PT Link Net Tbk
Investors Presentation Version Q1 2015
PT Link Net Tbk Investors Presentation Version Q1 2015 Disclaimer - - PowerPoint PPT Presentation
PT Link Net Tbk Investors Presentation Version Q1 2015 Disclaimer THE INFORMATION CONTAINED IN THESE MATERIALS IS STRICTLY CONFIDENTIAL AND MAY NOT BE FORWARDED, PUBLISHED OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON (WHETHER
Investors Presentation Version Q1 2015
Disclaimer
THE INFORMATION CONTAINED IN THESE MATERIALS IS STRICTLY CONFIDENTIAL AND MAY NOT BE FORWARDED, PUBLISHED OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON (WHETHER WITHIN OR OUTSIDE YOUR ORGANIZATION/FIRM) FOR ANY PURPOSE AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, PUBLICATION, DISTRIBUTION OR REPRODUCTION OF THESE MATERIALS IN WHOLE OR IN PART IS UNAUTHORIZED. IMPORTANT: You must read the following before continuing. In accessing the attached summary information presentation (this “presentation”), you are agree to be bound by the following terms and conditions. Confirmation of Your Representation: These materials and their contents may not be viewed by persons within Canada, Japan, the People’s Republic of China (excluding the Hong Kong Special Administrative Region) or by persons in the United
Neither these materials nor any of their contents may be disclosed or distributed or used for any other purpose without the prior written consent of PT Link Net Tbk (the “Company”). All information herein should be regarded as indicative, preliminary and for illustrative purposes only. Such information reflects prevailing conditions as of the date of this presentation, all of which is subject to change. The Company does not make any representation or warranty (express or implied) or accepts any responsibility or liability for the accuracy or completeness of these materials or any or all of the information in these materials or otherwise made
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reflect future events or circumstances, except as required under applicable laws. This presentation includes certain forecasts and projections. By their nature, forecast and projected financial information address a hypothetical situation, and therefore do not represent the actual financial position or results of the Company had the transactions described therein been completed at the dates assumed or any other date, or in the future and should not be regarded as an indication of the operating results generated by the Company or of the future financial position of the
This presentation contains certain non-GAAP measures, including Adjusted EBITDA and EBITDA, that are not audited, not included in the Company's audited financial statements and not presented in accordance with Indonesian Financial Accounting Standards. The measures have been used by management as a supplemental measure of the Company’s performance. Although these measures are either contained in or fully reconcilable to line items on the Company's audited financial statements and/or based on management accounts, they may not be equivalent to similarly named measures used by other companies, and should not be considered as a measure comparable to income statement items for the year in the financial statements. This presentation also contains certain statistical data and analyses (the “Statistical Information”) which have been prepared in reliance upon information furnished by the Company and/or third party sources for which the Company has either
the Statistical Information’s accuracy, appropriateness or completeness in any particular context, nor as to whether the Statistical Information and/or the assumptions upon which they are based reflect present market conditions or future market
quoted without the prior written consent of such third party. Statistical Information provided by PT Nielsen Audience Management (“Nielsen”) is about demographic trends and not product performance and is aimed at Nielsen clients in the media
information/data measures consumer sentiment and confidence in the future of the economy, expenditure and saving patterns and major concerns. Such information/data reflects the optimism of consumers of the overall economic condition which includes future job prospects, and the indication of how consumers will spend and save their money in the next 12 months. This information/data is for general information and research purposes only and should not be viewed as a basis for investments. Any references to Nielsen should not be considered as Nielsen’s opinion or endorsement as to the value of any security or the advisability of investing in the Company This presentation does not purport to be a complete description of the terms of or the risks inherent in any actual or proposed transaction described herein. You should not construe any statements and/or information made in this presentation as tax or legal advice. The recipient of this presentation must conduct its own investigation and analysis of the proposed transaction and the information and data contained in this presentation and in connection with the proposed transaction should you proceed. No information set out in this presentation will form the basis of any contract. In furnishing these materials, none of the Company or any other person undertakes any obligation and/or liability to provide any additional information, to update these materials or to correct any inaccuracies or incompleteness which may become apparent. This presentation does not constitute or form part of and should not be construed as an offer to sell or the solicitation of an offer to buy securities in any jurisdiction in which such offer or sale would be restricted, prohibited or unlawful. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS PRESENTATION ELECTRONICALLY OR OTHERWISE, IN WHOLE OR IN PART, TO ANY OTHER PERSON IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS PARAGRAPH MAY RESULT IN A VIOLATION OF THE SECURITIES ACT, THE CAPITAL MARKETS LAW OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. IF THIS PRESENTATION HAS BEEN RECEIVED IN ERROR, IT MUST BE DELETED IMMEDIATELY.
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PROPERTY & REAL ESTATE HEALTH CARE RETAIL & STORES SHOPPING MALLS HOTELS & RESORTS UNIVERSITY & SCHOOLS
BANKING & FINANCE
49 Malls 350 Stores 14 Hospitals
TMT in Lippo
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Lippo TMT Current Business Units
Data Center Electronic Payment IT & BP Outsourcing System Integrator Content Production Online Media Cable TV & Satellite TV Printed Media Broadband Internet Fiber Optic Network 4G Network Satellites Operators Document Management Cinema In Building Services
TECHNOLOGY TELECOM MEDIA
Fixed Broadband and Pay TV Penetration – A large and underpenetrated market
(a) Based on 2013, Source: Media Partners Asia (b) 2013 – 18 CAGR, Source: Media Partners Asia and BMI (c) Based on 2013, Source: Media Partners Asia (d) Based on 2013, Source: Nielsen (e) Growth from 2010 to 2030, Source: McKinsey Global Institute (f) Based on 2010, Source: McKinsey Global Institute (g) By 2030, Source: McKinsey Global Institute (h) 2013-18 CAGR, Source: Media Partners Asia Source: World Bank, Media Partners Asia, McKinsey Global Institute
Indonesia today… …with a highly compelling macro story
248 million people(a) 4th largest by population country(c) in the world 54% of Indonesians under 30 years of age(a)
One of the youngest(c) populations in the world
5.8% real GDP growth rate(b)
One of the fastest growing economies in the world(b) Consumption contribute to 59%(d) of GDP Consumer class to grow by 90 million(e)
53%(f) urban population contributed to 74%(f) of
GDP
71%(g) urban population to contribute 86%(g)
5.4% fixed broadband penetration rate(c) Highest fixed broadband growth
8.6% pay TV penetration rate(c) Fast Pay TV growth of 16% CAGR(h)
Indonesia is a large and attractive cable market with faster growth in larger cities
Large population base Young population High GDP growth GAGR Under-penetrated broadband Under-penetrated pay TV Consumption driven economy Urbanization with GDP concentration in cities
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1.789 3.013 5.437 193 340 860 2011 2013 2018
ADSL Cable 3 Mbps 100 Mbps
speedy linkNetLink Net is undisputed leader in Next Generation broadband in Indonesia
Large and fast growing market illustrates strong demand…
…and Link Net having the highest number of cumulative homes passed and subscribers
% ADSL subscribers
90% 90% 86%
Speed offered
(a) Based on number of subscribers as of 31 December 2013. Link Net homes passed is as of 31 December 2014 Source: Media Partners Asia and Company data
s
areas and demographics
…in an industry with only 2 key broadband players…
Market share(a)
(1.4million homes passed) (0.2million homes passed)
Even if competitors can roll out as fast as Link Net, we believe it will take them up to six years to reach where Link Net is TODAY
No other residential NGBB network of scale
2013-18 CAGR
20.4% 12.5%
98% 2%
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Network ownership under First Media Network ownership under Link Net
506
655 933
1,194
1,433 1999 2000 2007 – 2008 2011 2013 2014
2010 Dec 2011 2012 2013 2014
1999 Launch of Cable TV services 2000 Launch of Internet services 2002 Sole provider to IDX of remote trading network 2014
placement (Oct) Post transaction shareholding (Dec)
33.8%
33.5%
32.7% Jun 2011
network and related assets from First Media
2002
2007 – 2008 Launch of broadband services and bundled packages
Number of homes passed (‘000)
2010 Launch of HD
553
Jun 2011
2013
Greater Surabaya and Bandung
the residential sector
2010
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(a) Based on 2013 Media Partners Asia data (b) HFC stands for Hybrid Fiber-Coaxial (c) Greater Jakarta (Jabodetabek includes: Jakarta DKI, Bogor, Depok, Tangerang, Bekasi). Greater Surabaya (Gerbangkertasusila includes: Gresik, Bangkalan, Mojokerto, Surabaya, Sidoarjo, Lamongan) (d) As at 31 March 2015 (e) RGUs refers to Revenue Generating Units throughout the Information Memorandum (f) Others principally include revenue from installation charges, sales of cable modems and promotional items (g) Converted to using an exchange rate of US$1:IDR13,000 (h) Adjusted EBITDA is a non-GAAP measure and is defined as the Company’s profit for the year before finance costs, finance income, share of loss in associate, income tax expenses, depreciation and amortisation and is adjusted by adding back certain non- recurring expenses to the Company’s profit for the year
Link Net – The Gateway to the Indonesian Consumer Homes
~98% market share(a) for Next Generation broadband (“NGBB”) in Indonesia Technological leader in Indonesia, operating the only NGBB network of scale w/ newly-upgraded 870MHz HFC(b) and
DOCSIS 3.0 enabled network Focus on large and fast-growing affluent core households in the most important metropolitan cities – Greater Jakarta, Greater Surabaya and Bandung(c)
Strong growth trajectory with revenue CAGR of 28% over 2012–14 Strong enterprise offering, with 1,484(d) enterprise customers and serving IDX as a flagship customer since 2002
Large residential consumer base of ~784k RGUs(e) and ~Close to 1.5m homes passed Pioneering innovation through providing reliable, NGBB bundled with rich and differentiated TV entertainment
~ 94% bundled
Source: Company data, Nielsen Consumer and Media View, Media Partners Asia
Link Net is the only NGBB player of scale in Indonesia
Greater Jakarta
Bandung
Greater Surabaya
Bali
Hubs: 20 Total homes passed: 1,489k Total cable length: 20,308km
(a) Based on addressable market of AB SES households as defined by Nielsen (2013 definition of SES classification) (b) Based on Company’s estimated coverage of areas that the Company believes are addressable and commercially feasible for network buildout Source: Company data (As of December 2014), World bank, Media Partners Asia
Link Net is operating in the most attractive metropolitan areas of Indonesia
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11 15.211 14.386 9.425 130 Jakarta Bandung Surabaya Indonesia 117 107 99 31 Jakarta East Java West Java Rest of Indonesia
(a) Key cities in East Java include Gresik, Bangkalan, Mojokerto, Surabaya, Sidoarjo, Lamongan and West Java includes Bandung (b) Rest of Indonesia figure is the average of the remaining top 12 provinces as per BPS excluding Jakarta, East Java and West Java Source: Media Partners Asia, Biro Pusat Statistik (BPS), Nielsen and Company data
Targeting in most attractive metropolitan areas...
Operating in provinces with high GDP in Indonesia Operating in cities with high population density in Indonesia
% of national GDP
13% 12% 11% 4%
Total population (millions)
10.1 2.5 3.1 248
(b) (a) (a)
Addressable market for Link Net
Per km2 in 2013 2013 GDP (US$ bn)
E E D D C2 C2 C1 C1 B B A2 A2 A1 A1 2010 2013E Axis title
...and most attractive demographics & fastest growing segment market
Link Net’s target market A1 >4,500 A2 3,000 – 4,500 B 2,000 – 3,000 C1 1,500 – 2,000 C2 1,000 – 1,500 D 700 – 1,000 E < 700 Households in Link Net's operating cities(a)
(a) Cities include Jakarta, Surabaya and Bandung Source: Nielsen, assuming 4 pax per household
Affordable entry level packages also available for C1 segment customers AB Segments of the population growing the fastest 63% Unsatisfied demand for quality broadband and premium entertainment experience ABC1 growth driven by robust Indonesia macro fundamentals where lower income CDE hhs moving to affluent AB hhs
Monthly expenditure (IDR ‘000)
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2.9% 6.3% 17.8% 23.2% 25.6% 16.9% 7.3% 6.4% 9.1% 28.6% 27.9% 19.1% 6.8% 2.2%
ABC1 50.2% AB 27% ABC1 72% AB 44%
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199 359 529 849 1.649 (US$15) (US$28) (US$41) (US$65) (US$127)
(a) US$1 : IDR13,000 exchange rate was assumed Source: Company data as of Feb 2015 All price is including CPE rental All price exclude 10% VAT
Profitability margins are similar across all packages from entry-level to most premium tier package
Catering to a large addressable market from a large C population to a fast growing AB segment D’Lite
for subscribers with basic Internet and TV channel needs
Elite
packages which deliver faster Internet and more TV channel genres
Supreme
consumers who are looking for full access to high speed Internet and all channels
Maxima
users of high speed internet who require full access to all channels
1 2 3 4
50 Mbps 160 channels 25 Mbps 160 channels 12 Mbps 130 channels 6 Mbps 106 channels (US$)(a) IDR ‘000
Family
with basic Internet and TV Channel needs 2 Mbps 87 channels
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With a wide range of packages catering to a large addressable market
Examples of customer class areas
53
Premium Intermediate Entry level
127.290 133.710 162,981 2012 2013 2014
Track record of price increases and repackaging
Successful upselling through focused marketing efforts
(a) 2013 Combo repackage (b) Increase over previous reference period (3Q2013 over 4Q2012 for 3Q2013), (1Q2014 over 3Q2013 for 1Q2014), and (1Q2015 over 3Q2014 for 1Q2015) Source: Company data
4Q 2012 3Q 2013(a,b) 1Q 2014(b) 1Q 2015(b) Family
IDR 150,000 / mth
6.0% Increase 6.3% Increase 17.8% Increase D’lite
IDR 280,000 / mth
10.4% Increase 9.7% Increase 5.9% Increase Elite
IDR 390,000 / mth
10.0% Increase 9.3% Increase 12.8% Increase
Proven track record of package enhancements and upselling to drive ARPU growth
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Continuous Innovations to create Point of Difference to Entertainment & Broadband Experience
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– please do up this slide for me. I’ve indicated what are the key things to highlight.
with launch of 200 Mbps across all cities
TV Anywhere service on First Media Go
Multi-Screen Interactive Experience with next generation cable OTT STB
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Key performance indicators show no sign of slowing down
Homes Passed (‘000) RGUs (‘000) ARPU (IDR ‘000) 1.194 1.433 1.489 Dec-13 Dec-142 Mar-15 333 392 407 304 363 377 637 755 784 Dec-13 Dec-142 Mar-15 Broadband Cable TV 203 216 225 151 186 188 2013 2014 3M 2015 Broadband Cable TV 402 412 355
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763 941 222 269 191 256 55 81 553 795 179 216 94 92 21 19 65 52 15 15 1.665 2.136 493 600 2013 2014 3M 2014 3M 2015 Broadband - residential Broadband - Enterprise Cable TV Advertising Others
1
Revenue growth trajectory continues
Revenue (IDR bn)
1 “Others” primarily includes revenue from installation charges, sales of cable modems and promotional items19
362 558 138 145
21.8% 26.1% 28.1% 24.2%
200% 220% 240% 260% 280% 300% 320% 340% 360% 380% 400%
100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 1.000
2013 2014 3M 2014 3M 2015
901 1.231 274 345
54,1% 57,6% 55,7% 57,6%
0% 10% 20% 30% 40% 50% 60%
100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 1.000 1.050 1.100 1.150 1.200 1.250 1.300 1.350 1.400 1.450 1.500
2013 2014 3M 2014 3M 2015
Healthy margins maintained amidst external pressures
Adjusted EBITDA (IDR bn) Net income (IDR bn)
Adjusted EBITDA and Net income margins
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397 168 229
Total Cash Total Debt Net Cash
Capex breakdown1 (IDR bn)
777 554 189 173 184 71 45 39 13
995 777 274
2013 2014 3M 2015
Network-related Capex CPE Capex Other Capex
1 Capital expenditure represents additions to property, plant and equipment (PPE) 2 Network-related capital expenditure is the sum of additions to head-end electronics and network service control points 3 CPE capital expenditure is the sum of additions to converters, decoders, cable modem and set-top boxes 4 Other capital expenditure is the sum of additions to land, buildings, leasehold improvements, furniture and fixtures, office equipment and vehicles 5 Total debt and cash position as of March 2015 6 Total debt includes vendor financing2 3 4
Net Cash with large leverage capacity5 (IDR bn) Net Cash
6
Expansion plans on track on back of strong balance sheet
xxxxxxxxx
Deep and experienced management team
positions at leading global and Indonesian technology companies including Microsoft, Motorola, PT Teknologi, Andalan Solusindo Pratama and PT Ander Cakra Buana Richard Kartawijaya, Chief Executive Officer
Complementary skills and expertise with strong domestic and international track record
(a) NRO stands for New Roll Out Source: Company data
Lippo companies for over 10 years
StarHub
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Surya Tatang, Chief Financial Officer Desmond Poon, Chief Technology Officer Iris Wee, Chief Marketing Officer
Content at StarHub Dewi Dharma Yanti , Director of Corporate Resources
Victor Indajang, Director of Operations Agus Setiono, NRO Director(a)
Clarissa Joesoep, Finance Director
and media industries
Liryawati, Investor Relation Director
Sales and Retail
position as CMO to BOLT! 4G TD-LTE Operator Joseph Lembayung, Enterprise Director
Account, Project, Channel & Marketing in Carrier, Enterprise and Corporate & regional role
position in Microsoft Indonesia in Media & Telecommunication
Industry accolades achieved in 2014
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TOP BRAND AWARD 2014
Internet Service Provider Fixed
From Frontier Consulting Group & Marketing Magazine (2012–2014)
CORPORATE IMAGE AWARD 2014
Pay TV
From Frontier Consulting Group & Tempo Magazine (2012 & 2014)
CORPORATE IMAGE AWARD 2014
Internet Provider
From Frontier Consulting Group & Tempo Magazine (2014)
TOP TELCO 2014
Top Fixed Internet 2014
From Ikatan TI Indonesia & itech Magazine (2014)
Net Promoter is both a loyalty measure and an organizational discipline that enables an organization to build a customer –centric brand experience that drives growth through building loyal advocates who will continue to use the brand and recommend it to others.
First Media – Link Net awarded Net Promoter Leader BOTH Pay TV & Broadband / Fixed ISP Category since 2011. 4X consecutive wins testament to
Our most recent achievement
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In Summary – FY 2014 and Q1 2015
Strong growth and profitability continues in 2014 and Q1 2015: FY 2014 Q1 2015
Rp2,136.0 billion up 28.3% Rp 599.9 billion up 21.8%
Rp1,230.7 billion up 36.6% Rp 345.4 billion up 26.0%
Rp557.9 billion up 54.0% Rp 145.2 billion up 4.9% Continued network expansion which at 31 March 2015 comprised:
High bundling rate remains key competitive differentiator:
Introduced new product enhancements & innovations in Q1 2015:
Shareholding structure as of Q1 2015:
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Expand network coverage into areas with attractive penetration potential ~ 200K to 240K per annum homes passed addition Increase penetration in existing coverage areas ~ Maintain blended 28% to 30% penetration rate overall ARPU growth around 5% to 5.5% per year Increase penetration of large and untapped enterprise market ~ maintain revenue CAGR 40% Grow advertising sales to monetize unutilised inventory
Our strategies to drive future growth
Enterprise
16% of
Revenue(a) Residential
81% of Revenue(a)
A B C D E
(a) Based upon FY2014 total revenues. The remaining FY2014 revenue is derived principally from installation charges, sales of cable modems and promotional items (b) Based on Company’s estimated coverage of areas that the Company believes are addressable and commercially feasible for network buildout (c) As of Dec 2013. Global peer average includes Numericable (35% - Including bulk subscribers which are individual subscribers under collective contracts per building), Charter(37% - % penetration of internet passings), Virgin Media(39%), Shaw Comm.(50% - Based on video % penetration of homes passed as of Nov 2013), Ziggo(63% - Ziggo and Telenet were originally cable TV providers connecting most households with analog TV), Cablevision(63%) and Telenet(72%)
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Appendix