MAGYAR TELEKOM GROUP INVESTOR PRESENTATION JANUARY, 2017

Transcription

1 MAGYAR TELEKOM GROUP INVESTOR PRESENTATION JANUARY, 217

2 STRATEGY AND MARKET POSITION

3 OVERVIEW MAGYAR TELEKOM AT A GLANCE International presence Revenue (FY215) Hungary Czech Republic Slovakia Austria Hungary Hungary Slovenia Croatia Croatia Romania BiH Serbia Serbia Montenegro Kosovo Bulgaria Macedonia Macedonia Albania Greece Moldova 87% 8% 5% EBITDA (FY215) 83% 11% 6% Hungary Macedonia Montenegro Budapest Magyar Telekom copper Invitel copper UPC copper Leading telecommunications operator in Hungary, Macedonia and Montenegro 1 Majority owned by Deutsche Telekom (59.2%) EUR 1.6bn market capitalization Stock exchange listings Primary listing on Budapest Stock Exchange Level I ADR program, ADSs traded on the OTC Market MT is the incumbent fixed telco provider on ca. 75% of primary copper areas of Hungary 2.7 million households covered with High Speed Internet (HSI) access across country FTTx (611k HHs) ongoing countrywide roll-out ED3 (74k HHs) participating in market consolidation VDSL (1,389k HHs) revitalizing copper, excl. overlaps 83% outdoor population coverage of 3G 98% outdoor population coverage of 4G 3 1 As announced on January 1, 217, Magyar Telekom disposes of its majority stake in Crnogorski Telekom, closing of the transaction is expected by the end of January, 217

4 MARKET POSITION IN HUNGARY Total mobile market* Fixed voice market** Subscribers 12,, 9,, 6,, 3,, 22.9% 3.% 45.9% -1.% 24.3% 27.9% 47.8% 24.7% 28.1% 47.2% Vodafone Telenor MT -138,58 Subscribers 3,5, 3,, 2,5, 2,, 1,5, 1,, 3.9% 12.9% 1.% 15.6% 57.6% +1.2% 3.1% 13.% 1.8% 16.5% 56.6% 3.2% 13.1% 11.5% 17.6% 54.5% -32,129 Other Invitel DIGI UPC MT 3Q 214 3Q 215 2Q 216 5, 3Q 214 3Q 215 3Q 216 Fixed broadband market** TV market** Subscribers 3,, 2,5, 2,, 1,5, 1,, 5, Other Subscribers +5.7% Invitel 4,, 14.9% DIGI 15.1% 16.9% 9.5% UPC 9.5% 3,, 9.4% 14.6% 15.5% MT 14.1% 21.8% 22.% 2,, 22.% +31, % 39.% 38.1% 1,, 3Q 214 3Q 215 3Q % 4.% 23.% 26.2% 26.3% 3Q % 16.9% 4.4% 24.4% 26.8% 27.5% 3Q % 4.7% 25.% 26.8% 27.6% 3Q 216 Other Invitel DIGI UPC MT +27,44 * based on internal calculations from Vodafone Group and Telenor Group Reports ** based on the total fixed voice channels / BB access / pay TV access market estimated by the National Media and Infocommunications Authority (NMIA) 4

5 MARKET LEADER IN IT SERVICES IN HUNGARY DUE TO WIDE RANGE OF IT SOLUTIONS BOTH IN IT PROJECTS AND IT OUTSOURCING Total Hungarian IT services market Revenue based market shares* (215) Package application Custom app. Dev. SYSTEM INTEGRATION System integration IT consulting App. OS & operation Hosting IT INFRASTRUCTURE Infra. OS & operation Infra. proj. service SI & IT Cloud 2% 34% 26% 2% Blended MSH 14% 15% 14% 14% 1% 5% 8% 7% 9% 4% Market size* HUF 25 bn HUF 24 bn HUF 29 bn HUF 1 bn HUF 33 bn HUF 12 bn HUF 2 bn HUF 61 bn HUF 17 bn * Source: IDC 215; Market size by demand side, while market shares by supply side data 5

6 STRATEGY OVERVIEW: WITH OUR ENGAGED PEOPLE WE ARE BUILDING A GROWING ICT COMPANY SERVING SATISFIED CUSTOMERS Strategic pillars Strategic goals Main KPIs for Together. For our customers We all listen to our customers and colleagues: we truly listen to them and we consider what they say when making decisions Improve customer satisfaction Improve customer service level Improve employees engagement Cut number of complaints Improve customer satisfaction index (TRIM) Improve overall satisfaction of all channels (NGICCA) Launch Employee Share Program 2 Integrated products & network As a nr. 1 integrated service provider we give all our customers the opportunity to connect in a seamless way Foster technology leadership Monetize FMC capabilities Strengthen integrated ICT brand Increase nr of additional HP with HSI with more than half million Increase LTE indoor coverage to 87% Have additional 1k Magenta1 households Increase the awareness of the Telekom brand to over 6% 3 IT & digital services We believe that IT and digital services mean great opportunity for our customers and are key drivers of our future growth Grow in IT Develop digital business Grow last year s SI/IT revenues (excl. 215 Dec one-offs) Find new revenue streams in Cloud, M2M, IoT, Big data, Security 4 Digital telekom We continue to transform Telekom into a digital company to make it effortless for our customers to do business with us Push digital transformation Increase ebill, esales, ecare ratios Cut nr of non-selling transactions by additional 3% Increase remote work ratio to 3% 6

7 INT L HUNGARY GROUP Q3 216 STRATEGIC HIGHLIGHTS: HUNGARIAN SEGMENT CONTINUES TO DRIVE GROUP PERFORMANCE REVENUE EBITDA FCF OPERATIONS TELCO SI/IT MACEDONIA MONTENEGRO Decline due to partial exit from energy business and lower SI/IT revenues; excl. energy and SI/IT, revenues up by 1.2% driven by growth in mobile revenues EBITDA up by 1.% as lower employee related and other operating expenses more than offset the slight decline in gross profit Increased FCF reflective of higher EBITDA and one-off gains which offset higher severance costs, loan repayment and higher settlement of capex and capex creditors Sustained focus on cost efficiency through headcount reduction, process/product simplification and online customer servicing Continued growth in mobile and TV revenues 4Play Magenta 1 offer among key growth drivers SI/IT revenue decline due to a slowdown in EU fund inflows Sustained EBITDA turnaround at our enterprise sub-segment Strong mobile revenue growth supported by higher mobile broadband customer base Higher EBITDA driven by higher gross margin and efficient operation Continued competitive and regulatory pressures on telco margins Strong take up of Magenta 1 offer 7

8 TURNAROUND STORY OF MAGYAR TELEKOM Major financial and strategic milestones Integrated Telco and SI/IT operator Continuous decline in revenue and EBITDA Building up ICT capabilities Loyalty system Launching SAT TV Change in strategy Launching energy Full ICT integration Flat fixed voice offer introduced Multiplay ICT provider Diversified service provider Digital service company Execution of turnaround strategy Mobile BB focus Insurance takeup Cross selling, multiplay offers Topline revenue turnaround Smartphone push IPTV focus M-commerce Turnaround in revenue w/o energy Frequency prolongation Push beyond core EBITDA turnaround Frequency tender Smart device push HSI / 4G roll-out FCF turnaround Upsell focus 4G push FMC re-launched Growth in SI/IT Energy exit Sustainable operation and FCF generation Online Security, Cloud transformation Big Data Simplification M2M and IoT Digital Hungary Revenue and Ebitda turnaround Capex and free cash-flow development bn HUF Revenue turnaround Revenue w/o energy turnaround Revenue Revenue w/o energy EBITDA Capex Capex w/o spectrum* FCF 25 2 EBITDA turnaround 5 FCF turnaround * Excluding spectrum license fees and annual frequency fee capitalization 8

9 TELEKOM AS THE LEADEING OPERATOR AND BRAND IN HUNGARY Our vision FIRST NOW FIRST FOREVER Our mission OUR MISSION IS TO MAKE THE DIGITAL WORLD MORE UNDERSTANDABLE AND ACCESSIBLE FOR EVERYONE. WE ENABLE PEOPLE TO HAVE A MORE EFFORTLESS, COLOURFUL AND SUCCESSFUL LIFE. Brand awareness* and brand values 47% T-Home 19% Apr % Dec % T-Mobile 23% Dec % 9% Telekom 44% 45% LIFE IS FOR SHARING. INNOVATION SIMPLICITY COMPETENCE * Source: Brand tracking research, TNS, Dec 214 (Brands identified by the logos) Our major awards EXCELLENCE IN CUSTOMER SERVICE AWARD SUSTAINABLITY AWARDS (OEKOM, CEERIUS, DELOITTE) 1% CARBON NEUTRAL COMPANY FAMILY-FRIENDLY WORKPLACE AWARD BICYCLE-FRIENDLY WORKPLACE AWARD DIVERSE ORGANIZATION AWARD 9

10 HUNGARIAN ECONOMIC ENVIRONMENT Growth strucutre Domestic demand 6% 4% 2% Domestic demand improved as economy recovers Governmental measures support consumer spending % -2% -4% FC* 217FC* Investment levels show strong volatility due to EU fund cycles MT is expected to benefit from positive trends of domestic demand Household consumption Inflation GDP y-o-y growth Public consumption Net exports Investment Taxes levied on Magyar Telekom Tax burdens to reduce budget deficit HUF bn ca.31.8 ca Telecom tax Utility tax Special tax -.4 Temporary special revenue-based sector tax levied between Permanent traffic-based telecom tax introduced in July 212 and increased in August 213 Permanent tax on utility and telecom networks levied in 213, but slight decrease in 216 due to 5-year tax holiday on networks > 1Mbps * Central Bank Sept 216 forecasts 1

11 HUNGARIAN MOBILE SPECTRUM SITUATION Current spectrum situation (MHz) BAND 8 MHz 9 MHz 2x1 2x1 2x1 2x11.8 2x11 2x12 Magyar Telekom Telenor Vodafone Digi 18 MHz 2x15 2x5 2x25 2x3 21 MHz 2x15 2x15 2x15 26 MHz 2x3 2x2 + 1x25 2x GHz* 2x3 1x2 * TDD band 11

12 DIVIDEND AND GUIDANCE

13 DIVIDEND POLICY Dividend payment and net debt ratio developments Net debt ratio* Dividend per share (HUF) Highlights 5% 4% 3% 2% 1% 32.7% 34.1% 34.3% % 45.7% 42.9% % TARGET Aiming to maintain net debt ratio (net debt/total capital) target of 3% - 4% HUF 15 dividend paid on 215 earnings in May 216 Based on the current operating, regulatory and taxation environment and outlook coupled with the anticipated significant improvement in the free cash flow generation, the management of the Company targets to pay HUF 25 dividend per share on 216 results** % Q * Defined as net debt / total capital ** Subject to the Board of Directors future proposal to the General Meeting, which will be made in due course, when all necessary information is available and all prerequisites to making such proposal are met 13

14 PUBLIC GUIDANCE 215 RESULTS 216 TARGETS 217 TARGETS 1 REVENUE HUF 656 bn 2 (+4.8%) around HUF 595 bn HUF bn EBITDA HUF 187 bn (+3.4%) around HUF 193 bn HUF bn CAPEX 3 HUF 11 bn ca. 1% yoy decline ca. 15% yoy decline FCF HUF 27 bn surpassing HUF 5bn 4 DIVIDEND HUF 15 per share HUF 25 per share 1 modified due to the disposal of Magyar Telekom s majority stake in Crnogorski Telekom 2 includes HUF 49.3 billion relating to the energy business 3 excluding spectrum license fees and annual frequency fee capitalization 4 after minority dividend payments 14

15 9M 216 FINANCIAL HIGHLIGHTS AND REVISED TARGETS FOR 217 9M 216 RESULTS vs. 9M TARGETS 217 TARGETS 1 REVENUE HUF bn (-6.3%) around HUF 595 bn HUF bn Decline due to partial exit from energy business and lower SI/IT revenues Excluding energy and SI/IT, revenues up by 1.2% driven by growth in mobile Revenue growth in mobile driven by mobile data and equipment sales due to 4G push EBITDA HUF bn (+6.7%) around HUF 193 bn HUF bn EBITDA boosted by one-off gains Increased margins in telco and SI/IT Improved fixed and mobile broadband performance driven by larger customer base and higher ARPUs Lower utility tax due to tax credits granted following HSI development and lower telco tax Decrease in employee related expenses driven by lower severance expenses and savings from the 214/215 headcount reduction program CAPEX 2 HUF 59.3 bn (-1.1%) ca. 1% yoy decline ca. 15% yoy decline 1 modified due to the disposal of Magyar Telekom s majority stake in Crnogorski Telekom 3 excluding spectrum license fees and annual frequency fee capitalization 15

16 Q3 216 RESULTS

17 HUNGARY Revenue* EBITDA HUF bn % HUF bn % Q 215 Mobile voice Mobile nonvoice Mobile other Fixed voice Fixed BB TV Fixed other SI/IT Energy 3Q 216 3Q 215 Gross margin Special tax Employee related expenses Other op. expenses (net) 3Q 216 Mobile: HUF +3.3 bn Fixed: HUF -1. bn Mobile revenues up by 4.9% mainly driven by higher equipment sales Mobile broadband growth due to 4G push Stable fixed broadband revenues as higher customer numbers offset the slightly decline in ARPU Significant increase in fixed TV revenues thanks to growth in the customer base and ARPU Decline in SI/IT due to a slowdown in EU fund inflows Drop in energy revenues following exit and transfer to JV Improving SI/IT margins and bad debt expenses counterbalanced by higher direct costs due to increased mobile equipment sales leading to gross margin decline Lower telco tax due to fewer subs and changing calling habits Decrease in employee-related expenses attributable to lower severance expenses and actual savings from headcount Other OPEX in line with Q3 215 * Mobile voice includes mobile retail and wholesale voice; Mobile non-voice includes data, SMS and equipment; Fixed other includes equipment, data, wholesale and other 17

18 HUNGARY MOBILE Mobile SIMs HUF Mobile ARPU 6, 5, 4, 3, 2, 1, 5, % 56.% 3Q 215 5, % 56.4% 4Q 215 5, % 57.7% 1Q 216 5, % 58.2% 2Q 216 5, % 58.9% 3Q Prepaid Postpaid Blended Prepaid Postpaid 1,26 1,197 3,324 3, % +.9% 4,993 4, % 3Q 215 3Q 216 Distribution of postpaid voice SIMs Highlights % Flat rate ratio Mar Sept Mar % Sept 25% 27% 29% * outdoor population coverage Voice only Voice+Internet Xplay Customer base decline due to fewer prepaid customers and intense competition for business customers 2% (+53k net adds) increase in postpaid RPC driven by strong data demand MOU up by 5% due to higher postpaid ratio and growing flat tariff subscriber base Growth in ARPU driven by successful prepaid to postpaid migration All postpaid voice services bundled with mobile broadband Continued increase in flat rate ratio among postpaid customer base 18

19 HUNGARY MOBILE BROADBAND Mobile broadband development Smartphone penetration 2.5% 4G cov.* % Non-4G 95% 97% 97% 98% 98% 3, 1 4G 2,5 2,36 2,366 2,469 2,315 2, , 6 1,5 1, % 4% 44% 47% 51% 2 3Q 215 4Q 215 1Q 216 2Q 216 3Q Q 212 3Q 213 3Q Q Q 216 Total mobile data development among all users GB 1,6 1, % +23% +22% 1,315 2% 1,49 27% 863 4% 71 5% 6% 45% 86% 68% 71% 51% 8% 27% 3Q 213 3Q 214 3Q 215 3Q 216 * outdoor population coverage 2G 3G 4G Highlights 4G outdoor population coverage at 98% Almost half million yearly netadd in mobile broadband users Smartphone sales account for over 9% of postpaid handsets with total SP penetration over 61% Significant growth in mobile data usage driven by 4G Average 4G usage of 1.7 GB/month 19

20 HUNGARY FIXED BROADBAND AND TV Fixed BB customer number Pay TV customer number 3.5% 1,2 1, ,9 1,9 1,19 <1Mbps 1, 7% 6% 6% 5% 5% 1Mbps -3Mbps 8 8 >3Mbps 62% 6 68% 66% 65% 64% % 27% 29% 31% 34% 2 3Q 215 4Q 215 1Q 216 2Q 216 3Q % 17% 5% 3Q % 16% 52% 4Q % % 15% 53% 1Q % 15% 54% 2Q % 14% 56% 3Q 216 Sat Cable IPTV Fixed BB and TV ARPU Highlights HUF Fixed BB Pay TV 3Q 215 3Q 216 3,261 3,32 3,57 3, % +1.2% More than 1 million fixed broadband subscribers thanks to over 3Mbps customer net adds Leading market positions reinforced through ca. 35, broadband and 27, TV net adds Increasing ratio of higher bandwidth packages due to upselling activities following network upgrades Fixed BB ARPU decline driven by intense local competition Focus on IPTV to offer added value to customers, slightly higher TV ARPU driven by upselling and price increases Continued intense competition in the business sub-segment 2

21 HUNGARY FIXED VOICE AND ENERGY Fixed voice customer number Fixed voice ARPU -2.% HUF 1,467 1,5 1,461 1,448 1,441 1,437 PSTN 16% 1% IP based* 32% 27% 23% Blended 1, 2,75 2, % 5 68% 73% 77% 84% 9% 3Q 215 3Q 216 3Q 215 4Q 215 1Q 216 2Q 216 3Q 216 Energy revenues Highlights HUF bn 15, -84.5% 12,63 1, 9,418 46% 32% 2,313 5, 1,49 5% 37% 16% % 12% 95% 3% 5% % 2% 3% 15% 12% 72% 3Q 215 3Q 215 4Q 215 1Q 216 2% 1,459 1% 98% % 3Q 216 B2B gas B2B electricity RES gas RES electricity Fixed voice churn at 2% due to effective bundling strategy Fast IP based migration supports strive for efficiency Fixed voice MOU down by 4%, ARPU rate of decline at 8% Exited residential gas market as of July 31, 215 B2B energy deconsolidation as of Dec 31, 215** * IP based RPC equals to VoIP and VoCa RPC ** with the exception of universal business customers in the public sector 21

22 HUNGARY MULTIPLAY Fixed line multiplay residential subs. development Fixed line multiplay residential ARPU development 1,5 1Play HUF 1,49 1,46 1,395 1,391 1,382 2Play 3Play Blended 5,72 5,844 3Q % 3Q 216 1, 5 36% 3% 34% 3Q % 3% 35% 4Q % 3% 36% 1Q % 3% 37% 2Q % 29% 38% 3Q 216 1Play 2Play 3Play 2,969 3, % 5,83 5, % 8,559 8,35-2.4% 4Play Magenta1 subscriber development Aug Sept 215 Oct Nov Dec Jan Feb Mar Apr May Jun 216 July Aug Sept Magenta1 subscribers Highlights Continuously increasing 3Play share Lower churn among 2/3 Play customers Blended fixed line ARPU up by 3% Almost 1, Magenta1 customers help maximize the telecommunication share of wallet in household spending More than half of Magenta1 customers have at least 3Mbps fixed broadband * IP based RPC equals to VoIP and VoCa RPC 22

23 HUNGARY SI/IT Total Hungarian IT services market development* Market share** HUF bn % % 58% % 58% % % 41% 59% 59% % 6% % 6% 22 IT Infrastructure services System Integration / IT Application services 14% 7% 4% 2% 2% 3% 63% 2% 2% Telekom HP NISZ Microsoft IBM MVMI Oracle SAP Others SI/IT revenue and gross profit of MT Hungary HUF bn 2, 15, 1, 5, Margin 15,37 3Q % 5, % 14,749 6,467 3Q % 44% Revenue Gross profit Highlights * hardware and software markets are excluded, IDC Research, 215 ** based on IDC Research Total SI/IT market expected to grow over the next 5 years due to significant opportunities in application development and integration Volatility of incoming EU funds to affect timing of projects Total revenue decreased as a result of a slowdown in EU fund inflows Major project wins in the financial and utility sectors Slight improvement in gross profit with significant margin growth due to successful sales mix shift towards higher added value system integration projects 23

24 MACEDONIA Financials Mobile KPIs Revenues (HUF bn) -3.% EBITDA (HUF bn) +1.9% Subscribers 2,5, 2,, 1,5, 1,, 5, 26.1% 27.% 46.9% -.5% 25.% 28.4% 46.7% 5.4% 49.6% One (T. Slovenia)* VIP (T. Austria) One.Vip Telekom. 3Q 215 Mobile Fixed SI/IT 3Q Q 215 Gross profit Other 3Q 216 expenses 3Q 214 3Q % -1% 3Q 216-1% Telekom ARPU change (QoQ) KPIs (mobile/fixed voice/fixed BB/TV) Highlights customer number QoQ change +4% -3% % +6% ARPU (HUF) 1,828 1,816 2,148 2,42 2,788 2,866 2,594 2, % -4.9% -7.6% +2.8% * including Albafone before June, 215 3Q 215 3Q 216 Successful 4Play Magenta1 sales helped to increase mobile market share Mobile revenues increased for the third consecutive quarter due to market stabilization VIP/One merger has created a strong integrated competitor which now offers fixed-mobile bundles under the VIP brand Robust growth in TV subs and reduced churn in fixed voice EBITDA increase for the first time in the last two years thanks to higher gross margin, savings on employee related expenses, as well as an increase in other operating income 24

25 MONTENEGRO Financials Revenues (HUF bn) 8.4 3Q Mobile -8.2% -.5 Fixed -.1 SI/IT 7.7 3Q 216 EBITDA (HUF bn) KPIs (mobile/fixed voice/fixed BB/TV) Q Gross profit -3.8% Other 3Q 216 expenses Mobile KPIs Subscribers 1,2, +.5% 1,, 8, 38.2% 39.3% 38.3% 6, 28.9% 28.5% 29.% 4, 2, 33.% 32.2% 32.7% 3Q 214 3Q 215 3Q 216 Highlights -1% +3% +3% Telenor m:tel (T. Serbia) T-Mobile Telekom ARPU change (QoQ) customer number QoQ change +2% -6% -6% -3% ARPU (HUF) 3,42 3,121 3,61 2,667 3,12 3,176 4,291 3, % -12.9% +2.4% -7.% 3Q 215 3Q 216 Revenue decline driven by strong OTT competition, lower Balkan roaming rates and lower SMS revenues Postpaid share in the RPC base up by 6ppt to 48.6% due to successful 4Play Magenta 1 sales Continued regulatory pressure on fixed voice and broadband businesses Decline in fixed line customer base due to competition from cable competitors offering 3Play bundle packages EBITDA decline at only 3.8% thanks to focus on cost efficiency 1 As announced on January 1, 217, Magyar Telekom disposes of its majority stake in Crnogorski Telekom, closing of the transaction is expected by the end of January,

26 APPENDIX

27 Q3 216 GROUP SEGMENTAL REVENUE AND EBITDA Group segmental revenues Group segmental EBITDA HUF bn % HUF bn % Q 215 Change Y-o-Y Hungary Macedonia Montenegro -5% -3% -8% Elimination 3Q 216 3Q 215 Change Y-o-Y Hungary Macedonia Montenegro +13% +2% -4% Measurement diff. 3Q 216 Hungary: revenue decline primarily a result of exit from the energy business and lower SI/IT revenues, while mobile revenues increased Macedonia: higher mobile revenues (increased market share) offset by lower voice revenues and equipment sales Montenegro: decline due to intense competition and OTTs in mobile, and regulatory pressure on fixed line revenues Hungary: EBITDA up due to lower employee related and other operating expenses, mitigated by slight gross profit decline Macedonia: increase due to higher gross margin and savings on employee related expenses Montenegro: decline due to sustained pressure on margins and higher OPEX 27

28 MAGYAR TELEKOM CONSOLIDATED INCOME STATEMENT HUF million Q3 215 Q3 216 Change Mobile revenues 79,15 82, % Fixed line revenues 52,72 5, % System Integration/Information Technology revenues 16,781 15, % Revenue from energy services 9,418 1, % Revenues 158,6 15,66-4.7% Direct costs (53,761) (47,253) 12.1% Employee-related expenses (25,293) (19,695) 22.1% Depreciation and amortization (27,667) (29,896) -8.1% Hungarian telecommunications and other crisis taxes (6,398) (5,976) 6.6% Other operating expenses (25,) (24,49) 2.% Total operating expenses (138,119) (127,31) -7.8% Other operating income 1, % Operating profit 21,261 23, % Net financial results (7,146) (6,817) 4.6% Share of associates' profits (32) n.a. Profit before income tax 14,115 17,61 2.9% Income tax expense (3,522) (3,42) 2.9% Profit for the period 1,593 13, % Non-controlling interests 1,257 1,21-4.5% Equity holders of the Company (Net income) 9,336 12, % 28

29 MAGYAR TELEKOM CONSOLIDATED BALANCE SHEET HUF million December 31, 215 Sept 3, 216 Change Current assets ,4% Cash and cash equivalents ,1% Other current financial assets ,9% Non current assets ,% Property, plant and equipment - net ,9% Intangible assets ,9% Total assets ,8% Equity ,7% Current liabilites ,1% Financial liabilities to related parties ,2% Other financial liabilities ,% Non current liabilites ,4% Financial liabilities to related parties ,7% Other financial liabilities ,5% Total equity and liabilites ,8% 29

30 MAGYAR TELEKOM CONSOLIDATED CASH FLOW STATEMENT HUF million 1-9 months months 216 *Free cash flow defined as Net cash generated from operating activities plus Net cash used in investing activities, adjusted with Proceeds from / Payments for other financial assets and Repayment of other financial liabilities Change Net cash generated from operating activities 16,993 14, % Investments in tangible and intangible assets (59,929) (67,84) -13.1% Adjustments to cash purchases (3,754) (13,7) 248.2% Purchase of subsidiaries and business units (16,428) (34) 99.8% Cash acquired through business combinations 1,815 n.a Payments for / proceeds from other financial assets - net 15,38 7, % Proceeds from disposal of subsidiaries 3,484 n.a Proceeds from disposal of PPE and intangible assets 1,6 8, % Net cash used in investing activities (62,252) (6,828) 2.3% Dividends paid to shareholders and minority interest (6,369) (22,656) % Net payments of loans and other borrowings (23,12) (23,317) -1.3% Repayment of other financial liabilities (12,792) (6,175) 51.7% Repurchase of treasury shares (559) n.a. Net cash used in financing activities (42,173) (52,77) -25.% Free cash flow* 16,911 29, % 3

31 For further questions please contact the IR department: Investor Relations Phone: Fax : investor.relations@telekom.hu Márton Lennert Head of Investor Relations Phone: lennert.marton@telekom.hu Linda László Investor Relations Consultant Phone: laszlo.linda@telekom.hu Gerda Gáti Investor Relations Manager Phone: gati.gerda@telekom.hu DISCLAIMER This investor presentation contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore should not have undue reliance placed upon them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors are described in, among other things, our Annual Reports for the year ended December 31, 214 available on our website at Abbreviations: 3G: third generation, 4G: fourth generation, ARPU: average revenue per user, BB: broadband, IP: internet protocol, IT: information technology, LTE: long term evolution, MOU: minutes of use, MTR: mobile termination rate, NRA: National Regulatory Authority, POD: points of delivery, R/E: real estate, RPC: revenue producing customer, SAC: subscriber acquisition cost, SRC: subscriber retention cost, SI: system integration, SIM: subscriber identity module, SMB: small and medium businesses, TWM: Total Workforce Management, VAS: value added services, WS: wholesale In addition to figures prepared in accordance with IFRS, Magyar Telekom also presents non-gaap financial performance measures, including, among others, EBITDA, EBITDA margin, and net debt. These non-gaap measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways. For further information relevant to the interpretation of these terms, please refer to the chapter Reconciliation of pro forma figures, which is posted on Magyar Telekom s Investor Relations webpage at