Magyar telekom group q results presentation. November 7, 2018

Transcription

1 Magyar telekom group q3 218 results presentation November 7, 218

2 Disclaimer This investor presentation contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore should not have undue reliance placed upon them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. Wecaution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors are described in, among other things, our Annual Reports for the year ended December 31, 217 available on our website at In addition to figures prepared in accordance with IFRS, Magyar Telekom also presents non-gaap financial performance measures, including, among others, EBITDA, EBITDA margin, and net debt. These non-gaap measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways. For further information relevant to the interpretation of these terms, please refer to the chapter Reconciliation of pro forma figures, which is posted on Magyar Telekom s Investor Relations webpage at 2

3 Q3 218 GROUP SEGMENTAL REVENUE AND EBITDA Group segmental revenues 1 Group segmental EBITDA 1 HUF bn HUF bn % % Q 217 Mobile Fixed line SI/IT Energy Mobile Fixed line SI/IT 3Q 218 3Q 217 Gross profit Indirect costs Gross profit Indirect costs Measurement diff. 3Q 218 Hungary Macedonia Hungary Macedonia Change Y-o-Y +5.1% +8.7% -7.3% +2.2% 1 Excluding Crnogorski Telekom financials and IFRS 9 and 15 impacts 3

4 9M 218 RESULTS AND 218 FINANCIAL TARGETS 9M 218 Results (change y-o-y) Target 218 REVENUE Strong growth in SI/IT revenue and equipment sales Positive service revenue trends HUF 482 bn (+7.2%) around HUF 63 bn 1 EBITDA Strong revenue growth outweighs margin dilution from changing revenue mix Improvements in indirect costs driven by optimization measures HUF bn (+1.7%) around HUF 19 bn CAPEX Different timing of investments vs 9M 217 Reduced spending on 4G and fiber rollout HUF 51.8 bn (-8.8%) around HUF 9 bn FCF Improved thanks to higher EBITDA and lower CAPEX Negative changes in working capital due to higher receivable balances and increased supplier outpayments vs 9M 217 HUF 28.6 bn (+4.2%) around HUF 6 bn 1 Changed from around HUF 6 bn

5 Q3 218 STRATEGIC HIGHLIGHTS Land Grabbing FMC Digitalization Macedonia Accelerated fiber rollout to increase competitiveness Leading position in the IT service market strengthened 15% Market share in IT Services 4% Of homes passed with 1 Mbps Continuous growth in fixed-mobile convergent households Magenta 1 relaunch Residential: 3% discount on all related services Business: bonus IT service offered to increase penetration 13, FMC net adds in August >2% Of served households Magenta1 subscribers Digitalization to enhance operating efficiency and customer experience Portfolio simplified to improve customer servicing Increase in e-sales and Telekom App usage 33% Telekom App usage (Sep 18) Continued subscriber growth in mobile broadband, fixed broadband and TV Positive trends in service and SI/IT revenues Double mobile data and option for exclusive TV content in Magenta package % 3.3 9% Growth in IPTV customers (yoy) ppt. Prepaid/postpaid ratio improvement 5

6 Hungary - total Revenue 1 EBITDA 1 HUF bn % HUF bn % Q 217 Mobile service Mobile equipment Fixed service Fixed equipment SI/IT Energy Other 3Q 218 3Q 217 Gross profit Employee related expenses Other operating expenses (net) 3Q 218 Mobile service revenue growth thanks to strong data demand Rise in fixed service revenue driven by higher TV and broadband subscriber bases Increase in SI/IT revenue due to strong demand for HW&SW delivery projects Decline in other revenues resulting from reclassification of handset insurance revenues as mobile content from Excluding IFRS 9 &15 effects Decline in gross profit driven by the increasing weight of lower margin services in the sales mix, coupled with one-off effects positively impacting Q3 217 Higher employee related expenses due to trainee insourcing, wage increases and higher severance expenses Other OPEX savings achieved in energy and maintenance 6

7 Hungary - Mobile Mobile SIMs 2, 1, 58.9% Sep % Sep 217 Total mobile data subscribers 66.7% Sep 218 Mobile ARPU HUF Prepaid 6, 3,446 5, 31 5, 41 5, 32 Postpaid Blended 3,72 5, 4, 41.1% 37.4% 33.3% 1,63 Prepaid +6.9% 3, 1,136 3, 2,5 2, 1,5 1, 5 2, % 52% 1 Excluding IFRS15 effects , % 63% Sep 216 Sep , 98 27% 73% Sep 218 Non-4G 4G Postpaid Mobile broadband usage GBmn/month 8, 7, 6, 5, 4, 3, 2, 1, 2, 981 2% 71% 3Q % 42.5% 4, % 1% 83% 3Q % 7, 279 9% 9% 3Q % % 4,899 5,28 2G 3G 4G +2.6% 3Q 217 3Q 218 Average bb usage in 3Q 218 G B/month

8 Hungary fixed voice, broadband and tv Fixed line customer base Fixed line multiplay residential subscribers 1,5 1, 5 1,437 1, ,421 1,63 1,16 1,385 1,126 1,66 Voice Broadbad PayTV 1,5 1, , 387 1, 366 1, % 29% 29% 28% 26% 29% 38% 43% 45% 1Play 2Play 3Play Sep 216 Sep 217 Sep 218 Sep 216 Sep 217 Sep 218 Fixed Voice, BB and TV ARPU 1 Fixed line multiplay residential ARPU 1 HUF Fixed voice Fixed BB Pay TV 2,38 2, % 3,461 3,55 3,479 3, % -1.8% 3Q 217 3Q 218 HUF Blended 1Play 2Play 3Play 3,23 3, % 6,81 6,26 5,787 5, % +.2% 8,295 8, % An nual churn 12% 15% 11% 9% 1 Excluding IFRS15 effects 3Q 217 3Q 218 8

9 Hungary SI/IT SI/IT revenue HUF bn SI/IT revenue and gross profit of MT-Hungary HUF bn % 28% 22% Q % 35% 27% % 1 Based on IDC Research 218, market shares based on 217 revenues +1.6% Revenue Gross profit 23. 3Q 218 G ross margin 33% 31% 45% 3% 26% Hardware & Software w/o mobile devices IT Infrastructure services System Integration / IT Application services SI/IT revenue breakdown by vertical segments 1 217, HUF bn Finance Manufacturing Retail&WS Prof. Services Telco+Media Utilities Transport Government Education Healthcare Highlights Positive trajectory of SI/IT revenues maintained EU funded projects are hardware and software focused and relatively low margin Infrastructure delivery projects instrumental in developing long term customer relationships and securing IT service contracts Demand for higher margin SI projects starting to increase Market share 1 11% 7% 7% 11% 6% 18% 23% 23% 3% 4% 9

10 Macedonia Financials 1 Revenues (MKD mn) +2.7% 2,78 4 EBITDA (MKD mn) 3Q 217 KPIs (mobile/fixed voice/fixed BB/TV) 1 Customer no. QoQ change -1% % +5% +9% ,783 3Q 217 Mobile Fixed SI/IT 3Q 218 ARPU (MKD) 1,229-1 Gross profit % -7 Other expenses (net) +5.5% % -6.% +1.8% 1,221 3Q 218 3Q 217 3Q 218 Mobile market Subscribers (mn) Highlights % 49.5% 5.5% Sep % -.4% 48.1% 49.3% Sep % 47.8% 49.% Sep 218 Convergent fixed-mobile offers gaining in popularity Continued revenue growth primarily driven by SI/IT revenues Increase in fixed line revenue due to one-off refund for Universal Service Obligation net costs previously recognized in Q4 217 EBITDA decline mainly attributable to temporarily higher indirect costs and an increase in lower-margin activities 6.% weakening in HUF/MKD Lycamobile One.Vip Telekom 1 Excluding IFRS 9 and 15 impacts 1

11 For further questions please contact the IR department: Péter Bauer Head of Investor Relations Phone: bauer.peter@telekom.hu Rita Walfisch Investor Relations Manager Phone: walfisch.rita@telekom.hu? 11

12 APPENDIX: Q3 218 FINANCIAL HIGHLIGHTS HUF mn, except ratios IAS 18 & IAS 11, continuing operation IFRS 9 & IFRS 15, continuing operation Q3 217 Q3 218 Change (%) Q3 218 (IFRS 9/15 effect) Q3 218 Change (%) Total Revenues 155, , % (112) 163,685 (.1%) Operating Profit 3,171 23,662 (21.6%) (554) 23,18 (2.3%) Gross Profit 24,652 18,388 (25.4%) (554) 17,834 (3.%) EBITDA 57, (6.3%) (554) 53,42 (1.%) Net income 19,341 15,67 (22.1%) (554) 14,513 (25.%) 9M 217 9M 218 Change (%) 9M 218 (IFRS 9/15 effect) 9M 218 Change (%) Free Cash Flow 27,421 28,57 4,2% n.a. 28,57 4,2% Net Debt 343,725 39,957 (9.8%) n.a. 39,957 (9.8%) Net Debt/ Total Capital 37,4% 33,8% n.a. n.a. 33,8% n.a. 12

13 Appendix: Hungarian telco market positions Total mobile market 1 Subscribers (mn) % 28.2% 46.8% Sep % 27.4% 48.% Sep 217 Fixed voice market 2 Fixed broadband market 2 TV market 2 Subscribers (mn) % 15.5% 22.% 46.9% 38.1% 37.7% 38.% Sep 216 Sep 217 Aug Based on internal calculations from Vodafone Group and Telenor Group reports 2 Based on the total fixed voice channels/bb access/pay TV access market estimated by the National Media and Infocommunications Authority (NMIA) % 27.6% Jun % 15.4% 9.5% 8.9% 24.7% 16.2% 22.1% 21.9% Vodafone Telenor MT Other INVITEL DIGI UPC MT Subscribers (mn) Subscribers (mn) % 3.2% % 12.4% 3.6% 11.5% 12.4% 24.% 17.6% 18.8% 21.% 54.5% Sep % Sep % Sep % Sep % Aug 218 Other INVITEL DIGI UPC MT Other 16.% 14.4% 14.% INVITEL 4.7% 4.8% DIGI 25.% 25.4% 3.3% UPC MT 26.8% 26.6% 25.9% 29.8% Sep