Hrvatski Telekom D.d. · ZSE:HT

Hrvatski Telekom D.d — Hrvatski Telekom — Investor Day (November 2013)

49 slides from Hrvatski Telekom D.d's investor day presentation, Nov 5, 2013

  1. Slide 1: T-Hrvatski Telekom Capital Markets Day

    T-Hrvatski Telekom Capital Markets Day Zagreb, 5 November 2013

  2. Slide 2: Agenda

    Agenda  T-HT Group  T-HT Group profile  Economic environment  Croatian telecommunication market  Regulatory framework  T-HT strategy  T-HT Group financial overview  Impacts on mobile market  January-September 2013 group performance  2013 outlook  Financial performance history and financia

  3. Slide 3: Disclaimer

    Disclaimer  These materials and the oral presentation do not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company nor should they or any part of them or the fact of their distribution form t

  4. Slide 4: Economic and market environment, Group position and strategy

    T-HT Capital Markets Day Economic and market environment, Group position and strategy Ivica Mudrinić, President of the Management Board and CEO

  5. Slide 5: T-HT Group: Profile

    T-HT Group: Profile Market position Facts and figures Customers and lines 2012 Results HRK EUR  2,392,472 mobile customers Revenue 7,456 m 991 m  1,268,304 fixed mainlines EBITDA(1) 3,520 m 468 m  667,120 fixed BB access lines Capex 1,180 m 157 m  383,314 TV customers Net OCF 2,982 m 397 m Reven

  6. Slide 6: Economic environment: 2014 - year of recovery?

    Economic environment: 2014 - year of recovery? GDP growth (%) 1.0 1.5 0.0 2014: a year of -0.5 recovery -2.0 2011 2012 2013 f 2014 f 2015 f Unemployment (registered rate %) Consumption growth (in %) 19.1 19.3 19.1 1.5 1.8 18.6 0.2 -1.5 -3.0 18.0 2011 2012 2013f 2014f 2015f 2011 2012 2013f 2014f 2015

  7. Slide 7: Croatian telecommunication market: facts and figures

    Croatian telecomunication market: facts and figures Croatian telecommunication market CAGR (1) (HRK million)  Croatian market impacted  by regulation -5.1% 13,198  increasing price 12,476 competition 11,878  mobile market saturation 5,810  delayed economic recovery 5,423 5,298  PayTV and broad

  8. Slide 8: Key trends to 2020 in Croatian market

    Key trends to 2020 in Croatian market drive new business opportunities as the digital social paradigm Customers Multi-screen Cloud services Telco as provider of services broader service portfolio  Changing  Development of  Increasing trend of  E.g. m/e-Payment, behaviors, fixed mobile cloud serv

  9. Slide 9: EU initiatives

    EU initiatives Europe 2020 Initiative (1) One single Telecom market for Europe! (2)  Aimed at creating reliable regulatory  Removing roaming charges and charges for framework with no cost regulation for optical calling across borders fibre/NGA networks if sufficient competition  Ensuring consiste

  10. Slide 10: T-HT Group strategy focused on four strategic areas

    T-HT Group strategy focused on four strategic areas in order to grow, compete and transform T-HT will maintain dominant market position Revenue structure change Customer experience and growth eTransformation Network transformation 10

  11. Slide 11: Radical transformation of core business and focused development of new services

    Radical transformation of core business and focused development of new services is key to sustainable T-HT future CORE NEAR CORE NEW BUSINESS Radical transformation Digital services and ICT Bring NEW services  NT/IT transformation  Content & media  Leverage existing  Simplification of services a

  12. Slide 12: Capturing growth opportunities in CORE, NEAR and NEW businesses

    T-HT Group capturing growth opportunities in CORE, NEAR and NEW businesses 2013 revenue structure 2017 revenue structure < 1% 16% 13% Core Core Near core 17% Near core New business 67% New business 87% Core: mobile & fixed voice & data Near core: payTV, ICT… New business: m-payment, energy… 12

  13. Slide 13: Delivering e-Transformation: e-Business example

    T-HT Group delivering e-Transformation: e-Business example Online paradigm From 2013 to 2017  Telco sales channels and touch points are 60% increasingly shifting to online, self- management 50%  Customers expect immediate and 40% personalized response everywhere on any device at any point in time

  14. Slide 14: Network technology: Coverage and capacity always in focus

    Network technology: Coverage and capacity always in focus Copper Optical network PSTN migration Fixed network  ADSL 2+, VDSL2  GPON (Gigabit passive  Includes:  Deployment of advanced optical network  Migration of voice service to xDSL technology  FTTA: 265,000; FTTH: VoIP platform and PSTN 

  15. Slide 15: Network transformation through PSTN migration

    Network transformation through PSTN migration facilitates transformation towards all IP multi service delivery platform From the “old PSTN world” ... to the “new IP era” ATM ATM Ethernet Ethernet ATM IP Network IP Network Digital telephone exchange Aggregation switch IP router  First local  2013:

  16. Slide 16: TeraStream: revolutionizing cloud-enabled IP network architecture

    TeraStream: revolutionizing cloud-enabled IP network architecture  TeraStream enables innovation and new service at higher pace for new Gigabit society  TeraStream represents new network paradigm, currently not in existence anywhere in the world  First pilot test operated by Hrvatski Telekom in C

  17. Slide 17: T-HT Group Financial Overview

    T-HT Capital Markets Day T-HT Group Financial Overview Dr Dino Dogan, Member of the Management Board and CFO

  18. Slide 18: Croatian core telco market registers average annual decline

    Croatian core telco market registers average annual decline of by around 5% since 2009; mobile market decline sharper than fixed Total Croatian mobile and fixed market (revenue, HRK billion)  Mobile revenue peaked in 2008; since then, it is has been impacted by: 8.4 8.0  market saturation 7.4 -21%

  19. Slide 19: MTRs, roaming and price erosion had major impact on mobile market

    MTRs, roaming and price erosion had major impact on mobile market MTRs  MTRs first reduced by the regulator in 2006  Current price of 19.33 lp/min or 2.5 €c/min  Glide path now in place; includes prices from 1 Jan 2015 Roaming  Roaming revenue impacted by continued non-mandatory price reductions

  20. Slide 20: T-HT mobile broadband shows significant growth

    T-HT mobile broadband shows significant growth T-HT mobile broadband revenue (HRK), CAGR  Further strong growth expected  All three operators promoting voice-messaging-data bundled +16% offers alongside increasing range of smartphone and tablet offers  T-HT smartphone penetration at 31% vs 46% in

  21. Slide 21: Group operational highlights Jan-Sep 2013

    Group operational highlights Jan-Sep 2013  Leading market position across all areas of business maintained  Worsening economic climate and increased competitive pressure  EU roaming regulation applied as of 1 July 2013  Continued promotion of 4G mobile internet tariffs; largest coverage in the c

  22. Slide 22: Continued recession, regulatory measures and competition impact revenue

    Continued recession, regulatory measures and intensifying competition impact revenue T-HT revenue Jan-Sep 2013 (HRK million)  Fixed revenue down due to -8.0% general usage trends, but at 5,660 -12.9% slower rate compared to 2012 -162  From July 2013 mobile and -11.6% wholesale additionally impacte

  23. Slide 23: Group financial highlights Jan-Sep 2013

    Group financial highlights Jan-Sep 2013 all in HRK million, except where stated differently Revenue (1) EBITDA before except.items (2) EBITDA 47.1% 47.1% 42.5% 41,3% -8.0% -17.% -19.5% 5,660 5,206 2,666 2,666 2,214 2,148 €251 m €355m €244m €293m €251 m €355m €244m €284m €753m €689m Jan-Sep 2012 Jan-

  24. Slide 24: Group 2013 Outlook

    Group 2013 Outlook 2012 Results 2013 Outlook as of 30 Oct 2013 ..the Group's revenue will decline further in 2013. Revenue Decline: 7.6% However, we expect our efforts to capitalise on certain areas of growth will help to slow the decline in Group revenue seen last year. EBITDA before Margin: 47.2%

  25. Slide 25: Solid margins to be maintained in 2013

    Solid margins to be maintained in 2013, in face of revenue decline T-HT total revenue (HRK million) 8,517 8,372 8,067 7,456 45% 47% 47% 44% 3,859 3,694 3,832 3,520 EBITDA margin (%) EBITDA before EI 2009 2010 2011 2012 2013E In 2013 no special contributions to operational results 25

  26. Slide 26: Capex and dividend payments reflect strong underlying cashflow

    Capex and dividend payments reflect strong underlying cashflow Capex development Dividend per share development (HRK million) (HRK) 18% 138% 16% 106% 100% 14% 100% 100% 12% 1,553 34.05 29.99 1,153 1,180 22.76 22.14 20.51 938 2009 2010 2011 2012 2013E 2009 2010 2011 2012 2013 CAPEX / Revenue Dividend

  27. Slide 27: High performing compared to regional peers

    High performing compared to regional peers; conservative financial profile maintained Peer comparison EBITDA margin % Dividend yield % 27 13 Magyar 26 Magyar 3 37 9 Telefonica CR 37 Telefonica CR 10 31 1 Telekom Austria 30 Telekom Austria 1 32 5 Telekom Slovenije 32 Telekom Slovenije 5 31 4 TPSA 31

  28. Slide 28: Business Unit: Leveraging our market strength

    T-HT Capital Markets Day Business Unit: Leveraging our market strength Jens Hartmann, Member of the Management Board and COO Business

  29. Slide 29: Maintaining market share in B2B segment with clear strategy

    Successfully maintaining market share in B2B segment with clear strategy for innovative portfolio development  We have maintained leading market position despite challenging environment  We have established strong position in ICT market in short period  We are focused on keeping core revenues sta

  30. Slide 30: Leveraging our market strength to grow in new business areas

    Leveraging our market strength to grow in new business areas Competitive advantages Revenue structure  Fully integrated telco/ICT provider Core Near core  Bringing innovations to the market New business  Educated sales force and capillarity  Customer experience management 12% 17% 2011 2013 88% 8

  31. Slide 31: Revenue impacted by lower voice revenue

    Revenue impacted by lower voice revenue; non-voice and other revenues stable and growing Revenue (HRK million) Voice revenue (HRK million) -8% -13% 3,635 -13%* 1,795 -26%* 3,358 1,561 Trend driven by 2,232 932 mobile regulation and lower usage in fixed 2011 2012 Jan-Sep 2013 2011 2012 Jan-Sep 2013 N

  32. Slide 32: Fixed business characterized by fixed to mobile substitution

    Fixed business characterized mainly by fixed to mobile substitution; we maintain market leadership Fixed mainlines in 000 Total traffic (million of minutes) ARPA voice (HRK) -7%* -22% -27%* -9% -15%* -9% 706 238 216 193 176 166 554 188 313 2011 2012 Jan-Sep 2011 2012 Jan-Sep 2011 2012 Jan-Sep 2013 2

  33. Slide 33: Internet business growing customer base with stable ARPA

    Internet business growing customer base and with stable ARPA BB access lines in 000 TV customers in 000 BB ARPA (HRK) +6% +7.9%* 0% -1%* 0% +4%* 19 21 22 134 134 133 107 107 109 2011 2012 Jan- Sept 2011 2012 Jan- Sept 2011 2012 Jan- Sept 2013 2013 2013 September 2013  BB customer base growing 19% o

  34. Slide 34: Mobile business impacted by regulation from 1 July

    Mobile business impacted by regulation from 1 July but positive developments in customer base and usage Mobile customer base in 000 MOU per average subscriber Blended ARPU (HRK) -2%* +2%* -17%* -10% -13% +3% 271 244 250 184 160 454 467 466 136 2011 2012 Jan-Sep 2011 2012 Jan-Sep 2011 2012 Jan-Sep 20

  35. Slide 35: ICT business strong and growing

    ICT business strong and growing Revenue development (HRK million) IT Services revenue market share -11% +14%* +5 p.p. 447 396 303 16 11 2011 2012 Jan-Sep 2013 2011 2012 More than 1,450 companies and  Based on ICT revenue T-HT Group is 2nd biggest company on about 11,300 end users are Croatian IT ma

  36. Slide 36: Building blocks for the future: new business streams

    Building blocks for the future: strong market position will enable us to monetize new business streams ICT M2M mPayment Online advertising Energy Spending on IT Internet of things – By EO 2013 global By 2015, global Croatian Retail services in Croatia by 2020, nearly 50 mobile payments mobile intern

  37. Slide 37: HT and Combis offer complete ICT portfolio

    HT and Combis together offer complete ICT portfolio of services across all customer market segments Market potential  Trend: CAGR of 6.1% is predicted for five-year forecast period 2012-2017*  Croatia Cloud Services Spending in 2012 totals US$ 19,28 million (Public 54% and Private 46%)  Combis re

  38. Slide 38: Residential Unit: Changing momentum and positioning for the future

    T-HT Capital Markets Day Residential Unit: Changing momentum and positioning for the future Nataša Rapaić, Member of the Management Board and COO Residential

  39. Slide 39: Residential segment strengthened market position and slowed revenue decline

    In Residential segment we successfully strengthened our market leading position and slowed revenue decline Residential revenue (HRK million) Residential voice revenue (HRK million) 4,433 2,658 -8% -12% 2,353 4,099 -4% -10% 2,973 1,587 2011 2012 Jan-Sep 2013 2011 2012 Jan-Sep 2013 Residential non-voi

  40. Slide 40: In mobile segment, we improved our market share

    In mobile segment, we improved our market share despite intense and aggressive competition Customers (000) ARPU (HRK) 1,323 1,281 +2% 1,312 74 74 71 581 578 +6% 615 2011 2012 Jan-Sep 2011 2012 Jan-Sep 2013 2013 Postpaid Prepaid  Customer base grew in both prepaid and postpaid Multibrand approach dr

  41. Slide 41: In fixed segment, we are maintaining market leadership

    In fixed segment, we are maintaining market leadership in all areas; we increased IP revenues by 3.5% Customers (000) ARPU (HRK) -4% 120 126 +2% 1,068 1,032 989 121 -6% -1% 100 97 94 539 526 521 +5% 321 344 362 2011 2012 Jan-Sep 2011 2012 Jan-Sep 2013 2013 Voice ADSL Pay TV Voice Internet  Pay TV i

  42. Slide 42: New and innovative propositions to protect revenue

    To protect our revenue we successfully introduced new and innovative propositions Innovations MAXtv To Go - over 100,000 customers Deezer - over 70,000 customers  Watch TV anywhere, anytime, on your  Leading music streaming service with computer, tablet or mobile phone with 25 million songs the be

  43. Slide 43: We pay close attention to trends worldwide

    We pay close attention to trends worldwide and drive market trends in Croatia… Bundled telco services  Push tariffs with bundled voice and data services  We will introduce more convergent offers to ensure retention and customer base growth Higher bandwith demand  First in Croatia to launch LTE; a

  44. Slide 44: Work on improving customer experience

    …and work on improving customer experience Fix the basics  Address the most critical elements in the key customer journeys along lifecycle  Improve existing and introduce new sales and service channels  Decrease waste contacts  Improve processes of provisioning and fault repair Achievements  30

  45. Slide 45: Investor relations contact

    Investor relations contact  Erika Kašpar Tel: + 385 1 4912 000  Elvis Knežević Tel: + 385 1 4911 114  Anita Marić Šimek Tel: +385 1 4911 884  e-mail: [email protected]  www.t.ht.hr/eng/investors/ London Stock Exchange GDR trading symbol: THTC Zagreb Stock Exchange Share trading symbol: HT-R-A Reuters:

  46. Slide 46: Appendix

    Appendix Hrvatski * *i Telekom 46

  47. Slide 47: Consolidated income statement

    Consolidated income statement Q3 Q3 % of change Jan-Sep Jan-Sep % of change in HRK million (IFRS) 2013 2012 A13/A12 2013 2012 A13/A12 Mobile 741 923 -19.7% 2,127 2,405 -11.6% Fixed Telephony 351 411 -14.7% 1,095 1,257 -12.9% Wholesale 150 173 -13.5% 427 491 -13.1% IP Revenue 394 380 3.7% 1,170 1,147

  48. Slide 48: Consolidated balance sheet

    Consolidated balance sheet At 30 Sep At 31 Dec % of change in HRK million (IFRS) 2013 2012 A13/A12 Intangible assets 1,149 1,142 0.6% Property, plant and equipment 5,621 5,734 -2.0% Non-current financial assets 614 897 -31.5% Receivables 19 21 -7.1% Deferred tax asset 59 65 -9.3% Total non-current a

  49. Slide 49: Consolidated cash flow statement

    Consolidated cash flow statement Jan-Sep Jan-Sep % of change in HRK million (IFRS) 2013 2012 A13/A12 Profit before tax 1,205 1,722 -30.0% Depreciation and amortization 1) 959 975 -1.7% Increase / decrease of current liabilities 1) -209 -160 -30.9% Increase / decrease of current receivables -64 -51 -

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