Telekom Austria Ag · VIE:TKA

Telekom Austria — A1 Telekom Austria Group — FY2018 Earnings Presentation

53 slides from Telekom Austria's earnings presentation, Feb 12, 2019

  1. Slide 1: Results for the fourth quarter and full year 2018

    Results for the fourth quarter and full year 2018 12th February 2019, Vienna

  2. 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

  3. Slide 3: Operational and financial highlights for the full year 2018

    Operational and financial highlights for the full year 2018

  4. Slide 4: Highlights FY 2018

    Highlights FY 2018  Strong performance in Austria and most CEE countries led to growth of 1.8% in revenues (adjusted: 3.1%*) and of 1.6% in EBITDA, excl. restructuring (adjusted: 3.6%*)  Mobile contract customer base increase of 4.1% y-o-y due to ongoing shift from prepaid to contract and M2M, mig

  5. Slide 5: FY 2018 – Solid service revenue growth translated into strong operative EBITDA increase

    FY 2018 – Solid service revenue growth translated into strong operative EBITDA increase Group (in EUR million) FY 2018 FY 2017 % change Total revenues (proforma*) 4,466.4 4,388.5 1.8% EBITDA (proforma*) 1,380.6 1,398.9 -1.3% excl. restructuring 1,402.7 1,380.7 1.6% Net Income (reported) 242.7 345.5

  6. Slide 6: FY 2018 – EBITDA benefits from service revenue growth in all areas

    FY 2018 – EBITDA benefits from service revenue growth in all areas and strong focus on sales execution Equipment Service revenues OOI OPEX Non-operating effects margin 1.402.7 1.380.7 EUR mn EBITDA 2017 Mobile Fixed Solutions OOI Subsidies Handset Opex Opex One-offs FX Roaming EBITDA 2018 excl. Conn

  7. Slide 7: Ongoing cost efficiencies more than offset indirect cost increases

    Ongoing cost efficiencies more than offset indirect cost increases* OPEX** development 2018 Savings initiatives 2019  Ongoing program ‘Sourcing 4 Success’ will target especially the following areas:  Maintenance  Customer Service  Energy  Focus on process efficiency and process automation  Inv

  8. Slide 8: Key financial developments for the fourth quarter 2018

    Key financial developments for the fourth quarter 2018

  9. Slide 9: Q4 2018 in line with FY trends: Strong service revenues translated into EBITDA growth

    Q4 2018 in line with FY trends: Strong service revenues translated into EBITDA growth Reported Reported Group (in EUR million) Q4 2018 Q4 2017 % change Total revenues 1,165.1 1,130.0 3.1% EBITDA 293.0 288.3 1.6% excl. restructuring 306.8 283.3 8.3% CAPEX 263.7 238.5 10.6%  Service revenue growth in

  10. Slide 10: Austria: Strong operational performance driven by sound service revenue growth

    Austria: Strong operational performance driven by sound service revenue growth and a better equipment margin ARPU ARPL (in EUR) (in EUR) Operational data Δ: +2.1%  High demand for mobile WiFi routers and sound development in high- Δ: +3.7% 31.1 30.5 value tariffs both benefit postpaid subscriber ba

  11. Slide 11: Service revenue growth in CEE profits from solid trends in Bulgaria, Serbia and Macedonia

    Service revenue growth in CEE profits from solid trends in Bulgaria, Republic of Serbia and Republic of Macedonia Highlights CEE EBITDA Bulgaria: (proforma, in EUR mn)  Ongoing fixed-line service revenue growth mainly driven by the business segment and TV Δ: +0.4%  Mobile: Solid trends in the busi

  12. Slide 12: FY 2018: Stable free cash flow

    FY 2018: Stable free cash flow as the strong operational performance and lower interest paid offset higher CAPEX paid (in EUR million) Q4 2018 Q4 2017 % change FY 2018 FY 2017 % change Net cash flow from operating activities 314.1 264.7 18.7% 1,232.3 1,174.8 4.9% Capital expenditures paid -212.9 -18

  13. Slide 13: Focus Points

    Telekom Austria

  14. Slide 14: Solutions & Connectivity

    Fully integrated ICT propositions benefit both solutions and connectivity revenue trends Unique combination of digital and traditional products 11.1% 600 10.3% 10.2% 10.5% Millionen 500 Datacenter Applications Solutions & Connectivity 400 MS 365, cloud messenger Cloud servers, Housing CAGR +6% 300 S

  15. Slide 15: Broadband roll-out in Austria provides best technology-mix

    Broadband roll-out in Austria provides best technology-mix in line with customer demand 5,000 of households reached via pure Homes passed (in thsd.) ~60% >40 mbps fixed-line with at least 40 Mbps ~98% >40 mbps 4,000  ~60% product 3,000 2,000 set as standard bandwidth  40 Mbps for gross adds 1,000

  16. Slide 16: Austria: Further development of A1 customer base with the connect PLUS proposition

    Austria: Further development of A1 customer base with the connect PLUS proposition Fully convergent Mobile only Internet@Home** household Speed upgrades n.a. ~2/3 of HH* ~1/2 of HH TV product n.a. ~1/4 of HH ~1/5 of HH Churn rate * (all churn rates below 1%) <1/5 highest lowest standard €€€€ € ARPH

  17. Slide 17: Outlook for the full year 2019

    Outlook for the full year 2019

  18. Slide 18: A1 Telekom Austria Group outlook for the full year 2019

    A1 Telekom Austria Group outlook for the full year 2019 February 12, 2019 Consensus 2019 Total revenues ~+2% +1.1% CAPEX ~ EUR 770 mn EUR 750 mn* Proposed dividend EUR 0.21 / share - *CAPEX consensus excl. spectrum  Outlook based on reported numbers under IFRS 15 and pre-IFRS 16; assumed devaluatio

  19. Slide 19: Appendix 1

    Appendix 1 All figures are stated according to IAS 18 on a reported basis

  20. Slide 20: IAS 18 – IFRS 15 comparison shows same growth dynamics

    IAS 18 – IFRS 15 comparison shows same growth dynamics in FY 2018 revenues and EBITDA in both accounting standards Income Statement FY 2018 FY 2017* % change FY 2018 FY 2017* % change (in EUR mn) IAS 18 IAS 18 IAS 18 IFRS 15 IFRS 15 IFRS 15 Service revenues 3,828.2 3,780.9 1.3 3,680.8 3,626.8 1.5 Eq

  21. Slide 21: The leading regional communications player providing convergent telecommunication services

    The leading regional communications player providing convergent telecommunication services as of December 31, 2018 (in ‘000) Austria Bulgaria Croatia Mobile market position #1 Mobile market position: #1 Mobile market position #2 Mobile subscribers: Mobile subscribers: Mobile subscribers:  5,364 (Q4

  22. Slide 22: A1 Telekom Austria Group – Profit and Loss

    A1 Telekom Austria Group – Profit and Loss (in EUR million) Q4 2018 Q4 2017 % change Service Revenues 973.6 940.2 3.6% Equipment Revenues 170.0 161.5 5.3% Other operating income 21.5 28.2 -24.0% Total Revenues 1,165.1 1,130.0 3.1% Cost of Service -364.6 -365.6 0.3% Cost of Equipment -197.4 -183.9 -7

  23. Slide 23: Total revenues & costs and expenses per segment

    A1 Telekom Austria Group – Total revenues & costs and expenses per segment A1 Telekom Austria Group - Total Revenue Split Total Revenues (in EUR million) Q4 2018 Q4 2017 % change Austria 694.9 676.2 2.8% Bulgaria 116.2 112.1 3.6% Croatia 113.2 106.9 5.8% Belarus 99.5 95.9 3.8% Slovenia 56.4 54.1 4.2

  24. Slide 24: A1 Telekom Austria Group – Headcount development

    A1 Telekom Austria Group – Headcount development FTE (Average Period) Q4 2018 Q4 2017 % change Austria 8,062 8,263 -2.4% International 10,329 10,377 -0.5% Corporate 375 335 12.0% A1 Telekom Austria Group 18,765 18,974 -1.1% FTE (End of Period) Q4 2018 Q4 2017 % change Austria 8,010 8,246 -2.9% Inter

  25. Slide 25: A1 Telekom Austria Group – Capital expenditure split

    A1 Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q4 2018 Q4 2017 % change Austria 135.0 131.3 2.8% Bulgaria 35.6 25.9 37.8% Croatia 31.7 31.8 -0.3% Belarus 23.0 18.5 24.0% Slovenia 16.4 11.6 41.5% Republic of Serbia 16.1 11.8 36.3% Republic of Macedonia 9.8

  26. Slide 26: A1 Telekom Austria Group – Net debt

    A1 Telekom Austria Group – Net debt per December 31, 2018 Net Debt (in EUR million) 31 December 2018 31 December 2017 % change Long-term Debt 2,536.8 2,533.6 0.1% Short-term Borrowings 245.3 0.6 n.m. Cash and Cash Equivalents and Short-term Investments -63.6 -202.4 68.6% Net Debt of A1 Telekom Austr

  27. Slide 27: A1 Telekom Austria Group – Debt maturity profile

    A1 Telekom Austria Group – Debt maturity profile as of December 31, 2018 747.1 746.3 744.4 245.3 298.9 0.2 0.0 0.0 2019 2020 2021 2022 2023 2024 2025 2026  EUR 2,782.0 mn short-and long-term borrowings as of 31 December 2018  Average cost of debt of 2.68%  Cash and cash equivalents and short-term

  28. Slide 28: A1 Telekom Austria Group – Debt profile

    A1 Telekom Austria Group – Debt profile as of December 31, 2018 Overview debt instruments Fixed/floating mix 9% 9% 91% 91% Bonds Loans Fixed Floating Lines of credit Ratings  Undrawn committed credit lines  S&P: BBB (positive outlook) amounting to EUR 1,015 mn  Moody’s: Baa1 (stable outlook)  Av

  29. Slide 29: Segment Austria – Fixed-line key performance indicators

    Segment Austria – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 30.5 30.5 30.8 31.1 30.4 3,390.4 3,378.7 3,362.7 3,334.3 3,327.7 194.0 192.2 192.0 191.7 191.8 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPL ARPL-rel

  30. Slide 30: Segment Austria – Mobile key performance indicators

    Segment Austria – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 16.0 15.9 16.3 16.1 1.8 1.7 15.5 1.5 1.6 1.5 254.6 258.3 256.6 252.9 248.1 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPU Service revenues Subsidies (incl. promoti

  31. Slide 31: Segment Austria – Broadband market split

    Segment Austria – Broadband market split Market share total broadband Market share mobile Market share fixed- (in %) broadband line broadband (in %) (in %) 2.0 2.8 4.2 4.6 35.3 36.6 Mobile Broadband Other Operators 22.1 16.8 17.3 25.5 Unbundled Lines 3.5 3.0 22.7 23.1 Cable 38.6 4.2 4.0 16.4 16.5 34

  32. Slide 32: Segment Austria – Voice market split

    Segment Austria – Voice market split Market share voice Minutes (in %) 13.7 13.9 3.3 3.5 23.1 22.2 Others UPC Tele2/UTA 59.9 60.5 A1 Q4 17 Q4 18 Results for the fourth quarter and full year 2018 32

  33. Slide 33: Segment Bulgaria – Fixed-line key performance indicators

    Segment Bulgaria – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 12.8 12.8 1,005.0 1,005.1 1,014.7 1,017.6 1,029.0 12.5 12.1 12.2 20.4 20.6 19.9 19.3 19.5 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPL ARPL-relevan

  34. Slide 34: Segment Bulgaria – Mobile key performance indicators

    Segment Bulgaria – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 2.3 2.0 5.5 5.4 5.6 5.8 5.6 1.5 1.4 1.4 70.4 65.8 66.6 67.3 64.6 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPU Service revenues Subsidies (incl. promotional deal

  35. Slide 35: Segment Croatia – Fixed-line key performance indicators

    Segment Croatia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 30.4 30.3 30.3 681.8 29.9 29.9 658.2 668.5 654.1 655.4 26.8 26.9 26.8 26.6 26.5 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPL ARPL-relevant revenues

  36. Slide 36: Segment Croatia – Mobile key performance indicators

    Segment Croatia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 13.3 3.6 12.3 3.2 11.2 11.2 11.4 2.4 1.7 2.0 73.9 60.5 65.1 63.4 59.3 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPU Service revenues Subsidies (incl. promotional

  37. Slide 37: Segment Belarus – Fixed-line key performance indicators

    Segment Belarus – Fixed-line key performance indicators ARPL & ARPL-relevant revenues* Total RGUs* (in EUR, in EUR million) (in ‘000) 657.3 614.9 615.8 463.4 475.5 5.9 5.9 5.6 5.6 5.5 5.5 6.4 6.9 7.0 5.4 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPL ARPL-relevant revenues Fixed Br

  38. Slide 38: Segment Belarus – Mobile key performance indicators

    Segment Belarus – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 4.4 4.3 4.4 1.7 1.7 4.1 4.2 1.6 1.5 1.4 63.7 63.2 63.9 60.9 59.0 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPU Service revenues Subsidies (incl. promotional deals

  39. Slide 39: Segment Slovenia – Fixed-line key performance indicators

    Segment Slovenia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 36.6 35.8 34.9 35.2 35.4 183.0 182.1 176.9 178.1 171.4 7.7 7.7 7.6 7.6 7.4 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPL ARPL-relevant revenues Fixe

  40. Slide 40: Segment Slovenia – Mobile key performance indicators

    Segment Slovenia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 1.8 15.7 1.6 15.0 15.2 15.0 1.5 14.4 1.3 1.3 32.6 31.8 31.8 31.2 30.2 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPU Service revenues Subsidies Mobile penetration

  41. Slide 41: Segment Serbia – Mobile key performance indicators

    Segment Serbia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 3.4 6.2 6.4 6.3 5.7 3.2 3.2 5.5 42.1 41.4 40.1 3.1 3.1 37.2 36.1 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPU Service revenues Subsidies (incl. promotional deals)

  42. Slide 42: Segment Macedonia – Fixed-line key performance indicators

    Segment Macedonia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 383.1 367.8 12.1 355.6 348.6 11.7 11.7 340.7 11.6 11.4 5.5 5.5 5.3 5.4 5.3 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPL ARPL-relevant revenues Fix

  43. Slide 43: Segment Macedonia – Mobile key performance indicators

    Segment Macedonia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 6.8 6.7 6.5 6.3 2.9 6.1 2.6 22.2 1.7 1.7 21.3 1.2 20.7 19.9 20.1 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ARPU Service revenues Subsidies (incl. promotional dea

  44. Slide 44: Appendix 2 – Regulatory topics

    Appendix 2 – Regulatory topics

  45. Slide 45: Glide Path of Mobile Termination Rates

    Glide Path of Mobile Termination Rates Currently no further reductions expected Jul Jan Jul Jan Jul Jan 2015 2016 2016 2017 2017 2018 Austria (EUR) 0.008049 0.008049 0.008049 0.008049 0.008049 0.008049 Bulgaria (BGN) 0.019 0.019 0.019 0.014 0.014 0.014 Croatia (HRK)* 0.063 0.063 0.063 0.063 0.047 0.

  46. Slide 46: Upcoming spectrum tenders/prolongations/assignments

    Upcoming spectrum tenders/prolongations/ assignments* Expected Comments 2019 (3400-3800 MHz) 3400–3800 MHz auction in February 2019. Austria 2020 (700, 1500, 2100 MHz) 700/1500/2100 MHz auction planned for Q1/2020, consultation up & running 2020 (1500, 2300 MHz) 2019 (1800, 2100, 2600 MHz) Availabil

  47. Slide 47: EU roaming price regulation

    EU roaming price regulation RETAIL (in EURc) July 2014 April 30, 2016 June 15, 2017 Data (per MB) 20 domestic tariff + 5* domestic tariff Voice-calls made 19 domestic tariff + 5* domestic tariff (per minute) Voice-calls received 5 weighted average MTR 0 (per minute) SMS (per SMS) 6 domestic tariff +

  48. Slide 48: Appendix 3 – Personnel restructuring in Austria

    Appendix 3 – Personnel restructuring in Austria

  49. Slide 49: Full Year Overview – Restructuring charges and provision vs. FTE

    Full Year Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 FTE reduction 149.0 86.4* 69.5** 95.0 9.1 70.1 Transfer to government 22 52 49 6 3 0 Servicekom contribution -10

  50. Slide 50: Overview – Cash flow impact of restructuring

    Overview – Cash flow impact of restructuring Restructuring cash flow impact Restructuring outlook 2019f Cash flow impact (in EUR million) 2013 108.0  Restructuring charges of ~EUR 80 mn 2014 107.1 expected for the next few years addressing 2015 101.9 2016 105.5 civil servants 2017 102.4  Target: d

  51. Slide 51: Appendix 4 – Corporate sustainability

    Appendix 4 – Corporate sustainability

  52. Slide 52: Alignment with core business and materiality analysis define sustainability strategy

    Alignment with core business and materiality analysis define sustainability strategy Results for the fourth quarter and full year 2018 52

  53. Slide 53: Key figures – Corporate Sustainability

    Key figures – Corporate Sustainability Selected group-wide KPIs Ratings Environment 2018 Total CO2 emissions (Scope 1+2 market-based in tonnes) 244.313 Classification: B Classification: B- Energy efficiency index (in Mwh/terabyte) 0,18 Paper consumption (in kg) 1.127.925 Collected old mobile phones

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