Slide 1: Results for the first nine months and third quarter 2015
Results for the first nine months and third quarter 2015 Vienna, 19 October 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 nine months and third quarter 2015
Operational and financial highlights for the first nine months and third quarter 2015 Results for the first nine months and third quarter 2015 3
Slide 4: 1-9 M 2015: Efficiency gains drive margin expansion to 35.6% despite ongoing challenges
1-9 M 2015: Efficiency gains drive margin expansion to 35.6% despite ongoing challenges Clean Group revenues* EUR 3,022.6 mn / +0.2% yoy Reported Group revenues EUR 2,950.4 mn / -1.2% yoy Clean EBITDA comparable** EUR 1,067.5 mn / +3.1% yoy Reported Group EBITDA comparable EUR 1,051.7 mn / +1.7% yoy
Slide 5: 1-9 M 2015: Efficiency gains drive margin expansion to 35.6% despite ongoing challenges
1-9 M 2015: Efficiency gains drive margin expansion to 35.6% despite ongoing challenges > Acquisition of Amis closed in Q3 2015 3 M&A deals closed in CEE > Merger of Vip Operator and ONE in Macedonia and acquisition of blizoo Bulgaria will be consolidated as of Q4 2015 results Outlook 2015 unchanged
Slide 6: Key financial developments in the third quarter 2015
Key financial developments in the third quarter 2015 Results for the first nine months and third quarter 2015 6
Slide 7: Q3 2015: Stable Revenues and EBITDA comparable growth on a clean basis
Q3 2015: Stable Revenues and EBITDA comparable growth on a clean basis (in EUR million) Q3 2015 Q3 2014 % change > Stable Group revenues on a clean Revenues 1,011.6 1,048.7 -3.5% basis (-0.2%) EBITDA comparable 386.4 414.6 -6.8% EBITDA comparable margin 38.2% 39.5% > 4.1% Group EBITDA comparable gro
Slide 8: Revenue decline driven by FX and losses in CEE; Austrian trends remain positive
Revenue decline driven by FX and losses in CEE; Austrian trends remain positive EUR 634.5 mn Group Revenues Δ: +1.6% Reported EUR 1,011.6 mn -3.5% Clean* EUR 1,047.1 mn -0.2% EUR 88.3 mn EUR 99.9 mn EUR 84.1 mn EUR 119.7 mn Δ: -5.8% Δ: -6.2% Δ: -22.8% Δ: -6.2% Austria Bulgaria Croatia Belarus Additi
Slide 9: Clean Group EBITDA comparable growth of 4.1% due strong performance in Austria & Belarus
Clean Group EBITDA comparable growth of 4.1% due strong performance in Austria & Belarus Group EBITDA comparable EUR 255.9 mn Δ: +9.1% Reported EUR 386.4 mn -6.8% Clean* EUR 403.8 mn 4.1% EUR 34.4 mn EUR 29.2 mn EUR 41.5 mn EUR 30.3 mn Δ: -8.6% Δ: +0.1% Δ: -23.9% Δ: -22.4% Austria Bulgaria Croatia B
Slide 10: 1-9 M 2015: Increased free cash flow due to lower working capital needs and lower CAPEX
1-9 M 2015: Increased free cash flow due to lower working capital needs and lower CAPEX (in EUR million) Q3 2015 Q3 2014 % change 1-9 M 2015 1-9 M 2014 % change Gross cash flow 348.3 329.2 5.8% 949.2 916.6 3.6% Change in working capital -76.8 -28.6 n.m. -143.2 -242.6 n.m. Cashflow from operating act
Slide 11: Focus points
Focus points Results for the first nine months and third quarter 2015 11
Slide 12: Active Austrian no-frills mobile market – new offers and bob goes convergent
Active Austrian no-frills mobile market – new offers and bob goes convergent Overview key contract SIM-only offers Price EUR 11.90/17.90* EUR 9.90 EUR 14.50 EUR 9.90 EUR 14.90 Voice/SMS 1,000/1,000 1,000 1,000/1,000 1,000/500 2,000/2,000 Data 3 GB 3 GB 3 GB 3 GB 3 GB Network Hutchison T-Mobile Hutch
Slide 13: Austria: Significant cost savings provide flexibility on the market
Austria: Significant cost savings provide flexibility on the market -2.7% 414.2 402.7 Opex Q3 2014 Material Employee * IC Maintenance & repair Services received Other support Other cost Opex Q3 2015 * Employee costs remained stable excluding a partial reversal of the accrual regarding the EU court d
Slide 14: EU roaming: Mitigating revenues and OPEX activities under evaluation
EU roaming: Mitigating revenues and OPEX activities under evaluation EU roaming exposure Approx. 25% of exposure „at risk“ in 2016: ~10-15% of Abolition of retail roaming 2015e EBITDA comparable Approx. 10% of exposure„at risk“ in 2017: New wholesale roaming price caps expected > Non-EU roaming Floo
Slide 15: Activities in CEE: Cluster implementation and M&A
Activities in CEE: Cluster implementation and M&A 2 Clusters implemented 3 M&A transactions closed > Slovenia and Republic of Serbia > Croatia and Republic of Macedonia Bulgaria EUR 47 mn Targeted upside > Expected cost-savings in Slovenia > Technology EUR 41 mn > Market activities > Finance Republi
Slide 16: Outlook for the full year 2015
Outlook for the full year 2015 Results for the first nine months and third quarter 2015 16
Slide 17: Telekom Austria Group outlook for the full year 2015 unchanged
Telekom Austria Group outlook for the full year 2015 unchanged 19 October 2015 16 July 2015 Revenues Revenues Approx. flat Approx. flat 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 * Do
Slide 18: Appendix 1
Appendix 1 Results for the first nine months and third quarter 2015 18
Slide 19: The leading regional communications player providing convergent telecommunication services
The leading regional communications player providing convergent telecommunication services as of 30 September 2015 (in ‘000, in %) Austria Slovenia Belarus Mobile: Mobile: Mobile: > Market share: 40.0% (Q3 2014: 41.0%) > Market share: 30.0% (Q3 2014: 29.6%) > Market share: 42.5% (Q3 2014: 42.5%) > S
Slide 20: Telekom Austria Group – Revenue breakdown
Telekom Austria Group – Revenue breakdown Revenue Split - Segment Austria (in EUR million) Q3 2015 Q3 2014 % change Monthly fee and traffic 454.6 461.5 -1.5% Data and ICT solutions 56.4 56.1 0.5% Wholesale (incl. Roaming) 36.5 30.3 20.5% Interconnection 45.9 49.4 -7.1% Equipment 33.0 24.0 37.3% Othe
Slide 21: Telekom Austria Group – Expense breakdown
Telekom Austria Group – Expense breakdown Operating Expense - Segment Austria (in EUR million) Q3 2015 Q3 2014 % change Material expense 61.2 54.7 11.9% Employee costs 149.8 153.8 -2.6% Interconnection 44.1 47.8 -7.6% Maintenance and repairs 23.5 25.8 -8.7% Services received 22.4 28.1 -20.5% Other s
Slide 22: Telekom Austria Group- Headcount development
Telekom Austria Group- Headcount development FTE (Average period) Q3 2015 Q3 2014 % change Austria 8,657 8,817 -1.8% International 7,288 7,136 2.1% Telekom Austria Group* 16,124 16,124 0.0% FTE (End of period) Q3 2015 Q3 2014 % change Austria 8,628 8,806 -2.0% International 7,441 7,371 0.9% Telekom
Slide 23: Telekom Austria Group – Capital expenditure split
Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q3 2015 Q3 2014 % change Segment Austria 120.9 91.0 32.9% Segment Bulgaria 13.9 11.5 21.0% Segment Croatia 13.0 13.2 -1.2% Segment Belarus 12.0 11.1 7.7% Segment Additional Markets 11.9 16.8 -29.3% Slovenia 1.9 6
Slide 24: Telekom Austria Group – Net debt
Telekom Austria Group – Net debt Net debt* (in EUR million) 30 September 2015 31 December 2014 % change Long-term debt 2,633.5 3,385.0 -22.2% Short-term borrowings** 1,082.1 340.8 217.5% Cash and cash equivalents and short-term investments -1,143.0 -1,032.5 n.m. Net Debt of Telekom Austria Group 2,5
Slide 25: Telekom Austria Group – Debt maturity profile
Telekom Austria Group – Debt maturity profile Debt maturity profile (including accrued interest)* (in EUR million) 868.5 743.6 742.5 546.5 298.0 263.9 205.3 47.3 0.0 2015 2016 2017 2018 2019 2020 2021 2022 2023 > EUR 3,715.6 mn short- and long-term borrowings as of 30 September 2015** > Average cost
Slide 26: 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 27: 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) 2,275 2,287 2,289 2,282 2,284 30.2 30.5 29.5 29.3 29.4 11.6 208.5 0.4 1.8 1.9 206.0 202.7 201.1 -6.7 200.5 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q3 14
Slide 28: Segment Austria – Mobile key performance indicators
Segment Austria – Mobile key performance indicators ARPU & ARPU-relevant revenues* MoU per subscriber** (in EUR, in EUR million) (in min) 139.0 141.0 137.6 136.4 132.6 16.9 16.5 15.7 16.0 16.3 277.4 268.6 263.4 254.1 257.9 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 ARPU ARPU-relevan
Slide 29: Segment Austria – Broadband market split
Segment Austria – Broadband market split Market share total broadband Market share mobile broadband (in %) (in %) 3.0 23.8 23.8 Hofer T-mobile Mobile 42.7 31.4 Broadband Other 44.0 33.7 Hutchison Operations Unbundled Lines A1 33.5 29.2 4.6 4.3 Cable 16.7 Q3 14 Q3 15 16.7 A1 Mobile Broadband Market s
Slide 30: Segment Austria – Voice market split
Segment Austria – Voice market split Market share total minutes Market share fixed-line minutes (in %) (in %) 13.2 12.9 3.8 3.5 Mobile 22.3 22.7 Others 86.7 87.3 Fixed Line Others UPC Tele2/UTA Fixed Line Telekom Austria A1 60.8 60.9 5.0 4.8 8.3 7.9 Q3 14 Q3 15 Q3 14 Q3 15 Results for the first nine
Slide 31: 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) 14.4 14.4 183.5 200.8 13.4 170.4 11.7 11.5 151.3 153.6 6.6 6.6 6.5 6.3 6.7 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 ARPL ARPL-relevant
Slide 32: Segment Bulgaria – Mobile key performance indicators
Segment Bulgaria – Mobile key performance indicators ARPU & ARPU-relevant revenues MoU per subscriber (in EUR, in EUR million) (in min) 129.7 129.6 127.5 134.4 135.2 6.2 5.9 5.5 5.5 5.6 76.4 73.5 71.8 70.1 70.6 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 ARPU ARPU-relevant revenues M
Slide 33: 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) 21.1 21.4 21.2 21.9 22.5 273.5 219.9 228.9 237.8 212.3 15.3 16.6 13.3 13.9 14.3 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 ARPL ARPL-rele
Slide 34: Segment Croatia – Mobile key performance indicators
Segment Croatia – Mobile key performance indicators ARPU & ARPU-relevant revenues MoU per subscriber (in EUR, in EUR million) (in min) 11.4 11.2 10.7 11.5 11.8 150.7 154.4 160.6 156.7 145.0 63.7 60.0 63.3 60.0 55.7 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 ARPU ARPU-relevant revenu
Slide 35: Segment Belarus – Mobile key performance indicators
Segment Belarus – Mobile key performance indicators ARPU & ARPU-relevant revenues MoU per subscriber (in EUR, in EUR million) (in min) 6.2 198.8 201.4 199.6 199.8 187.8 4.5 4.6 5.0 4.6 91.5 67.1 68.7 73.5 67.5 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 ARPU ARPU-relevant revenues Mo
Slide 36: Segment Additional Markets – Key performance indicators
Segment Additional Markets – Key performance indicators Slovenia - ARPU Republic of Serbia - ARPU (in EUR) (in EUR) 19.6 7.3 7.5 17.3 16.2 17.1 6.7 6.7 15.8 6.0 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Republic of Macedonia - ARPU Republic of Macedonia - ARPL (in ‘000) (in ‘000) 7
Slide 37: Appendix – Regulatory topics
Appendix 2 – Regulatory topics Results for the first nine months and third quarter 2015 37
Slide 38: 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 Jan 2014 2014 2014 2015 2015 2016 Austria (EUR) 0.008049 0.008049 0.008049 0.008049 0.008049 0.008049 Bulgaria (BGN) 0.02 0.02 0.02 0.019 0.019 0.019 Croatia (HRK) 0.12
Slide 39: EU roaming price regulation
EU roaming price regulation RETAIL (in EURc) Before July 2012 July 2013 July 2014 30 April 2016 15 July 2017 domestic tariff Data (per MB) none 70 45 20 domestic tariff + 5* Voice-calls made domestic tariff 35 29 24 19 domestic tariff (per minute) + 5* Voice-calls received weighted 11 8 7 5 domestic
Slide 40: Upcoming spectrum tenders/prolongations/assignments
Upcoming spectrum tenders/prolongations/assignments Planned/Expected Comments Austria 2019 (2100 MHz) - 1800 MHz: Decision on available 2x18.4 MHz spectrum in 1800 MHz band still pending and not decided by regulator CRC Bulgaria 2015 (1800 MHz) 2600 MHz available since 1st Sept. 2015 but market play
Slide 41: Appendix – Personnel restructuring in Austria
Appendix 3 – Personnel restructuring in Austria Results for the first nine months and third quarter 2015 41
Slide 42: Overview – Restructuring charges and provision vs. FTE
Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) Q1 Q2 Q3 Q1 Q2 Q3 2010 2011 2012 2013 2014 2015 2015 2015 2010 2011 2012 2013 2014 2015 2015 2015 Transfer to FTE effect 76.9 274.3 49.9 149.0 86.4* 4.5 17.4 13.0 158 106 44 22 52 10
Slide 43: 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 2010 57.9 comprises old and new 2011 2012 93.4 104.0 programmes 2013 108.0 > Cash flow impact for Q3 2015 of 2014 107.1 Q1 2015 25.2 EUR 23.9 mn Q2 2015 25.6 Q3 20
Slide 44: Appendix – Corporate sustainability
Appendix 4 – Corporate sustainability Results for the first nine months and third quarter 2015 44
Slide 45: Alignment with core business and materiality analysis define sustainability strategy
Alignment with core business and materiality analysis define sustainability strategy Results for the first nine months and third quarter 2015 45
Slide 46: Key figures
Key figures Selected Group-wide KPIs Ratings Environment: Living Green 2014 Total CO2 Emissions (Scope 1+2 in tonnes) 170,842 Energy efficiency index (in Mwh/terabyte) 0.8 Paper consumption (in tonnes) 1,771 ›Classification: B ›Classification: C+ (93 points out of Collected old mobile phones (in pcs