Telekom Austria AG · VIE:TKA
Telekom Austria — FY2015 Earnings Presentation
53 slides from Telekom Austria's earnings presentation, 2016
Slide 1: Roadshow Presentation Full Year and Fourth Quarter 2015 Results
Roadshow Presentation Full Year and Fourth Quarter 2015 Results
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: Telekom Austria Group key facts
Telekom Austria Group key facts Revenue by segment(a) Bulgaria 9.0% 62.1% Austria 9.1% Croatia 8.0% 11.8% Belarus Additional markets (b) EBITDA comparable by segment(a) Bulgaria Austria 63.1% 9.5% 5.9% Croatia 11.7% Belarus 9.8% Additional markets (b) Notes: (a) For Full Year 2015. Breakdown does no
Slide 4: The leading regional communications player providing convergent telecommunication services
The leading regional communications player providing convergent telecommunication services as of 31 December 2015 (in ‘000, in %) Austria Slovenia Belarus Mobile: Mobile: Mobile: > Market share: 39.5% (Q4 2014: 41.1%) > Market share: 29.9% (Q4 2014: 29.2%) > Market share: 42.5% (Q4 2014: 42.4%) > Su
Slide 5: Telekom Austria Group Strategy - Overview
Telekom Austria Group Strategy - Overview Three Focus Growth Areas Excellence in Core Business Products & Services Expansion Value Adding M&A • Enhance sales execution • Enterprise into cloud • Market consolidation via improved cross-/ upselling (convergence) • Wholesale services & • Convergence int
Slide 6: Cash-use policy: Strengthening of the financial position, fibre roll-out and growth projects
Cash-use policy: Strengthening of the financial position, fibre roll-out and growth projects Conservative financial strategy define investment framework Ratings Baa2 from Moody’s and BBB from Standard & Poor’s strengthen financial flexibility A Fibre roll-out in Austria > Investments of EUR 400 mn i
Slide 7: Shareholder structure as of 31 December 2015
Shareholder structure as of 31 December 2015 Two strong core shareholders* Free float by nationality ÖBIB 28.4% América Móvil 59.7% Free Float 11.9% * As filed for the Annual General Meeting held on 27 May 2015 Results for the full year and fourth quarter 2015 7
Slide 8: Operational and financial highlights for the full year 2015
Operational and financial highlights for the full year 2015 Results for the full year and fourth quarter 2015 8
Slide 9: FY 2015 – Revenue and EBITDA comparable growth
FY 2015 – Revenue and EBITDA comparable growth Clean Group revenues* EUR 4,096.8 mn / +1.3% yoy EUR 4,026.6 mn / +0.2% yoy Reported Group revenues Clean EBITDA comparable* EUR 1,370.9 mn / +4.0% yoy EUR 1,372.6 mn / +6.7% yoy Reported EBITDA comparable Net income EUR 392.8 mn (2014: EUR -185.4 mn) C
Slide 10: Outlook 2016 – Slight revenue growth despite abolition of retail roaming
Outlook 2016 – Slight revenue growth despite abolition of retail roaming CEE 2015 – operations > Macro and FX (BYR-EUR) picture remains strengthened challenging > Strong operational development of Belarus and Croatia > Challenges in mobile in Bulgaria and segment Additional Markets remain > M&A tran
Slide 11: Key financial developments in the fourth quarter 2015
Key financial developments in the fourth quarter 2015 Results for the full year and fourth quarter 2015 11
Slide 12: Q4 2015 – Revenue and EBITDA growth due to operational improvements, OPEX savings and M&A
Q4 2015 – Revenue and EBITDA growth due to operational improvements, OPEX savings and M&A (in EUR million) Q4 2015 Q4 2014 % change > 4.3% and 7.7% clean* revenue and Revenues 1,076.1 1,030.3 4.5% EBITDA comparable growth with increases in all segments EBITDA comparable 320.8 252.1 27.3% EBITDA comp
Slide 13: Revenue growth across all segments supported by M&A in CEE
Revenue growth across all segments supported by M&A in CEE EUR 664.3 mn Group Revenues Δ: +2.2% Reported EUR 1,076.1 mn +4.5% Clean* EUR 1,074.1 mn +4.3% EUR 142.3 mn EUR 102.8 mn EUR 96.7 mn EUR 81.4 mn Δ: +20.8% Δ: +8.4% Δ: +0.8% Δ: +2.2% Austria Bulgaria Croatia Belarus Additional markets Segment
Slide 14: Revenue growth and OPEX savings result in 8% clean EBITDA comparable growth
Revenue growth and OPEX savings result in 8% clean EBITDA comparable growth Group EBITDA comparable EUR 210.5 mn Δ: +36.9% Reported EUR 320.8 mn +27.3% Clean* EUR 303.8 mn +7.7% EUR 31.5 mn EUR 36.7 mn EUR 37.7 mn EUR 15.8 mn Δ: +6.5% Δ: +1.8% Δ: +18.5% Δ: +53.5% Austria Bulgaria Croatia Belarus Add
Slide 15: Healthy free cash flow generation
Healthy free cash flow generation (in EUR million) Q4 2015 Q4 2014 % change FY 2015 FY 2014 % change Gross cash flow 272.1 273.8 -0.6% 1,221.3 1,190.4 2.6% Change in working capital -5.7 -46.4 n.m. -149.0 -289.0 n.m. Cashflow from operating activities 266.4 227.4 17.2% 1,072.4 901.4 19.0% CAPEX paid
Slide 16: Focus points
Focus points Results for the full year and fourth quarter 2015 16
Slide 17: Gross OPEX savings of approx. EUR 150 mn across all operating units realised
Gross OPEX savings of approx. EUR 150 mn across all operating units realised Group OPEX development 2015 > Revenue-related > handsets subsidies & sales commissions ~ 80 mn > ICT solutions (platforms and servers) net OPEX OPEX Increases > Content reduction > Salary increases (e.g. inflation adjustmen
Slide 18: 3 M&A deals with focus on convergence and market consolidation strengthen existing operations
3 M&A deals with focus on convergence and market consolidation strengthen existing operations Country Slovenia Croatia Bulgaria Rep. of Macedonia Consolidated 1 September 2015 1 October 2015 FY 2015 contributions - EUR 11.1 mn EUR 2.7 mn EUR 11.7 mn ca. EUR 13 mn Revenues EUR 0.9 mn EUR 0.2 mn EUR 3
Slide 19: Groupwide LTE rollout on track with support from additional frequencies in 2015
Groupwide LTE rollout on track with support from additional frequencies in 2015 Frequency acquisitions in 2015 LTE focus 2016 Croatia - Vipnet 1,800 MHz / 18.5 EUR mn Austria: > Almost full coverage Belarus - velcom > Improve indoor quality 900 MHz / 4.5 EUR mn Republic of Macedonia: Rep. of Serbia
Slide 20: Austria: Strong customer demand encouraging for faster than planned fibre rollout
Austria: Strong customer demand encouraging for faster than planned fibre rollout Fibre homes passed (y-o-y) Fibre homes connected 2015 (y-o-y growth) ~ +30% ~ +60% ~ +480% 69% 74% 28% 40% 2% 19% 16 Mbps 30 Mbps 30+ Mbps 16 Mbps 30 Mbps 30+ Mbps 2014 2015 Plan 2015 CAPEX efficient use of alternative
Slide 21: Austria: Subsidies for broadband will support accelerated fibre roll-out
Austria: Subsidies for broadband will support accelerated fibre roll-out Open to Tranche 2016 – Open for tenders all operators Projects to be finished by 2020 EUR 96 mn EUR 96 mn EUR 80 mn EUR 5 mn Access Backhaul Ducts Content > Programme “Breitband Austria 2020” approved by EC > Tender for access
Slide 22: Cloud & datacentre investments complement infrastructure roll-out
Cloud & datacentre investments complement infrastructure roll-out Fixed-line Network Mobile ~45% ~45% Network up to 10% Cloud & datacentre investments > Virtualisation of network (NFV) to increase agility, cost efficiency and faster time-to-market > Cloud services market places for enterprise custom
Slide 23: Outlook for the full year 2016
Outlook for the full year 2016 Results for the full year and fourth quarter 2015 23
Slide 24: Telekom Austria Group outlook for the full year 2016
Telekom Austria Group outlook for the full year 2016 9 February 2016 Consensus Revenues Revenues approx. +1% EUR 4,028 mn CAPEX* CAPEX approx. EUR 750 mn EUR 758 mn Proposed Proposed Dividend** dividend EUR 0.05 / share n/a > Outlook based on constant currencies except for Belarus (assumed 20%, in l
Slide 25: Appendix 1
Appendix 1 Results for the full year and fourth quarter 2015 25
Slide 26: Telekom Austria Group – Revenue breakdown
Telekom Austria Group – Revenue breakdown Revenue Split - Segment Austria (in EUR million) Q4 2015 Q4 2014 % change Monthly fee and traffic 454.6 455.6 -0.2% Data and ICT solutions 59.2 64.5 -8.2% Wholesale (incl. Roaming) 42.0 28.5 47.0% Interconnection 48.3 50.2 -3.8% Equipment 53.4 45.6 17.1% Oth
Slide 27: Telekom Austria Group – Expense breakdown
Telekom Austria Group – Expense breakdown Operating Expense - Segment Austria (in EUR million) Q4 2015 Q4 2014 % change Material expense 87.4 74.5 17.3% Employee costs 175.1 206.2 -15.0% Interconnection 47.8 45.7 4.6% Maintenance and repairs 31.0 31.4 -1.3% Services received 22.3 27.2 -18.0% Other s
Slide 28: Telekom Austria Group – Headcount development
Telekom Austria Group – Headcount development FTE (Average period) Q4 2015 Q4 2014 % change Austria 8,556 8,735 -2.0% International 8,572 7,412 15.6% Telekom Austria Group* 17,332 16,325 6.2% FTE (End of period) Q4 2015 Q4 2014 % change Austria 8,512 8,635 -1.4% International 8,952 7,424 20.6% Telek
Slide 29: Telekom Austria Group – Capital expenditure split
Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q4 2015 Q4 2014 % change Segment Austria 165.4 166.3 -0.5% Segment Bulgaria 31.3 43.6 -28.3% Segment Croatia 37.7 25.8 46.5% Segment Belarus 35.9 21.7 65.3% Segment Additional Markets 66.4 27.5 141.5% Slovenia 6.
Slide 30: Telekom Austria Group – Net debt
Telekom Austria Group – Net debt Net debt (in EUR million) 31 December 2015 31 December 2014 % change Long-term debt 2,584.1 3,385.0 -23.7% Short-term borrowings* 1,003.8 340.8 194.5% Cash and cash equivalents and short-term investments -911.5 -1,032.5 n.m. Net Debt of Telekom Austria Group 2,676.4
Slide 31: Telekom Austria Group – Debt maturity profile
Telekom Austria Group – Debt maturity profile Debt maturity profile (including accrued interest)* (in EUR million) 1,003.8 743.8 742.8 546.6 298.1 205.3 47.3 0.0 2016 2017 2018 2019 2020 2021 2022 2023 > EUR 3,587.8 mn short- and long-term borrowings as of 31 December 2015** > Average cost of debt o
Slide 32: Telekom Austria Group – Debt profile
Telekom Austria Group – Debt profile Overview debt instruments Fixed-floating mix 10.4% 89.6% 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 33: 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) 2,287 2,289 2,282 2,284 2,291 30.5 29.5 29.3 29.4 30.2 11.6 6.4 207.3 1.8 1.9 208.5 -6.7 202.7 200.5 201.1 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14
Slide 34: 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) 141.0 137.6 136.4 132.6 136.4 16.5 15.7 16.0 16.3 15.8 268.6 263.4 254.1 257.9 256.7 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 ARPU ARPU-relevan
Slide 35: Segment Austria – Broadband market split
Segment Austria – Broadband market split Market share total broadband Market share mobile broadband (in %) (in %) 3.7 23.9 23.6 Hofer Mobile Broadband T-Mobile Other Operations 43.1 31.4 44.9 Hutchison 34.9 Unbundled Lines A1 4.5 33.0 27.8 4.2 Cable 16.8 Q4 14 Q4 15 16.5 A1 Mobile Market share fixed
Slide 36: Segment Austria – Voice market split
Segment Austria – Voice market split Market share total minutes Market share fixed-line minutes (in %) (in %) 13.3 13.2 4.0 3.6 Mobile 22.0 21.9 Others 86.9 88.1 Fixed-line Others UPC Tele2/UTA Fixed-line Telekom Austria A1 60.7 61.3 5.0 4.5 8.2 7.5 Q4 14 Q4 15 Q4 14 Q4 15 Results for the full year
Slide 37: 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 18.4 13.4 11.7 11.5 11.8 583.6 153.6 170.4 183.5 200.8 6.6 6.5 6.3 6.7 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 ARPL ARPL-relevan
Slide 38: 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) 129.6 127.5 134.4 135.2 137.8 5.9 5.5 5.5 5.6 5.5 73.5 70.1 70.6 71.8 70.0 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 ARPU ARPU-relevant revenues M
Slide 39: 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) 21.9 22.5 22.2 273.5 283.4 21.4 21.2 237.8 219.9 228.9 16.6 18.5 13.9 14.3 15.3 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 ARPL ARPL-rele
Slide 40: 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) 11.2 10.7 11.5 11.8 11.1 150.7 154.4 160.6 156.7 153.1 60.0 60.0 63.3 59.1 55.7 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 ARPU ARPU-relevant revenu
Slide 41: 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) 5.0 201.4 187.8 199.6 199.8 195.7 4.5 4.6 4.6 4.2 67.1 68.7 73.5 67.5 62.7 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 ARPU ARPU-relevant revenues Mo
Slide 42: Segment Additional Markets – Key performance indicators
Segment Additional Markets – Key performance indicators Slovenia - ARPU Republic of Serbia - ARPU (in EUR) (in EUR) 17.3 7.5 7.4 15.8 16.2 17.1 16.0 6.7 6.7 6.0 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Republic of Macedonia - ARPU Republic of Macedonia - ARPL (in ‘000) (in ‘000) 1
Slide 43: Appendix – Regulatory topics
Appendix 2 – Regulatory topics Results for the full year and fourth quarter 2015 43
Slide 44: 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 45: 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 46: Upcoming spectrum tenders/prolongations/assignments
Upcoming spectrum tenders/prolongations/assignments Planned/Expected Comments Austria 2019 (2100 MHz) - Bulgaria - - 2100 MHz: dependent on LTE roll-out dynamics and traffic development (on 2016-2017 (2100 MHz) Croatia request of at least one operator) as well as fulfilment of 2015 plan. 2017-2018 (
Slide 47: Appendix – Personnel restructuring in Austria
Appendix 3 – Personnel restructuring in Austria Results for the full year and fourth quarter 2015 47
Slide 48: Overview – Restructuring charges and provision vs. FTE
Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Transfer to FTE reduction 76.9 274.3 49.9 149.0 86.4* 69.5 ** 158 106 44 22 52 49 government Servicekom 0.0 -40.6 -76.7 -1
Slide 49: 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 Q4 Q1 Q2 Q3 Q4 Transfer to 10 18 10 11 FTE reduction 4.5 17.4 13.0 34.6 * government Servicekom Social plans 7 49 46 168 -0.6 -12.1 -5.2 -54.1 contribution Staff released fr
Slide 50: Overview – Cash flow impact of restructuring
Overview – Cash flow impact of restructuring Overview cash flow impact* (in EUR million) Total cash-flow impact 2010 57.9 > Total cash flow impact comprises 2011 93.4 2012 104.0 old and new programmes 2013 108.0 > Cash flow impact for Q4 2015 of EUR 2014 107.1 27.2 mn Q1 2015 25.2 Q2 2015 25.6 > Tot
Slide 51: Appendix – Corporate sustainability
Appendix 4 – Corporate sustainability Results for the full year and fourth quarter 2015 51
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 full year and fourth quarter 2015 52
Slide 53: 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: B- (99 points out of Collected old mobile phones (in pcs