Telekom Austria Ag

Good morning, everybody, and thank you for joining our Q4 and full-day results 2023 call. I am here with our management, our CEO, Alessandro Plaza, our deputy CEO, Thomas Arnoldner, and our group CFO, Sonja Wallner. As usual, they will need you for the presentation now, and we're happy to take your questions afterwards. Thank you.

Thank you. Good morning to everyone, and thank you very much for joining us today. I hope you can hear us well. It's flues and colds all over Austria, so sorry for the quality of our voice. I hope we will get soon fast. A summary, if we move to a slide. First slide, please. As a summary of the quarter, you see that our revenues went up 2.3%, 5% if you adjust by currency effects, especially Belarus. We saw in Q4 basically the same trends as during the full year, which are good service revenue development in mobile, very good traction in ICT or B2B solutions. EBITDA went up before restructuring one-offs and FX effects 7.3%. What we reported was 11.4%. We had some special effects. Sonia will talk about it a little bit later in detail. We bought a spectrum in Bulgaria. It was a renewal of the 7 and 800 spectrum for a 15-year period for 22 million euros. Finally, in December, we got upgraded as well by Moody's from BAA1 to A3. Now all major rating agencies are rating A1 in the A category that we are very proud of. We are also very proud of having reached the sixth best performing telco worldwide in the CDP list, which has been a focus area the last couple of years. And as you well know, we have managed to spin off our tower company, Euro Telecites, basically with some impacts in A1 revenues, almost no impact, minus 0.1, but we managed to spin off 1 billion euro of financial debt. And, of course, there is impact on precautionary due to higher leases moving forward. For 2024, we expect revenues to grow between 3% to 4%. CAPEX, around 800 million euros. So we are backloading CAPEX basically based on what we presented in the last capital market days. We are putting some projects under review in 2024, especially these special projects that we have all the time that we don't know exactly how much value They are bringing to the company, so we are having an extra look at that. And the management board is recommending the board and the AGM afterwards a dividend increase to 36 cents per share. Having said that, I will move to Sonia, who will drive us into the details of the financials in the quarter and the full year.

On the next page, in the mobile business, our subscriber base increased by 5% to 6% in the new year comparison. This was driven by the growth of M2M major latency. Excluding M2M subscriber, the customer base remained stable. We saw growth in post-paid subscribers, especially in Croatia and Belarus, and in M3, especially in Bulgaria. This was the process in prepaid subscribers in Belarus. The increase in RGUs was above all driven by growth in Belarus and Bulgaria. Good demand for TB in the international market offset the legacy of white losses in Austria. Reported RQ in Q4 increased in the whole market except Belarus. Also, operative RQ excluding M2M business subscribers and negative prices increased by 4.1% in Fort Porter. In the full year, it exhibited growth of 1.9 percentage points, of 1.9 percent. Operative ARPL is constant currency increased by 2.1 percent in Q4 2023, and slightly above full year increase of ARPL of 1.5 percent. Moving to the next page, please. Those revenues were the main driver for the revenue increase, both in Q4 and the full year of 2023. And looking at the chart of the bottom left, we posted growth in all areas except for fixed voice and the regulation-driven declining interconnection. The main growth drivers were retail mobile, so mobile core and cubes. We also saw an encouraging traction in the solution business. On the retail fixed line side, broadband and TV, especially in CE, supports the growth. As mentioned before, sales revenues also profited to a large extent from indexation measures, a strong mobile core business, successful upsetting to higher speeds, and across selling measures, especially in the CE countries. Equipment revenues declined slightly to Austria and Serbia. Overall, we were able to overcompensate 77 million negative foreign exchange effects resulting from only Belarus. The currency depreciated by 15% on a period average in the full year 2023 and by 26% in Q4. So the last quarter was especially heavily hit by the currency with a negative impact of 33 million in total revenues. Excluding foreign exchange effects, all markets posted revenue and service revenue growth. 80 percent of the group revenue growth was stemming from international markets. There was more than 50 percent from Bulgarian operations. Next page. In Austria, most of the previous trends remained unchanged amidst the rather rational Christmas seasons on the mobile market, while the fixed-line markets stayed competitive. Service revenues were the world's driver on the top line and benefited from taxation measures that we implemented already in May 2023. A strong mobile core business and good traction and solution business that overcompensated the loss of interconnection as well as the regular fixed voice revenue decline as we already showed in the previous years. Mobile service revenues increased by 3.3% in Q4 2023 with growth both in mobile and core in the Q business. Recent fixed line service revenues increased slightly on the factor of indexation measures. At the same time, on the subscriber side, we saw the general trend of losing voice and basic broadband HUs, while advanced broadband HU numbers increased and mitigated some of the former losses. Equipment revenues were lower after larger ICT customer projects in the previous year. Also, we are seeing a general calm hardware tariff market, a certain shift to seem only to offerings. In this context, we also keep our subsidies low because, as mentioned in the previous calls, we see subsidies as a distraction of the tactical measures and clearly decrease them wherever possible. Looking at the OPEC side, we want to flex several non-operational effects in Q4 2023. In total, OPEX included positive 1 knots in the amount of €41 million. Thereof, 35.5 were related to the activation of the stampede, which was booked in the OPEX in Q3 2023. So a positive effect in Q4, while it has no effect in full year results. The remainder was related to 10 million related to a release of provision in workforce costs, and 55 million were related to a provision in other office related to a legal case. So excluding these effects, more effects was mainly due to high electricity and workforce costs. Operationally, workforce costs rose related to increased inflation, while the number of FDs decreased. Overall, this result is a stable performance of the underlying EBITDA, excluding restructuring one-offs. Please move to the next page. The international markets exhibited another strong quarter, with 4 percent service revenue growth in double-digit EBITDA growth in all markets except Belarus. For constant currency basis, service revenues in EBITDA grew by 10 and 16 percent respectively. The clear growth drivers were Croatia and Bulgaria, the two markets beside Austria, where we implemented indexation measures in June, July, and March respectively. In Bulgaria, Iran continued to perform very convincingly in all business areas, besides a very strong retail mobile performance on the back of upsetting indexation results. The results profited from the strong demand for security services and IT solutions in Q4, particularly from two big ICT projects. Growth was fueled by strong demand for high-speed services and TV products also lifting RCUs up by 5.2%. Croatia exhibited an extraordinarily high growth of 44% in EBITDA, also supported by some small non-recurring effects. Operationally, the result was already strong in the back of 11% service revenue increase. OPEX was lower despite rising workforce and electricity costs. Despite macro regulatory headwinds, Belarus delivered a solid operational performance in Q4 on the back of successful upsetting and charity migration. Besides that, the higher RGU subscriber base benefited service revenue growth. Roman will present more details on Belarus afterwards in the focus points. Also, the smaller markets exhibited strong results. Let's move on to the next page of P&L. To sum it up at the end, in the full year, we delivered a 5% revenue increase, thereby exactly meeting our guidance. 75% of the growth was driven by service revenues. We managed to offset the OPEX increase, mainly stemming from high electricity, workforce, and product-related costs, and translated 5% revenue growth into 5% EBITDA growth. Operationally, EBITDA also increased by 5%, as positive one-off effects and negative foreign exchange effects offset each of the full year 2023. The margin remains stable. The operational improvement also led to the increase of EBIT of 4.5% despite the higher depreciation amortization. The latter increased now into Q4 related to the rights of use asset after the spin-off of the tower business in Q3 2023. The financial result of negative $90 million versus $55 million last year was mainly due to higher interest expenses on leases and financial debt. The increase in interest expense on lease liabilities is mainly due to interest rate levels as well as the spin-off of the euro-telecent. The increase related to the financial liabilities and interest Income from the financial asset related to the issue bond and the long-term debt bank, as well as the invest of these funds in the previous subsidiary pay-one-to-outholding, and was generated in the period between the issuance, respectively the investment in July, until the spin of the Eurotel asset at the end of September 2023. Altogether, with the stable income tax, we resulted in a slightly increase of net results to 646 million euros. Then moving to the next page, to the free cash flow, and in the full year of 2023, we delivered a free cash flow of 355 million euros compared to 603 million last year. Despite the solid operational performance and the EBITDA increase of 86 million, the difference to last year amounts to 250 million euros. The biggest part of the difference, 120 million, was attributed to a spectrum payment of 103 million in 2023. These payments were also higher by 74 million euros, mainly as a result of the tower spin-off last year. Income taxes increased by 43 million euros due to a better operational result. And the vendors can be explained by the swing in change of working capital from a positive $90 million last year to a negative $14 million this year. We saw positive timing effects in accounts receivables and received some parts, roughly $40 million of the subsidy related to the broadband subsidy program in Austria as a prepayment. The only partly compensated, the lower increase of the accounts payable and the increase in installments is . The low increase in accounts payable was mainly reflected in the timing effect, especially on the CAPEX side, but the negative effect from installment sales was reflected almost to Belarus. In 2022, we temporarily reduced the period for installment sales in Belarus to six months, positively affecting the free cash flow in 2022. After we increased the contract periods again in the second half of 2022, we have a more normal development now again in the 2020. Now handing over to Thomas with the focus on the presentation.