MAGYAR TELEKOM GROUP INVESTOR PRESENTATION SEPTEMBER, 2017
STRATEGY AND MARKET POSITION
OVERVIEW – MAGYAR TELEKOM AT A GLANCE Overview International presence Revenue (FY2016) Integrated operations in Hungary and Macedonia* 8.9% 4.8% leading telecommunications service provider in both countries 86.4% leading SI/IT service provider in Hungary EBITDA (FY2016) Majority owned by Deutsche Telekom (59.2%) 9.7% EUR 1.6bn market capitalization** 4.8% Stock exchange listings 85.5% Primary listing on Budapest Stock Exchange Hungary Level I ADR program, ADSs traded on the OTC Market Macedonia Montenegro* Main services offered Incumbents in Hungary Mobi obile Copp opper Coa oax Fiber Budapest Magyar Telekom copper Invitel copper UPC copper *As announced on January 10, 2017, Magyar Telekom disposed of its majority stake in Crnogorski Telekom. The transaction closed at the end of January 3 3 2017; following this date, the Montenegrin operations will no longer be consolidated into Magyar Telekom Group’s financials. **As of August 21, 2017
MARKET POSITIONS IN THE HUNGARIAN TELCO MARKET Total mobile market* Fixed voice market** Other Vodafone Subscribers Subscribers -0.5% +0.9% Invitel Telenor 12,000,000 3,500,000 DIGI MT 3.3% 3,000,000 3.1% 24.1% 24.9% 3.9% 24.7% UPC 13.2% 12.4% 12.9% 9,000,000 2,500,000 MT 12.2% 11.4% 10.6% 28.1% 27.5% 28.1% 2,000,000 16.3% 17.4% 18.4% 6,000,000 1,500,000 1,000,000 3,000,000 47.8% 47.2% 47.5% 56.3% 54.9% 53.6% 500,000 0 0 Jun 2016 Jun 2017 Jun 2015 Jun 2015 Jun 2017 Jun 2016 Fixed broadband market** TV market** Subscribers Subscribers Other Other +5.4% 3,000,000 +1.2% Invitel Invitel 4,000,000 15.2% DIGI DIGI 2,500,000 15.0% 16.1% 14.5% 15.6% 9.0% 17.2% UPC UPC 9.6% 3,000,000 4.8% 4.7% 2,000,000 9.5% 4.3% 15.9% MT MT 15.4% 25.2% 14.4% 25.0% 24.3% 1,500,000 2,000,000 22.1% 21.9% 21.8% 26.8% 26.8% 1,000,000 26.8% 1,000,000 37.9% 500,000 38.2% 38.6% 28.6% 27.5% 27.4% 0 0 Jun 2016 Jun 2017 Jun 2015 Jun 2017 Jun 2015 Jun 2016 *Based on internal calculations from Vodafone Group and Telenor Group reports 4 4 **Based on the total fixed voice channels/BB access/pay TV access market estimated by the National Media and Infocommunications Authority (NMIA)
IT MARKET IN HUNGARY Total IT market (HW&SW and IT services)* IT Services market shares (by revenue)* SYSTEM INTEGRATION IT INFRASTRUCTURE SI&IT HUF bn +4.0% 800 Package Custom System IT App. OS & Infra. OS & Infra. proj. 742 Hosting Cloud 721 appl. app. dev. integration consulting operation operation service 696 679 700 643 33% 33% 610 29% 29% 600 20% 20% 19% 60% 60% 500 61% 61% 62% 63% 400 15% 14% 14% 14% 14% 300 10% 16% 9% 9% 16% 9% 9% 16% 16% 200 16% 15% 6% 6% 100 24% 5% 5% 24% 23% 23% 22% 21% 0 2016 2017 2018 2019 2020 2021 Market size* 26 bn 26 bn 30 bn 10 bn 35 bn 12 bn 20 bn 61 bn 17 bn (HUF) Hardware &Software IT Infrastructure System Integration / w/o mobile devices services IT Application services Magyar Telekom is the only fully integrated ICT company in IT services market represents ca. 40% of the total IT market Hungary IT Services market in Hungary very fragmented Total IT market expected to grow by 4% CAGR over the next 5 Presence of major international players, such as HP, Microsoft, IBM years Magyar Telekom is the market leader with 14.7% market share in the IT EU fund inflows are a major driver of IT spending in Hungary services market (ca. 12% total IT market ie. including HW&SW) Magyar Telekom’s total revenue based ITmarket share is ca. 12% 5 * Source: IDC 2016; Market size calculated by demand side, while market shares by supply side data
STRATEGY OVERVIEW: WITH OUR ENGAGED PEOPLE, WE ARE BUILDING A GROWING ICT COMPANY SERVING SATISFIED CUSTOMERS Strategic pillars Strategic goals 1 Increase customer satisfaction Together. For We listen: customer and colleague opinions form an Improve customer service level our important part of our decision making customers Enhance employee engagement 2 Foster technology leadership Integrated As a number 1 integrated service provider we give all products & Monetize FMC capabilities our customers the opportunity to connect seamlessly network Strengthen integrated ICT brand 3 Grow in IT IT & digital IT and digital services are important areas of focus for services us and will be key drivers of future growth Develop digital business 4 Magyar Telekom’s transformation into a digital Digital company is part of our efforts to ensure customer Push digital transformation telekom satisfaction 6 6
HUNGARIAN ECONOMIC ENVIRONMENT Growth structure Domestic demand 6% Domestic demand improved as economy recovered 3.7% 3.7% 3.6% 4% 3.4% Governmental measures support consumer 2.0% spending 1.5% 2% Investment levels show volatility due to EU fund cycles 0% MT leveraged positive trends of domestic demand -2% 2016 2017FC* 2018FC* 2013 2014 2015 Consumption of HH-s Inflation GDP growth Y/Y Consumption of GOV Net export Investments Taxes levied on Magyar Telekom Tax burdens to reduce budget deficit HUF bn Temporary special revenue-based sector tax 33.5 32.9 35 31.5 31.8 31.3 Telecom tax levied between 2010-2012 30 Utility tax 25 Permanent traffic-based telecom tax introduced 25.8 25.2 20 24.4 23.9 24.3 in July 2012 and increased in August 2013 15 Permanent tax on utility and telecom networks 10 levied in 2013, 5-year tax holiday on new 5 7.6 7.6 7.4 7.3 7.4 networks > 100Mbps since 2016 0 2013 2014 2015 2016 2017FC 7 7 * Central Bank March 2017 forecasts
NETWORK DEVELOPMENTS IN HUNGARY Fixed network (Households covered) Mobile network coverage (population based) HHs ths % 99% 98% 4,000 97% 100 93% 86% 83% 83% 78% 80 33% 3,000 38% 43% 4% 60 2,000 36% 28% 89% 87% 84% 82% 40% 40 76% 71% 71% 43% 65% 34% 1,000 22% 20 7% 2% 25% 17% 15% 12% 0 0 2014 2015 2016 2017FC 2016 2014 2015 2017FC >100 Mbps 30-100 Mbps 10-30 Mbps <10 Mbps 3G indoor/total 4G indoor/total 2.9 million households across the country covered by High Network sharing on 800 MHz with Telenor Speed Internet (HSI) access 4G+ coverage, enabling 250Mbps exceeded 30% FTTx (697 HHs) – ongoing countrywide roll-out Number of mobile data subscribers grew by 15% CAGR (2013-2016) ED3 (757k HHs) – participating in market consolidation Overall mobile data usage increased by over 30% CAGR VDSL (1,464k HHs) – revitalizing copper, excl. overlaps (2013-2016) Roll-out is ongoing, aim to reach in excess of another 250,000 Average data usage grew by 50% from 764MB/month to households in 2017 with HSI 1,163 MB/month (2013-2016) 8 8
HUNGARIAN MOBILE SPECTRUM ALLOCATION Current spectrum allocation (MHz) BAND Magyar Telekom Telenor 700 MHz 2x5 2x5 2x5 2x5 2x5 2x5 Vodafone Digi Free 800 MHz 2x10 2x10 2x10 900 MHz 2x11.8 2x11 2x12 1800 MHz 2x15 2x5 2x25 2x30 2100 MHz 2x15 2x15 2x15 2x5 2x5 2x5 2600 MHz 2x30 2x20 + 1x25 2x20 3.4 - 3.8 GHz* 2x30 1x20 * TDD band 9 9
H1 2017 RESULTS, GUIDANCE AND DIVIDEND
H1 2017 FINANCIAL RESULTS AND 2017 TARGETS* FY 2016 H1 2017 2017 TARGETS RESULTS RESULTS Strong growth in Hungarian SI/IT driven by uptick in EU fund inflows around Mobile service revenue growth continues REVENUE HUF 574.0 bn HUF 294.0 bn HUF 580 bn** Equipment sales used to establish customer relationships and to secure higher-margin contracts going forward Increased ratio of low margin services in the revenue mix around EBITDA HUF 188.1 bn HUF 86.2 bn TV content fee introduced in July 2016 adding to gross profit decline HUF 182 bn Indirect costs remain flat thanks to cost efficiency measures Balanced distribution of spending throughout the year around CAPEX HUF 37.7 bn HUF 97.9 bn Increased spending on fixed customer connections HUF 85 bn Savings on efficiency projects concluded (e.g. PSTN migration) Absence of one-off profit items (Building and Origo sale in Q1 2016) around FCF HUF 57.3 bn HUF 10.7 bn Lower provisions and interest payments partly offset EBITDA decline HUF 55 bn Cable acquisitions weighing on investing CF performance 11 11 *Excluding Crnogorski Telekom financials and the transaction price received for the disposal of the majority ownership in Crnogorski Telekom ** Modified from HUF 560bn on August 10, 2017
Recommend
More recommend
