Telekom Austria Ag · VIE:TKA

Telekom Austria — Q3 2007 Earnings Presentation

48 slides from Telekom Austria's earnings presentation, Nov 14, 2007

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

    Telekom Austria Group Results for the Third Quarter 2007 Vienna, November 14, 2007

  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 § Key Developments § Fixed Net § Mobile Communication § Financial Overview § Outlook Results for the Third Quarter 2007 3

  4. Slide 4: Key Developments

    Key Developments Results for the Third Quarter 2007 4

  5. Slide 5: Revenues Increase Driven by Both Segments

    Revenues Increase Driven by Both Segments § Revenues increase by 3.6% due to higher revenues in the Fixed Net and Mobile Communication segments § EBITDA declines by EUR 30 mn to EUR 551.2 mn with start-up operations contributing cost of EUR 18.1 mn § Strong subscriber growth of Mobile Communication

  6. Slide 6: Revenue Growth Continues, Sharebuybacks Mitigate Impact of Higher Costs on EPS

    Revenue Growth Continues, Sharebuybacks Mitigate Impact of Higher Costs on EPS Revenues EBITDA* Costs of start-up (in EUR Mio.) (in EUR Mio.) operations 3.6% 18.1 1,277.1 1,232.3 -5.4% 551.2 521.2 3Q 07 3Q 06 3Q 07 3Q 06 Net Income Earnings per Share (in EUR Mio.) (in EUR) -18.7% 213.6 -13.6% 0.39 0

  7. Slide 7: Fixed Net

    Fixed Net Results for the Third Quarter 2007 7

  8. Slide 8: Consolidation of eTel Drives Revenue Growth

    Consolidation of eTel Drives Revenue Growth Revenues (in EUR Mio.) § Revenues increase by 2.2% with 2.2% eTel contributing EUR 26.2 mn 541.4 529.8 § EBITDA decline driven by per- sonnel expenses, interconnection and costs for services received 3Q 07 3Q 06 § Lower D&A compensates higher EBITDA* opera

  9. Slide 9: Line Loss Accelerates, Growth of Naked Broadband Mitigates Impact

    Line Loss Accelerates, Growth of Naked Broadband Mitigates Impact Line Loss Quarterly § Acceleration of line loss due to (in 000) fixed-to-mobile migration 69 67 59 52 37 § Success of mobile broadband impacts Fixed Net segment 3Q 07 2Q 07 1Q 07 4Q 06 3Q 06 § Push of aonPur – naked aonPur – Naked Bro

  10. Slide 10: Mobile Broadband Accounts for Large Portion of Incremental Broadband Growth

    Mobile Broadband Accounts for Large Portion of Incremental Broadband Growth Broadband Market Shares § Total broadband share of Telekom 14.0% Austria Group at 47.2% 47.2% § Telekom Austria’s total broadband market share remained stable § Growth of mobile broadband 26.9% share results in slightly lowe

  11. Slide 11: Commercial Rollout of aonTV has Started in Time for Christmas Business

    Commercial Rollout of aonTV has Started in Time for Christmas Business § Nationwide marketing campaign on TV, radio and billboards started in October § Up to 82 channels, video on demand and program guide § Monthly fee of EUR 4.9 is best offer on Austrian TV market aonTV customers are ... § Order in

  12. Slide 12: New Fixed-Mobile Bundle will be Launched Tomorrow

    New Fixed-Mobile Bundle will be Launched Tomorrow § “KombiPaket” includes fixed net voice, fixed net broadband and mobile voice § Mobile communication for the first time under the brand aonMobil marketed § Customer gets one package that covers all communication needs § Monthly fee of EUR 19.9 is bes

  13. Slide 13: Mobile Communication

    Mobile Communication Results for the Third Quarter 2007 13

  14. Slide 14: Growth of Subscriber Base by 14.8% and Well Performing International Operations

    Growth of Subscriber Base by 14.8% and Well Performing International Operations Revenues § Subscriber growth of 14.8% to 11.2 (in EUR Mio.) mn customers even excluding new 4.2% customers in Serbia & Macedonia 805.3 772.9 § Strong performance of international operations lead to revenue growth of 4.2%

  15. Slide 15: mobilkom austria Increases Market Share Driven by Mobile Broadband & Contract Subscribers

    mobilkom austria Increases Market Share Driven by Mobile Broadband & Contract Subscribers Revenues (in EUR Mio.) § Market share increases from -2.1% 426.7 435.8 38.8% to 40.3% § Mobile broadband & contract subscribers drive market share increase 3Q 07 3Q 06 § 250,000 mobile broadband EBITDA* custome

  16. Slide 16: Mobiltel's Revenues Increase by 8.2% while Profitability Remains High

    Mobiltel’s Revenues Increase by 8.2% while Profitability Remains High Revenues (in EUR Mio.) § Subscriber base grows by 19.3% 8.2% to 4.8 mn customers 174.4 161.2 § Revenues grow by 8.2% driven by strong growth in customer base and higher traffic revenues 3Q 07 3Q 06 EBITDA* § EBITDA increases by 4.

  17. Slide 17: Strong Performance and Customer Growth in Croatia and Slovenia

    Strong Performance and Customer Growth in Croatia and Slovenia EBITDA* Vipnet in Croatia (in EUR Mio.) 8.9% § Subscriber base grows by 84.5 77.6 15.0% § EBITDA increases by 8.9% to EUR 84.5 mn 3Q 07 3Q 06 Si.mobil in Slovenia 17.5 42.3% § Subscriber base grows by 12.3 18.2% § EBITDA increases by 42.

  18. Slide 18: Full Consolidation of Belarusian Mobile Operator MDC will positively impact FY 2007

    Full Consolidation of Belarusian Mobile Operator MDC will positively impact FY 2007 § Telekom Austria Group has acquired a 70% stake in MDC Belarus § MDC is #2 mobile operator in Belarus Czech Republic § Closing expected 4Q FL Austria § Full consolidation of MDC Slovenia Croatia starting 4Q supports

  19. Slide 19: Recent Reduction of Mobile Termination Rates Establish Symmetry by January 1, 2009

    Recent Reduction of Mobile Termination Rates Establish Symmetry by January 1, 2009 Scheduled Reduction of § In mid-October regulator Termination Rates adopted new termination rate 16 schedule 14 § Target level lowered to 5.72 eurocent from 6.79 eurocent 12 § Symmetry between operators Eurocent 10 st

  20. Slide 20: Financial Overview

    Financial Overview Results for the Third Quarter 2007 20

  21. Slide 21: Higher Revenues, but Start-up Costs impact EBITDA

    Higher Revenues, but Start-up Costs impact EBITDA Higher revenues in the Fixed Net and Mobile Communication (EUR million) 3Q 07 3Q 06 Revenues 1,277.1 1,232.3 Weaker fixed net business and EBITDA* 521.2 551.2 start-up costs in Serbia and Macedonia Operating income* 257.8 282.9 Higher shareholder rem

  22. Slide 22: Revenues Increase, Start up Costs and Lower Fixed Net Business Result in Lower EBITDA

    Revenues Increase, Start up Costs and Lower Fixed Net Business Result in Lower EBITDA (EUR million) 3Q 07 3Q 06 % change 1-9M 07 1-9M 06 % change Revenues 1,277.1 1,232.3 3.6% 3,630.9 3,560.3 2.0% EBITDA* 521.2 551.2 -5.4% 1,463.6 1,535.6 -4.7% Operating income* 257.8 282.9 -8.9% 668.0 699.6 -4.5% F

  23. Slide 23: Free Cash Flow Lower due to Higher Change in Working Capital

    Free Cash Flow Lower due to Higher Change in Working Capital (EUR million) 3Q 07 3Q 06 % change 1-9M 07 1-9M 06 % change Cash Flow from operations before 489.3 501.4 -2.4% 1,341.6 1,407.9 -4.7% working capital adjustments Change in working capital -88.0 -68.6 28.3% -144.0 -248.4 -42.0% Ordinary capi

  24. Slide 24: Lower Capex for Existing Operations, Growth Capex Accounts for Capex Increase

    Lower Capex for Existing Operations, Growth Capex Accounts for Capex Increase (EUR million) 3Q 07 3Q 06 % change 1-9M 07 1-9M 06 % change Fixed Net 64.9 64.6 0.5% 188.8 178.3 5.9% Mobile Communication 63.8 83.9 -23.9% 260.9 243.1 7.3% Ordinary capital expenditures 128.7 148.5 -13.3% 449.7 421.4 6.7%

  25. Slide 25: Asset Base Remains Stable Compared to Year End 2006

    Asset Base Remains Stable Compared to Year End 2006 (EUR million) Sept. 30, 07 Dec. 31, 06 % change Current Assets 1,366.9 1,160.2 17.8% Long-term Assets 6,192.4 6,399.5 -3.2% Total assets 7,559.3 7,559.7 0.0% Current liabilities 1,763.1 1,657.3 6.4% Long-term liabilities 3,230.2 3,078.9 4.9% Stockh

  26. Slide 26: Sharebuyback Reaches All-Time High with EUR 195 mn Returned to Shareholders

    Sharebuyback Reaches All-Time High with EUR 195 mn Returned to Shareholders Share Buyback Treasury Shares Held (in EUR Mio.) (in % of shares outstanding) Cancellation of 8% of treasury shares held 66.6% 194.8 7.8% 116.9 3.9% 7 3Q 07 3Q 06 3Q 07 FY 06 Net Debt Net Debt/EBITDA (in EUR Mio.) (last 12 m

  27. Slide 27: Outlook

    Outlook Results for the Third Quarter 2007 27

  28. Slide 28: Telekom Austria Group Adapts its Outlook for Full Year 2007

    Telekom Austria Group Adapts its Outlook for Full Year 2007 Group § Full consolidation of MDC in 4Q 2007 positively impacts revenues and EBITDA of Telekom Austria Group and compensates higher fixed line loss and the recent retroactive reduction of termination rates § Revenue growth of approximately

  29. Slide 29: Appendix

    Appendix Results for the Third Quarter 2007 29

  30. Slide 30: Regulatory Issues – Key Aspects (1)

    Regulatory Issues – Key Aspects (1) § Analysis of wholesale market for mobile termination: mobilkom austria was found to have significant market power and following remedies were applied: non-discriminatory obligation, standard offer for mobile termination and cost orientated termination rates based

  31. Slide 31: Analysis wholesale broadband access market

    § Analysis wholesale broadband access market: The Austrian Regulatory Authorit Results for the Third Quarter 2007 31

  32. Slide 32: 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 roaming traffic to be introduced in the second half of 2007. Wholesale: The maximum wholesale charge mu

  33. Slide 33: Recent Reduction of Mobile Termination Rates Establish Symmetry by January 1, 2009

    Recent Reduction of Mobile Termination Rates Establish Symmetry by January 1, 2009 Termination charges according to new schedule (in cents) Jan. 1, 2007 Jul. 1, 2007 Jan. 1, 2008 Jul. 1, 2008 Jan. 1, 2009 mobilkom austria 7.13 5.91 5.72 5.72 5.72 T-Mobile 9.45 8.23 7.02 5.8 5.72 One 10.07 8.85 7.64

  34. Slide 34: Fixed Net - Access Lines

    Fixed Net - Access Lines (in 000) 3Q 07 3Q 06 % change PSTN access lines 2,071.4 2,289.8 -9.5% Basic ISDN access lines 369.3 398.0 -7.2% Multi ISDN access lines 6.8 7.2 -6.8% Naked broadband lines 34.5 12.8 169.5% Total access lines in service 2,482.0 2,707.9 -8.3% of these xDSL access lines 722.1 6

  35. Slide 35: Fixed Net – Voice Traffic

    Fixed Net – Voice Traffic 70% 65% 60% 55% 50% 45% 3Q 07 2Q 07 1Q 07 4Q 06 3Q 06 2Q 06 1Q 06 4Q 05 3Q 05 Local + National long distance traffic Fixed to mobile International Results for the Third Quarter 2007 35

  36. Slide 36: xDSL – Revenues and Residential ARPU

    xDSL – Revenues and Residential ARPU* xDSL Revenues (incl. Wholesale) xDSL Residential ARPU (in EUR Mio.) (in EUR) 63.0 62.7 63.4 58.9 58.8 59.8 57.2 29.8 29.8 53.3 28.8 29.0 50.3 28.5 27.9 27.3 26.5 26.0 3Q 07 2Q 07 1Q 07 4Q 06 3Q 06 2Q 06 1Q 06 4Q 05 3Q 05 3Q 07 2Q 07 1Q 07 4Q 06 3Q 06 2Q 06 1Q 06

  37. Slide 37: Fixed Net - Minutes and Average Tariffs

    Fixed Net - Minutes and Average Tariffs (in million minutes) 3Q 07 3Q 06 % change National 789 818 -3.5% Fixed-to-mobile 180 195 -7.6% International 96 101 -5.6% Total voice minutes 1,065 1,114 -4.4% Internet dial-up 167 310 -46.0% Total Fixed Net minutes 1,232 1,424 -13.5% (Average tariffs in EUR)

  38. Slide 38: Mobile Subscribers

    Mobile Subscribers* (in 000) 3Q 07 3Q 06 % change Contract 2,536.5 2,093.7 21.1% Prepaid 1,317.2 1,435.7 -8.3% Total Austria 3,853.7 3,529.4 9.2% Market share 40.3% 38.8% Contract 1,894.5 1,446.8 30.9% Prepaid 2,919.2 2,589.5 12.7% Total Bulgaria 4,813.7 4,036.3 19.3% Market share 50.3% 54.0% Contra

  39. Slide 39: Operational Data – mobilkom austria

    Operational Data – mobilkom austria MoU per Subscriber ARPU & Data ARPU (in EUR) 174.0 174.4 171.0 164.6 154.3 33.4 34.9 31.4 32.0 31.7 6.6 6.3 6.2 5.6 5.2 3Q 07 2Q 07 1Q 07 4Q 06 3Q 06 3Q 07 2Q 07 1Q 07 4Q 06 3Q 06 Blended ARPU Data ARPU ARPU Quarterly Churn SRC & SAC* (in EUR) (in EUR Mio.) 52.7 7

  40. Slide 40: mobilkom austria - Mobile Data

    mobilkom austria - Mobile Data Number of mobile broadband Number of SMS (in Mio.) customers 250 416 400 372 210 310 170 140 238 109 3Q 07 2Q 07 1Q 07 4Q 06 3Q 06 3Q 07 2Q 07 1Q 07 4Q 06 3Q 06 MMS Users Data in % of Revenues* (in 000) 1,794 1,701 1,607 1,488 1,361 27.5% 21.3% 3Q 07 2Q 07 1Q 07 4Q 06

  41. Slide 41: Headcount Development

    Headcount* Development (average period) 3Q 07 3Q 06 change Fixed Net 9,737 9,497 240 Mobile Communciation 6,444 5,954 490 Telekom Austria Group 16,182 15,451 731 (end of period) 3Q 07 3Q 06 change Fixed Net 9,732 9,499 233 Mobile Communciation 6,495 5,968 527 Telekom Austria Group 16,227 15,467 760

  42. Slide 42: Fixed Net - Revenue Breakdown

    Fixed Net - Revenue Breakdown (EUR million) 3Q 07 3Q 06 % change 1-9M 07 1-9M 06 % change Switched voice base traffic 88.9 86.6 2.7% 261.2 275.9 -5.3% Switched voice monthly & other voice revenues 116.9 128.8 -9.2% 359.1 390.6 -8.1% Payphones & VAS 11.6 11.8 -1.7% 34.3 33.8 1.5% Wholesale data & IT-

  43. Slide 43: Mobile Communication - Revenue Breakdown

    Mobile Communication - Revenue Breakdown (EUR million) 3Q 07 3Q 06 % change 1-9M 07 1-9M 06 % change Traffic revenues 376.7 382.9 -1.6% 1,074.6 1,083.0 -0.8% Monthly rental 154.2 121.0 27.4% 437.2 357.6 22.3% Equipment 69.8 61.0 14.4% 193.1 173.1 11.6% Roaming 86.2 87.9 -1.9% 200.5 213.0 -5.9% Inter

  44. Slide 44: Revenues by Segment

    Revenues by Segment (EUR million) 3Q 07 3Q 06 % change 1-9M 07 1-9M 06 % change Fixed Net revenues 541.4 529.8 2.2% 1,585.6 1,584.0 0.1% Mobile Communication revenues 805.3 772.9 4.2% 2,238.9 2,172.0 3.1% Corporate, Other & Eliminations -69.6 -70.4 -1.1% -193.6 -195.7 -1.1% Revenues Telekom Austria

  45. Slide 45: EBITDA and Operating Income by Segment

    EBITDA and Operating Income by Segment (EUR million) 3Q 07 3Q 06 % change 1-9M 07 1-9M 06 % change Fixed Net EBITDA 186.8 204.4 -8.6% 568.8 617.1 -7.8% Mobile Communciation EBITDA 339.0 351.7 -3.6% 919.6 931.5 -1.3% Corporate, Other & Eliminations -4.6 -4.9 -6.1% -24.8 -13.0 90.8% EBITDA Telekom Aus

  46. Slide 46: Capital Expenditure by Segment

    Capital Expenditure by Segment (EUR million) 3Q 07 3Q 06 % change 1-9M 07 1-9M 06 % change Fixed Net tangible 57.6 59.7 -3.5% 166.1 161.8 2.7% Mobile Communication tangible 67.4 55.9 20.6% 250.8 190.2 31.9% Tangible (total) 125.0 115.6 8.1% 416.9 352.0 18.4% Fixed Net intangible 7.3 4.9 49.0% 22.7 1

  47. Slide 47: Net Debt - Telekom Austria Group

    Net Debt - Telekom Austria Group (EUR million) Sep 30, 2007 Dec 31, 2006 % change Long-term debt 2,887.2 2,750.1 5.0% Short-term debt 718.5 562.1 27.8% - Short-term portion of capital and cross border lease obligations -10.3 -9.4 9.6% + Capital lease obligations 1.1 0.1 n.a. Cash and cash equivalent

  48. Slide 48: Debt Maturity Profile

    Debt Maturity Profile Ratings: § S&P: BBB+ (stable outlook) § Moody‘s: A3 (stable outlook) (in EUR Mio.) 739 Ratio: 637 § Net Debt / EBITDA (last 12 484 498 442 months): 1.8x 215 224 Listed Bonds: 2008 2009 2010 2011 2012 2013 2017 § EUR 750 million 2003 – 2013 § EUR 500 million 2005 – 2010 § EUR 50

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