OTE Hellenic Telecommunications Organization. February 2016

Transcription

1 OTE Hellenic Telecommunications Organization February 2016

2 OTE Group Overview OTE OTE Group Corporate Presentation Q4 15 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. OTE Group Key figures (Trailing 12M) Revenues: 4bn Employees: 21,573 EBITDA*: 1.3bn Market Cap: 3.4bn Albania (2% of Group Revenues) Mobile Business: Challenger Mobile subscribers: 1.7mn Romania (24% of Group Revenues) Fixed Business: Incumbent/Leader Greece (74% of Group Revenues) Fixed Business: Incumbent/Leader Total access lines: 2.7mn Broadband subscribers 1.5mn OTE TV subscribers: 446 k Mobile Business: Leader Mobile subscribers : 7.4mn Total access lines: Broadband subscribers OTE TV subscribers: Mobile Business: Challenger Mobile subscribers : 2.2mn 1.2mn 1.4mn 5.8mn Note: Data as of December 31, 2015 OTE OTE Group Corporate Presentation Q * Excluding voluntary retirement programs & restructuring charges

4 At a Glance Shareholder Structure (Dec 31, 2015) Group Structure Deutsche Telekom 40.0% Hellenic State* 10.0% Own Shares 0.3% Private Investors 6.7% Institutional Investors 43.1% 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: 6.90 (Feb 24, 2016) Zapp Romania 100% 70% Telekom Romania Mobile Outstanding shares: 490,150, % Germanos S.E.Europe OTE OTE Group Corporate Presentation Q4 15 * Including voting rights attached to 4% of shares owned by State Pension Fund 4

5 Key industry trends crafting the focus of our Strategy Our Strategy Growing demand for converged networks with increased data capacity Competition focus moving from Pricing to Quality Slowdown of traditional revenue streams High competition Increased demand for bundled offerings Invest wisely Think Quality Drive Innovation Increase Loyalty The 6 Pillars of our strategic plan 1. Technological Superiority 2. Best Customer Experience 3. New Revenue Streams 4. Lead in Traditional Services NGN/NGA development - VDSL Expansion - 4G, 4G+ coverage IP Transformation Maximize Fixed & Mobile technological synergies Processes Optimization -Order-to-Bill -Fault-to-Repair Call Centers Excellence Digital Communication channels Optimize experience of the FMC customer Data Revenues increase Reinforce OTE TV growth ICT, Cloud, Machine-to- Machine New Service areas (books, music, e-payments) Seek innovation through partnerships Enriched offers (higher speeds, better content) Expand Converged services & products Optimize sales channels B2B leadership based on IP technology Leverage brand strength 5. Operational and Cost Optimization Boost operating efficiency: - Improving systems and processes - Reducing our cost base 6. Human Resources Strategy - Creating common culture and policies in the merged Fixed and Mobile structure - Developing people and give career opportunities OTE OTE Group Corporate Presentation Q4 15 5

6 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 The BoD will propose a dividend of 0.10 per share, compared to 0.08 per share distributed last year. This reflects the strong balance sheet and healthy financial position of the Group Identify opportunities in high growth market segments, to enhance existing market position OTE OTE Group Corporate Presentation Q4 15 6

7 Full Year ( mn) CAGR: Revenues -3.4% Pro Forma EBITDA -4.0% -11.6% -8.6% -5.1% Group - Key Financials Quarterly 0.1% -0.3% ( mn) Revenue trends yoy % OTE Group - Quarterly Performance q -5.2% -5.0% -2.8% -2.4% , , % 36.4% 37.6% 36.5% 34.7% 33.4% 36.0% 33.6% Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Revenues Pro Forma EBITDA Pro forma EBITDA margin Revenue* Breakdown (12M ending Dec 31, 2015) EBITDA* * Breakdown (12M ending Dec 31, 2015) Greece: ~75% Greece: >80% OTE OTE Group Corporate Presentation Q4 15 * Gross figures (excl. eliminations) ** Excluding voluntary retirement programs & restructuring charges

8 Business Review 8

9 Fixed Line Operations - Greece Market Overview Evolution of Greek Fixed Market ( 000) 5,248 5,203 5,073 4,906 4,796 4,770 4,741 OTE s retail fixed-line market share: 56.6% 1,917 37% 2,262 43% 2,458 48% 2,667 54% 2,888 60% 3,141 66% 3,362 71% OTE s retail broadband market share: 44.8% FY 2012 FY 2013 FY 2014 FY 2015 Total Greek Fixed Line Market Total Greek Broadband Market Broadband / Total Fixed Lines (%) OTE is the Greek leading operator with approximately 2.7 million retail lines OTE fixed-line posted net additions of 8k access lines in Q4 15, for the first time after more than 10 years of contraction Broadband market growth at +7.0%, with Greece lagging behind EU Broadband penetration Fast-growing Pay - TV segment Increased competition in providing integrated solutions to the customer OTE OTE Group Corporate Presentation Q4 15 9

10 Fixed-Line Access Line Evolution ( 000) Fixed Line Operations - Greece Key Operational Trends Fixed-Line Net Additions ( 000) 5,073 4,906 4,796 4,770 4, % 37.6% 40.5% 42.8% 43.4% 66.0% 62.4% 59.5% 57.2% 56.6% FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Competitors' Lines Market Shares OTE Retail Lines Market Shares (49) (44) 23 (6) (9) (6) 14 (17) (29) (31) 28 5 (22) 15 (2) (12) (11) (9) (27) (2) (16) (14) Q4 '13 Q1'14 Q2'14 Q3'14 Q4 '14 Q1'15 Q2'15 Q3'15 Q4 '15 Competitors' Lines Net additions OTE Retail Lines Net additions/(disconnections) Total Fixed Market Lines Net additions/(disconnections) Broadband Market Evolution ( 000) Broadband Net Additions ( 000) 2,458 2,667 2,888 3,141 3, % 55.8% 56.3% 56.5% 55.2% 44.6% 44.2% 43.7% 43.5% 44.8% FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 OTE Retail Broadband Market Share Competitors' Broadband Market Share Q4 Q4 '13 '13 Q1'14 Q2'14 Q3'14 Q4 '14 Q1'15 Q2'15 Q3'15 Q4 ' % 48.5% 48.1% 45.7% 26.2% 23.5% 69.6% 68.4% 70.2% Competitors' (LLU & Wholesale ADSL/VDSL) Net Adds OTE s market OTE Retail Broadband net additions share on Greek Broadband market Net additions Broadband net OTE Broadband net additions Market share additions OTE OTE Group Corporate Presentation Q

11 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 almost 40% of the market 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: Rebranded its fixed services to COSMOTE & launched a campaign of fixed & mobile services under the name COSMOTE 1 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 OTE OTE Group Corporate Presentation Q

12 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 Current coverage almost 40% of total market Mobile (Dec 14 Dec 15) 45% increase in mobile broadband network capacity 70% increase in mobile internet speeds 4G expansion Nationwide coverage, ahead of competition 81% population coverage LTE advanced (4G+) population coverage >50% 4G+ with 3 Carrier Aggregation technology has been commercially launched with speeds up to 375Mbps in Oct 2015 (first network in Europe) Rollout actions in full progress in big cities, smaller towns, motorways & popular destinations VDSL OTE 4G COSMOTE OTE OTE Group Corporate Presentation Q

13 Building foundations for Next Generation Networks (NGN/NGA) Fixed VDSL/Vectoring Mobile LTE IP Transformation VDSL Coverage 70% ~40% 50% LTE Population Coverage (outdoor) 98% 81% IP:3% TDM 97% Q4 15 IP 100% 2018 Q % 2019 VDSL/Vectoring VDSL Q Mbps Vectoring services Retail ARPU Uplift Wholesale Bitstream service Enabler for IP/Cloud Services 2019 Upgrade to 4G+ (375Mbps) Maintain Network leadership Mobile Data Monetization Hybrid (VDSL/LTE) service Network simplification & modernization Operating cost reduction Improved customer experience New IP based services OTE OTE Group Corporate Presentation Q

14 Fixed Line Operations - Greece Leader in VDSL take up VDSL subscribers in Greece ( 000) Q4 '13 Q1'14 Q2'14 Q3'14 Q4 '14 Q1'15 Q2'15 Q3'15 Q4 '15 Wholesale VDSL subscribers OTE Retail VDSL subscribers OTE VDSL 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 broadband service had been adopted by approximately 150k subscribers, or 10% of its retail broadband base, by the end of the quarter Customers likely to focus more on quality as speed and content requirements grow OTE OTE Group Corporate Presentation Q

15 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 Solid growth in TV offering; subscribers amounted to 446k The service s growth is fueled by extensive, exclusive and diverse content OTE entered the field of TV production with the launch of its own History Channel Broadcasting of Champions League & Europa League as of August 2015 and for the next 3 years During 2015, OTE renewed the broadcasting rights of significant sports events: - Bundesliga (until 2017) - Campionato (until 2018) - La Liga (untill 2018) - NBA (until 2018) - Formula 1 (until 2017) OTE OTE Group Corporate Presentation Q

16 Fixed Line Operations - Greece Financial Overview Full Year ( mn) CAGR: Revenues -5.3% Pro Forma EBITDA 2.5% -11.6% -8.6% -5.1% Quarterly 0.1% -0.3% ( mn) Revenue trends yoy % OTE SA -5.2% -5.0% -2.8% -2.4% 0.0% +0.3% +0.6% +0.2% -4.6% -4.2% -3.0% +5.1% % 37.0% 40.1% 42.5% 40.0% 38.5% 41.7% 40.7% Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Revenues Pro Forma EBITDA Pro forma EBITDA margin Revenues continue to grow for a fifth consecutive quarter, posting a 5.1% increase after several years of quarterly revenue contraction Growth supported by continuing strong performance in broadband and ICT as well as a sharp increase in revenues from OTE TV The continuous development and penetration of triple play a key strategic objective 4.4% 4.3% 2.6% 0.0% -0.2% 2.6% -1.8% -0.3% 0.9% -3.1% -2.4% -3.8% -4.2% -5.0% -4.5% -7.0% Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Retail Revenue yoy change (%) Wholesale Revenue yoy change (%) OTE OTE Group Corporate Presentation Q

17 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 Since the beginning of 2015, more than 2,000 employees were transferred from OTE Plus to OTE , % 32.9% 34.4% % % ,369 10,925 10,569 8,750 6,878 6,924 6, % 21.6% Personnel Expenses ( mn) Personnel Expenses/Revenues Significant Personnel Cost Reduction achieved through: - A Voluntary Exit Plan was successfully completed in the end of Q2 15, that is contributing 30mn net annual cost savings at OTE SA (started from July 2015) - Previous 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 salary levels, 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 OTE OTE Group Corporate Presentation Q

18 Mobile Greece - Financials Full Year ( mn) CAGR: Revenues -7.1% Pro Forma EBITDA -8.6% Quarterly ( mn) -11.6% -8.6% -5.1% 0.1% -0.3% Revenue trends yoy % -5.2% Market leader since 2001 Greece: Mobile Termination Rates (eurocent/min) Customer-centric strategy, focusing on customer experience and high quality of services Following the rebranding under the Cosmote name, Cosmote launched unified residential and business propositions to address the overall communications needs of the respective customer segments Investing to maintain network superiority in terms of coverage and speeds - Expanding 4G footprint - 81% population coverage OTE OTE Group Corporate Presentation Q

19 Mobile Greece Data Penetration Data Revenues / Service Revenues Smartphone penetration Data Revenues Cosmote Greece 20% 20% 52% 11% 14% 16% FY 2012 FY 2013 FY 2014 FY 2015 % of Data Revenues over Service Revenues 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 - +45% growth in data traffic compared to Q4 14 ; 52% of customer base are smartphone users Data standing at ~20% of service revenues, steadily growing Meet high demand through integrated offerings with MB/Data included OTE OTE Group Corporate Presentation Q

20 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 Focus on fixed-mobile convergent services under the T brand to defend customer base Leveraging its exclusive fully convergent offerings to raise its customer appeal, reduce churn and improve its competitive position Responding to competitive challenge through extensive FTTB / FTTH investment plan Broadband penetration at 55% of voice connections - TV Services penetration at 67% of voice connections OTE OTE Group Corporate Presentation Q

21 Fixed Line Operations - Romania Telekom Romania Financial Overview Full Year ( mn) CAGR: Revenues -2.1% Pro Forma EBITDA -5.7% Quarterly ( mn) -11.6% -8.6% -5.1% 0.1% -0.3% Revenue trends yoy % -5.2% Positioned as a technology and media provider, breaking away from a single fixed line business model Revenues from fixed-mobile offers continue to partially offset the decline in voice revenues Continuing FTTH rollout and ICT project revenue streams OTE OTE Group Corporate Presentation Q

22 Mobile Romania - Financials Full Year ( mn) CAGR: Revenues -1.6% Pro Forma EBITDA -3.4% Quarterly ( mn) -11.6% -8.6% -5.1% 0.1% -0.3% Revenue trends yoy % -5.2% - Strengthening market position in an intensely competitive environment Romania: Mobile Termination Rates(eurocent/min) 9.06 Rebranded jointly with RomTelecom under the common Telekom Romania - Launch of fixed-mobile convergent bundles Growing business segment reflecting the Company s targeted offers for professional users and synergies created following the rebranding 0.96 Dec-08 Apr-09 Jan-10 Jul-10 Mar-12 Sep-12 Apr-14 OTE OTE Group Corporate Presentation Q

23 Mobile Albania -Financials Full Year ( mn) CAGR: Revenues: -3.2% Pro Forma EBITDA: -14.0% Quarterly ( mn) -11.6% -8.6% -5.1% 7.1% -2.4% -14.5% -8.5% 0.1% -0.3% Revenue trends yoy % 32.8% 3.3% -16.4% -14.8% -5.2% - Albania: Mobile Termination Rates (eurocent/min) 13.1 Maintaining position in a highly fragmented and competitive market Gradually transformation into a single - SIM market after regulation taking place in July 2015 Retail regulation further intensified competition in the Albanian market Dec - 08 Jan-09 Sep-09 Mar-11 Sep-11 Sep-12 Sep-13 Apr-14 Dec-14 OTE OTE Group Corporate Presentation Q

24 12. 0% 10. 0% 8.0% 6.0% 4.0% 2.0% 0.0% Mobile International Data Penetration Romania - Data / Service Revenues 14.9% 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 Albania - Data / Service Revenues Data Revenues Cosmote Albania 5.8% 8.0% 9.2% 10.4% 10.4% Enriched data services & product portfolio to enhance data usage % increase in mobile handset data revenues in Q4 15 Significant increase in Smartphone penetration in prior years -still room for further growth FY 2012 FY 2013 FY 2014 FY 2015 % of Data Revenues over Service Revenues OTE OTE Group Corporate Presentation Q

25 Cashflow Review 25

26 OTE Group Cash Flow Trends Full Year ( mn) Quarterly ( mn) 50mn one-off tax payment related to capitalization of reserves Adj. Free Cash Flow on target at 507mn in 12M 15 despite additional financial costs on bond issue and buybacks and challenging macro conditions OTE expects free cash flow for full year 2016 to amount to approximately 0.5bn. * Cash Flow includes interest received but excludes Voluntary Exit Programs, Restructuring and/or Spectrum payments ) OTE OTE Group Corporate Presentation Q

27 OTE Group Debt & Liquidity Profile Debt Maturity Profile Nominal Amounts ( mn) Debt & Cash Evolution ( mn) As of Dec 31, x 4, x 4, x Net Debt/EBITDA 0.8x 0.6x 3,865 2,879 2,956 2,639 2,189 1,496 1, (1,037) (1,172) (1,461) (1,514) (1,329) FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Gross Debt Cash & Other financial assets Underlying Net Debt Existing cash balances and cashflow secure the servicing of debt payments OTE OTE Group Corporate Presentation Q

28 OTE Credit Profile OTE PLC Bonds Overview OTE PLC Bond 2016 OTE PLC Bond 2018 OTE PLC Bond 2019 OTE PLC Bond 2020 Maturity: May 2016 Outstanding Amount: 389mn Coupon: 4.625% Current Yield: 5.44% Maturity: Feb 2018 Outstanding Amount: 650mn Coupon: 7.875%(paid semi-annually) Current Yield: 6.79% Maturity: Dec 2019 Outstanding Amount: 350mn Coupon: 4.375% Current Yield: 6.45% Maturity: July 2020 Outstanding Amount: 700mn Coupon: 3.5% Current Yield: 6.69% Source: Bloomberg Data as Feb 24, 2016 OTE s Rating Evolution A- 13 BBB+ 12 BBB 11 BB+ BB BBB-10 BB- B+ B B- CCC+ CCC Standard & Poor's BBB Dec '08 BBB- May '10 BB Mar '11 BB- May '11 B Oct '11 B- Jun '12 B+ Feb '13 (Investment Grade level) BB- Dec '13 BB Sep '14 BB- Feb '15 B+ B Sep'15 Jul '15 2 Dec '08 Jun '09 Dec '09 Jun '10 Dec '10 Jun '11 Dec '11 Jun '12 Dec '12 Jun '13 Dec '13 Jun '14 Dec '14 Jun '15 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3 B1 B2 B3 Caa1 Caa2 Caa3 Ca Moody s Baa2 May '08 OTE - Moody's rating evolution Baa3 Mar '11 Ba1 May '11 B1 Jun '11 B2 Oct '11 B3 May '12 Caa1 June '12 0 Dec '08 Jun '09 Dec '09 Jun '10 Dec '10 Jun '11 Dec '11 Jun '12 Dec '12 Jun '13 Dec '13 Jun '14 Dec '14 Jul Jun '15 Moody's B2 Dec '13 (Investment Grade level) Ba3 Aug '14 B3 May '15 Caa2 Jul '15 OTE OTE Group Corporate Presentation Q

29 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: iroffice@ote.gr or visit: OTE OTE Group Corporate Presentation Q