Telekom Austria Ag

Good morning, everybody, and thank you for joining our results call for the second quarter results 2024. I'm here with our CEO, Alejandro Plaza, our deputy CEO, Thomas Arnoldner, and our CFO, Sonja Weidner. And as usual, they will lead you through the presentation now, and we're happy to take your questions afterwards.

Thanks. Thank you very much, Susan, and good morning to you all. Thank you for joining our call. So let me drive you through the presentation that we have put together for you, starting in slide number three. That will be on the screen any moment. Okay, thank you. So let me give you a summary of the second quarter of this year. So total revenues were up 1.3%, driven primarily by a solid service revenue growth of close to 4%. All markets were showing service revenue growth, except Belarus. In euros, in local currency, Belarus was also going up, and Slovenia, where we see a lot of competition in the market. Service revenue growth was driven by a combination of factors. Of course, our value-protecting measures that we have been implementing now in almost all markets, a very strong fixed-line performance in the international segment. We see in-customers are also upselling speed. EBITDA went up close to 4%, 3.8%. Nevertheless, in this quarter, we have some one-off effects. If we correct these one-off effects, adjusted EBITDA would have been 8.3%, which I think is pretty solid. These one-off effects are related to some positive one-offs last year in Austria and some issues that we will talk a little bit later in Belarus that we decided to make a provision on a potential penalty that we got in Belarus. OPEX driven primarily by workforce and product-related costs compensated by electricity costs. You know, last year we were suffering quite a bit of high electricity costs. This 2024 has been much less of a problem. Actually, we have some upsides due to lower electricity costs versus previous year. We have prolonged the spectrum in Bulgaria, the 900-1900 megahertz spectrum for roughly 31 million euro. That is a very good platform to keep claiming the best network in the country. We have confirmed also in the last AGM the dividend of 36 euro cents per share. Our pre-cash flow was up in the first half of the year by 42%. driven primarily by lower-spectrum CAPEX compared to last year. SIP have confirmed our trade rating A-minus last May 2024, and we are confident to confirm our outlook to 3 to 4 percent revenue growth driven primarily by service revenue growth and CAPEX excluding the spectrum and M&A of around $800 million. If I move to the next slide, you see a customer development in the quarter. We saw mobile subscribers growing roughly 6% driven by our IoT or M2M business. If you take that, put that aside, we had a stable mobile subscriber development. Our use also grew, declining fixed voice compensated fully by broadband growth. close to 2% new customers. And what is even more important for us, we have been managing to upsell the base, reporting almost 14% growth in what we call advanced RGUs or broadband with higher speeds. RBL and ARPO developed pretty well in the quarter, about 4% in custom currency. If we move to the next slide, you see more color in our quarterly and half-year results. So as I said before, on the quarter, we accelerated service revenue growth to 3.9%. The first half was 3.5%, so Q1 was actually weaker than Q2, so we saw that. Still, equipment revenues, we see a decline of 30% in the quarter, driven by the two factors, hardware for ICT projects, but also phones, that we see less demand in the market, I think. little bit of consequence of uh challenging economical uh developments i would say uh total revenues up 1.3 percent now and low to the left you can see a more color on the service revenue and composition we see a strong growth in what we call mobile core which is basically postpaid services and a little bit of prepaid You see also nice growth in what we call queues or fixed mobile substitution. Broadband and TV also growing nicely, as well as ICT services on solution of connectivity, or now we call it business digital services. What is declining is two things. One is interconnection, partially driven by regulation, partially driven by reduction of our transit business, That is today reported in Austria. So that will continue to decline slowly. Several factors there. One is the migration of voltage. So we have less circuit switch transit minutes and more voltage traffic. Also customers using more OTT for international calls. And secondly is the changes in regulated interconnection prices coming in the EU. No EBITDA there. It's just service revenues that we lose. And also a decline in fixed costs. On the bottom right side, you can see the development of service revenues per market, and you see a very strong development in the Eastern European footprint and weaker in Austria. If we deep dive in Austria, which is the next slide, you see service revenue growing close to 1%. If we remove this transit business that you see there reported as without IB, which is the transit business that is We report in Austria, but it's basically transit minutes from Germany to Turkey, for example, that we do as an example. So it's not Austrian-related business that we start to give you more visibility on that business decline and will continue to decline. IEBTA came up to 1.1%. We see a more competitive market, especially in the low-value segments, with MB&Os being very aggressive there. And we saw also in Q2 a much better performance in customer development. You can see it in our numbers how the decline of customers in Austria improved in all segments, in fixed and also in high-value voice, or as we call it, the high-value market in Austria, where we have a pretty high market share. We have introduced a value-protected measure of 8%. Even though when you look at this, you see that over time, after the indexation of the contract, we see that customers start to optimize themselves. So we see that this growth that is very strong at the beginning starts to dilute throughout the year. We saw that last year, and that's why you don't see As many of you could have expected, 7% service revenue growth. So we do these indexations, but then customers start to optimize. So we lose the full indexation basis throughout the year. Let's see what's happening this year. We implemented different strategies on the indexation. Let's see how the service revenues will develop the rest of the year. But we see a lot of competition. On the fixed, we see a much better performance on keeping our base stable, especially where we can compete with a good network. When we have a weaker network, we have also been compensating the fixed customers with cubes or fixed mobile substitution products. OPEX is a lot focused on having a controlled workforce cost. We're doing a lot of activities there to have this under control, and we have a one-off in OPEX with a positive effect net of 3 million euro as it is reported. In the next slide, we can give you more color on the international business, and you see some growth almost all over the place. Bulgaria with a very strong growth in fixed, mobile, and ICT. Basically, the strategies are working very fine. upselling the base, value measure protecting measures as well, cross-selling the base, so it looks very good. You can see there how strong service and EBITDA growth we are experiencing. The same in Croatia, where we also implemented value protecting measures, but also the fixed platform is working very good. We are accelerating our fiber rollout, so I'm very confident that growth will continue in Croatia. Beta rules in local currency, you see a growth, even though it's a special market, especially with this potential penalty that we will describe later with more in detail that affected EBITDA, of course, due to the provision that we took on this penalty. We still have a plan on how to overcome that, but the time will tell if we manage to do it or not. Serbia, a combination of both. We managed to index the contracts as well this year, plus the organic growth that we have in customers and upsells, and that is reflected in also very strong results, especially the team has managed to keep OPEX under control and converting all the growth in EBITDA growth. Slovenia, probably our most challenging market. It's one of the few markets in Europe, or maybe the only one, I don't know, with four mobile operators, so a lot of competition. We have seen an ARPU dilution, you know, the last five years, and so we expect that sooner or later has to be some consolidation in that market to go back to growth. And North Macedonia, still small, but also delivering very good results. It's the only market where we cannot index, but it's a market where we can work increasing prices in the new products, so slowly, we are basically indexing without having an index clause in the contract yet. Having said that, as a summary, I will hand over to Sonia, who will drive us more in the details on the P&L and in the cash flow.

Thank you. Thank you, Alejandro. As Alejandro was talking about the most important impact on the EBITDA, I will focus a little bit on the EBIT and what comes below. And talking immediately about the EBIT, on a reported base, as reported at the moment, we show a negative development that is impacted by the increase of depreciation, especially out of the tower effects. Talking about the performer basis, that would mean as if towers have been spanned off already in 2023. We have an increase of $17 million depreciation on the leases instead of $44 million if we talk on a performance basis. Coming to the financial results, there you see the positive impact of the reduction of financial liabilities in the interest. and partially compensated with the effect of the interest on the basis on the date. And coming then to the net results that is showing on a performance basis, last year on Q2 and on half-year. But looking at the comparable operative basis, we see that the increase of the net result would be 8% on Q2 and 9% on the first half-year this year. And coming to the cash flow, most important effects, in focusing now on the half-year, the half-year free cash flow is higher than previous year by more than 42 percent and is especially impacted on the one-hand side by better performance with lower CapEx on regards of CapEx saved and lower frequencies that we had in the group. In 2023, we had 110 million frequency for Croatia and Austria and Bulgaria, about 39 million euros in the first half year. Additionally, the free cash flow is impacted by the higher needs paid in the sequence of the tower spin-off and about unfavorable changes in the working capital. And these changes are, in fact, the biggest one is the accounts payable that comes from the broadband subsidy that we received in 2023. And on the positive side, we have a better performance on the inventory and on the accounts . And with that, I will hand over to Thomas to give us the input on that.