Telekom Austria AG · VIE:TKA
Telekom Austria — Shareholder Meeting (May 2010)
54 slides from Telekom Austria's shareholder meeting presentation, May 27, 2010
Slide 1: Annual General Meeting 2010
Annual General Meeting 2010 1
Slide 2: Telekom Austria Group Annual General Meeting 2010
Telekom Austria Group Annual General Meeting 2010 Vienna, May 27, 2010 Annual General Meeting 2010 2
Slide 3: Agenda
Agenda Agenda Item 1: Report of the Management Board on the business year 2009 Agenda Item 2: Distribution of Net income Agenda Item 3: Discharge of the Management Board Agenda Item 4: Discharge of the Supervisory Board Agenda Item 5: Compensation of the Supervisory Board Annual General Me
Slide 4: Agenda
Agenda Agenda Item 6: Election of auditors of the financial statements and the consolidated financial statements for the fiscal year 2010 Agenda Item 7: Election of a member of the Supervisory Board Agenda Item 8: Management report on share buybacks, number of treasury shares held and use of t
Slide 5: Agenda Item 1: Report of the Management Board on the Business Year 2009
Agenda Item 1: Report of the Management Board on the Business Year 2009 Annual General Meeting 2010 5
Slide 6: Austria's Leading Telecommunications Company and a Strong Player in Eastern and South-Eastern Europe
Austria’s Leading Telecommunications Company and a Strong Player in Eastern and South-Eastern Europe over 2 mn fixed net Belarus access lines 19 mn mobile communication over 100,000 subscribers, 2009 +6% aonTV customers FL Austria FL Slovenia Croatia Rep. of Serbia Bulgaria 1 mn fixed net Rep. of Ma
Slide 7: In 2009 We Were Prepared for Anything
In 2009 We Were Prepared for Anything Product bundles enhanced attractiveness and competitiveness of the Fixed Net segment Investments in infrastructure roll-out Further subscriber growth in Mobile Communication Strict cost management in both segments Stable dividend policy until 2012 Ch
Slide 8: Fixed Net
Fixed Net Annual General Meeting 2010 8
Slide 9: Continued Fixed-to-Mobile Substitution
Continued Fixed-to-Mobile Substitution Development of Fixed Net Voice Telephony in million of minutes per month 2,000.0 1,800.0 1,600.0 1,400.0 Fixed Net 1,200.0 Mobile 1,000.0 Communication 800.0 600.0 400.0 200.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 Annual General Meeting 2010 9
Slide 10: Product Bundles Remain Success Factor for the Fixed Net Segment
Product Bundles Remain Success Factor for the Fixed Net Segment Since their Launch 2 Years ago Fixed Net Access Line Loss (in 000) Product bundles safeguard 2007 2008 2009 customer base over the long term -23 -98 Fixed Net access line loss reduced by 76% to 23,300 -225 lines in 2009 Product Bund
Slide 11: Product Bundles Drive Broadband Customer Growth
Product Bundles Drive Broadband Customer Growth Continued Focus on Broadband Ensures Future Success Broadband Customers (in 000) 1.023 886 751 2007 2008 2009 Fixed net broadband base increased by 16% to over 1 mn broadband lines in 2009 Broadband market share stable at 30% Telekom Austria‘s Gi
Slide 12: aonBreitbandDuo is the Best Mix of Mobile Communication and Fixed Net
aonBreitbandDuo is the Best Mix of Mobile Communication and Fixed Net aonBreitbandDuo is fixed net and mobile broadband Austria’s Broadband penetration of 91% higher than EU average of 70% Fixed net broadband competing against mobile broadband Mobile broadband share of 35% in Austria considera
Slide 13: aonTV Media Box Set New Standards for Digital Entertainment in 2009
aonTV Media Box Set New Standards for Digital Entertainment in 2009 aonTV subscriber base increased by 60% to over 100,000 in 2009 Over 120 TV channels – of which 10 in HD format Integrated video library with over 1,000 movies and series Electronic program guide as well as interactive inform
Slide 14: With Aon BusinessKombi Everything from One Source for Business Customers
With Aon BusinessKombi Everything from One Source for Business Customers Now Aon BusinessKombi Everything from one source also for SMEs for the first time Unlimited high-speed Internet and domain service Web space, mail boxes, WLAN router Fixed IP addresses, virus and spam filter Both Fixe
Slide 15: Investments in Network Infrastructure Strengthen Austria
Investments in Network Infrastructure Strengthen Austria Investments 2009 (in EUR million) In 2009 Telekom Austria invested 30 times more than its main 289 competitor Focus on unified network architecture based on IP 9 technology and further network expansion Telekom Austria Tele 2 Investments
Slide 16: 375,000 Households Connected to Telekom Austria's GigaNetz
In 2009 approximately 375,000 Households Connected to Telekom Austria’s GigaNetz High-speed broadband Internet for rural areas Data transfer rates of up to 30 Mbps GigaSpeed: Additional feature starting from EUR 4.90 per month Annual General Meeting 2010 16
Slide 17: Start of Four Fiber Glass Projects in Vienna and Carinthia in 2009
Start of Four Fiber Glass Projects in Vienna and Carinthia in 2009 Pilot projects* in Villach, Klagenfurt and two districts in Vienna Goal: To gain experience about roll-out costs and customer acceptance for future product portfolio and pricing structures Future: Internet speeds of up to 100 M
Slide 18: Mobile Communication
Mobile Communication Annual General Meeting 2010 18
Slide 19: Mobile Subscriber Base Increases by 6% to 19mn Customers
Mobile Communication Subscriber Base Increases by 6% to 19mn Customers Year-on-Year (in 000) 2009 2008 % Change Austria 4,834 4,496 8% Bulgaria 5,353 5,396 -1% Belarus 4,102 3,698 11% Croatia 2,603 2,487 5% Slovenia 589 571 3% Republic of Serbia 1,154 908 27% Republic of Macedonia 304 242 26% Liecht
Slide 20: Mobile Communication Impacted by Challenging Market Environment in 2009
Mobile Communication Impacted by Challenging Market Environment in 2009 Revenues EBITDA (in EUR million) (in EUR million) -5% 3,206 3,391 -6% 1,325 1,246 2009 2008 2009 2008 Regulatory intervention and weak economies impact business development Cost cutting mitigates negative effects Profitabi
Slide 21: mobilkom austria Defends Market Leadership and Expands Customer Base
mobilkom austria Defends Market Leadership and Expands Customer Base in 2009 Market Shares as of December 2009 41% 39% 39% 40% 43% 43% 37% 36% 34% 34% 32% 30% 20% 21% 22% 21% 19% 20% 2% 4% 5% 5% 6% 8% 2004 2005 2006 2007 2008 2009 Leadership position with 43% market share safeguarded 338,000 cus
Slide 22: Mobile Broadband Customer Base Grows by approximately 1/3 in 2009
Mobile Broadband Customer Base Grows by approximately 1/3 in 2009 Mobile Broadband Customers (in 000) Mobile broadband customer base grows by approx. 1/3 +35% Data revenues as percentage 441 465 500 540 of traffic-related revenues 400 increased from 32% to 37% Connect confirms mobilkom austria
Slide 23: Unique Smart Phones and Additional Services Highlight Quality Leadership
Unique Smart Phones and Additional Services Highlight Quality Leadership HTC Desire und Sony Ericsson X10 Set new standards Smart phones are more than mobile phones A1 Apps: More than just Telephony A1 credit box A1 TV player A1 Navi Mobile parking Annual General Meeting 2010 23
Slide 24: Key Financials Telekom Austria Group
Key Financials Telekom Austria Group Annual General Meeting 2010 24
Slide 25: Revenue Development Impacted by Fixed Net, Price Pressure and Currency Effects
Revenue Development Impacted by Fixed Net, Price Pressure and Currency Translation Effects Revenues (in EUR million) -7% 5,170 -179 -94 -87 -8 4,802 Revenues Fixed Net mobilkom Internat. Other Revenues 2008 austria subsidiaries 2009 Annual General Meeting 2010 25
Slide 26: Cost Cutting Measures to Counter Revenue Development
Cost Cutting Measures to Counter Revenue Development EBITDA (in EUR million) 597 -15 -68 -1 1,794 1,281 Revenues Fixed Net mobilkom Internat. Other Revenues 2008* austria subsidiaries 2009 * Including provision for restructuring expenses of EUR 632 million Annual General Meeting 2010 26
Slide 27: Planned Cost Reductions in Fixed Net Exceeded in 2009
Planned Cost Reductions in Fixed Net Exceeded in 2009 Cost Savings Start of cost-saving program in 2008 with the aim to cut EUR 150 2009 target exceeded by EUR mn in 2009 18 mn 2009 target exceeded by EUR 18 mn 2009 target : EUR 168 EUR 140 mn mn – 2009: EUR 150 In 2008 a total of EUR 46 mn cu
Slide 28: Successful Cost Management Reduces Operating Expenses in Mobile Communication
Successful Cost Management Reduces Operating Expenses in Mobile Communication Operating Expenses (in EUR million) -5 % 2,104 -68 -13 -4 -18 -11 10 2,000 Velcom Mobiltel mobilkom Vipnet Si.mobil Other austria expenses Operating expenses Operating 2009 2008 Annual General Meeting 2010 28
Slide 29: Net Profit Impacted by Impairment Charges in Belarus and the Republic of Serbia
Net Profit Impacted by Impairment Charges in Belarus and the Republic of Serbia (in EUR million) 2009 2008 % Change Revenues 4,802 5,170 -7% EBITDA 1,794 1,281* 40% Impairment Charges -350 - - Operating Income 344 121* 185% Net Profit/Loss 95 -49* - * incl. restructuring provision of EUR 632mn Annua
Slide 30: Strong Cash Flow Enables Dividend Payment
Strong Cash Flow Enables Dividend Payment (in EUR million) Cash Flow Distribution 711 Capex 1.682 1,570 378 Deleveraging and Others 184 Working capital 332 Dividends 2009 Annual General Meeting 2010 30
Slide 31: Dividend Provides Adequate Return on Shareholders' Investment
Dividend Provides Adequate Return on Shareholders’ Investment Proposed Dividend Dividend Yield Share price as of 31.12.2009 of EUR 9.95 EUR 0.75 7.5 % Annual General Meeting 2010 31
Slide 32: Attractive Dividend Policy with Dividend Yield Above the Sector Average
Attractive Dividend Policy with Dividend Yield Above the Sector Average Dividend Yield 2009 Dividend Yield 8.6% 8.8% Telekom Austria 8.1% 7.5% 7.3% 7.2% 6.5% 6.2% 6.0% 5.7% 5.6% 5.4% 4.8% 4.7% 0.0% e ag m m m a ia a e m om ca p or ri r TE N ko co er n co al u ve co st ni fo P n ro It on sc le O le l
Slide 33: Challenges 2009
Challenges 2009 Annual General Meeting 2010 33
Slide 34: Capital Structure and Corporate Governance
Capital Structure and Corporate Governance Annual General Meeting 2010 34
Slide 35: Successful Placement of a EUR 750 million Bond in January 2009
Successful Placement of a EUR 750 million Bond in January 2009 Allocation EUR 750 million bond with maturity of 7 years and coupon Retail Demand of 6.375% 10% Order book of EUR 3.3 billion Solid rating provide access to 25% debt capital markets Banks 65% Refinancing for 2009 and 2010 secured
Slide 36: Telekom Austria AG has a Broad Shareholder Structure
Telekom Austria AG has a Broad Shareholder Structure Shareholder Structure by Country (as of 31.12.2009) Rest of the world 9% Austria (incl. ÖIAG and treasury shares) Rest of Europe 36% 22% UK 10% USA 23% Annual General Meeting 2010 36
Slide 37: Telekom Austria Share Remains Stable in a Challenging Market Environment
Telekom Austria Share Remains Stable in a Challenging Market Environment Share price (since beginning of 2009) 60% 50% ATX 40% 30% 20% 10% Telco Sector 0% Telekom Austria -10% -20% 0 ay l 09 01 08 ar ar n p n pr ug pr ov n b b ct Ju Se Ju Ja Ja Fe Fe M O M M A A N 20 2 20 A 26 ec ec D D , ay M Haupt
Slide 38: Treasury Shares Reduced by 17 Million Shares
Treasury Shares Reduced by 17 Million Shares Treasury Shares (as of end of December, in million) Telekom Austria retired 17 million shares in August 2009 Share Buyback 17.4 The share capital is now reduced to 443 million shares 0.4 Thus, shareholders own a higher stake in the company 2009 2008
Slide 39: Long-Term Incentive Program for the Management of Telekom Austria Group
Long-Term Incentive Program for the Management of Telekom Austria Group Stock Option Program ESOP expired in 2009 and will be replaced by a LTI program in 2010 Long-term and value-based incentives are crucial to excellent Corporate Governance Requirements for a value-based incentive system Lon
Slide 40: The New Management Incentive Program Requires Personal Investment
The New Management Incentive Program Requires Personal Investment in the Company Personal investment in Telekom Austria shares is prerequisite for participation Program No options, performance-related allocation of Telekom Austria shares Personal Management Board: maximum 65% of basic salary I
Slide 41: Numerous Awards for Best-Practice Corporate Governance
Numerous Awards for Best-Practice Corporate Governance Effective framework for sustainable and transparent company management “True and fair view” as well as equal treatment of all shareholders Compliance with Corporate Governance Code confirmed by KPM at the beginning of 2008 Separate discl
Slide 42: Active Risk Management as Integral Part of Excellent Corporate Governance
Active Risk Management as Integral Part of Excellent Corporate Governance Risks are regularly and systematically identified and assessed Risk management gains importance against the backdrop of a challenging business environment Counter-measures are developed, implemented and reported on an on
Slide 43: Award-Winning Investor Relations as Core Pillar of Good Corporate Governance
Award-Winning Investor Relations as Core Pillar of Good Corporate Governance Dialogue with investors intensified in 2009 - 16 road shows world-wide - 339 one-on-ones - 173 conference calls - 64 group presentations - Capital Market Day in January Award-winning IR work: - Best IR team in Austria -
Slide 44: Outlook 2010
Outlook 2010 Annual General Meeting 2010 44
Slide 45: Challenges 2009 New Challenges 2010
Challenges 2009 New Challenges 2010 Competition in Austria Economic environment in Eastern und South-Eastern Europe Integration of Fixed Net and Mobile Communication in Austria Increase in efficiency Expansion of infrastructure Annual General Meeting 2010 45
Slide 46: Outlook Telekom Austria Group 2010
Outlook Telekom Austria Group 2010 Telekom Austria Group 2010* Revenues ~ EUR 4.7bn EBITDA ~ EUR 1.6bn CAPEX ~ EUR 800mn Operating Free Cash Flow ~ EUR 800mn Planned Dividend per Share at least EUR 0.75 *On a constant currency basis and excluding the impact from the merger of domestic operations Ann
Slide 47: Strategy
Strategy Annual General Meeting 2010 47
Slide 48: Telekom Austria Group Trimaran Strategy
Telekom Austria Group Trimaran Strategy Fixed Net Consolidation in Mobile Mobile Communication Communication Operational Excellence Convergence of Fixed Net and Mobile Communication Innovation Leadership Annual General Meeting 2010 48
Slide 49: Trend Towards Convergent Telecommunications Providers in Europe
Trend Towards Convergent Telecommunications Providers in Europe Status as of 01.01.2006 Current Status Separate Fixed Net and Integration underway1),2) Mobile Communication segments 1) TeliaSonera, Magyar Telekom and Telekom Slovenije partly integrated 2) Eircom, TP Poland and Makedonski Telekom are
Slide 50: We Offer Customers Everything From One Source: Integration of Fixed Net and Mobile
We Offer Customers Everything From One Source: Integration of Fixed Net and Mobile Communication Safeguarding future success through creation of additional advantages for customer Integrated customer Wide range of service from one source convergent products customers Rapid provision of products and
Slide 51: Efficient Group Structure through Integration and Shorter Reporting Lines
Efficient Group Structure through Integration and Shorter Reporting Lines Current Group Structure New Group Structure after Integration Telekom Austria Group Telekom Austria Group (Financial Holding) (Management Holding incl. mags*) Telekom Austria mobilkom austria Fixed Net A1 mags* Telekom FL1 Aus
Slide 52: Sustainable Positive Cash Flow Expected
Sustainable Positive Cash Flow Expected In 2010 a negative cash flow effect of EUR 80 million is expected, break even anticipated for 2012 Telekom Austria Group expects a sustainably positive cash flow of approx. EUR 100 million per year starting from 2014/2015 Cash Flow – Negative Effect due to
Slide 53: Thank you for your attention!
Thank you for your attention! Annual General Meeting 2010 53
Slide 54: Annual General Meeting 2010
Annual General Meeting 2010 54
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