OTE Hellenic Telecommunications Organization. Q Results

Transcription

1 OTE Hellenic Telecommunications Organization Q Results 1

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. OTE Group Key figures (Trailing 12M) Revenues: 3.9bn Employees: 21,563 EBITDA*: 1.3bn Market Cap: 4.1bn 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: 458 k Mobile Business: Leader Mobile subscribers : 7.5mn Total access lines: Broadband subscribers OTE TV subscribers: Mobile Business: Challenger Mobile subscribers : 2.2mn 1.2mn 1.4mn 5.7mn Note: Data as of March 31, 2016 OTE OTE Group Corporate Presentation Q * Excluding voluntary retirement programs & restructuring charges

4 At a Glance Shareholder Structure (Mar 31, 2016) Group Structure Own Shares 0.3% Deutsche Telekom 40.0% Private Investors 6.7% Hellenic State* 10.0% Institutional Investors 43.0% 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 Listed on the Athens Stock Exchange Telekom Albania 99.97% 30% Other (Symbol: HTO GA) Share price: 8.4 (April 28, 2016) Zapp Romania 100% 70% Telekom Romania Mobile Outstanding shares: 490,150, % Germanos S.E.Europe OTE OTE Group Corporate Presentation Q1 16 * Including voting rights attached to 4% of shares owned by State Pension Fund 4

5 Our Strategy Key industry trends crafting the focus of 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 Technological Superiority Best Customer Experience New Revenue Streams Lead in Traditional Services Integrated Network Strategy - VDSL & 4G Expansion - Launch Hybrid Access, Vectoring Core Network Transformation (all-ip) Rural Networks Explore DT Group synergies Build on COSMOTE brand superiority Customer Service Excellence Optimize experience of the FMC customer Digital Transformation - e-sales, e-care, e-bill, B2B Go Digital etc.) Data Revenues increase Reinforce OTE TV growth Product Innovation & partnerships Accelerate growth in B2B developmental areas - ICT SyS, expand in Cloud & M2M marketplaces Pursue FMC+ strategy Transform B2B with FMCC strategy Pricing & segmentation Optimize omni-channel strategy Defend OTE Wholesale revenues Boost operating efficiency: Operational and Cost Optimization - Improving systems and processes - Reducing our cost base Human Resources -Operating model enhancements: supporting major transformation projects - Operational efficiency & organizational clarity: One HR, New Job Families framework, Key HR policies & systems harmonization - Leadership empowerment & People development through training and internal & external talent programs OTE OTE Group Corporate Presentation Q1 16 5

6 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 % q -5.2% -5.0% -2.8% -2.4% Revenue* Breakdown (12M ending Mar 31, 2016) EBITDA* * Breakdown (12M ending Mar 31, 2016) Greece: ~74% Greece: ~84% OTE OTE Group Corporate Presentation Q1 16 * Gross figures (excl. eliminations) ** Excluding voluntary retirement programs & restructuring charges

7 Business Review 7

8 Fixed Line Operations - Greece Market Overview Evolution of Greek Broadband Market ( 000) TV Penetration in Greece 3,249 3,310 3,353 3,417 3,481 68% 70% 71% 72% 73% 52% 53% 55% 56% 58% Q1'15 Q2'15 Q3'15 Q4 '15 Q1'16 Total Greek Broadband market ('000) Broadband Penetration in Greece (%) OTE Broadband/OTE Total Fixed lines OTE s retail broadband market share: 44.4% * OTE is the Greek leading operator with approximately 2.7 million retail lines Broadband market growth at +7.2%, with Greece lagging behind EU Broadband penetration Fast-growing Pay - TV segment Increased competition in providing bundled services *Based on internal market estimates OTE OTE Group Corporate Presentation Q1 16 8

9 Fixed-Line Access Line Evolution ( 000) Fixed Line Operations - Greece Key Operational Trends Fixed-Line Net Additions ( 000) Broadband Market Evolution ( 000) Broadband Net Additions ( 000) OTE s market share on Broadband net additions OTE OTE Group Corporate Presentation Q1 16 9

10 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 more than 41% of total market Mobile (Mar 15 Mar 16) 43% increase in mobile broadband network capacity 25% increase in mobile internet speeds 4G expansion Nationwide coverage, ahead of competition 83% population coverage LTE advanced (4G+) population coverage >60% Rollout actions in full progress in big cities, smaller towns, motorways & popular destinations VDSL OTE 4G COSMOTE OTE OTE Group Corporate Presentation Q

11 Building foundations for Next Generation Networks (NGN/NGA) Fixed VDSL/Vectoring Mobile LTE IP Transformation VDSL Coverage 70% >41% 50% LTE Population Coverage (outdoor) 98% 81% 83% IP:4% TDM 96% Q1 16 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

12 Fixed Line Operations - Greece Leader in VDSL take up VDSL subscribers in Greece ( 000) 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 168k subscribers, or 11% 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 s wholesale VDSL offering also gains traction OTE OTE Group Corporate Presentation Q

13 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 EU benchmark) OTE Solid growth in TV offering; subscribers up 25%, amounted to 458k 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 OTE OTE Group Corporate Presentation Q

14 Full Year ( mn) Fixed Line Operations - Greece Financial Overview -11.6% -8.6% -5.1% CAGR: Revenues -5.3% Pro Forma EBITDA 2.5% Quarterly 0.1% -0.3% ( mn) Revenue trends yoy % -5.2% -5.0% -2.8% -2.4% OTE SA % 37.0% 40.1% 42.5% 40.0% 38.5% 41.7% 40.7% 42.5% Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Revenues Pro Forma EBITDA Pro forma EBITDA margin Revenues continue to grow for a sixth consecutive quarter, posting a 1.7% in Q1 16 Growth supported by continuing strong performance in broadband,tv and ICT revenues Broadband revenues supported by strong VDSL take-up in the quarter 3.1% Continuous improvement of Retail revenues OTE OTE Group Corporate Presentation Q

15 OTE S.A Headcount & Employee Cost Evolution Headcount Evolution Personnel Cost Evolution mn Since the beginning of 2015, more than 2,000 employees were transferred from OTE subsidiaries to OTE 21.2% Significant Personnel Cost Reduction achieved through: Voluntary Exit Plans resulting in significant annual cost savings for OTE SA Signing of new labor agreement at the end of 2014, maintaining salary levels, and establishing new salary grades for new recruits OTE OTE Group Corporate Presentation Q

16 % 10. 0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% 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 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 Investing to maintain network superiority in terms of coverage and speeds - Expanding 4G footprint 83% population coverage Blended ARPU Evolution ( /month) Blended ARPU ( /Month) % -2.7% -3.0% -4.4% -14.0% FY 2013 FY 2014 FY 2015 Q1'15 Q1'16 Blended ARPU ( /Month) YoY Growth (%) OTE OTE Group Corporate Presentation Q

17 Mobile Greece Data Penetration Data Revenues / Service Revenues Smartphone penetration 20.8% 53% 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 - +43% growth in data traffic compared to Q1 15 ; 53% of customer base are smartphone users Data standing at ~21% of service revenues, steadily growing Meet high demand through integrated offerings with MB/Data included OTE OTE Group Corporate Presentation Q

18 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 OTE OTE Group Corporate Presentation Q

19 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 down 7.8% reflecting lower voice revenues and delayed implementation of ICT projects Mobile Revenues from fixed-mobile offers up 82% as customers adopt convergent offerings Continuing FTTH rollout and ICT project revenue streams OTE OTE Group Corporate Presentation Q

20 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% - Blended ARPU Evolution ( /month) Strengthening market position in an intensely competitive environment Launch of fixed-mobile convergent bundles after the rebranding under the common Telekom Romania Growing business segment reflecting the Company s targeted offers for professional users and synergies created following the rebranding OTE OTE Group Corporate Presentation Q

21 % 45. 0% 25. 0% 5.0% -15.0% -35.0% Mobile Albania -Financials Full Year ( mn) CAGR: Revenues: -3.2% Pro Forma EBITDA: -14.0% Quarterly ( mn) -11.6% -8.6% -5.1% 0.1% -0.3% Revenue trends yoy % -5.2% - Blended ARPU Evolution ( /month) Blended ARPU ( /Month) 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 % 10.0% -8.9% -8.7% -16.7% FY 2013 FY 2014 FY 2015 Q1'15 Q1'16 Blended ARPU ( /Month) YoY Growth (%) OTE OTE Group Corporate Presentation Q

22 % 15. 0% 5.0% -5.0% 25. 0% 20. 0% 15. 0% 10. 0% 5.0% 0.0% -5.0% -15.0% -25.0% -10.0% -15.0% -20.0% -25.0% Mobile International Data Penetration Romania - Data / Service Revenues Data Revenues Cosmote Romania 12.1% 13.0% 14.3% 15.1% 9.8% % % 15.6% 16.8% Smartphone-centric operator with ongoing development of 3G & 4G services portfolio New mobile applications in order to promote mobile data services Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Customized devices compatible with 4G Network Data Revenues Cosmote Romania as % of Service Revenues Albania - Data Data / Service Revenues Revenues Cosmote Albania 9.3% 9.1% 9.5% 9.1% 11.5% 11.1% 10.3% 9.3% 11.5% Enriched data services & product portfolio to enhance data usage % increase in mobile handset data revenues in Q1 16 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Significant increase in Smartphone penetration in prior years -still room for further growth Data Revenues Cosmote Albania as % of Service Revenues OTE OTE Group Corporate Presentation Q

23 Cashflow Review 23

24 OTE Group Cash Flow Trends Full Year ( mn) Quarterly ( mn) Adj. Free Cash Flow impacted by lower EBITDA, Capex and working capital timing OTE expect 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

25 OTE Group Debt & Liquidity Profile Debt Maturity Profile Nominal Amounts ( mn) Debt & Cash Evolution ( mn) As of Mar 31, 2016 Net Debt/EBITDA 1,045 Cash & Other Financials May'16 56 Feb'18 Jul' Bonds Syndicated Cosmote Romania & Other Existing cash balances and cashflow secure the servicing of debt payments OTE OTE Group Corporate Presentation Q

26 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% Maturity: Feb 2018 Outstanding Amount: 650mn Coupon: 7.875%(paid semi-annually) Maturity: Dec 2019 Outstanding Amount: 350mn Coupon: 4.375% Maturity: July 2020 Outstanding Amount: 700mn Coupon: 3.5% Source: Bloomberg Data as of April 28, 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

27 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: [email protected] or visit: OTE OTE Group Corporate Presentation Q