OTE Hellenic Telecommunications Organization. August 2015

Transcription

1 OTE Hellenic Telecommunications Organization August

2 OTE Group Overview 2

3 The Group today OTE is the leading integrated telecommunications operator in southeast Europe, providing voice, mobile, TV and broadband services. OTE s strategy aims at further strengthening its market positions through successful leveraging of new technologies, active customer service and innovative marketing. GREECE Fixed Business: Incumbent/Leader Total lines (000): 2,712 Broadband subscribers (000): 1,449 OTE TV subscribers (000): 378 Mobile Business: Leader Mobile subscribers (000): 7,386 ROMANIA Fixed Business: Incumbent/Leader Total lines (000): 2,162 Broadband subscribers (000): 1,208 TV subscribers (000): 1,421 Mobile Business: Challenger Mobile subscribers (000): 5,861 ALBANIA Mobile Business: Mobile subscribers (000): 2,056 Note: Data as of June 30,

4 At a Glance Shareholder Structure (June 30, 2015) Group Structure Deutsche Telekom 40.0% Hellenic State* 10.0% Own Shares 0.3% Private Investors 7.2% Institutional Investors 42.6% Fixed-line telephony Mobile telephony Other operations 100% Cosmote Greece OTE SA Greece 54% Telekom Romania 100% 100% 94% OTE Globe Greece OTEestate Greece OTESat-Maritel Greece Telekom** Albania 99.97% 30% Other Listed on the Athens Stock Exchange (Symbol: HTO GA) Share price: 7.25 (Aug 4, 2015) Zapp Romania 100% 70% Telekom Romania Mobile Outstanding shares: 490,150,389 Market capitalization: 3.5bn 100% Germanos S.E.Europe * Including voting rights attached to 4% of shares owned by State Pension Fund ** On July 2015, the Board of Directors of AMC approved the rebranding of AMC to Telekom Albania 4

5 Group financial Objectives Secure Group s financial stability Maximise financial results Secure debt servicing at all times in a challenging operating environment Support capex requirements to enhance competitive advantage Stabilizing revenues Gradually recover in mobile Maintain aggressive focus on cost base Sustain EBITDA margin Generate strong cash flow Maintain competitive market positioning Invest in VDSL / 4G / FTTH (Ro) and TV to enhance competitive advantage and unique market offerings, leading to improvements in financial results Enhance and develop the customer base, through new service offerings maximizing the customer lifetime value Grow FMC Re-instate Dividend Enhance and deepen market presence Following 4 years of no payout, we reinstate dividends out of 2014 net distributable income (OTE SA). An 8 eurocents dividend per share was paid on August 5,2015 Identify opportunities in high growth market segments, to enhance existing market position 5

6 Group - Key Financials Full Year ( mn) OTE Group - Quarterly Performance 4,330 4, % -8.6% -5.1% 3,918 Quarterly 0.1% -0.3% ( mn) Revenue trends yoy % -5.2% -5.0% -2.8% -2.4% 35.0% 35.9% 36.3% 1,516 1,456 1,422 FY 2012 FY 2013 FY 2014 Revenues Pro Forma EBITDA Pro forma EBITDA margin Revenue* Breakdown (12M ending Jun 30, 2015) EBITDA* * Breakdown (12M ending Jun 30, 2015) Greece: ~75% Greece: ~ 80 % * Gross figures (excl. eliminations) ** Excluding voluntary retirement programs & restructuring charges 6

7 Business Review 7

8 Evolution of Greek Fixed Market ( 000) Fixed Line Operations - Greece Market Overview 5,248 5,203 5,073 4,906 4,796 4,770 4,758 4,747 OTE s retail fixed-line market share: 56.7% 2,458 2,262 1,917 48% 43% 37% 3,141 3,199 3,249 2,888 2,667 66% 67% 68% 60% 54% 17% 20% 22% 24% 26% 28% 29% 29% OTE s retail broadband market share: 44.0% FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Q1 '15 Q2 '15 Total Greek Fixed Line Market Broadband / Total Fixed Lines (%) Total Greek Broadband Market Greek Broadband Penetration (Population) OTE is the Greek leading operator with approximately 2.7 million retail lines Broadband market growth at +7.5%, with Greece lagging behind EU Broadband penetration Fast-growing Pay - TV segment Increased competition in providing integrated solutions to the customer 8

9 Fixed Line Operations - Greece Key Operational Trends Fixed-Line Access Line Evolution ( 000) Fixed-Line Net Additions ( 000) OTE s market share on Broadband net additions 29 (26) 18 (35) 10 (42) 43 (56) (53) (52) (49) 35 (44) 23 (6) (9) (6) (29) 14 (17) (31) 28 5 (22) 15 (12) (27) (2) (11) (9) Q1'13 Q2'13 Q3'13 Q4 '13 Q1'14 Q2'14 Q3'14 Q4 '14 Q1'15 Q2'15 Competitors' Lines Net additions OTE Retail Lines Net additions/(disconnections) Total Fixed Market Lines Net additions/(disconnections) Broadband Market Evolution ( 000) 3,141 3,021 2,888 2,667 2,458 3,249 Broadband Net Additions ( 000) % 55.8% 56.3% 56.5% 56.7% 56.0% 44.6% 44.2% 43.7% 43.5% 43.3% 44.0% FY 2011 FY 2012 FY 2013 FY 2014 Q2'14 Q2'15 Series3 Competitors' Broadband Market Share OTE Retail Broadband Market Share Q1'13 Q2'13 Q3'13 Q4 '13 Q1'14 Q2'14 Q3'14 Q4 '14 Q1'15 Q2' % 50.0% 46.2% 48.5% 48.1% 45.7% 36.7% 35.0% 26.2% 23.5% Competitors' (LLU & Wholesale ADSL/VDSL) Net Adds OTE Retail Broadband net additions OTE s market Greek Broadband market Net additions share on OTE Broadband net additions Market share Broadband net OTE Broadband net additions Market share additions 9

10 Greek Fixed & Mobile Operations Responding to customer needs Enhance competitiveness of our offering in tougher economic environment Provide state-of-the-art customer experience Sharply reduced cost base resulting in: Lower OTE pricing premium vs. competition Premium justified by superior services Dynamic development of Next Generation networks: Rapid Expansion of OTE VDSL network, currently covering more than 35% of population in Greece a unique competitive advantage Leading 4G network, gradually covering the whole Greek territory - 135mn investment for 4G Spectrum in Oct 14 Attractive pay - TV services : Competitive TV pricing compared to other providers Extensive, exclusive & diverse OTE content - Acquisition of 3-year broadcasting rights for UEFA Champions League & UEFA Europa League ( ) - Renewal of rights for Bundesliga, Campionato, La Liga, NBA and Formula 1 Best-in-class services, building on the distribution network & the points of contact with customers: Revamp and operational upgrade of the OTE Shops Continued training & skills enhancement for the company s technicians Improved order-to-bill and fault-to-repair cycles OTE customers now enjoy top-quality portfolio of services at attractive pricing OTE customers enjoy superior network performance and best-in-class services 10

11 NGN Expansion in Greece OTE pursues the rapid expansion of its New Generation Networks with VDSL and 4G high speed gradually covering the whole Greek territory VDSL Currently in excess of 35% population coverage Mobile (Jun 2014 Jun 2015) 60% increase in mobile broadband network capacity 80% increase in mobile internet speeds 4G expansion Coverage of all cities of over 40,000 residents, smaller towns & popular destinations 77% population coverage Available to 80% of population by the end of 2015 LTE advanced (4G+) 4G+ technology has been commercially launched with speeds up to 300Mbps since the beginning of the 2015 Rollout actions in full progress in big cities, smaller towns & popular destinations VDSL OTE 4G COSMOTE 11

12 Building foundations for Next Generation Networks (NGN/NGA) Fixed VDSL/Vectoring Mobile LTE IP Transformation VDSL Population Coverage 70% LTE Population Coverage (outdoor) 98% TDM 100% IP 100% > 35% 50% 77% Q Q2 15 VDSL/Vectoring 20% 2019 VDSL 100Mbps Vectoring services Retail ARPU Uplift LLU Wholesale-> Bitstream Enabler for IP/Cloud Services Q Upgrade to 4G+ (300Mbps) Maintain Network leadership Mobile Data Monetization Hybrid (VDSL/LTE) service Network simplification & modernization Operating cost reduction Improved customer experience New IP based services 12

13 Fixed Line Operations - Greece Leader in VDSL take up VDSL subscribers in Greece ( 000) In Q2 15, VDSL net additions comprised the 42% of OTE s total broadband net additions OTE is the main telecom operator in Greece that is developing an NGA network with FTTC (Fiber To The Cabinet), and thus has the greatest availability of VDSL services in the country OTE s high-speed VDSL had been adopted by more than 122k subscribers, extending the rapid expansion of the service Customers likely to focus more on quality as speed and content requirements grow 13

14 Fixed Line Operations - Greece Pay-TV offering by OTE OTE TV Subscribers ( 000) The Market Free-to-air channels content has deteriorated drastically in recent years, widening the quality differential versus Pay-TV competition Pay-TV is an affordable form of entertainment, with premium content, still at low penetration levels (<25% of households, compared to ~40% of benchmarks) OTE Continuing growth in TV offering, driving customer base to approx. 378k subscribers Q1'13 Q2'13 Q3'13 Q4 '13 Q1'14 Q2'14 Q3'14 Q4 '14 Q1'15 Q2'15 OTE TV Subscribers (IPTV & Satellite) The service s growth is fueled by extensive, exclusive and diverse content OTE TV s attractive offering serves at expanding the customer base During 2015, OTE renewed the broadcasting rights of significant sports events: Broadcasting of Champions League & Europa League as of August 2015 and for the next 3 years - Bundesliga (until 2017) - Campionato (until 2018) - La Liga (untill NBA (until 2018) - Formula 1 (until 2017) 14

15 Fixed Line Operations - Greece Financial Overview Full Year ( mn) 2,170 1,912 OTE SA 1, % -8.6% -5.1% CAGR: Revenues -8.6% Pro Forma EBITDA -2.4% 1,557 1,512 Quarterly 0.1% -0.3% ( mn) -5.2% -5.0% -2.8% -2.4% Revenue trends yoy % 0.0% +0.3% +0.6% -8.1% -8.4% OTE SA -5.9% -4.6% -4.2% -3.0% -11.8% % 29.3% 29.0% % 39.6% % 34.2% 35.7% 40.7% 38.8% 37.0% 40.1% 42.5% 40.0% 38.5% FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Revenues Pro Forma EBITDA Pro forma EBITDA margin Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Revenues Pro Forma EBITDA Pro forma EBITDA margin Steady improvement in fixed-line revenue trends - Revenues up for a third consecutive quarter Growth supported by Broadband,TV, Wholesale and ICT The continuous development and penetration of triple play a key strategic objective 2.6% -3.6% -3.1% -2.4% -1.8% -4.5% 0.0% -0.2% -0.3% -6.8% -3.8% -4.2% -7.0% -5.1% -5.0% -7.5% -7.5% -10.0% -12.0% -13.2% Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Retail Revenue yoy change (%) Wholesale Revenue yoy change (%) 15

16 14, , ,0 00 8,00 0 6,00 0 4,00 0 2, OTE S.A Headcount & Employee Cost Evolution Headcount Evolution Personnel Cost Evolution m 11,369 10,925 10,569 8,750 6,878 6,924 8,921 6,911 employees ex- Transfer of OTE Plus to OTE 8, % 32.9% % 31.8% 28.5% % 21.6% % Q1 '15 Q2 ' Q1 '15 * Q2 '15 Personnel Expenses ( mn) Personnel Expenses/Revenues Significant Personnel Cost Reduction achieved through: - A new Voluntary Exit Plan was successfully completed in the end of Q2 15, that will contribute another 30mn of net annual cost savings at OTE SA (starting from July 2015) - Older Voluntary Exit Plans executed in 2012 and 2013 resulted to annual savings of 80mn and 94mn respectively - Signing of new labor agreement at the end of 2014, maintaining 11% salary reductions introduced in 2011, and establishing new salary grades for new recruits The majority of OTEPLUS employees (more than 2000 employees) were transferred to OTE, under new salary grades, plus additional benefits: - As a result more than 10mn of additional cost (OTE Plus & Voicenet) is included in Personnel Cost, that previously was included in Other Operating Expenses (Third party fees) as well as in maintenance and repair expenses * Headcount of 2014 includes Voicenet employees 16

17 Mobile Greece - Financials Full Year ( mn) 1,812 Cosmote Greece - Quarterly Performance 1,648 1,525 1, % -8.6% -5.1% CAGR: Revenues -8.8% Pro Forma EBITDA -8.9% 1,251 Quarterly 0.1% -0.3% ( mn) Revenue trends yoy % -5.2% -5.0% -2.8% -2.4% -0.3% -3.1% -5.9% -7.6% -7.5% -7.0% -4.9% -12.6% -11.1% -17.8% 36.8% 38.1% 40.2% 37.4% 36.7% FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Revenues Pro Forma EBITDA Pro forma EBITDA margin Greece: Mobile Termination Rates (eurocent/min) Market leader since Customer-centric strategy, focusing on customer experience and high quality of services Investing to maintain network superiority in terms of coverage and speeds Expanding 4G footprint - 77% population coverage Dec 08 Jan-09 Jan-10 Jan-11 Jan-12 Aug-12 Oct-12 Jan-13 Jan-14 Jan-15 17

18 Mobile Greece Data Penetration Data Revenues / Service Revenues Smartphone penetration 18.8% 47% First to roll out LTE Network in Greece - Leader with superior coverage capacity versus competition - First to launch 4G+ mobile broadband network Significant growth potential fueled by growing demand for data services and smartphone penetration - 80% growth in data traffic in the quarter Data standing at ~19 % of service revenues, steadily growing Meet high demand through integrated offerings with MB/Data included 18

19 Fixed Line Operations - Romania Telekom Romania key Metrics Fixed Lines ( 000) DSL & Wireless Data Lines ( 000) TV Subscribers ( 000) Incumbent fixed line operator in Romania with growing TV portfolio Launch of attractive fixed-mobile convergent services to defend customer base Responding to competitive challenge through extensive FTTB / FTTH investment plan Broadband penetration at 56% of voice connections TV Services penetration at 66% of voice connections 19

20 Full Year ( mn) 717 Fixed Line Operations - Romania Telekom Romania Financial Overview RomTelecom - Quarterly Performance CAGR: Revenues -4.0% Pro Forma EBITDA -2.8% % -8.6% -5.1% Quarterly 0.1% -0.3% ( mn) -5.2% -5.0% -2.8% -2.4% Revenue trends yoy % RomTelecom - Quarterly Performance 8.8% 7.7% -9.2% -4.9% -0.6% % -0.9% -6.9% -5.1% 0.5% % 22.8% 26.8% 26.1% 26.3% FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Revenues Pro Forma EBITDA Pro forma EBITDA margin 27.1% 30.2% 30.0% 23.5% 23.4% 24.6% 27.4% 23.1% 22.1% % Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Revenues Pro Forma EBITDA Pro forma EBITDA margin Positioned as a technology and media provider, breaking away from a single fixed line business model Higher TV revenues as well as revenues from fixedmobile offers, continue to partially offset the decline in voice revenues Continuing FTTH rollout and ICT project revenue streams 20

21 Amounts in EURO million Cosmote Romania - Quarterly Performance Full Year ( mn) Mobile Romania - Financials -11.6% -8.6% -5.1% CAGR: Revenues -1.6% Pro Forma EBITDA +8.5% Quarterly 0.1% -0.3% ( mn) -7.8% Revenue trends yoy % -2.0% -1.7% -5.2% -5.0% -2.8% -2.4% 8.1% 9.2% -8.8% -7.8% -8.4% -12.7% 3.3% 16.3% % % 25.9% 24.0% FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Revenues Pro Forma EBITDA Pro forma EBITDA margin Romania: Mobile Termination Rates(eurocent/min) Strengthening market position in an intensely competitive environment 9.06 Rebranded jointly with RomTelecom in Sep 14, under the common Telekom Romania - Launch of fixed-mobile convergent bundles Offerings for professional users to further support business segment 0.96 Dec-08 Apr-09 Jan-10 Jul-10 Mar-12 Sep-12 Apr-14 21

22 Amounts in EURO million Mobile Albania -Financials Full Year ( mn) % Cosmote Albania - Quarterly Performance % % -11.6% -8.6% -5.1% CAGR: Revenues: -9.1% Pro Forma EBITDA: -15.4% % 36.6% Quarterly 0.1% -0.3% ( mn) Revenue trends yoy % -5.2% -5.0% -2.8% -2.4% FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Revenues Pro Forma EBITDA Pro forma EBITDA margin Albania: Mobile Termination Rates (eurocent/min) Maintaining position in a highly fragmented and competitive market 13.1 Impact of regulatory changes (MTRs) and competition 96% population coverage through cost-efficient 3G network - Increase in mobile handset data Dec - 08 Jan-09 Sep-09 Mar-11 Sep-11 Sep-12 Sep-13 Apr-14 Dec-14 22

23 16. 0% 14. 0% 12. 0% 10. 0% 8.0% 6.0% 4.0% 2.0% 0.0% 12. 0% 10. 0% 8.0% 6.0% 4.0% 2.0% 0.0% Mobile International Data Penetration Romania - Data Data / Service Revenues Revenues Cosmote Romania 6.3% 8.9% 12.2% 13.4% 13.4% Smartphone-centric operator with ongoing development of 3G & 4G services portfolio New mobile applications in order to promote mobile data services Customized devices compatible with 4G Network FY 2012 FY 2013 FY 2014 Q2'15 % of Data Revenues over Service Revenues Albania - Data / Service Revenues Data Revenues Cosmote Albania 8.0% 9.2% 11.1% 11.1% Enriched data services & product portfolio to enhance data usage 5.8% Significant increase in Smartphone penetration in prior years -still room for further growth FY 2012 FY 2013 FY 2014 Q2'15 % of Data Revenues over Service Revenues 23

24 Cashflow Review 24

25 OTE Group Cash Flow Trends Full Year ( mn) Quarterly ( mn) 1,340 1,188 1, , mn one-off tax payment related to capitalization of reserves (618) (448) (471) (557) FY 2011 FY 2012 FY 2013 FY 2014 Adj. Net Operating Cash Flow * Capex ex-spectrum Adj. Free Cash Flow* (ex-spectrum) Strong Free Cash Flow generation continuing; 159mn in in 6M 15 (+82.7% vs. 6M 14) OTE retains Free Cash Flow target close to 0.5bn in 2015, assuming a return to normal liquidity conditions in Greece *Cash Flow excluding spectrum, voluntary retirement Programs and restructuring payments plus interest received 25

26 OTE Group Debt & Liquidity Profile Debt Maturity Profile Nominal Amounts ( mn) Debt & Cash Evolution ( mn) As of June 30, 2015 Net Debt/EBITDA 1.9x 1.7x OTE 1.2x Group 1.0x - Underlying 1.1x 1.1x Net Debt 1.0xEvolution 0.8x 0.8x 0.8x 4,135 3,746 4,135 3,388 3,746 2,956 2,945 3,388 2,956 2,548 2,742 2,639 2,945 2,548 2,742 2,639 2,181 2,148 2,737 2,181 2,148 2,737 2,459 2,459 1,665 1,665 1,496 1,584 1,548 1,496 1,584 1,548 1,427 1,427 1,125 1,136 1,125 1,136 1,056 1,056 (1,398) (1,287) (1,723) (1,461) (1,361) (1,000) (1,314) (1,045) (1,092) (1,514) Q1 Q1 '13 '13 Q2 Q2 '13 '13 Q3 Q3 '13 '13 Q4 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Gross Debt Cash Cash && Other Other financial financial assets assets Underlying Underlying Net Net Debt Debt Existing cash balances and cashflow secure the servicing of debt payments 26

27 OTE Credit Profile OTE PLC Bonds Overview OTE PLC Bond 2016 OTE PLC Bond 2018 OTE PLC Bond 2020 Maturity: May 2016 Outstanding Amount: 629mn Coupon: 4.625% Current Yield: 6.118% Maturity: Feb 2018 Outstanding Amount: 700mn Coupon: 7.875%(paid semi-annually) Current Yield: 7.556% Maturity: July 2020 Outstanding Amount: 700mn Coupon: 3.5% Current Yield: 6.470% Standard & Poor s Rating Evolution Moody s Rating Evolution Source: Bloomberg, Data as of Aug 4,

28 IMPORTANT NOTICE - DISCLAIMER: This presentation is provided to persons who are entitled to receive it in accordance with the laws and regulations of appropriate jurisdictions. This presentation is provided for information purposes only and does not constitute an offer or an invitation to buy or sell or subscribe to any securities or a solicitation of an offer to buy or sell or subscribe for any security or instrument or to participate in any trading strategy. No part of this presentation may be construed as constituting investment advice or recommendation to enter into any transaction or as providing the basis for any credit or other evaluation. No representation or warranty is given with respect to the accuracy or completeness of the information, estimations, provisions, future expectations or other data, contained in this presentation, and no claim can be made that any transaction of any security will conform to any terms that may be contained herein. Under no circumstance, should OTE, or any of its directors, officers or employees be held liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any information contained in this presentation. Information contained herein may change without notice and OTE undertakes no obligation to update it. Before entering into any transaction, investors should determine any economic, trading and financial risks, restrictions and benefits, as well as any legal, tax, accounting consequences of doing so, and their ability to assume such risks, without reliance on the information contained in this presentation. You should consult a professional financial advisor before entering in any transactions in securities mentioned herein. Thank you For more information please contact OTE Investor Relations: Tel: Fax: or visit: https :// 28