Banc of America 35 th Annual Investment Conference
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Transcript of Banc of America 35 th Annual Investment Conference
Banc of America 35th Annual Investment Conference
September 19, 2005
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Caution Concerning Forward Looking Statements and Non-GAAP Financial Measures
Any statements in this presentation that are not historical facts are forward-looking statements. The Any statements in this presentation that are not historical facts are forward-looking statements. The words “plan”, “believe”, “expect”, “anticipate”, “estimate” and other expressions that indicate future words “plan”, “believe”, “expect”, “anticipate”, “estimate” and other expressions that indicate future events and trends identify forward-looking statements. These forward-looking statements are subject to events and trends identify forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. Factors that could have a material and adverse impact on actual results are described those anticipated. Factors that could have a material and adverse impact on actual results are described in the reports and documents Mediacom files from time to time with the Securities and Exchange in the reports and documents Mediacom files from time to time with the Securities and Exchange Commission. Mediacom undertakes no obligation to publicly release the results of any revisions to these Commission. Mediacom undertakes no obligation to publicly release the results of any revisions to these forward-looking statements to reflect events or circumstances after today or to reflect the occurrence of forward-looking statements to reflect events or circumstances after today or to reflect the occurrence of unanticipated events.unanticipated events.
This presentation may include the financial measures “operating income before depreciation and This presentation may include the financial measures “operating income before depreciation and amortization,” “unlevered free cash flow” and “free cash flow”, which are not determined in accordance amortization,” “unlevered free cash flow” and “free cash flow”, which are not determined in accordance with generally accepted accounting principles (GAAP) in the United States. The Company defines with generally accepted accounting principles (GAAP) in the United States. The Company defines unlevered free cash flow as operating income before depreciation and amortization less capital unlevered free cash flow as operating income before depreciation and amortization less capital expenditures, and free cash flow as operating income before depreciation and amortization less interest expenditures, and free cash flow as operating income before depreciation and amortization less interest expense, net and capital expenditures. expense, net and capital expenditures.
Any applicable reconciliation of historical non-GAAP financial measures included in this presentation to Any applicable reconciliation of historical non-GAAP financial measures included in this presentation to the most directly comparable GAAP financial measures is available at the Press Releases link in the the most directly comparable GAAP financial measures is available at the Press Releases link in the Investor Relations section of the Company’s website at www.mediacomcc.com. Investor Relations section of the Company’s website at www.mediacomcc.com.
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Key Objectives
Strengthen competitive video positionStrengthen competitive video position
Grow unit revenue and penetrationGrow unit revenue and penetration
Develop compelling new products and Develop compelling new products and servicesservices
Maintain flexibility in our capital structureMaintain flexibility in our capital structure
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Our Position Today
Improving competitive Improving competitive video positionvideo position
Widespread roll-out of VOD, Widespread roll-out of VOD, SVOD, HDTV and DVRsSVOD, HDTV and DVRs
Leveraging off network Leveraging off network capabilitiescapabilities
Growing ARPU and Growing ARPU and expanding RGU expanding RGU penetrationpenetration
Launching telephone Launching telephone serviceservice
Video/data/voice triple playVideo/data/voice triple play
Maintaining substantial Maintaining substantial liquidity position to liquidity position to underpin flexible capital underpin flexible capital structurestructure
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Robust Video Platform
% of Digital Customers
50%
65%
80%
0%
98% 100%
70%77%
90%
YE 2003 YE 2004 YE 2005 (Projected)
VOD DVR HDTV
Product Availability
Product DifferentiationProduct Differentiation
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Digital Turnaround
Digital Adds
50,000
12,000 13,000
59,000
FY 2002 FY 2003 FY 2004 1H 2005
For Q2 2005, digital penetration
is up 6.5% from prioryear period and digital sell-in
is over 70% higher.
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Mediacom On-Demand
43%
39%
Jan 2005 Aug 2005
Over 1,200 hours of contentOver 1,200 hours of content
Value-based packagingValue-based packaging
Driving digital salesDriving digital sales Lowering digital churnLowering digital churn Generating higher transactional revenuesGenerating higher transactional revenues
Orders per Month
Usage Rates
1,796,0001,796,000
1,016,0001,016,000
HoursHoursMovies On DemandMovies On Demand 600600SVODSVOD 550550FreeFree 9090
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Regaining the Competitive Advantage…
No equipment to No equipment to purchasepurchase
No contractNo contract Low entry price Low entry price
($15.45/month or ($15.45/month or $7.45/month incremental $7.45/month incremental to digital)to digital)
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…with Superior Products and Services
Low entry price Low entry price ($10.50/month or ($10.50/month or $2.50/month $2.50/month incremental to digital)incremental to digital)
Local broadcast Local broadcast channelschannels
Up to 16 HD channelsUp to 16 HD channels
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Strengthening High-Speed Data Product
Higher maximum download Higher maximum download speeds: 5 Mbpsspeeds: 5 Mbps
Launching premier Launching premier 10 Mbps residential product10 Mbps residential product Premium contentPremium content Wireless home networkWireless home network
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ARPU Growth
$44.54
$50.10
$55.75
$60.56$63.60
$49.52$47.40$45.90
$43.17$40.23
YE 2001 YE 2002 YE 2003 YE 2004 Q2 2005
Video ARPU Total ARPU
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ARPU Growth Despite Competition
15%28%
62%
92% 92%
1,595 1,5921,543
1,4581,446
YE 2001 YE 2002 YE 2003 YE 2004 Q2 2005
DBS Local-into-Local Coverage Basic subs (000's)
Video ARPU $40.23 $43.17 $45.90 $47.40 $49.52Total ARPU $44.54 $50.10 $55.75 $60.56 $63.60
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Mediacom Telephony Rollout
Partnershipwith
Sprint
Firstmarketlaunch
1 million homes are network
ready
1.5 millionhomes are
networkready
Aug 2004 June 2005 Aug 2005 Dec 2005 June 2006
2.5 millionhomes are
networkready
Flexible Capital Structure
Mediacom Broadband LLCSubsidiaries
Senior Debt2 $791Unused Credit Commitments $545Senior Debt/SCF 3.3x
Mediacom Broadband LLC
Senior Notes $600Total Debt/OCF 6.0x
Mediacom LLCSubsidiaries
Senior Debt2 $854Unused Credit Commitments $294Senior Debt/SCF 3.9x
Mediacom LLC
Senior Notes $625Total Debt/OCF1 7.0x
Mediacom Communications Corporation
Convertible Notes $173Total Debt $3,027Total Debt/OCF 7.2xTotal Debt (excl cnvt)/OCF 6.7x
Notes:Notes: Based on 2Q 2005 data; OCF is 2Q annualized. Pro forma for issuance of $200 million of 8.5% Notes due 2015 at Mediacom Broadband LLC in August 2005.Based on 2Q 2005 data; OCF is 2Q annualized. Pro forma for issuance of $200 million of 8.5% Notes due 2015 at Mediacom Broadband LLC in August 2005.11 OCF and SCF for Mediacom LLC includes cash investment income.OCF and SCF for Mediacom LLC includes cash investment income.22 Includes letters of credit and capital lease obligations (net of carve-outs) for bank covenant purposes.Includes letters of credit and capital lease obligations (net of carve-outs) for bank covenant purposes.
$ in millions
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2005E 2006E 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E
Convert Senior Notes Bank Debt
Q3 2004Fixed - Floating:
73% - 27%
$ in millions Note: Assumes no repayment of revolver outstanding until required by commitment reduction schedule.
Pro forma for August 2005 issuance of 8.5% Notes at Mediacom Broadband LLC.
$20.3
$220.5$70.5 $90.5 $124.0
$284.5
$84.5 $64.5
$1,411.0
MCCC Scheduled Debt Maturities
$200.0
$456.3
$437
$1,100
$844$770
$909$839
$839$909
$562$600
$800
$358
FYE 2000 FYE 2001 FYE 2002 FYE 2003 FYE 2004 2Q 2005 PF*
Unused Credit Commitments Borrowing Availability
Credit Availability
Solid track record of preserving liquidity and Solid track record of preserving liquidity and maintaining ample borrowing availabilitymaintaining ample borrowing availability
$ in millions*Pro forma for issuance of $200 million of 8.5% Notes due 2015 at Mediacom Broadband LLC in August 2005.
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Single Platform of Broadband Products
DBS RBOC ILECDigital XX XX
VOD XX
SVOD XX
HDTV XX XX
Local HDTV XX
DVR XX XX
HSD XX XX XX
Voice XX XX XX
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