Slide 1: Magyar Telekom first nine months 2009 results
Presentation Magyar Telekom first nine months 2009 results Difficult economic environment continues to put pressure on revenues; cost efficiency remains the key priority
Slide 2: Abbreviations and investigation notice
Abbreviations: 3G: third generation, ARPU: average revenue per user, BB: broadband, CBC: call-by-call, CPS: carrier pre-selection, HQ: headquarters, HSDPA: high-speed downlink packet access, IC: interconnection, IP: internet protocol, IT: information technology, LTO: local telecommunication operator
Slide 3: Overview – Magyar Telekom Group at a glance
Overview – Magyar Telekom Group at a glance International presence Ownership structure* Ukraine 59.2% 19.5% Foreign Moldova institutions 6.2% 15.1% Hungary Slovenia Croatia Croatia Romania BiH Serbia Serbia Deutsche Telekom Kosovo Bulgaria Bulgaria Domestic Other Montenegro institutions Macedonia Al
Slide 4: Strategic priorities
Strategic priorities Stronger customer focus Service Improved service quality and portfolio – triple play, Sat TV excellence Reinforcing technological leadership – fiber roll-out, cable upgrade Leaner organization and simpler brand structure Headcount rationalization – focus on Total Workforce Manag
Slide 5: Organizational & brand structure
Organizational & brand structure Customer segment-focused organization Clear brand structure CBU BBU TBU HQ “T” as our corporate brand identifies the Magyar Telekom Macedonia Montenegro Group New organization since January 1, 2008 Consumer Services Business Services Consumer Services (CBU): mobi
Slide 6: Hungarian market – infrastructure based competition
Hungarian market – infrastructure based competition Wireline voice market trends Mobile market trends Minutes (mn) Penetration 122% 121% 119% 118% 1,600 Subscribers 15,000,000 1,200 10,000,000 800 61% 60% 59% 58% 5,000,000 400 39% 40% 41% 42% 0 0 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2008 Q1 2009 Q2 20
Slide 7: Strong positions on the Hungarian market in all segments
Strong positions on the Hungarian market in all segments TV market Mobile voice market 100% 100% 14% 13% 13% 13% 21% 21% 21% 22% 80% 7% 7% 7% 6% 80% 24% 24% 24% 24% 60% 60% 35% 35% 35% 34% 40% 33% 33% 33% 33% 40% 20% 20% 44% 44% 44% 44% 22% 23% 23% 24% 0% 0% Jun-2009 Jul-2009 Aug-2009 Sep-2009 Q4 20
Slide 8: 3Play as growth engine & retention tool in the residential segment
3Play as growth engine & retention tool in the residential segment Fixed voice access Strong focus on triple play on all networks (fixed Subscribers line, cable and mobile) 2,100,000 -9% +47% 1,900,000 new, simple and competitive offers launched under the +126% T-Home brand in September 2008 New g
Slide 9: Changing trends require continued efficiency improvements
Changing trends require continued efficiency improvements Change in revenue mix Underlying TWM expense in Hungary Annual wage 100% SI/IT: 1% increase 5.5% 5.6% 1.5% New HUF billion revenue SI/IT >10% 80% New 150 sources -5% < 20% revenue 121 114 60% sources > 30% 100 Voice 40% revenues > 70% Voice 5
Slide 10: Dividend policy
Dividend policy Historical dividend payments Usage of free cash flow Net debt ratio* DPS (HUF) % of the generated free cash 50% 73 74 74 80 70 70 125% 40% 36% 33.2% 60 100% 38% 1% 31.7% 31.0% Target 29.7% 14% 30% 13% 1% 1% 75% 40 14% 20% 50% 74% 78% 79% 20 59% 10% 25% 0% 0 0% 2005 Q1 2007** 2007 200
Slide 11: Economic environment – still a drag on Magyar Telekom
Economic environment – still a drag on Magyar Telekom Group revenues and Hungarian GDP Economic indicators influence telecommunication 0% spending differently in 2009 all components of economic activity are suffering a -2% meaningful decline in Hungary -4% telecommunication spending lags GDP tre
Slide 12: Public targets for 2009 confirmed
Public targets for 2009 confirmed 2009 public targets 2009 nine month results Revenue Around 2% decline compared to 2008 2.8% decline excluding IC fees related significant drop in disposable income of significant pressure on private reversal of provisions in 2008 households due to recession (r
Slide 13: First nine months 2009 results – Business Unit analysis
First nine months 2009 results – Business Unit analysis Revenue development Underlying EBITDA development HUF million HUF million 500,000 494,309 220,000 11,111 212,567 480,614 480,000 -12,814 210,000 -1,719 -842 -7,398 2,109 206,457 -2,033 5,560 -5,769 460,000 200,000 -5,403 -1,933 -674 440,000 190
Slide 14: Regulatory snapshot
Regulatory snapshot Regulation in line with EU recommendations in all three countries Hungary: fully in line with the EU Regulatory Framework Macedonia: liberalization of fixed line market in progress, regulated mobile termination rates Montenegro: new telecommunication law adopted in 2008 – f
Slide 15: Consumer Services Business Unit (CBU) - Financials
Consumer Services Business Unit (CBU) - Financials CBU Fixed line revenues CBU Mobile revenues HUF million HUF million -6% 146,910 -4% 140,744 120,000 150,000 106,405 99,757 -16% -5% +15% +5% 80,000 100,000 -8% 40,000 -6% 50,000 -10% 0 0 Q1-3 2008 Q1-3 2009 Q1-3 2008 Q1-3 2009 Voice* Internet TV Oth
Slide 16: CBU – mobile operations
CBU – mobile operations ARPU MOU Mobile internet development HUF min leading market position with 49% market share 4,000 150 number of subscribers exceeded 360,000 at end of 3,415 3,141 126 124 3,000 -8% -2% September 2009 100 3G/HSDPA network covering ~73% of population 2,000 50 1,000 0 0 Mob
Slide 17: CBU KPIs
CBU KPIs Fixed Fixed & mobile broadband Voice ARPA Broadband ARPU Customer growth Subscribers +27% HUF HUF 900,000 4,500 6,000 3,657 3,623 5,181 4,496 +84% -1% -13% 600,000 3,000 4,000 +23% 1,500 2,000 300,000 +7% 0 0 0 Q1-3 2008 Q1-3 2009 Q1-3 2008 Q1-3 2009 Sept 2008 Sept 2009 ADSL Cable Mobile* *
Slide 18: Business Services Business Unit (BBU) - Financials
Business Services Business Unit (BBU) - Financials BBU revenues HUF million Falling voice revenues now coupled with pressure 150,000 125,217 -1% 123,498 on SI/IT services rationalization and cost cutting initiatives at our key +12% corporate clients lead to reduction in their telecom spending 100,
Slide 19: BBU KPIs
BBU KPIs Fixed voice access DSL connections Subscribers Subscribers 409,470 229,265 450,000 240,000 -6% 383,453 -12% 202,385 360,000 180,000 -5% 270,000 -14% 120,000 180,000 90,000 -23% 60,000 -9% +1% 0 0 Sept 2008 Sept 2009 Sept 2008 Sept 2009 Business lines Managed leased lines ISDN channels Retai
Slide 20: Macedonia
Macedonia Revenues Results supported by significant FX impact HUF million +12% 63,327 HUF weakened on average by 14.1% to the Macedonian 64,000 56,356 Denar in Q1-3 2009 +20% excluding FX impact revenues are down by 1%, underlying 48,000 +21% EBITDA down by 6% 32,000 Declining traditional fixed
Slide 21: Montenegro
Montenegro Revenues Results supported by significant FX impact HUF million +5% HUF weakened on average by 14.3% to the Euro in Q3 30,000 26,400 excluding FX impact revenues are down by 8%, underlying 25,135 -8% EBITDA down by 7% 20,000 +4% Fixed voice revenues under pressure +31% deterioration
Slide 22: International KPIs Macedonia Montenegro
International KPIs Macedonia Fixed voice access ADSL/IPTV customer growth Mobile subscribers Subscribers 106% Penetration 115% 21.6% Penetration 19.0% Subscribers 150,000 Subscribers 2,500,000 500,000 8,301 13% 2,000,000 12% 400,000 100,000 -14% 29% 30% 1,500,000 300,000 +40% 119,091 1,000,000 445,6
Slide 23: For further questions please contact the IR department
For further questions please contact the IR department: Investor Relations Phone: +36 1 458-0423 Fax: +36 1 458-0443 e-mail: investor.relations@telekom.hu 23