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1
Financial Strength & Market Leadership
June 2002
2
Q1 2002 Financial highlights
Q1 2001 Q1 2002
128,549140,983
9.7%
Revenues
13,292
19,946
Net Income50.1%
53,58158,850
9.8%
EBITDA(in HUF million)
EBITDA growth driven by Westel
Net income boosted by Westel and the strong HUF
Q1 2001 Q1 2002 Q1 2001 Q1 2002
Revenue growth due to mobile and international segment
3
Infrastructure based competition RIO based interconnection fees are provided only if there are at least 3 points of
interconnection out of the 10 secondary switches
Price cap regime The overall price cap is 4% in 2002 and CPI minus 3% in 2003 and 2004
Specific price caps for subscription fee and local tariffs
Matáv is a universal telecom service provider Universal Telecom Fund to provide compensation for uneconomical services such as
low-usage package and public payphone service
RUO approved in February
RIO expected to be approved by the end of June Matáv signed IC agreement with Pantel, Vivendi, GTS-Datanet and eTel
Predictable and transparent regulatory environment
4
1,000
1,500
2,000
2,500
3,000
1997 1998 1999 2000 2001 Q1 2002
Lin
es
in '0
00
25%
30%
35%
40%
Pe
ne
tra
tio
n
Residential analogue Business analogue ISDN Channels
Fixed line: Focus on innovative solutions, strong cash generator
Stabilised number of lines
Provide higher value services Shift to ISDN (up by 34%,
representing more than 16% of total
lines)
Respond to emerging competitive
environment Advanced tariff re-balancing
Increasing popularity of the wide
range of tariff packages
13.6% average headcount reduction
at parent company
322 lines per employee in Q1 2002
Number of Access Lines and Penetration in Matáv’s Local Service Areas
2,404
2,672
2,9002,966 2,936
31.7
35.4
38.6
39.5 39.1 39.2
2,939
5
Mobile: Continued delivery of excellent profit growth & efficiency
Mobile penetration in Hungary
reached 53% in Q1 2002
Actively maintained leadership
position (50.6% market share)
EBITDA margin increased to
35.6% in Q1 2002
Westel: ARPU (HUF 6,030)
and MOU (121)
Revenues from enhanced
services up by 63%
The world premier of MMS
0
500
1 000
1 500
2 000
2 500
3 000
1997 1998 1999 2000 2001 Q1 2002
0%
10%
20%
30%
40%
50%
60%
Pre-paid Contract
Su
bsc
rib
ers
in '0
00
842
547363
1,599
GS
M P
enet
rati
on
16.210.6
7.0
30.8
Penetration
48.7
2,493
Westel Subscriber Growth and Mobile Penetration in Hungary
2,711
53.0
6
International: Unchanged expectations, dynamic subscriber growth
Strong revenue growth but temporary slowdown in profitability Fixed-line tariff rebalancing in line with industry normsMobile and Internet customer base more than doubled
Penetration: 27% fixed line, 13% mobile, 1% Internet
Unchanged set of conditions for MakTel
Substantial volume growth potential in all market segments
Drivers of Q1 2002 results
7
Matáv Group: strong financial position
40%38%
33%
21%
47%*45%*
0%
10%
20%
30%
40%
50%
1997 1998 1999 2000 2001 Q1 2002
Net Debt to Total Capital Controlled leverage after the
Westel acquisition
Strong operational cash flow
provides some balance sheet
flexibility for the future
Rating:
S&P BBB+
Moody’s Baa1
Q1 2002 debt structure:
71% EUR, 24% HUF, 5% USD
*MakTel and Westel acquisition were financed from debt
8
Matáv Outlook
Focus on growth businesses (mobile, data)
Solid cash generation and efficiency improvement in fixed line
Transparent environment in key businesses
Targets for 2002: High single-digit revenue growth
Over 40% EBITDA margin
Approximately HUF 105 billion capex