1Q10 RESULTS ANNOUNCEMENT PRESENTATION...2010/05/12 · 1Q10 RESULTS ANNOUNCEMENT PRESENTATION 2...
Transcript of 1Q10 RESULTS ANNOUNCEMENT PRESENTATION...2010/05/12 · 1Q10 RESULTS ANNOUNCEMENT PRESENTATION 2...
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12 MAY 2010
1Q10
RESULTS ANNOUNCEMENT PRESENTATION
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DISCLAIMERDISCLAIMERDISCLAIMERDISCLAIMER
This presentation contains forward looking information, including statements which constitute forward looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These
statements are based on the current beliefs and assumptions of our management and on information available to management only as of the date such statements were made.
Forward-looking statements include
(a) information concerning strategy, possible or assumed future results of our operations, earnings, industry conditions, demand and pricing for our products and other aspects of our business, possible or future
payment of dividends and share buy back program; and
(b) statements that are preceded by, followed by or include the words “believes”, “expects”, “anticipates”, “intends”, “is confident”, “plans”, “estimates”, “may”, “might”, “could”, “would”, and the negatives of such
terms or similar expressions.
These statements are not guarantees of future performance and are subject to factors, risks and uncertainties that could cause the assumptions and beliefs upon which the forwarding looking statements were based
to substantially differ from the expectation predicted herein. These factors, risks and uncertainties include, but are not limited to, changes in demand for the company’s services, technological changes, the effects
of competition, telecommunications sector conditions, changes in regulation and economic conditions. Further, certain forward looking statements are based upon assumptions as to future events that may not
prove to be accurate. Therefore, actual outcomes and results may differ materially from the plans, strategy, objectives, expectations, estimates and intentions expressed or implied in such forward-looking
statements. Additionally, some of these statements refer to board proposals to be submitted to ZON - Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. (“Multimedia” or “ZON”) AGM and
subject to (i) its approval by Multimedia’s shareholders, (ii) the market conditions and (iii) the ZON’s financial and accounting position as revealed in the financial statements approved by Multimedia’s AGM.
Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to provide reasons why actual
results may differ. You are cautioned not to place undue reliance on any forward-looking statements.
ZON Multimedia is exempt from filing periodic reports with the United States Securities and Exchange Commission (“SEC”) pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934, as amended.
The SEC file number for PT Multimedia’s exemption is No. 82-5059. Under this exemption, ZON Multimedia is required to post on its website English language translations, versions or summaries of certain
information that it has made or is required to make public in Portugal, has filed or is required to file with the regulated market Eurolist by Euronext Lisbon or has distributed or is required to distribute to its
security holders.
This presentation is not an offer to sell or a solicitation of an offer to buy any securities.
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1. Continued Strong
Operating Performance
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+ 45.6%45.6%45.6%45.6% Triple Play Penetration
Leaders in Next Generation Services:
64%64%64%64% Share,
80 thousand80 thousand80 thousand80 thousand ZON Fibra customers
2,8 million 2,8 million 2,8 million 2,8 million homes with Eurodocsis 3.0
1/31/31/31/3 of the customer complaints of our main competitor (Anacom)
Key HighlightsKey HighlightsKey HighlightsKey Highlights
55
10101010thththth Consecutive Quarter of GrowthConsecutive Quarter of GrowthConsecutive Quarter of GrowthConsecutive Quarter of Growth
Revenues 213 .5 8 .2%
EBITDA 73 .3 17.0%
EBITDA Margin 34 .3% 2.6pp
Adjusted Net Incom e * 9 .3 28 .8%
Net Incom e 9 .3 (52.3%)
(Millions of euros) 1Q10 1Q10 / 1Q09
* Adjusted Net Income is adjusted for the impact of the pre-tax capital gain of 16.9 million euros due to the sale in 1Q09 of a 40% stake in Lisboa TV.
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#1 or #2 in all Key Markets#1 or #2 in all Key Markets#1 or #2 in all Key Markets#1 or #2 in all Key Markets
Ranking 2009 Market
Share 1Q10 Customers
Triple Play # 1 n.a. 537 thousand
Pay TV # 1 64% 1,6 m illion
Broadband # 2 32% 635 thousand
Fixed Voice # 2 17% 646 thousand
7
RGU RGU RGU RGU –––– Revenue Generating UnitsRevenue Generating UnitsRevenue Generating UnitsRevenue Generating Units
[thousands]
+16.6%+16.6%+16.6%+16.6%
+134.2 +134.4+134.2 +134.4+134.2 +134.4+134.2 +134.4 +134.5+134.5+134.5+134.5 +121.3 +126.0+121.3 +126.0+121.3 +126.0+121.3 +126.0[Net Adds - thousands]
Strong Operational MomentumStrong Operational MomentumStrong Operational MomentumStrong Operational Momentum
88
RGUs per SubscriberRGUs per SubscriberRGUs per SubscriberRGUs per Subscriber
[units]
Triple Play Subscribers Penetration of Cable BaseTriple Play Subscribers Penetration of Cable BaseTriple Play Subscribers Penetration of Cable BaseTriple Play Subscribers Penetration of Cable Base
+16.3%+16.3%+16.3%+16.3%+16.7pp+16.7pp+16.7pp+16.7pp
Triple Play SubscribersTriple Play SubscribersTriple Play SubscribersTriple Play Subscribers
[thousands]
+64.5 +51.1 +44.9 +48.5 +52.3+64.5 +51.1 +44.9 +48.5 +52.3+64.5 +51.1 +44.9 +48.5 +52.3+64.5 +51.1 +44.9 +48.5 +52.3
[Net Adds thousands]
Triple Play penetration increased by 4.6 percentage points to 45.6 %, with 537 thousand customers subscribing to all three services
Each customer now subscribes to 2.26 services, on average, compared with 1.94 a year ago
+57.9%+57.9%+57.9%+57.9%
3Play Penetration Over 3Play Penetration Over 3Play Penetration Over 3Play Penetration Over
45% of Cable Subscriber Base45% of Cable Subscriber Base45% of Cable Subscriber Base45% of Cable Subscriber Base
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Basic SubscribersBasic SubscribersBasic SubscribersBasic Subscribers
[thousands]
(0.4%)(0.4%)(0.4%)(0.4%)
(18.2) (3.9) +3.3 +0.1 (6.4)(18.2) (3.9) +3.3 +0.1 (6.4)(18.2) (3.9) +3.3 +0.1 (6.4)(18.2) (3.9) +3.3 +0.1 (6.4)
Cable SubscribersCable SubscribersCable SubscribersCable Subscribers
[thousands]
+0.0%+0.0%+0.0%+0.0%
+0.2 +3.1 +2.4 (1.0) (4.1)+0.2 +3.1 +2.4 (1.0) (4.1)+0.2 +3.1 +2.4 (1.0) (4.1)+0.2 +3.1 +2.4 (1.0) (4.1)
DTH SubscribersDTH SubscribersDTH SubscribersDTH Subscribers
[thousands]
(1.8)%(1.8)%(1.8)%(1.8)%
(18.4) (7.0) +0.8 +1.2 (2.3)(18.4) (7.0) +0.8 +1.2 (2.3)(18.4) (7.0) +0.8 +1.2 (2.3)(18.4) (7.0) +0.8 +1.2 (2.3)
Basic Customers posted a solid performance in 1Q10 with a marginal decline of 6 thousand
[Net Adds thousands]
In 1Q10, ZON launched an entry level Pay TV offer of 15 channels for 9.99 euros a month, targeting new market segments within the ZON footprint and that are currently not
Pay TV subscribers
Double Play and Triple Play entry level offers were launched later in 1Q10 for 14.98 euros and 24.98 euros respectively
Pay TV Pay TV Pay TV Pay TV –––– maintaining leadership in the Portuguese marketmaintaining leadership in the Portuguese marketmaintaining leadership in the Portuguese marketmaintaining leadership in the Portuguese market
1010
“Funtastic” Digital Subscribers“Funtastic” Digital Subscribers“Funtastic” Digital Subscribers“Funtastic” Digital Subscribers
[thousands]
ZON Boxes Installed, Penetration of Digital Cable BaseZON Boxes Installed, Penetration of Digital Cable BaseZON Boxes Installed, Penetration of Digital Cable BaseZON Boxes Installed, Penetration of Digital Cable Base
[thousands, %]
+26.4%+26.4%+26.4%+26.4%
+43.7 +35.3 +38.2 +35.0 +34.0+43.7 +35.3 +38.2 +35.0 +34.0+43.7 +35.3 +38.2 +35.0 +34.0+43.7 +35.3 +38.2 +35.0 +34.0
+3.6x+3.6x+3.6x+3.6x
> > > > 50% 50% 50% 50% withoutwithoutwithoutwithout PVRPVRPVRPVR
[Net Adds thousands]
Continued strong take-up of higher value digital services: 26.4% increase in sales of “Funtastic” to 682 thousand
663 thousand ZON Boxes installed enabling HD viewing, VoD, Pause live TV and catch-up TV, amongst other innovative TV features, reaching 54% penetration rate of the digital
customer base
Continued takeContinued takeContinued takeContinued take----up of higher value digital servicesup of higher value digital servicesup of higher value digital servicesup of higher value digital services
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Reinforced leadership in HD content, currently with 13 channels in the programming grid
Partnerships established with main FTA channels to simultaneously broadcast SD and HD transmissions of major UEFA Champions League and UEFA Europa League matches
Launch of a dedicated channel in “True 3D” available to all subscribers on ZON’s cable footprint and with a ZONBox installed
Leadership in HD contentLeadership in HD contentLeadership in HD contentLeadership in HD content
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[Net Adds thousands]
Broadband SubscribersBroadband SubscribersBroadband SubscribersBroadband Subscribers
[thousands]
+16.4%+16.4%+16.4%+16.4%
+27.0 +26.5 +21.9 +16.3 +24.7+27.0 +26.5 +21.9 +16.3 +24.7+27.0 +26.5 +21.9 +16.3 +24.7+27.0 +26.5 +21.9 +16.3 +24.7
Fixed Voice SubscribersFixed Voice SubscribersFixed Voice SubscribersFixed Voice Subscribers
[thousands]
+54.1%+54.1%+54.1%+54.1%
+72.8 +59.2 +50.6 +54.9 +62.0+72.8 +59.2 +50.6 +54.9 +62.0+72.8 +59.2 +50.6 +54.9 +62.0+72.8 +59.2 +50.6 +54.9 +62.0
Mobile SubscribersMobile SubscribersMobile SubscribersMobile Subscribers
[thousands]
+8.8 +17.4 +20.5 +15.0 +11.7+8.8 +17.4 +20.5 +15.0 +11.7+8.8 +17.4 +20.5 +15.0 +11.7+8.8 +17.4 +20.5 +15.0 +11.7
In Broadband, the pace of growth remains strong with 24.7k net adds in 1Q10. Importantly, latest operating data reveals that 12% of all broadband subscribers in 1Q10 subscribed to
ZON Fibra offers, almost 80 thousand customers
ZON achieved 62k net adds in Fixed Voice during 1Q10, taking the total Fixed Voice customer base to almost 650k subscribers, overtaking Broadband for the first time. Voice
penetration now stands at 54.3% of the cable base, supported by ZON’s continuous innovation in features and attractive tariff plans, unmatched by any of its domestic competitors
Mobile subscribers continued to grow in 1Q10, to 81 thousand, with much of the growth coming from mobile broadband connections
5.0x5.0x5.0x5.0x
Very Strong Momentum Maintained
Broadband, Fixed Voice and MobileBroadband, Fixed Voice and MobileBroadband, Fixed Voice and MobileBroadband, Fixed Voice and Mobile
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Multiple Service ARPU DifferentiationMultiple Service ARPU DifferentiationMultiple Service ARPU DifferentiationMultiple Service ARPU Differentiation
[Single Play ARPU = 1]
Blended ARPUBlended ARPUBlended ARPUBlended ARPU
[euros]
+7.6%+7.6%+7.6%+7.6%
ZON’s Strong RGU and 3P penetration growth is delivering value reflected in an increase in ARPU of 7.6% y.o.y. to 35.2 euros
Triple Play customers on average generate an ARPU of over 50 euros, representing a premium to Single Play customers of 116%
In 1Q10, ZON announced a price increase of 2-3% across the board in both individual services and bundles, which came into effect in May 1, 2010
Strong Operating Momentum Strong Operating Momentum Strong Operating Momentum Strong Operating Momentum
Driving ARPU growthDriving ARPU growthDriving ARPU growthDriving ARPU growth
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According to ANACOM, in its 2009 Report on Complaints and Information Requests, Cable TV customers present the lowest number
of complaints in the market.
ZON’s services post less than 1.8 complaints per thousand customers, which compares with between 1.8 to 4.9 complaints per
thousand customers for IPTV services.
Leadership in Customer ServiceLeadership in Customer ServiceLeadership in Customer ServiceLeadership in Customer Service
151515
Cinema tickets sold increased by 26.7% to 2.5 million in 1Q10 and average revenue per ticket grew by 7.1% to 4.6 euros.
ZON Lusomundo Cinemas is at the leading-edge of technological developments in movie exhibition worldwide, as regards its level of
digitalization ant roll-out of 3D projection systems.
ZON has the largest number of digitalized screens (77% of the market total) and 3D projection systems in Portugal, which helped
drive increase in cinema market share to 53.4% in 1Q10.
Leadership in 3D and DigitalizationLeadership in 3D and DigitalizationLeadership in 3D and DigitalizationLeadership in 3D and Digitalization
161616
Leadership in Cinema DistributionLeadership in Cinema DistributionLeadership in Cinema DistributionLeadership in Cinema Distribution
ZON Lusomundo Audiovisuais distributed 4 of the 5 Top movies in 1Q10.
Market share of revenues increased to 46.7%.
24 movies premiered in 1Q10.
1Q10 Market Share of Cinema Distribution Revenues1Q10 Market Share of Cinema Distribution Revenues1Q10 Market Share of Cinema Distribution Revenues1Q10 Market Share of Cinema Distribution Revenues
[%]
ZON
46,7%
Columbia
19,0 %
Castello Lopes
26,7%
Others
7,6%
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2. Supported by
Solid Financial Indicators
1818
Operating RevenuesOperating RevenuesOperating RevenuesOperating Revenues
[millions of euros]
Pay TV, Broadband and Voice RevenuesPay TV, Broadband and Voice RevenuesPay TV, Broadband and Voice RevenuesPay TV, Broadband and Voice Revenues
[millions of euros]
+8.2%+8.2%+8.2%+8.2% +8.4%+8.4%+8.4%+8.4%
Revenues driven by RGU and ARPU growthRevenues driven by RGU and ARPU growthRevenues driven by RGU and ARPU growthRevenues driven by RGU and ARPU growth
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Audiovisuals RevenuesAudiovisuals RevenuesAudiovisuals RevenuesAudiovisuals Revenues
[millions of euros]
Cinema RevenuesCinema RevenuesCinema RevenuesCinema Revenues
[millions of euros]
+8.8%+8.8%+8.8%+8.8% +24.3%+24.3%+24.3%+24.3%
Improving Sequential Trends in Audiovisuals and Cinema RevenuesImproving Sequential Trends in Audiovisuals and Cinema RevenuesImproving Sequential Trends in Audiovisuals and Cinema RevenuesImproving Sequential Trends in Audiovisuals and Cinema Revenues
2020
Operating CostsOperating CostsOperating CostsOperating Costs
[millions of euros]
+4.0%+4.0%+4.0%+4.0%
EBITDA and EBITDA MarginEBITDA and EBITDA MarginEBITDA and EBITDA MarginEBITDA and EBITDA Margin
[millions of euros, %]
+17.0%+17.0%+17.0%+17.0%
Operating Costs
(millions of euros) 1Q10 ∆ % Drivers
Marginal y.o.y. decrease of 1,6%
Slightly lower headcount due to reorganization of companies acquired in 2008
Higher fixed and mobile traffic interconnection charges and telecom capacity due to higher volume of traffic
Higher programming costs related with the introduction of new channels and some new HD content
Increase in royalty charges at Audiovisuals and Cinemas due to increase level of activity
Lower sales commission charges, due to better mix of sales channels
Decrease in COGS due to a higher proportion of terminal equipment being rented to customers rather than sold
Other Operating Costs 47,5 (0 ,6%) Remained flat over 1Q09
Commercial Costs 16,7 (10 ,4%)
W&S 14,3 (1,6%)
Direct Costs 61,6 14,7%
Operational Profitability Operational Profitability Operational Profitability Operational Profitability –––– Solid EBITDA growthSolid EBITDA growthSolid EBITDA growthSolid EBITDA growth
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Consolidated Net Income was 9.3 million euros in 1Q10, which represented y.o.y. growth of 28.8% adjusted for the impact of a pre-tax capital gain of 16.9 million euros in 1Q09,
due to the sale in February 2009 of ZON’s 40% stake in Lisboa TV
Total Net Results of 9.3 Million Euros in 1Q10
Adjusted Net IncomeAdjusted Net IncomeAdjusted Net IncomeAdjusted Net Income
[millions of euros]
+28.8%+28.8%+28.8%+28.8%
D&AD&AD&AD&A
[millions of euros]
+15.4%+15.4%+15.4%+15.4%
Net IncomeNet IncomeNet IncomeNet Income
22
Total CAPEXTotal CAPEXTotal CAPEXTotal CAPEX
[millions of euros]
+17.9%+17.9%+17.9%+17.9%
Increase mostly due to upgrade to Eurodocsis 3.0 and cell splitting
Increase mostly due to the installation of a greater amount of terminal
equipment
CAPEX increased 17.9% y.o.y. to 53.9 million euros however posted a 22.6% decline when compared with the previous quarter. The sequential decline is explained primarily by
the higher proportion of less-expensive non-PVR set-top boxes in the sales mix and an increase in the number of refurbished set-top boxes that were injected back into the
distribution chain
CustomerCustomerCustomerCustomer----Driven CAPEX y.o.y. IncreaseDriven CAPEX y.o.y. IncreaseDriven CAPEX y.o.y. IncreaseDriven CAPEX y.o.y. Increase
2323
Net Financial DebtNet Financial DebtNet Financial DebtNet Financial Debt
[millions of euros]
Net Financial Debt / EBITDANet Financial Debt / EBITDANet Financial Debt / EBITDANet Financial Debt / EBITDA
[x]
Sound Capital Structures and Adequate Debt MaturitySound Capital Structures and Adequate Debt MaturitySound Capital Structures and Adequate Debt MaturitySound Capital Structures and Adequate Debt Maturity
2424
Launch of ZAP in AngolaLaunch of ZAP in AngolaLaunch of ZAP in AngolaLaunch of ZAP in Angola
2525
Strong element of tailor-made, Portuguese speaking content
Opportunity for ZON to leverage key position in content production
Sale to Angolan market of “TVCine” movie channels, Dreamia channels (Panda,
Panda Biggs, Hollywood and MOV)
Exclusive distribution of SportTV Africa as from the next football season, starting in
August 2010 with the Portuguese football league
Strong HD differentiation with competitive pricing at launch
Proportionate consolidation of 30% stake in JV as from 2Q10
Two main packages :
“MaxMaxMaxMax“ around 50 channels (approx.30 USD/ month)
“PremiumPremiumPremiumPremium“ around 80 channels (approx.60 USD/ month)
Launch of ZAP in AngolaLaunch of ZAP in AngolaLaunch of ZAP in AngolaLaunch of ZAP in Angola
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3. Wrap Up
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•Leading roll-out of Next Generation Networks and Services: 2.8 million homes covered, 200 Mbps Triple Play bundles for almost all the
network
•Continued focus on profitable growth with EBITDA increasing significantly above Revenues: + 17.0% in 1Q10
•Customer driven growth CAPEX is successfully securing market share with attractive returns on investment, leveraging scalability of HFC
network while leading in technological innovation
•Operational KPIs continue to show very strong performance: Triple Play penetration now at 45.6%
•Still one of the highest growth companies of the peer group: +8.2% y.o.y. growth in Revenues, +8.4% in core Pay TV, Broadband and
Voice business
Wrap UpWrap UpWrap UpWrap Up
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Appendix
Financial Highlights
Operational Highlights
2929
(Millions of Euros) 1Q09 1Q10 ∆ y.o.y.
Operating Revenues 197,4 213,5 8 ,2%
Pay TV, Broadband and Voice 177,7 192,7 8,4%
Audiovisuals 14,3 15,5 8,8%
Cinema Exhibition 12,6 15,7 24,3%
Other (7,2) (10,4) 44,7%
EBITDA 62,6 73,3 17,0 %
Income from Operations 16,7 20,3 21,5%
NET INCOME 7,2 9,3 28 ,8 %
CAPEX 45 ,7 5 3,9 17,9%
EBITDA minus CAPEX 16,9 19,5 n.a.
Net Financial Debt 5 24,9 5 77,2 10 ,0 %
EBITDA margin (%) 31,7% 34,3% 2,6pp
CAPEX as % of Revenues 23,2% 25 ,2% 2,1pp
Net Financial Debt / EBITDA [x] 2 ,4x 2,1x n.a.
Financial HighlightsFinancial HighlightsFinancial HighlightsFinancial Highlights
3030
1Q09 1Q10 ∆ y.o.y.
Homes Passed ('0 0 0 ) 3 ,0 5 8 3,144 2.8 %
RGUs ('0 0 0 ) 3,116 3,632 16.6%
Triple Play Custom ers 340 537 57.9%
Basic Subscribers 1,595 1,588 (0 .4%)
"Funtastic" Digital Subscribers 540 682 26.4%
Fixed Broadband 546 635 16.4%
Fixed Voice 419 646 54.1%
Mobile 16 81 n.a.
Net Adds RGUs ('0 0 0 ) 134 126 (6.1%)
Triple Play Custom ers 64 52 (18 .9%)
Basic Subscribers (18 ) (6) n.a.
"Funtastic" Digital Subscribers 44 34 (22.3%)
Fixed Broadband 27 25 (8 .5%)
Fixed Voice 73 62 (14.8%)
Mobile 9 12 32.7%
Blended ARPU (€ ) 32.7 35 .2 7.6%
Revenues per ticket (€ ) 4.3 4.6 7.1%
Tickets sold ('0 0 0 ) 1,95 0 .1 2,472 26.7%
Pa
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Operational HighlightsOperational HighlightsOperational HighlightsOperational Highlights
31
José Pedro Pereira da Costa
CFO
Maria João Carrapato
Head of Investor Relations
ZON MultimediaZON MultimediaZON MultimediaZON Multimedia
Avenida 5 de Outubro, 208
1069-203 Lisboa, Portugal
Tel.: +351 21 782 47 25
Fax: +351 21 782 47 35
ContactsContactsContactsContacts