Presentation March 2020 Axtel Confidential Information - For - - PowerPoint PPT Presentation

Axtel – Confidential Information - For Recipient’s Use Only 1

Investor’s Presentation

March 2020

Axtel – Confidential Information - For Recipient’s Use Only 2

Agenda

I. Axtel Strategy II. Financial Results III. Business Opportunities in Infrastructure and Services Units IV. Appendix

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I. Axtel Strategy

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Infrastructure 51% Service 49%

B2B, infrastructure-based Company

+83% Enterprise

Services Unit (Alestra) – Revenue Breakdown

US $664 mm & US$ 232 mm

• Ps. 12,784 mm & Ps. 4,466 mm

2019 Revenues & EBITDA

+40,600 km +22,000 km LD & 18,600 km Metro

Fiber Network

50% service business unit (Alestra)

Infrastructure Unit – Revenue Breakdown EBITDA

Government 17% Enterprise 83% Alestra 50% Others 50%

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Functional Separation: Capture Opportunities and Maximize Value

SERVICES (Brand: “ALESTRA”) INFRASTRUCTURE (Brand: TBD)

Telecom IT Network Connectivity Collaboration Managed Networks

VPN LAN Ethernet Unified Comm.

System Integration Cloud

DRP IT Infrastructure Hybrid cloud

Cybersecurity

Perimeter Internal Network

Enterprise and Government

IP Transit Fiber (Dark & Lit) Spectrum Wholesale Access Fiber to the Tower Fiber to the Data Center

1) Source: AV&CO (2019).

• >18k

customers

• Value-added

services Expand expertise

• rganically and/or

inorganically:

• Cybersecurity
• Digital

Transformation

• Systems

Integration

• ~50k customers
• Wholesale connectivity and

passive infrastructure

Wholesale / Operators (Including Alestra Services)

Video Conference Wi Fi SD-WAN Productivity applications 40,600 km

22,000 km (LD) 18,600 km (Metro)

Largest neutral operator Standard Services

Voice Internet Migration

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 Sale to Televisa (~80%) in December 2018 and Megacable (~20%) in May 2019

▪ Km: 5,800 km of FTTx (fiber-to-the-home or business) ▪ Proceeds: 5,863 MPs ▪ Customers: ~280,000

Tower Sale

1

Non-strategic Asset Divestments – Focused Strategy &

Indebtedness Reduction

FTTx Mass Market Divestment

2

Data Centers’ Alliance with Equinix

3

 Valuation: 175 Mdlls  Includes assets and operations of 3 Data Centers

• 3 large-scale colocation customers

 Joint-Marketing agreement:

• Develop marketing opportunities for IT Solutions, data

center and network services; exchange sales leads of the enterprise segment and joint participation in government segment projects

 142 towers sold to ATC in 2017; 12 additional towers in 2018

▪ Proceeds: 61 Mdlls

Apodaca Querétaro

(1) Exclude ~5 Mdlls of related expenses and 13 Mdlls of funds held in escrow account, to be released in 12 months

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23 15 14 14 513 18 26 48 48

2020 2021 2022 2023 2024 2025 2026 2027 2028 Bancomext Others 2024 Notes

Debt Profile

Debt Composition (as of Dec’19 – PF Data Center Transaction) Leverage Evolution (Net Debt / EBITDA*) Maturity Profile Net Debt: US$ 614 M

• Acc. Pay. Alfa: US$ 11 M

4.0 3.6 3.6 3.7 3.4 3.2 2.9

2Q'17 4Q'17 2Q'18 3Q'18 4Q'18 4Q'19 4Q'19 PF

(1) With normalized cash balance. (2) PF Data Center transaction * Without tower sale benefit nor merger-related expenses

(1) (2)

• Avg. life: 5.1 yrs

(in US $mm)

Net Debt: US$ 966 M

• Acc. Pay. Alfa: US$ 83 M

617 500 173 24 22 102

Net Debt 2024 Notes (Dlls) Bancomext (Ps) IFRS 16 Others Cash

Debt Composition (as of Dec’17)

966 500 181 310 47 72

Net Debt 2024 Notes (Dlls) Bancomext (Ps) Syndicated Facility (Ps) Others Cash

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II. Financial Results

Axtel – Confidential Information - For Recipient’s Use Only 9 840 225

2017 2018 2019 3,460 4,169 4,466

11,456 12,199 11,905 1,089 590 879

12,544 12,788 12,784 2017 2018 2019 Revenues

(in MPs.)

EBITDA

(in MPs.)

CAGR

Tower Sale

Recurring One-time

• 10%

+2% +1%

(1) Includes merger-related expenses of Ps.429 million. (1)

Revenues & EBITDA

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Revenues by business unit – 2018 vs 2019

4,843 5,170 327

+7%

Infrastructure

(in MPs) 2018 2019

(1) Non-recurrent government segment revenues of Ps. 274 million in 2018 vs Ps. 148 in 2019.

8,014 8,018 2,475 9,954 2,159 223 316 219

Services

(in MPs)

• 3%

Government(1)

• 13%

Enterprise Voice

• 12%

Enterprise Others +4% 2018 2019

10,490 10,177

Enterprise Gov’t

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EBITDA by business unit – 2018 vs 2019

2,344 2,179 1,824 2,287 225 463 165

YTD18 Infrastructure Services YTD19

+7% (w/o tower sale) (in MPs)

+25% (w/o tower sale)

• 7%

+8% (w/o Voice)

4,393 4,466

Infrastructure Services Tower Sale

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• III. Business Opportunities in

Infrastructure and Services Units

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Services Unit – ICT Market Growth and Revenue breakdown

$60.3 $67.3 $76.9 $84.0 $85.9 $93.2 $102.4 2012A 2014A 2016A 2018A 2020E 2022E 2024E

Growth in Corporate ICT Market

Telecom - Voice Telecom – Internet & Data Telecom – Managed Network

IT

9.9% 3.0% (3.3%) (14.7%) CAGR ’19-’24E

(in BPs., %)

Large Corporate 35% SME 32% Financial Services 12% Government 21%

Customer Base

18,000+ Total Customers

• 21 of top 35 customers have average tenure with

Alestra of more than 8 years

• 90% of the most relevant Financial Institutions in

Mexico are Alestra’s customers

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✓ Growth concentrated in FTTT and FTTDC

• (CAGR of 28%) (1)

✓ Driven by mobile data consumption (4G), 5G deployment and growing IT outsourcing to DCs (cloud)

Infrastructure Unit – Sector growth and target market (Wholesale)

Wireless Carriers Fixed National Carriers Fixed International Carriers Internet Giants, Data Centers & Tower Operators

Growing segment demanding high- bandwidth services to connect facilities and customers. Large international players present relevant

• pportunities.

Large buyers of fiber to the tower backhaul. 5G will be a large driver

• f growth.

1) Source: AV&CO (2019).

Growth Infrastructure Market Wholesale Customer Base

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• IV. Appendix:

PF Financial Information

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Financial Summary – Proforma for Data Center Transaction

(in MPs)

2019 Adjustment 2019 PF

Revenue 12,784 (255) 12,528 Costs (3,353) (131) (3,484) Expense (5,015) 157 (4,858) Other income (expense) 50

• 50

EBITDA 4,466 (229) 4,236

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