Telekom Austria Ag · VIE:TKA
Telekom Austria — FY2007 Earnings Presentation
50 slides from Telekom Austria's earnings presentation, Feb 27, 2008
Slide 1: Telekom Austria Group Results for the Financial Year 2007
Telekom Austria Group Results for the Financial Year 2007 Vienna, February 27, 2008
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.
Slide 3: Agenda
Agenda § Key Developments § Fixed Net § Mobile Communication § Financial Overview § Outlook Results for the Financial Year 2007 3
Slide 4: Key Developments
Key Developments Results for the Financial Year 2007 4
Slide 5: Telekom Austria Group - Highlights 2007
Telekom Austria Group - Highlights 2007 § Revenues increase by 3.3% driven by growth in the Fixed Net and Mobile Communications segments § EBITDA declines by 3.0% from EUR 1,911.5 mn to EUR 1,854.9 mn § Competitive Austrian market drives EBITDA decline § Growth profile strengthened by market entry i
Slide 6: Growth of International Operations Covers Start-Up Costs, Weaker Domestic Results Drive EBITDA
Growth of International Operations Covers Start- Up Costs, Weaker Domestic Results Drive EBITDA Revenues EBITDA* (in EUR Mio.) (in EUR Mio.) 4,919.0 3.3% -3.0% 1,911.5 4,759.6 1,854.9 FY 07 FY 06 FY 07 FY 06 Net Income Earnings per Share (in EUR Mio.) One-off tax benefit (in EUR) -12.3% 561.8 492.5
Slide 7: Fixed Net
Fixed Net Results for the Financial Year 2007 7
Slide 8: Revenue Growth and Stable EBITDA
Revenue Growth and Stable EBITDA Revenues § Revenue increase driven by Wholesale (in EUR Mio.) and Data & IT-Solutions 2.2% 547.4 § EBITDA stable as lower personnel 535.5 expenses compensate higher opex § Expenses for the employee participation program and restructuring of EUR 14.9 Q4 07 Q4 06 mn co
Slide 9: Strong Growth Impuls in 4Q 07 Drives Increase of Broadband Lines and Retail Market Share
Strong Growth Impuls in 4Q 07 Drives Increase of Broadband Lines and Retail Market Share Broadband Market Shares as of year-end 07 3.9% § Successful promotion of product 12.3% bundle reverses trend in 4Q 07 30.6% § 38,500 xDSL broadband lines added in 4Q 07 25.9% § Retail broadband market share incr
Slide 10: aonTV Creates Unique Proposition for the Fixed Net
aonTV Creates Unique Proposition for the Fixed Net § aonTV offers more channels and higher usability than competition § Video on demand library extended through recent deals with content providers § Incremental monthly fee of EUR 4.9 is best offer on Austrian TV market § 20,900 customers by year-end
Slide 11: Promotion of Product Bundle Slows Down Line Loss
Promotion of Product Bundle Slows Down Line Loss Line Loss (in 000) § Promotion of product bundle from 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 Nov. 15, 2007 to Jan. 15, 2008 § Success of promotion slowed line -36 -48 loss in 4Q 07 -54 -60 -63 § Attractive pricing and promotion character changes price percepti
Slide 12: Mobile Communication
Mobile Communication Results for the Financial Year 2007 12
Slide 13: Subscriber Base Grows by 50.9% Driven by New Operations
Subscriber Base Grows by 50.9% Driven by New Operations Revenues § Subscriber base grows by 50.9% to (in EUR Mio.) Contribution of MDC 15.4 mn customers 9.0% 796.2 § Newly launched operations in Rep. of 730.6 64.0 Serbia & Rep. of Macedonia already have 650,100 customers 4Q 07 4Q 06 § Revenue growth
Slide 14: mobilkom austria Impacted by Retroactive Reduction of Mobile Termination Rates
mobilkom austria Impacted by Retroactive Reduction of Mobile Termination Rates Revenues (in EUR Mio.) § Market share increases from 38.7% to 40.3% -8.9% 395.8 434.7 § Growth of subscriber base by 9.1% to nearly 4 mn customers 4Q 07 4Q 06 § Strong data business evidenced EBITDA* One-off charge for by
Slide 15: Mobile Broadband Offers Growth in Highly Penetrated Market
Mobile Broadband Offers Growth in Highly Penetrated Market Mobile Broadband Subscribers § Number of mobile broadband (in 000) 290 subscribers doubles compared to 250 210 4Q 06 170 140 § Data growth partly compensates lower voice prices 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 Data in % of Revenues* § Data acco
Slide 16: Mobiltel's Revenues Increase by 10.6% while Profitability Remains High
Mobiltel’s Revenues Increase by 10.6% while Profitability Remains High Revenues § Subscriber base grows by 19.5% to (in EUR Mio.) 5.1 mn customers 167.6 10.6% 151.6 § Revenues grow by 10.6% driven by strong growth in customer base and higher traffic revenues 4Q 07 4Q 06 EBITDA § EBITDA increases by
Slide 17: Newly Acquired Belarusian MDC Consolidated as of October 3, 2007
Newly Aquired Belarusian MDC Consolidated as of October 3, 2007 Revenues § Subscriber base grew to 3.1 million subscribers at (in EUR Mio.) year-end 2007 64.0 § Revenues of EUR 64.0 mn consolidated in 2007 § EBITDA of EUR 30.9 mn with seasonally affected 4Q 07 margin of 48.3% EBITDA (in EUR Mio.) §
Slide 18: Strong EBITDA and Customer Growth in Croatia and Slovenia
Strong EBITDA and Customer Growth in Croatia and Slovenia EBITDA Vipnet Vipnet in Croatia (in EUR Mio.) 26.6% § Subscriber base grows by 40.0 14.0% 31.6 § EBITDA increases by 26.6% to EUR 40.0 mn 4Q 07 4Q 06 EBITDA Si.mobil Si.mobil in Slovenia (in EUR Mio.) § Subscriber base grows by 11.6 50.6% 18.
Slide 19: Greenfield Operations Account for 30.2% of Organic Customer Growth
Greenfield Operations Account for 30.2% of Organic Customer Growth Total Subscribers FY 07 Vip mobile in Serbia (in 000) 508.9 § Successful market entry evidenced by 508,900 141.2 subscribers at year-end 2007 Serbia Macedonia § Market share of 5.8% at year- end 2007 EBITDA Q4 07 (in EUR Mio) Vip ope
Slide 20: Financial Overview
Financial Overview Results for the Financial Year 2007 20
Slide 21: Improved Operational Performance, Higher Net Interest Expenses
Improved Operational Performance, Higher Net Interest Expenses Higher revenues in the Fixed Net and the Mobile Communi- (EUR million) 4Q 07 4Q 06 cations segment. MDC contri- butes EUR 64 mn Revenues 1,288.1 1,199.3 International operations over- compensate challenging domestic mobile business EBITD
Slide 22: Growth of International Operations already Feeding through in 4Q 07 Results
Growth of International Operations already Feeding through in 4Q 07 Results (EUR million) 4Q 07 4Q 06 % change FY 2007 FY 2006 % change Revenues 1,288.1 1,199.3 7.4% 4,919.0 4,759.6 3.3% EBITDA* 391.3 375.9 4.1% 1,854.9 1,911.5 -3.0% Operating income* 93.4 77.5 20.5% 761.4 777.1 -2.0% Financial Resu
Slide 23: Free Cash Flow Increases as Lower Working Capital Requirements Compensate Higher Capex
Free Cash Flow Increases as Lower Working Capital Requirements Compensate Higher Capex (EUR million) 4Q 07 4Q 06 % change FY 2007 FY 2006 % change Cash Flow from operations before 339.9 359.8 -5.5% 1,681.5 1,767.7 -4.9% working capital adjustments Change in working capital 204.4 70.6 189.5% 60.4 -17
Slide 24: New Operations and Fixed Net Account for Higher Ordinary Capex, Acquisition of MDC
New Operations and Fixed Net Account for Higher Ordinary Capex, Acquisition of MDC (EUR million) 4Q 07 4Q 06 % change FY 2007 FY 2006 % change Fixed Net 135.7 105.6 28.5% 324.5 283.9 14.3% Mobile Communication 180.8 149.7 20.8% 441.7 392.8 12.4% Ordinary capital expenditures 319.0 255.3 25.0% 766.2
Slide 25: Consolidation of MDC Enlarges Asset Base
Consolidation of MDC Enlarges Asset Base (EUR million) Dez. 31, 07 Dec. 31, 06 % change Long-term Assets 7,677.5 6,399.5 20.0% Current Assets 1,326.2 1,160.2 14.3% Total assets 9,003.7 7,559.7 19.1% Current liabilities 2,557.2 1,657.3 54.3% Long-term liabilities 3,881.2 3,078.9 26.1% Stockholders' e
Slide 26: Acquisition of MDC Increases Net Debt to 2.4x EBITDA
Acquisition of MDC Increases Net Debt to 2.4x EBITDA Net Debt § Net debt increase to EUR 4,407.2 mn (in EUR Mio.) equal to 2.4x EBITDA at year-end 07 39.1% 4,407.2 § Share buybacks frozen to be resumed at 3,169.0 net debt/EBITDA of 2.0x to maintain efficient balance sheet § Purchase price for MDC of
Slide 27: Management Proposes Distribution of Dividend of 75 Cent per Share
Management Proposes Distribution of Dividend of 75 Cent per Share § Management proposes a dividend of 75 cent per share § This corresponds to a dividend yield of 3.9% compared to a dividend yield of 3.7% in 2006 § Dividend per share 2007 equals dividend per share paid for 2006 § Increase of payout r
Slide 28: Outlook
Outlook Results for the Financial Year 2007 28
Slide 29: Telekom Austria Group Announces Outlook for Full Year 2008
Telekom Austria Group Announces Outlook for Full Year 2008 Group § Revenue growth of approximately 5% § EBITDA growth of approximately 3% § Net income decline by approximately 12% due to higher interest expenses § Operating free cash flow growth by about 10% § Capital expenditures to decline by appr
Slide 30: Appendix
Appendix Results for the Financial Year 2007 30
Slide 31: Regulatory Issues – Key Aspects (1)
Regulatory Issues – Key Aspects (1) § Mobile termination rates: On October 15, 2007 the Austrian regulatory authority adopted the final schedule for the reduction of termination charges between mobile operators in Austria. The regulator adheres to the successive abolishment of the asymmetry between
Slide 32: Regulatory Issues – Key Aspects (2)
Regulatory Issues – Key Aspects (2) § Analysis wholesale broadband access market: The Austrian Regulatory Authority started a market analysis process for the wholesale broadband access market (2nd round) in May 20, 2007. The result of the market analysis process is expected in 1Q 2008. Currently Tel
Slide 33: Regulatory Issues – Key Aspects (3)
Regulatory Issues – Key Aspects (3) § International roaming charges: In June 2007 the European Parliament and the European council voted on introduction of an extensive regulation of international voice roaming traffic to be introduced in the second half of 2007. Wholesale: The maximum wholesale cha
Slide 34: Fixed Net - Access Lines
Fixed Net - Access Lines (in 000) FY 07 FY 06 % change PSTN access lines 2,028.9 2,244.2 -9.6% Basic ISDN access lines 360.2 391.3 -7.9% Multi ISDN access lines 6.5 7.1 -8.5% Naked broadband lines 38.8 16.3 138.0% Total access lines in service 2,434.4 2,658.9 -8.3% of these xDSL access lines 750.7 6
Slide 35: Fixed Net – Voice Market Shares
Fixed Net – Voice Market Shares 70% 65% 60% 55% 50% 45% 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 Local + National long distance traffic Fixed to mobile International Results for the Financial Year 2007 35
Slide 36: xDSL – Revenues and Residential ARPU
xDSL – Revenues and Residential ARPU xDSL Revenues (incl. Wholesale) xDSL Residential ARPU* (in EUR Mio.) (in EUR) 63.4 62.7 63.0 29.8 29.0 28.8 28.5 59.8 60.0 27.9 58.8 58.9 27.3 57.2 26.5 26.0 24.6 53.3 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07
Slide 37: Fixed Net - Minutes and Average Tariffs
Fixed Net - Minutes and Average Tariffs (in million minutes) 4Q 07 4Q 06 % change National 784 853 -8.1% Fixed-to-mobile 198 194 2.2% International 107 101 5.7% Total voice minutes 1,089 1,148 -5.2% Internet dial-up 148 286 -48.3% Total Fixed Net minutes 1,237 1,434 -13.8% (Average tariffs in EUR) 4
Slide 38: Mobile Subscribers
Mobile Subscribers (in 000) 4Q 07 4Q 06 % change Total Austria 3,959.3 3,630.5 9.1% Market share 40.3% 38.7% Total Bulgaria 5,098.6 4,267.9 19.5% Market share 50.3% 52.5% Total Belarus 3,058.7 - n.a. Market share 43.4% - Total Croatia 2,179.6 1,912.3 14.0% Market share 43.0% 42.9% Total Slovenia 497
Slide 39: Operational Data – mobilkom austria
Operational Data – mobilkom austria MoU per Subscriber ARPU & Data ARPU (in EUR) 186.1 171.0 174.4 174.0 164.6 33.4 31.7 32.0 31.4 28.4 5.6 6.2 6.3 6.6 7.1 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 Blended ARPU Data ARPU Quarterly Churn SRC & SAC* (in EUR Mio.) 6.8% 6.9% 38.7 40.8
Slide 40: Mobile Data - mobilkom austria
Mobile Data - mobilkom austria Number of Mobile Broadband Number of SMS Customers (in Mio.) 290 523 250 416 210 372 400 170 310 140 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 MMS Users Data in % of Revenues* (in 000) 1,897 1,701 1,794 1,607 1,488 30.7% 24.1% 4Q 06 1Q 07 2Q 07 3Q 07
Slide 41: Headcount Development
Headcount* Development (average period) 4Q 07 4Q 06 change Fixed Net 9,685 9,460 225 Mobile Communciation 7,035 5,984 1,051 Telekom Austria Group 16,720 15,444 1,276 (end of period) 4Q 07 4Q 06 change Fixed Net 9,598 9,433 165 Mobile Communciation 8,030 5,995 2,035 Telekom Austria Group 17,628 15,42
Slide 42: Fixed Net - Revenue Breakdown
Fixed Net - Revenue Breakdown (EUR million) 4Q 07 4Q 06 % change FY 2007 FY 2006 % change Switched voice base traffic 88.7 89.3 -0.7% 349.9 365.2 -4.2% Switched voice monthly & other voice revenues 111.9 125.4 -10.8% 471.0 516.0 -8.7% Payphones & VAS 12.4 11.1 11.7% 46.7 44.9 4.0% Wholesale data & I
Slide 43: Fixed Net – Expense Breakdown
Fixed Net – Expense Breakdown (EUR million) 4Q 07 4Q 06 % change FY 2007 FY 2006 % change Material expense 24.3 25.9 -6.2% 79.0 77.1 2.5% Employee costs 158.4 162.3 -2.4% 559.4 539.1 3.8% Depreciation, amortization and impairment charges 142.6 166.8 -14.5% 553.8 636.6 -13.0% Interconnection 83.5 85.
Slide 44: Mobile Communication - Revenue Breakdown
Mobile Communication - Revenue Breakdown (EUR million) 4Q 07 4Q 06 % change FY 2007 FY 2006 % change Traffic revenues 398.4 359.3 10.9% 1,473.0 1,442.3 2.1% Monthly rental 176.6 125.5 40.7% 613.8 483.1 27.1% Equipment 85.6 91.3 -6.2% 278.7 264.4 5.4% Roaming 40.3 44.9 -10.2% 240.8 257.9 -6.6% Interc
Slide 45: Mobile Communication – Expense Breakdown
Mobile Communication – Expense Breakdown (EUR million) 4Q 07 4Q 06 % change FY 2007 FY 2006 % change Material expense 109.0 104.5 4.3% 345.9 331.1 4.5% Employee costs 66.3 57.7 14.9% 236.5 217.3 8.8% Depreciation, amortization and impairment charges 155.4 131.8 17.9% 540.1 498.3 8.4% Interconnection
Slide 46: Revenues by Segment
Revenues by Segment (EUR million) 4Q 07 4Q 06 % change FY 2007 FY 2006 % change Fixed Net revenues 547.4 535.5 2.2% 2,133.0 2,119.5 0.6% Mobile Communication revenues 796.2 730.6 9.0% 3,035.1 2,902.6 4.6% Corporate, Other & Eliminations -55.5 -66.8 -16.9% -249.1 -262.5 -5.1% Operating revenues Telek
Slide 47: EBITDA and Operating Income by Segment
EBITDA and Operating Income by Segment (EUR million) 4Q 07 4Q 06 % change FY 2007 FY 2006 % change Fixed Net EBITDA 136.2 135.7 0.4% 705.0 752.8 -6.3% Mobile Communciation EBITDA 258.0 245.6 5.0% 1,177.6 1,177.1 0.0% Corporate, Other & Eliminations -2.9 -4.9 -40.8% -27.7 -18.4 50.5% EBITDA Telekom A
Slide 48: Capital Expenditures by Segment
Capital Expenditures by Segment (EUR million) 4Q 07 4Q 06 % change FY 2007 FY 2006 % change Fixed Net tangible 106.5 98.6 8.0% 272.6 260.4 4.7% Mobile Communication tangible 114.1 110.1 3.6% 364.9 300.3 21.5% Tangible 220.6 208.7 5.7% 637.5 560.7 13.7% Fixed Net intangible 29.2 7.0 317.1% 51.9 23.5
Slide 49: Net Debt - Telekom Austria Group
Net Debt - Telekom Austria Group (EUR million) Dec 31, 2007 Dec 31, 2006 % change Long-term debt 3,389.3 2,750.1 23.2% Short-term debt 1,236.1 562.1 119.9% - Short-term portion of capital and cross border lease obligations -8.7 -9.4 -7.4% + Capital lease obligations 1.0 0.1 n.a. Cash and cash equiva
Slide 50: Debt Maturity Profile
Debt Maturity Profile (in EUR Mio.) Ratings: § S&P: BBB+ (stable outlook) § Moody‘s: A3 (stable outlook) 1,236 1,073** 766* 739 Ratio: 637 498 § Net Debt / EBITDA (last 12 470 215 224 months): 2.4x 2008 2009 2010 2011 2012 2013 2017 Listed Bonds: § EUR 750 million 2003 – 2013 § EUR 500 million 2005