1h10 results announcement presentation · operating costs 2q10 / 2q09 operating costs 1h10 / 1h09...
TRANSCRIPT
1 1
30 JULY 2010
1H10
RESULTS ANNOUNCEMENT PRESENTATION
2
DISCLAIMER
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
4 4
+ 9.5% Operating Revenues
+15.9% EBITDA
+41.7% Net Profit
572 thousand triple play subs; 49% penetration
100k ZON Fibra customers
700k fixed voice subs
ARPU +6.2%
11th consecutive quarter of growth and ahead of
expectations
Highlights of 2Q10
5 5
#1 or #2 in all Key Markets
Position
1Q10 Market
Share
2Q10
Subscribers
Triple Play
Pay TV
Broadband
Fixed Voice
45%(E)
62%
33%
18%
572 thousand
1.6 million
650 thousand
692 thousand
6 6 6
Almost 50% of cable subs with 3P services
RGUs per Sub [Units]
571.9 thousand customers subscribe to ZON’s 3P bundles and another 186.3 thousand to
2P bundles.
Triple play penetration increased by 3.4 p.p. in 2Q10 to 49%
Each customer, on average, subscribes to 2.31 services, compared with 2.02 a year ago.
ZON cable customer profile [%]
33%49%
23%16%
44% 35%
2Q09 2Q10
Triple Play Double Play Single Play
2,02 2,10 2,172,26 2,31
2Q09 3Q09 4Q09 1Q10 2Q10
+14.7%
7 7
Leading TV Clear leader in HD
• We have the largest HD offer in Europe
• We have the best channels
Clear leader in 3D
• The first 3D channel
• The first live golf and football broadcasts
in 3D in Portugal
The largest video club in Portugal
• 3 thousand titles in cataogue
• The largest HD catalogue
Widgets launched in 2Q10
• 5.5 million clicks
• 270 thousand ZON Boxes accessed
service
1,6
0,7
62%
25%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0, 0
0, 2
0, 4
0, 6
0, 8
1, 0
1, 2
1, 4
1, 6
1, 8
ZON # 1 # 2
Pay TV customer base 2Q10 and Market
Share 1Q10 [Millions, %]
7
Portuguese Premier League Sponsorship
• Premier League main sponsor, jointly
with Sagres
• Greater brand awareness and showcase
of leadership in HD and 3D in this
segment
8 8
Strong uptake of digital services
Strong uptake of digital services with 743
thousand ZON HD Boxes installed
Around 60% of digital customer base
already have the new HD ZON Box,
enabling use of new TV features:
• HD viewing,
• Pause Live TV
• VoD
• Widgets
• EPG
•PVR
ZON HD Boxes installed [Thousands]
292,3
417,4
545,5
662,9742,7
10%
20%
30%
40%
50%
60%
70%
0
100
200
300
400
500
600
700
800
2Q09 3Q09 4Q09 1Q10 2Q10
2.5x
8
9 9
Leading Next Generation Services
In 1Q10, ZON already had an implied share of NGN services of almost 60%
In 2Q10, ZON launched a new generation of its internet gateway, ZON Hub, which enables
broadband connectivity of up to 200 Mbps around the house and PBX functionalities.
ZONs WiFi network has proven to be a real success with over 100 thousand access points
spread around the country
Broadband customer mix [Thousands, %]
Broadband Subs and Penetration of
cable base [Thousands, %]
100k
ZON
Fibra
subs in
July
572,6
650,1
49%
56%
30%
35%
40%
45%
50%
55%
60%
65%
70%
200
250
300
350
400
450
500
550
600
650
700
2Q09 2Q10
+13.6%
9
10% 8%
50% 46%
39%32%
0,7% 14%572,6 650,1
520, 0
540, 0
560, 0
580, 0
600, 0
620, 0
640, 0
660, 0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2Q09 2Q10
2 Mbps 5 - 10 Mbps 20 -30 Mbps ≥ 50 Mbps
10 10
The strongest growing fixed voice operator
700k fixed voice subs in July
Fixed Voice Subs and
Penetration [Thousands, %]
Fixed voice subs increased by almost 45% in 2Q10 compared with the previous year and in
July surpassed 700 thousand.
We are already the second largest operator in terms of subscribers with a market share of
18% at the end of 1Q10. ZON is the only major operator presenting growth.
Mobile subs grew to 92.3 thousand, 59 thousand more than in 2Q09.
Fixed Voice net adds 1Q09-
1Q10 [Thousands]
478,6
692,0
41%
58%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0, 0
100, 0
200, 0
300, 0
400, 0
500, 0
600, 0
700, 0
800, 0
2Q09 2Q10
226,7
195,5
ZON Market
10
+44.6%
33,4
92,3
2Q09 2Q10
2.8x
Mobile Subscribers [Thousands]
11 11
Growth delivering Value
Blended ARPU increased 6.2% y.o.y. to 35.6 euros, driven by growth in RGUs and 3P
penetration.
On average, a 3P customer generates an ARPU that is 2.1x greater than a 1P customer.
In 2Q10, ARPU also benefitted from the 2-3% price increase across the board that was
announced in 1Q10 and implemented 1 May, 2010.
Blended ARPU [Euros]
Multiple service ARPU premium [ARPU Single Play = 1]
1,0
2,1
1P 3P
11
33,634,0
35,0 35,235,6
2Q09 3Q09 4Q09 1Q10 2Q10
+6.2%
12
The greatest coverage
with the highest bandwidth
Network independence
Greater operational flexibility
and cost efficiency
Eurodocsis 3.0 upgrade almost complete
2,8 million homes with up to 200 Mbps
Systems migrated to a new ZON data centre in
2Q10
Project underway in 2010/2011 to migrate site
currently on incumbent premises to ZON
premises
Focus on leading NGN momentum
12
13
The best customer service
Complaints in 2009 [source DECO]
ANACOM reports that our
main competitor has 2.5 x
more complaints than
ZON
Complaints / 1,000 services in 2009 [Source ANACOM]
13
1,8
4,9
Cable - ZON IPTV
1.3231.794
2.644
4.492
ZON Operator
A
Operator
B
Operator
C
14 14
1.7 million tickets sold in 2Q10, increase in average revenue per ticket of 5% to 4.6
euros
Digitalization project complete thus enabling higher operational and cost efficiency
The largest number of 3D projection systems in Portugal: 60 3D screens, an average of
2 screens per multiplexer.
Around 26% tickets sold is for a 3D movie
Leadership in 3D and Digitalization
14
15 15
Leading cinema distribution
ZON Lusomundo distributed 8 of the 10 films that beat the 200k spectator mark in 1H10.
Dreamia’s market share of total audience increased to 5.4% at the end of 1H10,
compared with 4.7% at the end of 1H09.
Audience of Dreamia’s children’s channels within the total audience for children’s
channels increased to 61.7% (13.7% of total cable audience).
Share of cinema distribution revenues 2Q10 [%]
15
ZON60,4%
Columbia23,8%
Castello Lopes6,3%
Others9,5%
16 16
ZAP launch in Angola
We are reinforcing our offer with a number of very
relevant channels, such as Sony / AXN, FOX, Panda,
SIC Notícias, TVI Internacional, Económico TV, ZAP
Novelas.
As from August 1, we will be broadcasting Sport TV
Africa, exclusive to ZAP’s network with exclusivity of the
Portuguese Football League, “Liga ZON Sagres”
We recently launched a very targeted marketing
campaign with a focus on the local market, and we are
in the process of strengthening our network of own
stores and distribution agents.
16
17
2. Supported by
Solid Financial Indicators
18 18 18
Revenues driven by RGU and ARPU growth
Operating Revenues [Millions of Euros]
Pay TV, BB and Voice Revenues [Millions of Euros]
394,8429,7
1H09 1H10
197,4
216,2
2Q09 2Q10
+9.5%
179,2
197,6
2Q09 2Q10
+8.8%
356,9
390,2
1H09 1H10
+9.3%
+10.2%
19 19
24,4
27,8
1H09 1H10
27,4
34,5
1H09 1H10
Improving Sequential Trends in Audiovisuals
and Cinema Revenues Audiovisuals Revenues [Millions of Euros]
Cinema Revenues [Millions of Euros]
13,1
19,0
2Q09 2Q10
11,812,1
2Q09 2Q10
+2.3% +44.6%
+25.9% +13.6%
20 20 20
Focus on efficiency and cost discipline Operating Costs 2Q10 / 2Q09 [Millions of Euros]
131,6140,0
2Q09 2Q10
+6.4%
266,4280,1
1H09 1H10
+5.2%
Operating Costs
(millions of euros) 1H10 Δ % Drivers
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 and royalty charges
Other Operating Costs 92.9 (0.6%) Remained flat over 1H09, a clear sign of cost discipline in general and administrative areas
Lower sales commission charges, due to more efficient mix of sales channels Commercial Costs 34.6 (11.4%)
W&S 28.8 5.0%
Direct Costs 123.8 16.4%
5.0% y.o.y. increase, but stable q.o.q.
Operating Costs 1H10 / 1H09 [Millions of Euros]
21 21 21
128,4
149,5
32,5%
34,8%
30, 0%
31, 0%
32, 0%
33, 0%
34, 0%
35, 0%
36, 0%
37, 0%
38, 0%
50, 0
70, 0
90, 0
110, 0
130, 0
150, 0
170, 0
1H09 1H10
65,8
76,2
33,3%
35,3%
30, 0%
31, 0%
32, 0%
33, 0%
34, 0%
35, 0%
36, 0%
37, 0%
38, 0%
30, 0
35, 0
40, 0
45, 0
50, 0
55, 0
60, 0
65, 0
70, 0
75, 0
80, 0
2Q09 2Q10
Operational Profitability, Solid EBITDA growth
+15.9% +16.5%
EBITDA and EBITDA Margin 2Q10 / 2Q09 [Millions of Euros, %]
EBITDA and EBITDA Margin 1H10 / 1H09 [Millions of Euros, %]
22 22
Net Income – 22.9 million euros in 1H10 Net Income 2Q10 / 2Q09 [Millions of Euros]
Net Income 1H10 / 1H09 [Millions of Euros]
9,6
13,6
2Q09 2Q10
+41.7%
16,8*
22,9
1H09 1H10
+36.2%
* Net Income adjusted for the capital gain resulting from the sale of the 40% in Lisboa TV in 1Q09.
(millions of euros) 1H10 Δ % Drivers
Higher operational investment in customer terminal equipment
Remained flat QoQ
Not directly comparable to 1H09 due to capital gain from sale of 40% stake in Lisboa TV in 1Q09
Net Interest charges decreased by 21% yoy due to lower level of gross debt and lower interest rate environment
Equity Consolidation of negative Net Income of Angolan operation in the amount of 2.3 million euros in 1H10
Significant YoY decrease in 1H10 due to impact of capital gain from sale of 40% stake in Lisboa TV in 1Q09
Positive impact of increase in corporate tax in deferred taxes and tax benefits for investments in research and development and NGN Income Taxes (70.4%)
D&A 105.2 22.6%
Net Financial Expenses 16.2 n.a.
(3.9)
23 23
Decline in Recurrent CAPEX
Focus on operational and cost efficiency -
impact of lower average cost of terminal
equipment
Increase in the proportion of equipment
reinjected in to the distribution chain.
Recurrent CAPEX, % of Operating
Revenues [Millions of Euros, %]
Increase in non-recurrent CAPEX due to
investment in own network to replace
infrastructure currently leased from the
incumbent and to the investment to build
ZON’s data centre which started operating
in 2Q10
Total CAPEX [Millions of Euros]
41,5
14,9 44,9
56,3
2Q09 2Q10
Baseline CAPEX Non-Recurrent CAPEX
+25.4%
20,9 16,8
0,93,6
23,0 21,1
44,9 41,5
2Q09 2Q10
Terminal Equipment Other Baseline CAPEX
Pay TV, BB and Voice Infrastructure
(7.6)%
23% 19%
24 24 24
Sound Capital Structures and Adequate Debt
Maturity
2,2x
2,3x
2,6x
1H10
2009
1H09
Net Financial Debt [Millions of Euros]
Net Financial Debt / EBITDA [X]
615,8
24,1
39,4
49,9
72,7
54,0
4,0
635,7
2009
Working Capital
EBITDA -CAPEX
Dividends Paid
Sale/ Acq of Own Shares
Long Term Contracts
Other Items
1H10
25
3. Wrap Up
26 26
Continued strong operational momentum
Leading the deployment of NGN networks: 2.8 million homes passed with Eurodocsis 3.0,
delivering broadband speeds of up to 200 Mbps
One of the fastest growing operators in the sector:
Total Operating Revenue growth of +9.5%
Clear focus on profitability:
EBITDA is growing well above Revenues at +15,9%
A rational, customer driven investment strategy, focused on reducing costs whilst at the
same time increasing operational flexibility and independence from the incumbent
operator.
Wrap-up
27
Appendix
Financial Highlights
Operational Highlights
28 28 28
Financial Highlights
(Millions of Euros) 2Q09 2Q10 ∆ y.o.y. 1H09 1H10 ∆ y.o.y.
Operating Revenues 197.4 216.2 9.5% 394.8 429.7 8.8%
Pay TV, Broadband and Voice 179.2 197.6 10.2% 356.9 390.2 9.3%
Audiovisuals 13.1 19.0 44.6% 27.4 34.5 25.9%
Cinema Exhibition 11.8 12.1 2.3% 24.4 27.8 13.6%
Other (6.8) (12.4) 83.2% (14.0) (22.8) 63.4%
EBITDA 65.8 76.2 15.9% 128.4 149.5 16.5%
Income from Operations 25.9 24.1 (7.2%) 42.6 44.3 4.1%
NET INCOME 9.6 13.6 41.7% 29.1 22.9 (21.2%)
CAPEX 44.9 56.3 25.4% 90.6 110.2 21.6%
EBITDA minus CAPEX 21.6 19.9 (7.9%) 40.2 39.4 (2.1%)
Net Financial Debt 638.8 635.7 (0.5%) 638.8 635.7 (0.5%)
EBITDA margin (%) 33.3% 35.3% 1.9pp 32.5% 34.8% 2.3pp
CAPEX as % of Revenues 22.7% 26.0% 3.3pp 22.9% 25.6% 2.7pp
Net Financial Debt / EBITDA [x] 2.6x 2.2x n.a. 2.6x 2.2x n.a.
29 29 29
Operational Highlights
30
José Pedro Pereira da Costa
CFO
Maria João Carrapato
Head of Investor Relations
ZON Multimedia
Avenida 5 de Outubro, 208
1069-203 Lisboa, Portugal
Tel.: +351 21 782 47 25
Fax: +351 21 782 47 35
Contacts