Telekom Austria AG · VIE:TKA
Telekom Austria — Shareholder Meeting (May 2011)
50 slides from Telekom Austria's shareholder meeting presentation, May 19, 2011
Slide 1: Telekom Austria Group Annual General Meeting 2011
Telekom Austria Group Annual General Meeting 2011 Vienna, 19 May 2011
Slide 2: Agenda
Agenda > Agenda A d Item It 1 1: Report on the fiscal year 2010 > Agenda A d Item I 2 2: Distribution of net profit > Agenda d Item 3 3: Discharge of the members of the Management Board > Agenda Item 4: Discharge of the members of the Supervisory Board Annual General Meeting 2011 2
Slide 3: Agenda
Agenda > Agenda A d Item It 5 5: Compensation for the members of the Supervisory Board > Agenda A d Item I 6 6: Election of the auditors of the financial statements and the consolidated financial statements for the fiscal year 2011 > Agenda Item 7: Election of members of the Supervisory Board > Agen
Slide 4: Agenda Item 1: Report on the Fiscal Year 2010
Agenda Item 1: Report on the Fiscal Year 2010 Annual General Meeting 2011 4
Slide 5: Market Leader in Austria and Strong Player in Eastern and South-Eastern Europe
Telekom Austria Group: Market Leader in Austria and Strong Player in Eastern and South-Eastern Europe Belarus A Austria i A1 Liechtenstein Republic of Serbia Slovenia Croatia Bulgaria Republic of Macedonia Annual General Meeting 2011 5
Slide 6: 2010 as Basis to Shape the Future
2010 as Basis to Shape the Future Fixed Line Return to growth after 13 years Integration of Mobile and Fixed Line Quick and successful completion Mobile Communication Customer growth of 5% or 1 mn Mobile Broadband Increase in customer base by 14% Convergence in SEE Launch in Bulgaria Incre
Slide 7: Austria
Austria Annual General Meeting 2011 7
Slide 8: Single Point of Contact for Customer: Integration of Fixed Line and Mobile
Single Point of Contact for Customer: Integration of Fixed Line and Mobile Communication Industry Trends Synergies and Savings Integration g Customer Demand for Convergent Products Single g Contact for All Customers and Products Harmonization of IT-systems U ifi i and Unification d Si Simplification
Slide 9: Convergence of Fixed and Mobile Reflected in Single Brand A1
Convergence of Fixed and Mobile is Reflected in the New Single Brand “A1“ A1 + What? Why? When? > Merger of Telekom Austria > Unification of product > Harmonization of Brands and A1 into one single offers - improved visibility in June 2011 brand for customers > Integration and > Integrated solutions
Slide 10: Group Remains at Group Level - A1 Integrated into Group Brand Architecture
Telekom Austria Group Remains at Group Level - A1 Integrated into Group Brand Architecture A1 Austria Bulgaria Croatia Belarus Slovenia Republic of Republic of Liechtenstein Serbia Macedonia Annual General Meeting 2011 10
Slide 11: Unique Position in Austria Through Integration
Unique Position in Austria Through Integration Mobile Communication Fixed Line > 3.7 3 7 mn customers > 0.4 0 4 million illi customers > Multi brand > Nationwide triple play A1 Telekom Austria > 2.3 mn customers > 5.1 mn mobile > 0.7 million customers > Multi brand subscribers > Triple-play in mayor
Slide 12: After 13 Years Return to Fixed Line Growth Due to Product Bundles
After 13 Years Return to Fixed Line Growth Due to Success of Product Bundles Development of Access Lines (in 000) > Product bundles sustainably protect 2007 2008 2009 2010 customer base 1 > Return to access line growth after 13 years -23 > Product bundles remain key success -98 factor 3 years after
Slide 13: High-Capacity Network Supports Customer Growth in Fixed Broadband
High-Capacity Network Supports Customer Growth in Fixed Broadband Fixed Broadband Access Lines (in 000) 1,161 Focus on broadband secures future 1,023 886 751 Fixed broadband market share of total broadband market stable at 31% in 2010 2007 2008 2009 2010 GigaSpeed Products GigaSpeed > 16 Mbit/s at E
Slide 14: aonTV as Innovative Component of Product Bundles
aonTV as Innovative Component of Product Bundles aonTV Customers (in 000) > In 2010, aonTV customer base increased 151 by approximately 50% to more than 101 151,000 customers 64 > Over 90 TV channels 21 > Austria’s largest video library with over 2,000 movies and TV-shows – on demand 2007 2008 2009
Slide 15: Further Exponential Growth of Fixed Line and Mobile Data Anticipated
Further Exponential Growth of Fixed Line and Mobile Data Anticipated Fixed Line Data Trends Mobile Data Trends Future expectations: Future expectations: 100 GB/month & 20-100 MBit/s 10 GB/month & 5 MBit/s Driver: Driver: > HD und 3D TV > Mobile broadband > Smart home > Video streaming > Cloud servic
Slide 16: Telekom Austria's Giganet Strategy to Cope with Data Growth
Telekom Austria’s Giganet Strategy to Cope with Data Growth Highest Bandwidth in Fixed Line Highest Mobile Bandwidth Mobile Broadband Technologies g Demand D dddriven i A1 Telekom Austria fiber connection: > Exchange > Building Fiber > Home Exchange Annual General Meeting 2011 16
Slide 17: Approximately 50% of Austrian Households Connected to Giganet in 2011
Approximately 50% of Austrian Households Connected to Telekom Austria Austria’ss Giganet in 2011 Number of Households (in million) 4.5 ADSL (≤ 2 MBit/s) 4.0 ADSL2+ (≤ 8 MBit/s) 35 3.5 GigaSpeed g p Products ((≤ 30 MBit/s)) 3.0 2.5 2.0 15 1.5 1.0 +480% 0.5 0.0 2005 2006 2007 2008 2009 2010 Basic ADSL
Slide 18: Successful Completion of Fiber-Trials and Connection to Giganet
Successful Completion of Fiber-Trials and Connection to Giganet Klagenfurt in November 2010 15th Vienna District in March 2011 Villach in October 2009 19th Vienna District in March 2011 Average Data Consumption > Bandwidth demand driven by (in GB/month) multimedia services 75 82 > Infrastructure rol
Slide 19: Innovation Leadership Ensures Best Mobile Network in Austria
Innovation Leadership Ensures Best Mobile Network in Austria Data Growth Connecting Mobile Base Stations With Fiber Expansion of A1 Telekom Austria Austria’ss Network Capacities Based on New Technologies Dual Cell Technology LTE Technology > Data speeds of up to 42 MBit/s > Data speeds of up to 150
Slide 20: Mobile Subscriber Base Grows by 6% to More Than 5 mn Customers
Mobile Subscriber Base Grows by 6% to More Than 5 mn Customers and Protects Market Leadership Mobile Subscribers Mobile Market Shares (in 000) (as of 31.12.2010) 5,100 4,800 Drei 9% 4,500 3,960 Orange 19% A1TA 41% 2007 2008 2009 2010 T-Mobile 31% Mobile Broadband Customers (in 000) 654 > Market lead
Slide 21: Best Smartphone Portfolio in Austria
Best Smartphone Portfolio in Austria Smartphone: More Than Just a Phone Smartphones for any Customer Need iPhone Market Launch A1 Applications > Mobile p parking g > High h demand d d > A1 Navi > Successful launch > A1 TV Player > A1 Sport p > Sold-out after 8 weeks Annual General Meeting 2011 21
Slide 22: International
International Annual General Meeting 2011 22
Slide 23: Group-Wide Convergence Strategy Continued in Bulgaria
Group-Wide Convergence Strategy Continued in Bulgaria Mobiltel Market leader with 50% mobile market share Strong positioning in the business segment Trends Strategy > Acquisition of 2 fiber operators Fixed to Mobile Convergence g > Quick introduction of convergent product bundles > Large g smartphon
Slide 24: In Croatia Vipnet Focuses on Quality and Innovation
In Croatia Vipnet Focuses on Quality and Innovation as Core Competences Vipnet p Mobile market share of 43% Successful dual-brand strategy Trends Strategy > Innovative products Machine-to-Machine* Services such as mobile surveillance > Convergent solutions for business Fixed to Mobile Convergence cu
Slide 25: Successful 3G Launch With High Customer Acceptance in Belarus
Successful 3G Launch With High Customer Acceptance in Belarus velcom Mobile market share of 42% Customer base increased by 6% to 4.4 mn Trends Strategy > Large portfolio of smartphones and Data Growth data cards > 144,000 , mobile broadband customers Mobile Broadband within one year > 3G roll-out wi
Slide 26: Positive Development in the Segment Additional Markets
Positive Development in the Segment Additional Markets Si.mobil - Slovenia 29% market share > Mobile broadband customer base increases by over 20% Approx. 619,000 customers > Strengthening of youth brand Ortho Vip mobile – Republic of Serbia 14% market share > EBITDA break-even achieved as planned i
Slide 27: Corporate Governance
Corporate p Governance Annual General Meeting 2011 27
Slide 28: Implementation of Strict Compliance Rules
Implementation of Strict Compliance Rules The Management g Board Has Reacted to the Hochegger gg Case with a Three-Point Concept p 1. Development and Adoption of Comprehensive Compliance Measures > Establishment of a group-wide compliance organization 2. Implementation of a Task Force > Supported by
Slide 29: Award for Excellent Corporate Governance
Award for Excellent Corporate Governance > Compliance with Corporate Governance Code confirmed by KPMG at the beginning of 2011 > “True and fair view” as well as equal treatment of all shareholders > Promotion of women in leading g positions p > Remuneration of Board Members disclosed in annual repo
Slide 30: Key Financial Figures Telekom Austria Group
Key Financial Figures Telekom Austria Group p Annual General Meeting 2011 30
Slide 31: All Group Financial Targets Achieved in 2010
All Group Financial Targets Achieved in 2010 in EUR Targets g 2010 Results 2010 Revenues approx. 4.70 bn 4.651 bn EBITDA co comparable pa able 1.60 .60 – 1.65 .65 b bn 1.646 .6 6 b bn Investments 0.75 – 0.80 bn 0.764 bn Operating Free Cash Flow* At least 0.80 bn 0.882 bn Dividend 65% of net
Slide 32: Net Income Doubled in 2010
Net Income Doubled in 2010 In EUR mn 2010 2009 % Change Revenues 4,651 4,802 -3% EBITDA comparable 1,646 1,812 -9% Operating income 438 344 +27% Net income 195 95 +106% Investments 764 711 +7% Annual General Meeting 2011 32
Slide 33: Regulation Impacts 2010 Results
Regulation Impacts 2010 Results by EUR 47 mn Regulation 2010 Further Development Roaming Roaming > Austria, Bulgaria and Slovenia mainly > Until July 2011, roaming tariffs will impacted by lower roaming tariffs be further reduced by 30 – 40% according to the EU glide path Interconnection Tariffs Int
Slide 34: High Investments into Austrian Network Secures Future Position
High Investments into Austrian Network Secures Future Position Investments Telekom Austria Group p Investments Segment g Austria (in EUR mn) (in EUR mn) +7 % 764 +21 % 711 516 424 2009 2010 2009 2010 > Telekom Austria Group increased > Investments in Austria’s best network investments by more than E
Slide 35: Revenue Target of Approx. EUR 4.7 bn Achieved in 2010
Revenue Target of Approx. EUR 4.7 bn Achieved in 2010 (in EUR mn) - 3.1 % 4,802 -140 -50 43 23 -3 4,651 -25 Revenue s 2010 Austria ulgaria Belarus Croatia Other, Revenuess 2009 Addiitional Marrkets Eliminattions Holding & O Bu A C B > Austrian, Bulgarian g and Croatian segments g were impacted p byy
Slide 36: Cost Stabilization to Counteract Revenue Development
Cost Stabilization to Counteract Revenue Development (in EUR mn) + 0.3 % 3,085 -2 -24 36 -7 10 3,094 -5 ulgaria elarus expensess 2010 Austria Croatia Other, expenses 2009 Additiional Eliminations kets Operatting Operatiing Be Holding & O Mark Bu A > Strict cost management g led to savings g in Austr
Slide 37: Strong Cash Flow As Basis for Investments, Deleveraging and Dividend
Strong Cash Flow As Basis for Investments, Deleveraging and Distribution of Dividend Gross Cash Flow 2010 Utilization 764 Investments 1,479 310 Debt reduction 73 W ki Capital Working C it l and d Oth Others 332 Dividend (in EUR mn) Annual General Meeting 2011 37
Slide 38: Strong Cash Flow Generation Allows Reduction of Net Debt
Strong Cash Flow Generation Allows Reduction of Net Debt by Approximately EUR 310 mn in 2010 In EUR mn 2010 2009 % Change g Long-term debt 3,146 , 3,235 , -3% Short-term borrowings 523 1,502 -65% Cash and cash equivalents, equivalents short-term short term and long- long -355 -1,099 -68% term invest
Slide 39: Balanced Debt Maturity Profile Minimizes Risk
Balanced Debt Maturity Profile Minimizes Risk Debt Maturityy Profile Rating (as of 31.12.2010, in EUR mn) > S&P: BBB (Outlook: stable) 1,292 > Moody’s: A3 (Outlook: negative) 942 823 523 75 2011 2012 2013 2014 thereafter Lines of Credit > Undrawn committed lines of credit of approx. EUR 1.0 bn > Ave
Slide 40: Completion of US-Cross Border Leasing Leads to Positive Net Present Value
Completion of US-Cross Border Leasing Leads to Positive Net Present Value of EUR 71.5 71 5 mn > Between B t 1998 and d 2001 2001, di digital it l switching it hi ttechnology h l was sold ld tto iinvestors t iin the US and leased back, in order to benefit from US tax law advantages > In 2008 and 2009
Slide 41: Shareholder Structure and Cash Use Policy
Shareholder Structure and Cash Use Policyy Annual General Meeting 2011 41
Slide 42: Volatile Market Environment Impacts Performance of Telekom Austria Share in 2010
Volatile Market Environment Impacts Performance of Telekom Austria Share in 2010 Relative Share Price Performance 2010 (in %) 120 100 80 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 Telekom Austria ATX Telecom sector Annual General Meeti
Slide 43: Broadly Diversified Shareholder Structure of Telekom Austria Group
Broadly Diversified Shareholder Structure of Telekom Austria Group Shareholder Structure by Country Shareholder Structure by Type of Investment (as of 31.12.2010) (as of 31.12.2010) Unknown 4% R t off W Rest World ld 5% ÖIAG 28% Rest of Europe Austria (incl. 15% ÖIAG and treasury shares) 41% Yalue &
Slide 44: Cash Use Policy Enables Value-Enhancing Growth and Increased Flexibility
Cash Use Policy Enables Value-Enhancing Growth and Increased Flexibility Free Free Cash Flow* cash flow Dividend Policyy Leverage 1 1. 55% of free cash flow, Ned debt/EBITDA comparable Priority ~2.0x - ~2.5x DPS 2011 – 2012 of EUR 0.76 2. Growth Investments Share Buybacks P i it Priority S lid iinve
Slide 45: Favourable Dividend Yield
Favourable Dividend Yield Proposed Dividend Dividend Yield Share price as of 31 Dec, 2010 of EUR 10.52 EUR 0.75 7% Annual General Meeting 2011 45
Slide 46: Active Risk Management Based on Close Connection to Business Planning
Active Risk Management Based on Close Connection to Business Planning > Regular analysis of risks and adoption of appropriate measures > Division managers responsible for Risk Management, central group group-wide wide supervision and coordination > Measures to minimize risks are elaborated,, impleme
Slide 47: Award-Winning Investor Relations as a Core Pillar of Good Corporate Governance
Award-Winning Investor Relations as a Core Pillar of Good Corporate Governance Intensive Dialogue with Investors in 2010 > 13 roadshows worldwide > 207 one-on-ones > 164 conference calls > 52 group presentations > Capital Market Day in December Award-Winning IR Work: > Second best financial disclosu
Slide 48: Outlook 2011
Outlook 2011 Annual General Meeting 2011 48
Slide 49: Outlook 2011
Outlook 2011 Telekom Austria Group–Outlook 2011 (on a constant currency basis, as of 11 May 2011) Revenues up to EUR 4.60 bn EBITDA comparable up to EUR 1.60 bn Investments up to EUR 0.80 bn Operating Free Cash Flow* approx. EUR 0.80 bn 55% of Free Cash Flow, Dividend DPS of at least 0.76 EUR *O *Op
Slide 50: Thank you for your attention!
Thank yyou for yyour attention! Further information of Telekom Austria Group is available under www.telekomaustria.com
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