Roadshow Presentation Results for the fourth quarter and full year - PowerPoint PPT Presentation

Roadshow Presentation Results for the fourth quarter and full year 2 0 1 8

Cautionary statement 'This presentation contains forward-looking statements. These forward-looking statements are usually accompanied by words such as 'believe', 'intend', 'anticipate', 'plan', 'expect' and similar expressions. Actual events may differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement. Neither A1 Telekom Austria Group nor any other person accepts any liability for any such forward- looking statements. A1 Telekom Austria Group will not update these forward-looking statements, whether due to changed factual circumstances, changes in assumptions or expectations. This presentation does not constitute a recommendation or invitation to purchase or sell securities of A1 Telekom Austria Group.‘ All figures are stated according to IAS 18 if not stated otherwise. To reflect the performance on an operational basis, the proforma figures present comparison figures for previous periods as if M&A transactions executed between the start of the comparison period and the end of the reporting period had already been fully consolidated in the relevant months of the comparison period. Alternative performance measures are used to describe the operational performance. Please therefore also refer to the financial information presented in the Consolidated Financial Statements, which do not contain proforma figures, as well as the reconciliation tables provided in the Earnings Release. Results for the fourth quarter and full year 2018 2

Operational and Operational and financial highlights financial highlights for the full year 2 0 1 8 for the full year 2 0 1 8

Highlights FY 2018 Strong performance in Austria and most CEE countries led to growth of 1.8% in revenues  (adjusted: 3.1%*) and of 1.6% in EBITDA, excl. restructuring (adjusted: 3.6%*) Mobile contract customer base increase of 4.1% y-o-y due to ongoing shift from prepaid  to contract and M2M, migrations to higher tariffs and strong demand for WiFi router Increase of RGUs by 3.7% y-o-y due to strong BB and TV trends with ARPL growing in  most markets Steady demand for ICT solutions and complementary connectivity continues to benefit  service revenues A1 brand successfully launched in Bulgaria and Croatia  Innovative products in the areas of entertainment and smart living as well as security  solutions fitting A1 connectivity proposition A1 Digital: customer wins confirm growing traction; further investments and intensified  sales actions Smart network rollout continued:  Austria: 333k more high-speed ready households as part of NGA rollout in 2018  Next Generation Data Center in Austria launched in Q4 2018  Next phase of future-proof mobile networks preparation towards 5G  * Adjusted basis excluding one-off and FX effects as well as restructuring charges Results for the fourth quarter and full year 2018 4

FY 2018 – Solid service revenue growth translated into strong operative EBITDA increase Group (in EUR million) FY 2018 FY 2017 % change Total revenues (proforma*) 4,466.4 4,388.5 1.8% EBITDA (proforma*) 1,380.6 -1.3% 1,398.9 excl. restructuring 1,402.7 1.6% 1,380.7 Net Income (reported) 242.7 -29.7% 345.5 CAPEX (proforma*) 771.0 4.5% 738.0 Revenue increase of 3.1% on an adjusted** basis with service revenue growth in all markets except for Slovenia.  EBITDA on an adjusted** basis increased by 3.6% driven by strong growth in Austria and most of the CEE segments;  ~EUR 15 mn negative roaming impact on Group EBITDA in FY 2018 more than offset. Net income declined due to amortization of brand values (EUR 198 mn in D&A in 2018; EUR 122 mn in 2017) and as the  prior-year was positively impacted by a lower effective tax rate (income taxes of EUR 99.7 mn 2018 vs. EUR 3.0 mn 2017). CAPEX higher due to investments in Austria (fiber roll-out, datacenter) as well as investments in CEE in late 2018.  * Proforma figures include effects of M&A transactions executed between the start of the comparison period and the end of the reporting period. ** Adjusted basis excluding one-off and FX effects as well as restructuring charges: One-off effects: EUR +5.0 mn (2017: EUR +30.4 mn) in revenues; EUR +9.4 mn (2017: EUR +21.3 mn) in EBITDA • Restructuring charges: EUR 22.1 mn in FY 2018 versus positive EUR 18.2 mn in FY 2017 • • FX effects: negative EUR 30.7 mn and EUR 14.9 mn in revenues and EBITDA respectively in FY 2018 Results for the fourth quarter and full year 2018 5

FY 2018 – EBITDA benefits from service revenue growth in all areas and strong focus on sales execution Equipm ent Service revenues OOI OPEX Non-operating effects m argin 1 .4 0 2 .7 1 .3 8 0 .7 EUR mn EBITDA 2017 Mobile Fixed Solutions OOI Subsidies Handset Opex Opex One-offs FX Roaming EBITDA 2018 excl. Connectivity valulation savings increase excl. restructuring restructuring (proforma) Results for the fourth quarter and full year 2018 • Restructuring charges: negative EUR 22.1 mn in FY 2018 versus positive EUR 18.2 mn in FY 2017 6

Ongoing cost efficiencies more than offset indirect cost increases* Savings initiatives 2019 OPEX** development 2018 Ongoing program ‘Sourcing 4 Success’ will  target especially the following areas:  Maintenance  Customer Service  Energy Focus on process efficiency and process  automation Investments in IT-system simplifications  2,054.4 Savings from lower frequency fees in Croatia  2,029.3 Drive digital transformation forward:   Customer provisioning  Customer post-sales processes 2017 (in Workforce Infra- Content A1 Advertising Other Opex FX 2018 (in EUR mn) related structure Digital Rebranding savings effect EUR mn) OPEX savings in 2019 are expected to be at a  * indirect costs: costs which are not directly product- or sales-related, overhead costs similar level like in 2018 ** excl. interconnection, roaming, equipment and restructuring costs; proforma figures Results for the fourth quarter and full year 2018 7

Key financial Key financial developm ents for the developm ents for the fourth quarter 2 0 1 8 fourth quarter 2 0 1 8

Q4 2018 in line with FY trends: Strong service revenues translated into EBITDA growth Reported Reported Group (in EUR million) Q4 2018 Q4 2017 % change Total revenues 1,165.1 1,130.0 3.1% EBITDA 293.0 288.3 1.6% excl. restructuring 306.8 283.3 8.3% CAPEX 263.7 238.5 10.6% Service revenue growth in all markets except for Slovenia (increase in Belarus excl. FX effects) with growth both  in the fixed-line and the mobile business; solutions & connectivity revenues particularly high in Austria. EBITDA excl. restructuring* showed a strong increase, especially driven by Austria and Bulgaria.  CAPEX increase in Q4 2018 driven by higher investments in CEE, stemming mainly from satellite IRU in Bulgaria  and VULA agreement in Slovenia. * Restructuring charges: EUR 13.9 mn in Q4 2018 (positive effect of EUR 5.0 mn in Q4 2017) The combined effects from the one-offs and FX caused the levelling out on Group level Results for the fourth quarter and full year 2018 9

Austria: Strong operational performance driven by sound service revenue growth and a better equipment margin ARPU ARPL Operational data (in EUR) (in EUR) Δ : +2.1% High demand for mobile WiFi routers and sound development in high-  value tariffs both benefit postpaid subscriber base (+1.2%) and ARPU 31.1 Δ : +3.7% 30.5 development 16.1 15.5 Higher ARPL due to strong demand for higher bandwidth and TV  options as well as price indexation Q4 18 Q4 17 Q4 18 Q4 17 1.9% RGU decrease mainly driven by voice; broadband RGUs  declined slightly year-on-year Total revenues EBITDA* Financial performance (in EUR mn) (in EUR mn) Strong service revenue growth (+3.8%), driven by mobile &  Δ : +2.8% completion of large ICT corporate projects in Q4 2018 Δ : +8.6% 694.9 676.2 OPEX excl. restructuring remained stable. Lower interconnection,  rep.: -0.9% roaming costs and cost efficiencies (i.e. network engineering, maintenance) outweighed higher costs for leased lines and content 214.1 197.1 Subsidy per handset increased due to higher-value handsets but  overall lower quantities Restructuring charges increased due to accelerated program  Q4 18 Q4 17 Q4 18 Q4 17 Results for the fourth quarter and full year 2018 * excl. restructuring charges of EUR 13.9 mn in Q4 2018 and positive EUR 5.0 mn in Q4 2017 1 0