Telekom Austria Ag · VIE:TKA

Telekom Austria — Q3 2009 Earnings Presentation

50 slides from Telekom Austria's earnings presentation, Nov 12, 2009

  1. Slide 1: Telekom Austria Group Results for the Third Quarter 2009

    Telekom Austria Group Results for the Third Quarter 2009 Vienna, November 12, 2009

  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 ƒ Key Developments ƒ Fixed Net ƒ Mobile Communication ƒ Financial Overview ƒ Outlook Results for the Third Quarter 2009 3

  4. Slide 4: Key Developments

    Key Developments Results for the Third Quarter 2009 4

  5. Slide 5: Telekom Austria Group – Third Quarter 2009

    Telekom Austria Group – Third Quarter 2009 ƒ Fixed Net operating trends improve further in 3Q 09 driven by a reduction in access lines of just 7,000 lines ƒ Mobile communication subscriber base grows by 1.5 mn to 18.5 mn customers ƒ Revenues decline by 7.3% to EUR 1.2 bn and EBITDA by 9.0% to EUR 48

  6. Slide 6: Cost Reduction Mitigates Impact of Lower Revenues

    Cost Reduction Mitigates Impact of Lower Revenues Revenues EBITDA (EUR million) (EUR million) -7.3% 1,328.0 -9.0% 1,231.7 489.8 538.2 3Q 09 3Q 08 3Q 09 3Q 08 Operating Free Cash Flow* Earnings per Share (EUR million) (EUR) -5.3% Impairment charges for Belarus and 0.37 335.3 354.2 Republic of Serbia

  7. Slide 7: Fixed Net

    Fixed Net Results for the Third Quarter 2009 7

  8. Slide 8: Sequential Improvements of Fixed Net Revenue Trends

    Sequential Improvements of Fixed Net Revenue Trends Revenues (EUR million) ƒ Revenues decline by 5.3% in 3Q 09 compared to a 12.5% decrease -5.3% in 2Q 09 496.9 470.7 ƒ Significant slowdown in line loss 3Q 09 3Q 08 continues, ARPL dilution decelerates EBITDA (EUR million) ƒ All revenue lines reflect

  9. Slide 9: Access Line Base stabilizes as Line Loss is Cut by 75% to 7,000

    Access Line Base stabilizes as Line Loss is Cut by 75% to 7,000 Access Lines (in 000) -1.3% ƒ Access line base stabilizes with a 2,339.2 2,336.8 2,328.8 2,316.2 2,309.2 reduction of 1.3% year-on-year ƒ Access line loss cut by 75% to just 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 7,000 in 3Q 2009 Average Revenue

  10. Slide 10: Fixed Net Retail Outgrows Broadband Market for the First Time

    Fixed Net Retail Outgrows Broadband Market for the First Time Driven by Product Bundles Broadband Market Shares ƒ Fixed Net retail broadband outgrows overall market 17.6% which increases by 19.2% 22.7% Cable 8.7% ƒ Number of Fixed Net retail 10.8% Unbundled lines broadband lines rises by 25.6% Mobil

  11. Slide 11: VDSL2 Rollout to Connect 365,000 Households in Rural Areas

    VDSL2 Rollout to Connect 365,000 Households in Rural Areas ƒ High speed internet access for rural areas at a low incremental investment ƒ 400 central offices upgraded to provide up to 30 MBit/s ƒ 365,000 households equivalent to about 10% coverage until 20-30 Mbit/s Jan 2010 central ca. 800m office

  12. Slide 12: Continuing Execution of Restructuring Program

    Continuing Execution of Restructuring Program, Strong Acceptance of Social Plan Continues Social plan 344 FTE Announced Nov 08 March 31, 09 June 30, 09 Sep 30, 09 Target Dec 31, 2009 Social plan 400 FTE by end 2010 Social plan Social plan Social plan Split between 344 FTE 433 FTE 520 FTE Total of 1,

  13. Slide 13: Mobile Communication

    Mobile Communication Results for the Third Quarter 2009 13

  14. Slide 14: Mobile Communication Impacted by FX, Roaming, Interconnection and Lower Prices

    Mobile Communication Impacted by FX, Roaming, Interconnection and Lower Prices Revenues (EUR million) FX translation effect ƒ Mobile Communication’s subscriber base grows by 8.6% to 18.5mn 27.5 subscribers -7.1% 895.7 831.8 ƒ Revenues and EBITDA excluding FX impact decline by 4.1% and 8.1% 1.5 0.5 1

  15. Slide 15: Cost Reductions at mobilkom austria Initiated to Mitigate Impact from Regulation

    Cost Reductions at mobilkom austria Initiated to Mitigate Impact from Regulation Revenues (EUR million) ƒ mobilkom austria’s customer base grows by 8.3% to 4.7 mn subscribers -6.4% 393.1 420.0 ƒ Fierce competition in the domestic mobile market remains 3Q 09 3Q 08 ƒ Roaming regulation cuts prices by

  16. Slide 16: Mobilkom Austria Continues to Enhance Mobile Broadband Subscriber Base

    Mobilkom Austria Continues to Enhance Mobile Broadband Subscriber Base Market Shares As of Sep 2009 ƒ Market share remains stable at 42.4% 42.4% in 3Q 09 30.4% 20.0% ƒ Mobile broadband subscriber base increases by 43.9% in 3Q 7.2% 09 compared to 3Q 08 3Q 07 1Q 08 3Q 08 1Q 09 3Q 09 mobilkom austria T

  17. Slide 17: Bulgarian Operations Impacted by Price Competition and Economic Downturn

    Bulgarian Operations Impacted by Combination of Price Competition and Economic Downturn Revenues Mobiltel (EUR million) ƒ Fierce competition, mobile termination rate cut by 28% and -11.9% economic crisis impact revenues 157.7 179.0 ƒ Usage growth of 5.9% partly compensates for lower prices 3Q 09 3Q

  18. Slide 18: Currency Devaluation in Belarus Consumes Strong Organic Growth of Velcom

    Currency Devaluation in Belarus Consumes Strong Organic Growth of Velcom Revenues Velcom (EUR million) ƒ Subscriber base grows by 12.9% to FX translation effect 4.0 million at the end of 3Q 09 20.3 -6.4% 82.4 77.1 ƒ Market share slightly lower at 43.5% ƒ Strong organic revenue growth of 18.2% and EB

  19. Slide 19: Strong Subscriber Growth in Croatia and Slovenia

    Strong Subscriber Growth in Croatia and Slovenia Revenues Vipnet Vipnet in Croatia (EUR million) ƒ Subscriber base grows by 9.9% to -9.5% 2.6 mn customers 142.8 157.8 ƒ EBITDA declines mainly due to 15% 3Q 09 3Q 08 reduction of MTRs Si.mobil in Slovenia Revenues Si.mobil (EUR million) ƒ Subscriber b

  20. Slide 20: Greenfield Operations Remain on Path to Break Even

    Greenfield Operations Remain on Path to Break Even as EBITDA Losses are Halved EBITDA Vip mobile Vip mobile in Serbia (EUR million) ƒ Subscriber base grows by 42.2% to 1.1 mn customers 3Q 09 3Q 08 ƒ Market share grows to 11.5% up from 7.9% at the end of 3Q 08 -3.9 -9.1 ƒ Improvement of EBITDA contin

  21. Slide 21: Financial Overview

    Financial Overview Results for the Third Quarter 2009 21

  22. Slide 22: Impairment Charges of EUR 352 mn Impact Results, EBITDA Margin Maintained

    Impairment Charges of EUR 352 mn Impact Results, EBITDA Margin Maintained at High Level (EUR million) 3Q 09 3Q 08 % change 1-9M 09 1-9M 08 % change Revenues 1,231.7 1,328.0 -7.3% 3,620.5 3,863.8 -6.3% EBITDA 489.8 538.2 -9.0% 1,394.6 1,492.4 -6.6% EBITDA margin 39.8% 40.5% 38.5% 38.6% Operating inco

  23. Slide 23: Reduction of Capital Expenditures to Support Free Cash Flow Continues

    Reduction of Capital Expenditures to Support Free Cash Flow Continues (EUR million) 3Q 09 3Q 08 % change 1-9M 09 1-9M 08 % change Cash Flow from operations before 443.0 478.3 -7.4% 1,215.8 1,305.1 -6.8% working capital adjustments Change in working capital -75.0 -44.8 67.3% -252.9 -199.4 26.8% Ordin

  24. Slide 24: Capital Expenditure in Fixed Net Catch Up while Mobile Requires less Capex

    Capital Expenditure in Fixed Net Catch Up while Mobile Communication Requires less Capex (EUR million) 3Q 09 3Q 08 % change 1-9M 09 1-9M 08 % change Fixed Net 67.5 48.7 38.6% 156.9 181.2 -13.4% Mobile Communication 87.0 135.3 -35.7% 262.9 353.1 -25.5% Ordinary capital expenditures 154.5 184.0 -16.0%

  25. Slide 25: Deleveraging Continues with Net Debt Decreasing by 5.3%

    Deleveraging Continues with Net Debt Decreasing by 5.3% (EUR million) Sep 30, 09 Dec 31, 08 % change Long-term assets 6,515.2 7,452.0 -12.6% Current assets 2,056.8 1,545.4 33.1% Total assets 8,572.0 8,997.4 -4.7% Current liabilities 2,144.1 2,220.5 -3.4% Long-term liabilities 4,860.6 4,621.3 5.2% St

  26. Slide 26: Impairment Charges Related to Operations in Belarus and Serbia

    Impairment Charges Related to the Operations in Belarus and in the Republic of Serbia ƒ Impairment charges of EUR 352 mn impact operating income and net income ƒ Consequence of lower than expected growth, higher discount rates and weaker FX ƒ Impairments are cash flow neutral and provide tax shield

  27. Slide 27: Outlook

    Outlook Results for the Third Quarter 2009 27

  28. Slide 28: Outlook Shifted from Constant to Actual Currency Basis, Op. FCF of EUR 1.1 bn

    Outlook Shifted from Constant to Actual Currency Basis, Op. FCF of EUR 1.1 bn reiterated Telekom Austria Group 2009 As announced on August 19, Actual Currency Basis 2009 on constant currency basis Revenues ~ EUR 4.8 bn slightly lower than EUR 5.1 bn EBITDA ~ EUR 1.8 bn ~ EUR 1.9 bn CAPEX ~ EUR 0.7 b

  29. Slide 29: Appendix

    Appendix Results for the Third Quarter 2009 29

  30. Slide 30: Regulatory Issues – Key Aspects

    Regulatory Issues – Key Aspects Next Generation Networks: The European Commission has started the 2nd public consultation on the regulatory treatment of Next Generation Access in June 09. Previous guidelines of the Commission have partly contradicted the terms adopted by the European Parliament on t

  31. Slide 31: Development of Revenues 3Q vs. 3Q

    Development of Revenues 3Q 09 vs. 3Q 08 Revenues (EUR million) 1,328.0 -26.2 -26.9 -21.3 -5.3 -15.0 2.3 -8.8 -2.0 6.9 1,231.7 Eliminations Vip mobile mobilkom Si.mobil Mobiltel Velcom Fixed Net Vipnet operator Corporate, Revenues Revenues austria Others & 3Q 08 3Q 09 Vip Results for the Third Quarte

  32. Slide 32: Development of EBITDA 3Q vs. 3Q

    Development of EBITDA 3Q 09 vs. 3Q 08 EBITDA (EUR million) 538.2 -8.1 -20.1 -10.4 -5.3 -8.3 1.5 0.4 489.8 -3.3 5.2 Eliminations Vip mobile mobilkom Si.mobil Mobiltel Fixed Net Velcom Vipnet operator Corporate, EBITDA EBITDA austria 3Q 08 3Q 09 Others & Vip Results for the Third Quarter 2009 32

  33. Slide 33: Fixed Net - Access Lines

    Fixed Net - Access Lines (in 000) 3Q 09 3Q 08 % change Access lines (without broadband lines) 1,326.6 1,503.9 -11.8% Fixed Net broadband retail lines 926.0 766.4 20.8% Fixed Net broadband wholesale lines 56.6 68.9 -17.9% Fixed Net broadband lines 982.6 835.3 17.6% Total access lines 2,309.2 2,339.2

  34. Slide 34: Fixed Net – Voice & Broadband Market Shares

    Fixed Net – Voice & Broadband Market Shares Market Share Voice Minutes 77.5% Mobile 74.0% Other Fixed Net 8.1% 9.5% Telekom Austria 14.4% 16.5% Fixed Net 3Q 09 3Q 08 Market Share Broadband Lines 17.6% 22.7% Cable 8.7% Unbundled lines 10.8% 25.6% Mobile Broadband 20.4% other operators Mobile Broadban

  35. Slide 35: Fixed Net Key Performance Indicators

    Fixed Net Key Performance Indicators Average Revenues per Access Line Fixed Net Broadband Net Adds incl. Wholesale (in EUR) (in 000) 36.5 36.5 50.4 49.9 35.7 34.5 34.9 22.7 24.2 8.9 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 Fixed Broadband Access Lines (in 000) 895.8 926.0 Fixed Ne

  36. Slide 36: Fixed Net - Minutes

    Fixed Net - Minutes (in million minutes) 3Q 09 3Q 08 % change National 555 635 -12.7% Fixed-to-mobile 167 180 -6.9% International 85 100 -14.8% Total voice minutes 807 914 -11.8% Total Fixed Net minutes 839 987 -15.0% (in million minutes) 3Q 09 3Q 08 % change National wholesale 1,202 1,712 -29.8% In

  37. Slide 37: Mobile Subscribers

    Mobile Subscribers (in 000) 3Q 09 3Q 08 % change Austria 4,719.4 4,355.8 8.3% Market share 42.4% 42.5% Bulgaria 5,242.9 5,193.7 0.9% Market share 49.7% 49.9% Belarus 3,981.3 3,525.0 12.9% Market share 43.5% 44.7% Croatia 2,606.1 2,372.0 9.9% Market share 42.9% 42.3% Slovenia 580.3 552.2 5.1% Market

  38. Slide 38: Operational Data – mobilkom austria

    Operational Data – mobilkom austria MoU per Subscriber ARPU (in minutes) (in EUR) 169.5 175.0 168.3 163.8 159.9 27.8 28.6 25.5 25.5 24.3 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 Quarterly Churn SAC per Gross Add (in EUR) 7.9% 7.9% 55.0 56.9 57.4 3.5% 3.7% 35.6 41.6 1.4% 2.0% 3Q 08

  39. Slide 39: Mobile Data - mobilkom austria

    Mobile Data - mobilkom austria Mobile Broadband Customers Number of SMS (in 000) (in million) 621 595 593 585 535 441 465 500 348 400 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 Data ARPU Data in % of Revenues ( in EUR) 37.4% 36.7% 33.9% 35.1% 32.1% 7.0 7.3 7.2 6.7 6.9 3Q 08 4Q 08 1Q

  40. Slide 40: ARPU & MoU per Subscriber for Selected Mobile Communication Operations

    ARPU & MoU per Subscriber for Selected Mobile Communication Operations MoU per Subscriber (in minutes) 169.5 159.9 162.8 158.5 92.7 98.2 92.1 127.7 139.8 80.5 mobilkom Mobiltel Velcom Vipnet Si.mobil austria 3Q 08 3Q 09 ARPU (in EUR) 27.8 25.8 24.3 23.0 15.6 10.1 12.6 9.1 7.6 6.2 mobilkom Mobiltel V

  41. Slide 41: Headcount Development

    Headcount* Development (Average period) 3Q 09 3Q 08 change Fixed Net 8,146 9,371 -1,225 Mobile Communciation 8,660 8,311 349 Telekom Austria Group 16,807 17,682 -875 (End of period) 3Q 09 3Q 08 change Fixed Net 8,129 9,337 -1,208 Mobile Communciation 8,673 8,368 305 Telekom Austria Group 16,802 17,7

  42. Slide 42: Revenues by Segment

    Revenues by Segment (EUR million) 3Q 09 3Q 08 % change 1-9 M 09 1-9M 08 % change Fixed Net revenues 470.7 496.9 -5.3% 1,397.1 1,540.7 -9.3% Mobile Communication revenues 831.8 895.7 -7.1% 2,422.7 2,506.5 -3.3% Corporate, Other & Eliminations -70.8 -64.6 9.6% -199.3 -183.4 8.7% Revenues Telekom Austr

  43. Slide 43: EBITDA and Operating Income by Segment

    EBITDA and Operating Income by Segment (EUR million) 3Q 09 3Q 08 % change 1-9 M 09 1-9M 08 % change Fixed Net EBITDA 157.9 166.0 -4.9% 457.7 478.4 -4.3% Mobile Communciation EBITDA 337.5 376.8 -10.4% 957.5 1,029.6 -7.0% Corporate, Other & Eliminations -5.6 -4.6 21.7% -20.6 -15.6 32.1% EBITDA Telekom

  44. Slide 44: Fixed Net – Revenue Breakdown

    Fixed Net – Revenue Breakdown (EUR million) 3Q 09 3Q 08 % change 1-9 M 09 1-9M 08 % change Access, Voice and Broadband 241.3 265.3 -9.0% 731.7 819.4 -10.7% Data & ICT-Solutions 97.8 105.1 -6.9% 292.0 324.2 -9.9% Wholesale Voice & Internet 91.7 100.3 -8.6% 268.3 314.9 -14.8% Others 39.8 26.2 51.9% 10

  45. Slide 45: Fixed Net – Expense Breakdown

    Fixed Net – Expense Breakdown (EUR million) 3Q 09 3Q 08 % change 1-9 M 09 1-9M 08 % change Material expense 21.5 20.1 7.0% 51.6 67.3 -23.3% Employee costs 116.6 125.9 -7.4% 380.4 416.4 -8.6% Depreciation, amortization and impairment charges 105.3 118.6 -11.2% 336.6 378.0 -11.0% Interconnection 79.5

  46. Slide 46: Mobile Communication - Revenue Breakdown

    Mobile Communication - Revenue Breakdown (EUR million) 3Q 09 3Q 08 % change 1-9 M 09 1-9M 08 % change Subscription and Traffic 601.5 628.1 -4.2% 1,752.2 1,788.4 -2.0% Equipment 59.5 70.4 -15.5% 167.8 185.6 -9.6% Roaming 51.2 62.5 -18.1% 113.7 152.5 -25.4% Interconnection 114.1 130.3 -12.4% 366.0 367

  47. Slide 47: Mobile Communication – Expense Breakdown

    Mobile Communication – Expense Breakdown (EUR million) 3Q 09 3Q 08 % change 1-9 M 09 1-9M 08 % change Material expense 86.8 89.3 -2.8% 253.6 244.1 3.9% Employee costs 66.8 66.2 0.9% 208.4 192.8 8.1% Depreciation, amortization and impairment charges 511.1 159.7 220.0% 834.6 478.3 74.5% Interconnectio

  48. Slide 48: Capital Expenditures by Segment

    Capital Expenditures by Segment (EUR million) 3Q 09 3Q 08 % change 1-9 M 09 1-9M 08 % change Fixed Net 67.5 48.7 38.6% 156.9 181.2 -13.4% Mobile Communication 87.0 135.3 -35.7% 262.9 353.1 -25.5% Total Capex Telekom Austria Group 154.5 184.0 -16.0% 419.8 534.3 -21.4% Thereof tangible 111.2 141.1 -21

  49. Slide 49: Net Debt - Telekom Austria Group

    Net Debt - Telekom Austria Group (EUR million) Sep 30, 2009 Dec 31, 2009 % change Long-term debt 3,868.3 3,599.5 7.5% Short-term debt 1,019.4 961.5 6.0% Cash and cash equivalents, short-term and long term investments, financing with related parties -1,096.2 -513.1 113.6% Derivate financial instrumen

  50. Slide 50: EUR 750 mn Bond Issued in 1Q 09 Supports Refinancing Beyond 2010

    EUR 750 mn Bond Issued in 1Q 09 Supports Refinancing Beyond 2010 Debt Maturity Profile (EUR million) 2,231 1,444 Ratings: 769 ƒ S&P: BBB+ (negative outlook) 209 215 ƒ Moody‘s: A3 (stable outlook) 2009 2010 2011 2012 there after Lines of Credit ƒ Undrawn committed lines of credit amounting to EUR 1.3

Telekom Austria Group — Q3 2009 Earnings Presentation on 6ix