Slide 19: Announced Cash Use Policy Balances Share Buyback with Growth Investments

    Announced Cash Use Policy Balances Share Buyback with Growth Investments ƒ EUR 3,300 million of Free Cash ( EUR million) Flow* from 2007 – 2010 Telekom Austria Group ƒ EUR 1,400 million earmarked for dividends New FCF* from Free Cash Flow* New ƒ EUR 2,650 million available for Debt Growth 3,300 750

  20. Slide 20: Establishment of Greenfield Operations in Serbia and Macedonia in 2007

    Establishment of Greenfield Operations in the Republic of Serbia and Macedonia in 2007 ƒ New operations will complement the Group’s footprint across Eastern and South-Eastern Europe Czech Rep. Slovak Rep. FL Austria ƒ EUR 7.5 million capex spent in the Hungary Republic of Serbia in 1Q 07 Slovenia Ro

  21. Slide 21: Outlook

    Outlook 21

  22. Slide 22: Outlook for FY 2007 Reiterated Despite Challenging Environment

    Outlook for FY 2007 Reiterated Despite Challenging Environment Group ƒ Stable revenues due to competitive impact on wholesale roaming prices; impact of the EU roaming regulation to be defined ƒ Adjusted EBITDA margin compression by 1.5 percentage points due to lower wholesale roaming prices and star

  23. Slide 23: Appendix

    Appendix 23

  24. Slide 24: Regulatory Issues – Fixed Net

    Regulatory Issues – Fixed Net Key Aspects ƒ RTR has to evaluate stage of competition on regulated markets every two years – Austria is ahead of other EU member states with the market analysis process – the second round for most markets was finalized and results were published. Telekom Austria was no

  25. Slide 25: Regulatory Issues – Mobile Communication (1)

    Regulatory Issues – Mobile Communication (1) Key Aspects ƒ Analysis of wholesale market for mobile termination: As in the previous market analysis, mobilkom austria was confirmed to have SMP-status and consequently the following remedies were applied: non-discriminatory obligation (also for the fixe

  26. Slide 26: Regulatory Issues – Mobile Communication (2)

    Regulatory Issues – Mobile Communication (2) Key Aspects ƒ Mobile termination rates: In July 2006 mobilkom austria initiated a regulatory proceeding against T-Mobile Austria requesting to lower its termination rates due to the merger with tele.ring. A proceeding against mobilkom austria was initiate

  27. Slide 27: Fixed Net - Access Lines

    Fixed Net - Access Lines (in 000) 1Q 07 1Q 06 % change PSTN access lines 2,186.2 2,350.0 -7.0% Basic ISDN access lines 382.2 412.9 -7.4% Multi ISDN access lines 7.0 7.3 -4.2% Total access lines in service 2,575.5 2,770.2 -7.0% of these ADSL access lines 721.6 616.0 17.1% thereof ADSL wholesale lines

  28. Slide 28: Fixed Net - Market Shares

    Fixed Net - Market Shares 65% 60% 55% 50% 45% 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 Local + National long distance traffic Fixed to mobile International Total voice traffic 28

  29. Slide 29: ADSL – Revenues and Residential ARPU

    ADSL – Revenues and Residential ARPU ADSL Revenues (incl. Wholesale) ADSL Residential ARPU (EUR million) (in EUR) 63.4 32.1 59.8 58.8 58.9 57.2 53.3 48.4 50.3 45.9 30.1 29.8 29.8 29.0 28.8 28.5 27.9 27.3 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06

  30. Slide 30: Fixed Net - Minutes and Average Tariffs

    Fixed Net - Minutes and Average Tariffs (in million minutes) 1Q 07 1Q 06 % change National 823 954 -13.7% Fixed-to-mobile 187 205 -8.9% International 102 109 -6.7% Total voice minutes 1,112 1,268 -12.3% Internet dial-up 247 463 -46.7% Total Fixed Net minutes 1,359 1,731 -21.5% (Average tariffs in EU

  31. Slide 31: Mobile Subscribers

    Mobile Subscribers (in 000) 1Q 07 1Q 06 % change Contract 2,306.5 1,978.4 16.6% Prepaid 1,390.8 1,458.3 -4.6% Total Austria 3,697.3 3,436.7 7.6% Market share 38.9% 38.9% Contract 1,658.0 1,278.9 29.6% Prepaid 2,789.7 2,375.6 17.4% Total Bulgaria 4,447.7 3,654.5 21.7% Market share 51.1% 56.0% Contrac

  32. Slide 32: Operational Data – mobilkom austria

    Operational Data – mobilkom austria MoU per Subscriber ARPU & Data ARPU (in EUR) 171.0 Blended ARPU Data ARPU 164.6 156.0 154.3 34.2 34.9 34.9 33.4 31.7 148.0 5.0 4.9 5.2 5.6 6.2 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 ARPU Quarterly Churn SRC & SAC* (in EUR million) (in EUR) 40.

  33. Slide 33: mobilkom austria - Mobile Data

    mobilkom austria - Mobile Data Number of Data Cards Sold Cumulated Number of SMS (in million) 372 170,000 310 140,000 238 109,000 207 100,000 182 70,000 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 MMS Users Data in % of Revenues* (in 000) 1,606.6 1,488.0 1,274.0 1,361.4 1,166.3 27.2%

  34. Slide 34: Headcount Development

    Headcount* Development (average period) 1Q 2007 1Q 2006 change Fixed Net 9,431 9,550 -119 Mobile Communciation 6,073 6,058 15 Telekom Austria Group 15,504 15,608 -104 (end of period) Mar 31,2007 Mar 31,2006 change Fixed Net 9,428 9,552 -124 Mobile Communciation 6,155 5,961 194 Telekom Austria Group

  35. Slide 35: Fixed Net - Revenue Breakdown

    Fixed Net - Revenue Breakdown (EUR million) 1Q 07 1Q 06 % change Switched voice base traffic 86.7 100.8 -14.0% Switched voice monthly & other voice revenues 121.4 132.2 -8.2% Payphones & VAS 11.1 10.8 2.8% Wholesale data & IT-solutions 105.0 103.6 1.4% Internet access & media 68.7 67.3 2.1% Wholesal

  36. Slide 36: Mobile Communication - Revenue Breakdown

    Mobile Communication - Revenue Breakdown (EUR million) 1Q 07 1Q 06 % change Traffic revenues 336.9 336.1 0.2% Monthly rental 138.4 119.0 16.3% Equipment 54.6 56.3 -3.0% Roaming 57.6 65.5 -12.1% Interconnection 103.6 107.7 -3.8% Other 16.0 10.0 60.0% Discounts -13.0 -6.4 103.1% Total Mobile Communica

  37. Slide 37: Operating Revenues by Segment

    Operating Revenues by Segment (EUR million) 1Q 07 1Q 06 % change Fixed Net revenues 510.8 534.9 -4.5% Mobile Communication revenues 694.1 688.2 0.9% Corporate, Other & Eliminations -59.1 -64.5 -8.4% Operating revenues 1,145.8 1,158.6 -1.1% 37

  38. Slide 38: Adjusted EBITDA and Operating Income by Segment

    Adjusted EBITDA and Operating Income by Segment (EUR million) 1Q 07 1Q 06 % change Fixed Net EBITDA 193.2 215.4 -10.3% Mobile Communciation EBITDA* 287.0 293.4 -2.2% Corporate, Other & Eliminations -5.3 -4.5 17.8% Adjusted EBITDA* 474.9 504.3 -5.8% (EUR million) 1Q 07 1Q 06 % change Fixed Net operat

  39. Slide 39: Capital Expenditure by Segment

    Capital Expenditure by Segment (EUR million) 1Q 07 1Q 06 % change Fixed Net tangible 48.7 51.0 -4.5% Mobile Communication tangible 73.0 52.7 38.5% Tangible (total) 121.7 103.7 17.4% Fixed Net intangible 10.7 9.5 12.6% Mobile Communciation intangible 34.9 8.6 305.8% Intangible (total) 45.6 18.1 151.9

  40. Slide 40: Net Debt - Telekom Austria Group

    Net Debt - Telekom Austria Group (EUR million) Mar 31,2007 Dec 31,2006 % change 75 Long-term debt 2,421.5 2,750.1 -11.9% Short-term debt 719.1 562.1 27.9% - Short-term portion of capital and cross border lease obligations -10.9 -9.4 16.0% + Capital lease obligations 0.1 0.1 0.0% Cash and cash equiva

  41. Slide 41: Telekom Austria Debt Maturity Profile

    Telekom Austria Debt Maturity Profile Debt Maturity Profile Key Points (EUR million) Ratings: ƒ S&P: BBB+ (positive outlook) ƒ Moody‘s: A3 (stable outlook) 1,228 Ratios: ƒ Net debt/equity as of March 31, 2007: 103.0% 481 497 237 ƒ Net debt/adj. EBITDA 215 137 (annualized): 1.58 2007 2008 2009 2010 2

  42. Slide 42: Reconciliation from Adjusted EBITDA to Net Income

    Reconciliation from Adjusted EBITDA* to Net Income (EUR million) 1Q 07 1Q 06 % change Adjusted EBITDA* 474.9 504.3 -5.8% Depreciation and amortization -264.2 -280.2 -5.7% Impairment charges 0.0 -2.5 Operating income 210.7 221.6 -4.9% Interest income 5.1 5.3 -3.8% Interest expense -33.0 -30.3 8.9% Ac

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