Telekom Austria Ag · VIE:TKA
Telekom Austria — Q2 2012 Earnings Presentation
47 slides from Telekom Austria's earnings presentation, August 2012
Slide 1: Roadshow Presentation Q2 2012 Results
Roadshow Presentation Q2 2012 Results 1
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.
Slide 3: Leading Operator in 8 Markets in Central and Eastern Europe
Leading Operator in 8 Markets in Central and Eastern Europe Belarus > Mobile market share: 43.0% > Mobile market share: 39.3% > Access lines: almost 2.3 mn > Mobile market share: 15.9% Austria > Mobile market share: 16.5% Liechtenstein Slovenia Croatia Serbia > Mobile market share: 29.9% Kosovo Bulg
Slide 4: Shareholder Structure Based on Stable Core Shareholders and Value and Yield Investors
Shareholder Structure Based on 2 Stable Core Shareholders As Well As Value and Yield Investors As of 31 December 2011 Per 30 June 2012 % of shares outstanding % of shares outstanding Not Not identified identified Trading 1.9% 3.1% Trading 0.2% 4.2% Index 6.6% Value & Yield Index 6.3% Value & Yield R
Slide 5: Relative Share Price Performance of Telekom Austria Group – 2012 Year-to-Date
Relative Share Price Performance of Telekom Austria Group – 2012 Year-to-Date 110 90 70 50 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 TKA ATX DJ Telco Stoxx Results for the Second Quarter 2012 5
Slide 6: Agenda
Agenda > Operational and Financial Highlights for the Second Quarter 2012 > Key Financial Developments in the Second Quarter 2012 > Key Challenges and Countermeasures > Outlook for Full Year 2012 > Appendix Results for the Second Quarter 2012 6
Slide 7: Operational and Financial Highlights for the Second Quarter 2012
Operational and Financial Highlights for the Second Quarter 2012 Results for the Second Quarter 2012 7
Slide 8: Disruptive Competition Drives Decline in Results
Disruptive Competition Drives Decline in Results > Second quarter 2012 results markedly impacted by heavy competition in major markets and macro-economic headwinds in CEE > Stable Group EBITDA comparable margin reflects effective countermeasures taken in all segments > Group Revenues decline by 4.2%
Slide 9: Key Operational Drivers
Key Operational Drivers > Revenue growth in three segments > Disruptive competition drives mitigates declines in Austria and ARPU decline in major markets Bulgaria > Regulation impedes fixed line > Successful convergence strategy price increases in Austria balances mobile pressure in > 59.4% MTR cut
Slide 10: Key Financial Developments in the Second Quarter 2012
Key Financial Developments in the Second Quarter 2012 Results for the Second Quarter 2012 10
Slide 11: Continued Focus on Cost Control Protects EBITDA Comparable Margin
Continued Focus on Cost Control Protects EBITDA Comparable Margin (in EUR million) Q2 2012 Q2 2011 % change Revenues 1,063.2 1,109.3 -4.2% > Revenue increase in Croatia, Belarus EBITDA comparable* 364.8 380.8 -4.2% and Additional Markets limits impact EBITDA comparable margin* 34.3% 34.3% of revenue
Slide 12: Growth in Three Segments Dampens Revenue Decline in Austria and Bulgaria
Growth in Three Segments Dampens Revenue Decline in Austria and Bulgaria Austria Q2 2012: EUR 673.6 mn | -7.9% yoy Belarus: Q2 2012: EUR 76.7 mn | +5.2% yoy > Price decline and increased churn driven by intensified > 5.2% growth despite net negative impact of hyperinflation competition accounting an
Slide 13: EUR 39.5 mn Group OPEX Savings Protect Profitability
EUR 39.5 mn Group OPEX Savings Protect Profitability Austria Q2 2012: EUR 218.2 mn | -8.6% yoy Belarus: Q2 2012: EUR 31.8 mn | -4.6% yoy > EUR 38.0 mn OPEX savings | Bulgaria Q2 2012: EUR 60.9 mn -14.0% yoy > EUR 21.8 mn net negative impact of > Lower marketing expenses > OPEX savings driven by lowe
Slide 14: Stable BYR Development Whilst Serbian Dinar Loses 10.9% Year-to-Date
Stable BYR Development Whilst Serbian Dinar Loses 10.9% Year-to-Date Belarus Republic of Serbia EUR-BYR Development EUR-RSD Development 13,000 130 1-6 M 2012: +4.1% YTD: +6.6% 1-6 M 2012: -9.7% YTD: -10.9% 120 11,000 110 9,000 100 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 Jan 12 Feb 12
Slide 15: Working Capital Savings Offset Lower Gross Cash Flow and CAPEX Increase
Working Capital Savings Offset Lower Gross Cash Flow and CAPEX Increase (in EUR million) Q2 2012 Q2 2011 % change 1-6 M 2012 1-6 M 2011 % change Gross cash flow 304.1 350.6 -13.3% 631.0 686.4 -8.1% Change in working capital -21.3 -38.0 -43.9% -155.7 -223.3 -30.2% Ordinary capital expenditures -185.1
Slide 16: Key Challenges and Countermeasures
Key Challenges and Countermeasures Results for the Second Quarter 2012 16
Slide 17: Rebalancing of New Ambition Program Ensures opFCF Target for 2012 is Met
Rebalancing of New Ambition Program Ensures that EUR 40 mn opFCF* Target for 2012 is Met Initial NAP Rebalanced NAP CAPEX** - 10pp Revenues Revenues CAPEX** 15% 20% Revenues 15% 30% + 10pp OPEX OPEX OPEX 55% 65% CAPEX** stable Further OPEX savings to offset pressure on revenue initiatives * Operatin
Slide 18: Austrian Segment: Convergence and Cost Countermeasures to Meet Aggressive Competition
Austrian Segment: Convergence and Cost Countermeasures to Meet Aggressive Competition Challenges > Accelerated ARPU decline due to price decline and migration to mobile package tariffs > Bundle price increases impeded due to competition law > Fierce competition prohibits mobile price increases > Com
Slide 19: Central and Eastern Europe: Competition and Macro-Economy Remain Key Challenges
Central and Eastern Europe: Competition and Macro-Economy Remain Key Challenges Bulgaria Croatia Additional Markets > ARPU pressure > Accelerated ARPU decrease > FX pressure on Serbian > Price aggression from aggressive All-In tariffs results > Migration to lower tariffs > Fierce price competition i
Slide 20: Outlook
Outlook Results for the Second Quarter 2012 20
Slide 21: Telekom Austria Group Outlook for Full Year 2012 Adapted to Second Quarter 2012 Results
Telekom Austria Group Outlook for Full Year 2012 Adapted to Second Quarter 2012 Results Telekom Austria Group – Full Year 2012 On a constant currency basis for all markets as well as before any effects of hyperinflation accounting for the Belarusian segment. As of 10 May 2012 As of 16 August 2012 Re
Slide 22: Intensified Cost Control Mitigates Effects from Revenue Pressure on EBITDA Comparable
Intensified Cost Control Mitigates Effects from Revenue Pressure on EBITDA Comparable Revised EBITDA Comparable Outlook Δ: approx. EUR 50 mn approx. Mainly EUR 1.5 bn driven by Republic on track of Serbia EUR 1.40 bn – EUR 1.45 bn Additional Croatia Outlook as of 16 August Bulgaria Austria Belarus o
Slide 23: Appendix
Appendix 1 Results for the Second Quarter 2012 23
Slide 24: Telekom Austria Group – Revenue Breakdown
Telekom Austria Group – Revenue Breakdown Revenue Split - Segment Austria (in EUR million) Q2 2012 Q2 2011 % change Monthly fee and traffic 476.5 511.5 -6.8% Data and ICT Solutions 50.9 49.5 2.8% Wholesale (incl. Roaming) 38.0 44.3 -14.3% Interconnection 81.4 86.7 -6.1% Equipment 23.2 24.1 -3.6% Oth
Slide 25: Telekom Austria Group – Expense Breakdown
Telekom Austria Group – Expense Breakdown Operating Expense - Segment Austria (in EUR million) Q2 2012 Q2 2011 % change Material expense 55.0 62.3 -11.6% Employee costs 167.6 169.2 -0.9% Interconnection 75.4 81.3 -7.2% Maintenance and repairs 28.3 29.6 -4.1% Services received 28.9 40.9 -29.2% Other
Slide 26: Telekom Austria Group - Mobile Communication Subscriber Base
Telekom Austria Group - Mobile Communication Subscriber Base Mobile Subscribers (in 000) Q2 2012 Q2 2011 % change Austria 5,288 5,176 2.2% Market share 39.3% 40.8% Bulgaria 5,532 5,295 4.5% Market share 47.7% 49.3% Croatia 1,977 2,039 -3.0% Market share 38.6% 38.8% Belarus 4,679 4,461 4.9% Market sh
Slide 27: Telekom Austria Group – Headcount Development
Telekom Austria Group – Headcount Development FTE (Average period) Q2 2012 Q2 2011 % change Austria 9,308 9,506 -2.1% International 7,443 7,439 0.1% Telekom Austria Group* 16,908 17,106 -1.2% FTE (End of period) Q2 2012 Q2 2011 % change Austria 9,300 9,372 -0.8% International 7,340 7,502 -2.1% Telek
Slide 28: Telekom Austria Group – Capital Expenditures Split
Telekom Austria Group – Capital Expenditures Split Capital Expenditures (in EUR million) Q2 2012 Q2 2011 % change Segment Austria 121.2 114.6 5.8% Segment Bulgaria 16.2 16.7 -3.1% Segment Croatia 16.8 8.8 91.0% Segment Belarus 7.4 4.4 68.1% Segment Additional Markets 23.5 12.3 91.4% Slovenia 4.1 2.1
Slide 29: Telekom Austria Group – Net Debt
Telekom Austria Group – Net Debt Net debt (in EUR million) Jun. 30, 2012 Dez. 31, 2011 % change Long-term debt 3,668.2 2,960.4 23.9% Short-term borrowings 718.7 1,052.4 -31.7% Cash and cash equivalents, short-term and long term investments, finance lease receivables -1,008.4 -657.7 53.3% Derivate fi
Slide 30: Telekom Austria Group – Debt Maturity Profile
Telekom Austria Group – Debt Maturity Profile Debt Maturity Profile (in EUR million) 992 804 739 665 553 253 205 129 47 - - * 2012* 2013** 2014 2015 2016 2017 2018 2019 2020 2021 2022 * Includes EUR 1.8 mn related to fixed line acquisitions in Bulgaria, which is reported in Other liabilities ** Incl
Slide 31: Telekom Austria Group – Debt Profile
Telekom Austria Group – Debt Profile Overview Debt Instruments Fixed-Floating Mix 25% 64% 36% 75% Bonds Loans Floating Fixed Lines of Credit Ratings > Undrawn committed lines of credit > S&P: BBB (stable outlook) amounting to EUR 935.0 mn* > Moody’s: Baa1 (stable outlook) > Average term to maturity
Slide 32: Belarus: Impact of Hyperinflation Accounting and FX Translations in Second Quarter 2012
Belarus: Impact of Hyperinflation Accounting and FX Translations in Second Quarter 2012 Belarus Profit and Loss Statement for the Second Quarter 2012 Excluding Hyperinflation Hyperinflation and FX Effects in Impairment Reported and FX in Belarus Belarus (in EUR million) Revenues 125.1 -48.4 0.0 76.7
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 000) 40.0 39.5 250.0 39.0 38.5 38.0 37.5 245.0 37.0 36.5 36.0 35.5 35.0 34.5 32.2 32.5 240.0 34.0 33.5 33.0 31.8 31.9 31.5 32.5 32.0 235.0 2,323 2,327 2,336 2,320 2,
Slide 34: Segment Austria – Mobile Key Performance Indicators
Segment Austria – Mobile Key Performance Indicators ARPU & ARPU Relevant Revenues MoU per Subscriber (in EUR) (in min) 21.0 335.0 20.5 152.7 20.0 20.5 151.9 325.0 20.0 19.2 19.5 149.5 149.1 315.0 19.0 317.4 18.5 18.3 146.4 305.0 18.5 311.9 290.7 18.0 295.0 300.9 293.6 17.5 285.0 17.0 Q2 11 Q3 11 Q4
Slide 35: Segment Austria – Broadband Market Split
Segment Austria – Broadband Market Split Market Share Broadband Lines Market Share Voice Minutes (in %) (in %) Mobile 28.7% Broadband 30.8% other operators 6.6% Unbundled lines 5.8% 14.9% Cable 14.9% 81.9% Mobile 84.9% A1 18.2% Mobile broadband 18.2% A1 1.1% fixed wholesale 1.0% A1 fixed retail Othe
Slide 36: Segment Bulgaria – Mobile Key Performance Indicators
Segment Bulgaria – Mobile Key Performance Indicators ARPU MoU per Subscriber (in EUR) (in min) 7.3 104.1 7.0 7.0 6.6 98.6 6.1 97.5 97.8 96.7 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Mobile Broadband Customers Mobile Penetration (in 000) (in %) 278.8 242.4 155.4% 192.0 151.4% 151.7
Slide 37: Segment Croatia – Mobile Key Performance Indicators
Segment Croatia – Mobile Key Performance Indicators ARPU* MoU per Subscriber* (in EUR) (in min) 13.4 13.4 104.3 12.4 12.6 97.1 96.5 95.8 11.7 92.6 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Mobile Broadband Customers* Mobile Penetration* (in 000) (in %) 192.9 127.0% 180.8 170.6 119.
Slide 38: Segment Belarus – Mobile Key Performance Indicators
Segment Belarus – Mobile Key Performance Indicators ARPU MoU per Subscriber (in EUR) (in min) 4.9 4.9 189.8 186.0 183.4 3.5 3.5 3.7 179.8 174.1 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Mobile Broadband Customers Mobile Penetration (in 000) (in %) 575.3 118.8% 119.4% 518.6 453.1 11
Slide 39: Segment Additional Markets – Mobile Key Performance Indicators
Segment Additional Markets – Mobile Key Performance Indicators Slovenia - ARPU Slovenia - MoU per Subscriber (in EUR) (in min) 22.7 178.3 177.0 179.1 21.6 21.4 168.7 20.7 20.4 155.4 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Republic of Serbia - ARPU Republic of Macedonia - ARPU (in
Slide 40: Appendix – Regulatory Topics
Appendix 2 – Regulatory Topics Results for the Second Quarter 2012 40
Slide 41: Negative Impact of Approx. EUR 175 mn on EBITDA Comparable Expected until 2013
Negative Impact of Approx. EUR 175 mn on EBITDA Comparable Expected until 2013* Key Points Impact EBITDA comp. Interconnection 2010 - 2013: EUR -75 mn Impact EBITDA comp. 2010 -2013: Impact EBITDA comp. EUR -175 mn Roaming 2010 - 2013: EUR -100 mn > EU commission: before January 1, Digital Dividend
Slide 42: Glide Path of Mobile Termination Rates
Glide Path of Mobile Termination Rates July January July August January June July August January April July August January 2009 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 Austria 4.00 3.50 3.01 2.51 2.01 market analysis during 2012 Bulgaria 11.76 10.48 6.65 2.70 2.30* Croatia 9.10 7
Slide 43: EU-Roaming Glide Path
EU-Roaming Glide Path July 2009 July 2010 July 2011 Voice Wholesale 0.26 0.22 0.18 Retail active 0.43 0.39 0.35 Retail passive 0.19 0.15 0.11 SMS Wholesale 0.04 0.04 0.04 Retail 0.11 0.11 0.11 Data Wholesale 1.00 0.80 0.50 Results for the Second Quarter 2012 43
Slide 44: Appendix – Personnel Restructuring in Austria
Appendix 3 – Personnel Restructuring in Austria Results for the Second Quarter 2012 44
Slide 45: Overview – Restructuring Charges and Provision vs. FTE
Overview – Restructuring Charges and Provision vs. FTE Overview Restructuring Charges FTEs Addressed (in EUR million) 2008 2009 2010 2011 Q1 2012 Q2 2012 2008 2009 2010 2011 Q1 2012 Q2 2012 Transfer to government 0 0 158 106 9 18 FTE Effect 632.1 -10.0 76.9 233.7 4.4 6.6 Social plans 256 451 28 685
Slide 46: Overview – Cash Flow Impact of Restructuring
Overview – Cash Flow Impact of Restructuring Overview Cash Flow Impact (in EUR million) Total cash flow impact > Total cash flow impact comprises 2008 14.7 old as well as new programs 2009 62.0 > Total expected cash flow impact 2010 57.9 for 2012 of approximately 2011 89.0 EUR 100 mn Q1 2012 24.3 Q2
Slide 47: Restructuring – Explanatory Information
Restructuring – Explanatory Information > The following factors have to be taken in account when comparing “FTEs Addressed” to “Provisioned FTEs”: > FTEs of social plans may include receivers of one-time payments such as golden handshakes and can fluctuate due to retirement > Number of staff release
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