Optus SingTel Investor Day 1 October 2003 Chris Anderson Chief - - PowerPoint PPT Presentation

Optus

SingTel Investor Day

1 October 2003

Chris Anderson

Chief Executive Officer Optus

Optus: only scale player challenging incumbent

Wireless and wireline networks around Australia

Inter Office Fibre Broadband Local Network Mobile Digital (GSM) Coverage International Fibre Optic Cable

B3 Satellite B3 Satellite A3 Satellite A3 Satellite C1 Satellite C1 Satellite Jasuraus Jasuraus SMW 3 SMW 3 PacRim PacRim West West Southern Southern Cross Cross Southern Southern Cross Cross Tasman Tasman 2 2 Sydney Sydney Brisbane Brisbane Melbourne Melbourne Adelaide Adelaide Perth Perth Darwin Darwin Hobart Hobart Cairns Cairns Canberra Canberra B1 Satellite B1 Satellite

Australian telecomms market: scale and returns

Australia supports 2-3 major players in most industries

Based on last reported FY results (Telstra & AAPT - y/e Jun 30; Optus & Vodafone - y/e Mar 31; Hutchison & PowerTel - y/e Dec).

Australian telecoms

• perators: revenue scale

Operating revenue (A$bn) Telstra Optus AAPT Vodafone

20 5.5 1.6 1.5 0.2

Hutchison PowerTel

0.1

EBITDA margins

• Incumbent: approximately 50%
• Optus: approaching 30% target
• Other operators have lower margins

Profitability correlates to revenue and network scale

Established track record of top line growth

Largest contributor to SingTel Group revenues

Optus Q1 FY04* JP Morgan estimate Q1 FY04

Optus revenue growth:

• utstripping the industry

* Excluding C1 defence contract

Optus 17% Growth Industry 5%

Q1 FY04: strong contributions from each retail division Mobile: service revenues

17%

Consumer: total revenues

21%

Optus Business: total revenues*

13%

Financial discipline: cost control

Margin improvement drives bottom line turnaround

Q1 FY03 Q1 FY04 80*

NPAT turnaround: A$122m

Net profit after tax (A$m) (42)

Operational EBITDA margin* increases to 28%

Q1 FY03 Q1 FY04* 22% 28% Operational EBITDA margin

* Excluding C1 defence contract

Financial discipline: capital management

Capex and cashflow turnaround

29% 16%

* FY02 revenues restated on basis consistent with FY03

Capex: revenue ratio continues to track within mid-high teens

FY02* FY03

Free cash flow* up 172% to A$185m…

Q1 FY03 Q1 FY04 185 Free cash flow* (A$m)

Strategic discipline: clear strategic focus

Strict investment criteria successfully executed

Investment criteria

Segments with a strong presence Maximise yield

Example

Mobile

• Segments with current

regulatory barriers Aim to maintain cash positive presence Consumer New markets Achieve scale and return on investment within 3-4 years DSL Pay TV content If businesses do not meet investment criteria Exit business

Optus divisions

Three retail divisions: different stages of maturity

Mix of yield and potential for growth

CMM 24% Mobile 54% Business 17% Wholesale 6%

Our businesses: Q1 FY04 Operational EBITDA margins

Mobile 38% Operational EBITDA margin 23% Business & Wholesale* Consumer 10% Optus overall margin target: 30%

Our businesses: Q1 FY04 revenue contribution*

*Excludes C1 Defence contract

Optus Business: Q1 FY04 results

Successful launch of C1 satellite contributes A$217m revenue

Corporate voice revenues Combined Business & Wholesale EBITDA margin*

23%

Corporate data revenues

7% 7%

222 Underlying corporate revenues Optus Business revenue (A$m) Q1 FY03 Q1 FY04

* Excludes C1 Defence contract

C1 Defence contract 252 217

Underlying corporate revenues up 13%*

Challenger approach underpins our strategy

Customers value quality in many areas of service

Icon account successes: financial services Icon account successes: government State governments NSW, WA, NT Other icon account successes

Outlook

Optus: strong & sustainable turnaround

“Best Asian Competitive Carrier” - Telecom Asia 2003

* Excluding C1 defence contract

Top line: strong growth track record Revenues* Free cash flow** Bottom line: now profitable Net profit after tax*

A$80m

Cashflow: positive Group contributor

17%

Strong turnaround delivered: Q1 FY04 results

A$185m

** Operating cash less cash capex

Positive outlook

FY04 revenue growth

Double digit

Operational EBITDA Margin target

30%

FY04 free cash flow**

>A$650m

Optus

SingTel Investor Day

1 October 2003