Telekom Austria Results of the Financial Year April 9, 2002

Transcription

1 Telekom Austria Results of the Financial Year 20 April 9,

2 Disclaimer 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. These risks and uncertainties are discussed in Telekom Austria's SEC filings, including, but not limited to, Telekom Austria's Form 6-K containing the relevant press release and certain sections of the Company's Annual Report on Form 20-F. 2

3 Agenda Group overview Operational highlights Wireline Wireless Financial overview Outlook 3

4 Group Overview 4

5 Telekom Austria Group 20 l Substantial improvement of operating group results l Successful staff reduction and stabilization of market share losses in the fixed line segment l Mobile profitability rises in Austria and Croatia; clear trend improvement in Slovenia since acquisition l Data communications earnings benefit from focus on solution business l Customer growth and strong demand help to achieve positive Internet EBITDA in Q4 20 5

6 Telekom Austria Group Results 20 Total managed operating revenues Total managed EBITDA* Consolid. net result of Telekom Austria (EUR million) (EUR million) (EUR million) +1.2% 3, , % , , % * excluding costs for idle workforce

7 Operational Highlights 7

8 Operational Highlights: Wireline l Fixed Line: l l Staff reduction faster than planned; 2,700 fewer personnel at January 1, 2002, compared to December 31, 1999 New tariff packages and marketing steps reduce market share losses l Recurring opex, excl. depreciation charges, fall by 13.3% l Data Communications: l l Re-directioning and integration with fixed line key accounts launched Migration to solution provider l Internet: l l Successful expansion of market position in Austria Focus on portal and content 8

9 Personnel Reduction Ahead of Schedule More than half of five-year headcount reduction target achieved after only 15 months Headcount reduced by 2,696 persons through January 1, 2002 Favorable composition of reduction: more natural attrition, less outsourcing No. of Fixed Line Employees 15,529 38% 9% 16% 14,375 11,902* 37% Dec. 31, 99 Dec. 31, 00 Dec. 31, Assigned to other group entities Early retirement Golden handshakes Natural attrition *including #273 of idle workforce 9

10 Reduction of Market Share Losses l Focused marketing campaign in the voice business based on operating customer segmentation and churn analysis l Tightening of market communication through clear messages l Extensive development of existing ADSL potential through promotion campaigns 10

11 TikTak Tariffs are Competitive Comparison based on TikTak privat Independent tariff consumer comparison on popular Austrian website, January 2002 in cents/ min. TikTak local national UTA tele2 tele.ring Peak Off- Peak l Additional features l l l Best friend 60 free minutes Attractive online minutes and international destinations With 2 cents/min in the local zone Telekom Austria offers the most attractive tariff l No regulatory delays 11

12 Quarterly Market Share Losses in 20 Quarterly Market Share Losses (%) ( 000) 1 Q March 31, 2 Q June 30, 3 Q Sep. 30, TikTak Lines 4 Q Dec. 31, Note: Voice market shares including internet dial-up traffic Successful placement of second-based tariff packages Improved customer intelligence to address most valuable segments Modular approach to focus on customer needs TikTak lines reach 20% of December voice volumes Substantial number of win backs amongst SME and large customers 12

13 Data Communications - EBITDA Margins Pressure from higher intercompany prices % EBITDA - Margins 7.4%... speeds up reorientation towards high margin business 18.3% 24.3% 1 HY 00 1 HY 2 HY 00 2 HY Respositioned as Telekom Austria s solution provider of large corporate accounts Higher intercompany prices from fixed line business segment Cost cutting (9% reduction of staff) speeds up margin improvement 58% market share, supplier to almost all Austria s top companies Integration with fixed line key account management started 13

14 Front Runner in Broadband ADSL-Lines and ADSL-Penetration ADSL-Lines Dec. 31, 00 March 31, June 30, Sep. 30, Dec. 31, Jet2Web Internet Wholesale 5.0% ADSL-Penetration Rate 4.3% 2.9% 2.5% 2.4% 2.2% Belgium Germany Austria Denmark Sweden Source: ECTA LLU Scorecard; January 2002 Finland Telekom Austria in top league of European broadband expansion 100,600 lines reached even before acceleration of marketing of ADSL lines in 2002 Expansion of geographical reach from 3 km to 4km - 80% household coverage in Austria New product package with 4Gb download limit for 49EUR per month Jet2Web Stream enlarges broadband footprint in Central Europe 14

15 Internet - First Positive EBITDA in Q4 (EUR million) Quarterly EBITDA s 1.3 Q 1 Q 2 Q 3 Q Strong demand and tight grip on cost leads to positive EBITDA in Q4 20 Austrian customer figure rises by 127% to 666,400 Cooperation with SAP and HP to address the business market Czech On Line expands into full service business for commercial customers, customers figure rises by 26 % to 238,000 15

16 Operational Highlights: Wireless Austrian business profits from growth in the most profitable customer segments Decline in customer acquisiton costs exceeds increase in retention costs Expansion into mobile data applications Strong customer growth and rising profitability in Croatia Si.mobil doubles subscriber base in Slovenia 16

17 Wireless Profit Drivers in Austria Share of Contract Subscribers ARPU s (EUR) % 49.6% 48.2% 47.7% 47.8% 4 Q 00 FY 00 1Q 2Q 3Q 4 Q FY SRC and SAC (EUR million) % Dec. 31, 00 March31, June 30, Sep. 30, Dec. 31,

18 Mobilkom Austria - Market Data Total - Churn Traffic Development Contract Prepaid Average Minutes per customer per month (charged) Successful retention programms Clean-up of subscriber base % 14% 17% 38% 23% 26%

19 Innovation Leader in Mobile Data Data revenues in % of airtime revenues: 9.7 % No. of SMS rises by 25% 4Q compared to 4Q 00 GPRS Growth starts in Q4 with the availability of handsets, 26,000 subscribers at YE Average usage: 5MB per user per month, ARPU uplift: about 3.5 EUR GPRS roaming between Austria, Croatia, Slovenia and Liechenstein GPRS Customers 26,000 Acquisition of 49% stake in paybox Austria Establishment of A1 bank to support mobile payment UMTS 2,000 7,000 Nortel and Ericcson deliver network in parallel Up to 1,000 base stations by the end of 2002 Smart launch in 2H 2002 expected, with applications already available June 30, Sep. 30, Dec. 31, 19

20 International Mobile Subscribers ARPU s customers ('000s) 1,127* (EUR) VIPnet Q 00 FY 00 1Q 2Q 3Q 4 Q FY Si.mobil Dec. 31, 00 March 31, June 30, Sep 30,. Dec. 31, VIPnet Si.mobil (Acquired in Feb. ) *Including mobilkom [liechtenstein] 1Q 2Q 3Q 4 Q FY 20

21 Financial Overview 21

22 Telekom Austria Group Figures (EUR million) Total managed operating revenues Operat. results excl idle workforce costs: Total managed EBITDA Total managed EBITDA (adjusted)* Total managed EBIT Total managed EBIT (adjusted)* Costs for idle workforce Consolid. net loss of Telekom Austria, with Mobilkom at-equity EPS Capex 4 Q 4 Q 00 % change FY FY 00 % change % 3, , % % 1, , % % 1, , % % % % % % % % % * Adjusted for early retirement costs EBIT is defined as operating income plus costs for idle workforce, EBITDA as EBIT plus charges for depreciation and amortization. 22

23 Business Segments - 4 Q Revenues & EBITDA Revenues EBITDA (adjusted)** (EUR million) 978.7* % * (EUR million) 260.0* % * Q 00 4 Q Fixed line Mobile Data Internet Q 4 Q 00 Fixed line Mobile Data Internet *Total managed group figures ** excluding idle workforce and early retirement costs 23

24 Steps to Achieve Leaner Operations -13.3% Total expenses* Cost savings of EUR 244 million through: -17.5% Other expenses Stringent controlling of general and admininistration costs -13.2% Interconnection Streamlining of I/C agreements -7.7% Employee costs Headcount reduction programme -24.3% Material costs Renegotiation of supplier contracts * excluding costs for idle workforce and early retirement costs, without depreciation and amortisation 24

25 Wireless - Geographic Breakdown FY Revenues EBITDA (EUR million) (EUR million) +14.1% 1,5.0* ,713.2* % 436.5* * , , FY 00 FY FY 00 FY Mobilkom Austria VIPnet Si.mobil Mobilkom Austria VIPnet Si.mobil * Total consolidated numbers 25

26 CAPEX - Telekom Austria Group (EUR million) Wireline capex falls by 24% with continuing change of focus % % E Broadband capex in fixed line rises from 42% to 53% 37% of mobile capex for international operations UMTS rollout started, minor capex in 20, appr. EUR 100million in 2002 Target capex/sales ratio: < 15% Wireless Wireline 26

27 Net Debt - Telekom Austria Group (EUR million) 3, (320.4) 3, Debt reduction through operating improvement and firm grip on capex 2, ,534.0 Net decline of EUR 138million achieved, despite EUR 182.2million spent on Si.Mobil and GSM licenses Comfortable ratios: Dec. 31, 2000 Si.Mobil acquisition, GSM licenses FCF Dec. 31, 20 Debt/equity: 131.3% Net debt/ebitda: 2.2 Mobilkom Austria (Wireless) Telekom Austria (Wireline) 27

28 Outlook 28

29 Outlook for 2002 Fixed Line Data Internet Mobile Group Concentration on further reduction of market share losses Continuation of headcount reduction program Netting of revenues and costs for transit calls lowers revenues and costs without impacting EBITDA Integration of key account distribution to enlarge customer base for onestop shop solutions is expected to increase share of high-margin revenues Rising customer base, especially in ADSL, drives access revenues Concentration on portal and content business Focus on high quality-customer base and lower SAC to combat further intensification of competition in Austria Continuing growth opportunities in Croatia, acceleration of operating and and financial improvement in Slovenia Further cost cuts should lead to improved fixed line market position; lower mobile growth in Austria.Telekom Austria is aiming to achieve at least a minimal increase in total managed EBITDA and a further improvement in net result in spite of relatively flat total managed revenues 29

30 Reorganisation of Wireline Business Wholesale Retail Wholesale marketing & sales Strategic Portfolio & Technology Management (PT) Business Solutions Residential/ SOHO Integrate marketing & sales under single leadership Accelerate and support product development Join business customer distribution within Telekom Austria & Datakom Merge Internet access and voice to win back customers Network Customer Care Media Realize cost synergies through concentration of network operations Ensure 100% end-toend customer satisfaction Focus on portal business 30

31 Wireline Initiative - WIN l Clear commitment, prioritization and supply of resources by management l Accelerated speed of implementation and internal communication l 11 initiatives to reach the operating targets l Organizational structure and responsibilities with key performance indicators defined 31

32 EBIT Contributions of WIN Initiatives EUR 220million plus in EBIT 11 initiatives in EBIT improvement through WIN: Ł Stop market share loss Ł Change price perception Ł ADSL- and dial-up access campaign Ł Exploitation of wholesale data opportunities Ł Integrated business portfolio Ł Network cost efficiency Ł Service leadership in the customer process Ł Profitable media strategy Ł Capex - market orientation and prioritization Ł Other WIN initatives and measurements: l Regulatory freedom l Strategic product management 32

33 Appendix

34 Fixed Line - Access Channels (in thousands) % change PSTN access lines 2, , % Basic ISDN access lines % Multi ISDN access lines % Total access lines 3, , % of these ADSL access lines % Total access channels 3, , % 34

35 Fixed Line - Minutes (in millions of minutes) % Change Local 4,335 6, % National long distance 823 1, % Fixed-to-mobile % International % Internet dial up 4,505 3, % Total fixed line minutes 10,969 12, % Carrier services: Incoming international 1,090 1, % Outgoing international 1,044 1, % 35

36 Fixed Line - Market Shares 93.6% 93.5% 93.1% 92.9% 59.9% 58.5% 57.3% 56.2% 62.8% 61.6% 60.3% 58.9% 47.5% 46.4% 45.8% 46.2% 45.9% 45.5% 45.2% 45.1% Access lines Total market share* Local* Long distance International March 31, June 30, Sep. 30, Dec. 31, * including internet dial-up traffic 36

37 Fixed Line - Average Tariffs (EUR/minute) Local Long distance Internet-dial up Fixed to mobile International Total average FY 00 FY 37

38 Mobilkom s Subscribers Customers ('000s) Mobile Subscribers Customers ('000s) Austrian Mobile Market 3,605 3,733 3,783 3,977* 2,834 2,859 2,810 2,850 3, ,120 2,143 2,136 2,200 1,468 1,480 1,482 1,417 1,411 1,252 1,312 1,363 1,300 1,337 1,354 1,377 1,393 1, Dec. 31, 00 March 31, June 30, Sep. 30, Dec. 31, Mobilkom contract Mobilkom prepaid VIPnet Si.mobil March 31, June 30, Sep. 30, Dec. 31, Mobilkom max.mobil One tele.ring * including mobilkom [liechtenstein] 38

39 Mobilkom s Subscribers Customers ('000s) Dec. 31, 20 Dec. 31, 2000 % change Austria Contract 1,439 1, % Prepaid 1,411 1, % Total 2,850 2, % Croatia Contract % Prepaid % Total % Slovenia Contract 97 - Prepaid Total Liechtenstein Total 1 - Total Group 3,977 3, % 39

40 Mobilkom s Traffic Development FY 00 FY Charged minutes (millions) * Non charged minutes (millions) * 3,189 3,708 2,732 3,221 Average number of customers ('000s) 2,544 2,829 Minutes per customer per month - charged non charged * Rated MOUs of Mobilkom customers 40

41 Mobilkom - Mobile Data Data revenues as % of airtime revenues (million) No. of SMS per Quarter % % FY 00 FY 1 Q 00 2 Q 00 3 Q 00 4 Q 00 1 Q 2 Q 3 Q 4 Q 41

42 Internet Subscribers Austria Czech Republic Customers ('000s) Customers ('000s) * Dial-up ADSL *Including 95,000 subscribers acquired during 2 Q 42

43 Headcount* Development (average of period) FY FY 00 Change Fixed Line* 13,088 14,939-1,851 Mobile 3,251 2, Data Internet Telekom Austria Group 17,549 18,560-1,1 *including idle workforce (end of period) FY FY 00 Change Fixed Line* 11,903 14,375-2,472 Mobile 3,438 2, Data Internet Telekom Austria Group 16,586 18,3-1,715 *including idle workforce * = Full-time-equivalents 43

44 Fixed Line - Key Financial Data (EUR million) 4 Q 4 Q 00 % change FY FY 00 % change Operating revenues % 2, , % Operat. results excl idle workforce costs: EBITDA % % EBITDA (adjusted)* % % EBIT % EBIT (adjusted)* % Costs for idle workforce * Adjusted for early retirement costs

45 Fixed Line - Revenue Breakdown (EUR million) 4 Q 4 Q 00 % change FY FY 00 % change Traffic revenues % % Monthly rental % % Interconnection % % Leased lines % % Equipment % % Other % % Total fixed line operating revenues % 2, , % 45

46 Fixed Line - Expense Breakdown (EUR million) FY FY 00 % change Material expense % Employee costs % Depreciation and amortization % Interconnection % Repairs % Services received % Other % Total fixed line operating expenses 2, , % 46

47 Mobile - Key Financial Data (EUR million) 4 Q 4 Q 00 % change FY FY 00 % change Operating revenues % 1, , % EBITDA % % EBIT % % Net income % % 47

48 Mobile - Revenue Breakdown (EUR million) 4 Q 4 Q 00 % change FY FY 00 % change Traffic revenues % % Monthly rental % % Equipment % % Roaming % % Interconnection % % Other % % Discounts % % Total mobile operating communications revenues % 1, , % 48

49 Data - Key Financial Data (EUR million) 4 Q 4 Q 00 % change FY FY 00 % change Operating revenues % % EBITDA % % EBITDA (adjusted)* % % EBIT % % EBIT (adjusted)* % % * Adjusted for early retirement costs

50 Internet - Key Financial Data (EUR million) 4 Q 4 Q 00 % change FY FY 00 % change Operating revenues % % EBITDA % EBIT % % 50

51 Operating Revenues by Segment (EUR million) 4 Q 4 Q 00 FY FY 00 Fixed line services , ,654.8 Data communications services Internet Intersegmental eliminations & other Consolidated operating revenues , ,814.4 Mobile communications services , ,5.0 Intersegmental eliminations Total managed operating revenues , ,

52 EBITDA by Segment - Excluding Idle Workforce Costs (EUR million) 4 Q 4 Q 00 FY FY 00 Fixed line services Fixed line services (adjusted)* Data communications services Data com. services (adjusted)* Internet Intersegmental eliminations & other Consolidated EBITDA Consolidated EBITDA (adjusted)* Mobile communications services Intersegmental eliminations & other Total managed EBITDA , ,060.9 Total managed EBITDA (adjusted)* , ,314.1 Consolidated EBITDA excluding idle workforce costs Costs for idle workforce Consolidated EBITDA * Adjusted for early retirement costs

53 EBIT by Segment - Excluding Idle Workforce Costs (EUR million) 4 Q 4 Q 00 FY FY 00 Fixed line services Fixed line services (adjusted)* Data communications services Data com. services (adjusted)* Internet Intersegmental eliminations & other Consolidated EBIT Consolidated EBIT (adjusted)* Mobile communications services Intersegmental eliminations & other Total managed EBIT Total managed EBIT (adjusted)* Consolidated EBIT excluding idle workforce costs Costs for idle workforce Consolidated EBIT * Adjusted for early retirement costs

54 Idle Workforce & Early Retirement Costs (EUR million) 4 Q 4 Q 00 FY FY 00 Costs for idle workforce exluded in total managed EBITDA Early retirement costs included in total managed EBITDA there of: fixed line data communications Costs for idle workforce: expenses for employees who have been released or transferred from the work force as well as all cash settlements for civil servants who have agreed to leave with severance packages. Early retirement costs: Accrued costs for early retirement programmes, which were finalized in

55 Capital Expenditures* (EUR million) FY FY 00 % change Fixed Line % Data Communications % Internet % Mobile Communications % Telekom Austria Group % * Additions to property, plant & equipment 55

56 Cash Flows - Telekom Austria Group Telekom Austria Consolidated Mobilkom Austria Consolidated (EUR million) FY FY 00 % FY FY 00 % Cash flow from operating activities % % Cash used in investing activities % % Cash from (used in) financing activities % Effect of exchange rate changes % % Net increase (decrease) in cash and cash equivalents % 56

57 Net Debt - Telekom Austria Group (in EUR million) Dec. 31, 00 Dec. 31, Long-term debt 2, ,005.2 Short-term debt Cross border lease, included in s/t debt Capital lease obligations Intercompany accounts with Mobilkom Austria Cash and cash equivalents and short-term investments Financial instruments, included in other assets Net debt Telekom Austria 2, ,534.0 Long-term debt Short-term debt Cross border lease, included in s/t debt Capital lease obligations 7.0 Intercompany accounts with Telekom Austria 68.5 Cash and cash equivalents and short-term investments Net debt Mobilkom Austria Net debt of Telekom Austra Group 3, ,282.1 Shareholders' equity 2, ,500.4 Net debt/equity 131.4% 131.3% 57