Main focus of Investor Relations‘ transparent and timelycommunication in the financial year 2016: Consistentimplementation of the Group’s strategy and its solid companyresults, higher dividend proposal, increase in free float and thesuccessful placement of its ninth benchmark bond.
SHARE PRICE PERFORMANCE AND SECTOR COMPARISON
The Telekom Austria shares had a weak start to the reporting year, as well as the ATX and thesector, and reached its low for the year of EUR 4.66 on 9 February 2016. Following the publica-tion of full year 2015 results, Telekom Austria’s share price increased, reaching its high for theyear of EUR 5.73 on 15 March 2016. In April and May, the Telekom Austria share traded mostlysideways with a slight upward trend. In the run-up to the British referendum on leaving the Eu-ropean Union, the stock came under selling pressure in June and lost further ground when vot-ers unexpectedly decided in favour of ‘Brexit’ in the middle of the year.
After an extended period of sideways movement, Telekom Aus-tria’s share price marked a significant increase towards the endof the year and finally closed on 31 December at EUR 5.61, up11.2% on the start of the year.
The Stoxx Telecom industry index and the ATX, the benchmarkindex of the Vienna Stock Exchange, declined during the firstquarter of 2016 due to concerns about macroeconomic marketconditions and the weakness of the oil price. In early Q2, bothindices started to rise again as the oil price recovered, but de-clined again at the end of June due to the British referendum.After the abolition of retail customer roaming, the sector sub-
sequently continued its downward trend. Meanwhile, the ATX rose on the back of strong com-pany results, posting a year-on-year increase of 9.2%. The Stoxx Telecom, by contrast, fell by15.7% in 2016.
On 22 July 2016, Telekom Austria Group announced thatAmérica Móvil and Österreichische Bundes- und Indus-triebeteiligungen GmbH (ÖBIB) agreed that day on a new ex-pected dividend level starting with the financial year 2016.This decision is based on the improved operational and finan-cial performance of the Group. This new dividend expectationentails the payment of EUR 0.20 per share to be maintained orincreased on a sustainable basis in line with the operationaland financial developments of the Group.
FINANCIAL DEBT AND RATINGS
The Telekom Austria Group actively uses the local and in-ternational debt capital markets in order to ensure that its fi-nancing is broadly diversified, both geographically and interms of the investor base.
Since its first bond transaction in 2003, the Telekom AustriaGroup has issued a total of nine benchmark bonds. In 2013, itplaced the first hybrid bond in the European telecommunica-tions sector.
A bond that matured in January 2016 was repaid as scheduledfrom existing liquidity. On 30 November 2016, Telekom Fi-nanzmanagement GmbH successfully placed a bond with aface value of EUR 500 million, a maturity of ten years and acoupon of 1.5%. The issue proceeds from the placement weremainly be used to refinance the EUR 500 million bond whichmatured in January 2017 and was paid back in due time, as wellas for general company purposes.
Telekom Austria AG is regularly rated by Moody’s InvestorsService and Standard & Poor’s Ratings Services. On 17 August2016, Standard & Poor’s confirmed its BBB rating (stable out-look) for Telekom Austria AG. Moody’s also retained its Baa2rating (stable outlook), which was most recently confirmedon 6 November 2016.
The liquidity of corporate bonds generally declines significantly within a certain period follow-ing their issuance. As credit default swaps (CDS) are not affected by this liquidity reduction, it isstandard international practice to use five-year CDS when analysing spread development.
Telekom Austria AG’s five-year CDS spread rose to around 96 bps in early 2016 in the wake ofconcerns about the condition of European banks and falling oil prices. At the same time, theMarkit iTraxx Europe Index reached its high for the year of around 112 bps. The spread for boththe company and the index then declined until early March. The subsequent sideways move-ment was followed by a moderate increase following the result of the Brexit referendum. How-ever, the Telekom Austria spread and the Markit iTraxx Europe Index then fell to their lows forthe year of around 52 bps and 42 bps respectively. Both spreads remained at a low level until theend of the year.
as of 31 Dec 2016
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