RESULTS PRESENTATION 9 NOVEMBER 2012 Disclaimer This presentation - - PowerPoint PPT Presentation
RESULTS PRESENTATION 9 NOVEMBER 2012 Disclaimer This presentation - - PowerPoint PPT Presentation
3Q12 RESULTS PRESENTATION 9 NOVEMBER 2012 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
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
- ur 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
- f 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.
Disclaimer
Resilience of Pay TV, Broadband and Voice revenues “ZAP” continues to post very positive quarter on quarter growth, reaching Net Income breakeven ahead of schedule Strong improvement of EBITDA-CAPEX driven by the stable performance of EBITDA and the decrease of CAPEX, as forecast For the 2nd consecutive year, ZON ranked Best Quality of Service in TV and Broadband by ANACOM versus its largest competitor The best performing Portuguese company at USA Contact Center World awards: 2 Gold and 2 Silver medals Leading in innovation with the launch of “Timewarp”
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3Q12 Highlights
ZON has the best 3P value proposition driven by IRIS’ innovative, unique features with outstanding customer feedback and leading broadband speeds
IRIS – The most advanced features
Over 70 channels for up to 2 hours
Free RESTART TV Free ZON ONLINE
Television on the PC, iPad and iPhone
Personalized
Profiles, configure premium channels, videoclub and packages whenever you like Quick and easy to find navigation
Advanced Search
Simultaneously record entire series and programmes
Advanced recording FREE APPS
Interactive TV APPS The largest and best HD content offer (43 channels)
HD
Share your preferences and your friends’, using the UI
Facebook VOD
The largest offer with the most recent movies Network PVR 7 days with simplified record management
Free TIMEWARP
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IRIS – The Best 3P product in the market
Why choosing IRIS over any other 3P bundle?
1) Only award winning interface for its design and usability 2) Most advanced cloud-based TV solution with innovative and unique TV features like Timewarp 3) Broadband with 100Mb/s – several times more than ADSL 4) Access to 500,000 hotspots free Wi-FI – by far the largest network in Portugal 5) Largest number of HD channels in the market 6) Largest VOD library with over 10,000 titles 7) Unlimited calls including 50 countries 8) Watch content on Smartphone, Tablet and PC 6
IRIS – The Best TV Experience
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IRIS – Timewarp is a unique feature
“Choice no longer depends
- n time of day
but on what I want to watch” “I only watch what I want” “I have more freedom to watch TV, no time restrictions” “Timewarp is fantastic and watching TV is cool again “The new way to record TV” “I can watch programmes recommended by friends and colleagues, after they were shown
- n TV”
“I don’t have to worry about missing a programme as I have 7 days to go back and watch it” What our customers are saying
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IRIS – The Best TV Experience extended to all devices
Live TV Restart TV for 36 channels (PC) Videoclub rental and viewing (PC) Schedule recording to watch later on TV Navigate full EPG Intelligent search for content
ZON Online - Available on the PC, iPad and iPhone for all IRIS customers
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Free Wi-Fi access to 500,000 hotspots in Portugal, 7 million worldwide Free for ZON Broadband customers On a monthly basis, 23% of Broadband customers used the service with an average of 2 sessions per day per user and 69% of hotspots generated traffic
Leading Innovation in Broadband and Voice
The largest Wi-Fi network in Portugal
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Unlimited fixed voice calls to 50 countries, nights and weekends ZON PHONE APP – Fixed calls from anywhere in the world using your home phone number and tariff plan, over a Wi-Fi network Fixed phone voice messages can be accessed away from home over a computer Dual number acount allowing more than one phone number per household
Leading Innovation in Broadband and Voice
Putting Fixed Voice back on the map
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3Q12 Operating Review
751.7 thousand Triple Play customers, up 9.1% yoy 193 thousand IRIS customers, 16% of cable customer base, 31.4k net adds in 3Q12
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Good Triple Play take-up High take-up of high-end IRIS bundles continues
Triple Play Customers and Penetration of Cable Base [Thousands, %] IRIS customers and Penetration of Cable Base
[Thousands, %]
603.5 688.8 751.7 51.9% 59.3% 62.4%
30 % 50 % 70 % 90 % 11 0% 13 0% 15 0% 00 10 20 30 40 50 60 70 803Q10 3Q11 3Q12
Net Adds [Thousands]
28.3 46.2 65.0 97.0 118.9 161.5 193.0
2.4% 4.0% 5.6% 8.2% 9.9% 13.3% 16.0%
00 % 05 % 10 % 15 % 20 % 25 % 30 % 00 50 10 15 20 251Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
28.3 17.9 18.8 32.1 21.9 42.6 31.4
766.2 thousand Broadband subs 63.6% penetration of customer base 57% offers greater than 20 Mbps and 38% higher or equal to 30 Mbps
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Robust net additions in Broadband and Fixed Voice
Broadband Subscribers
[Thousands, % of Penetration of Cable Base]
Fixed Voice Subscribers
[Thousands; % of Penetration of Cable Base]
960.2 thousand Fixed Voice subs 77.9% penetration of cable customer base
666.4 725.0 766.2 57.3% 62.4% 63.6%
30 % 35 % 40 % 45 % 50 % 55 % 60 % 65 % 70 % 20 30 40 50 60 70 803Q10 3Q11 3Q12 732.3 844.0 960.2 61.7% 70.7% 77.9%
40 % 45 % 50 % 55 % 60 % 65 % 70 % 75 % 80 % 85 % 00 20 40 60 80 1, 003Q10 3Q11 3Q12
Basic ARPU from core TV, BB and Voice services decreased 3% yoy Adjusting for the impact of entry level
- ffers, basic ARPU would have remained
nearly flat – a 0.9% decrease Success of lower ARPU, entry level,
- ffers and continued pressure from
discretionary premium ARPU (-14.3%) led to decline in Blended ARPU of 4.8% ≈ 50 thousand new entry-level customers between 3Q11 and 3Q12, due to analogue switch-off
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ARPU under pressure from less premium channel subscriptions
Basic, Premium and Blended ARPU
[3Q11 = Base 1]
- 4.8%
- 3.0%
- 14.3%
0.80 0.85 0.90 0.95 1.00 1.05 1.10
3Q11 4Q11 1Q12 2Q12 3Q12
Blended ARPU Basic ARPU Premium ARPU
Cinema Exhibition: 3Q12 performance improvement, above the remainder of the market
Source: ZON, ICA
Cinema tickets sold and revenue per ticket
[Thousands, Euros]
3Q12 Performance of Gross Revenues and Attendance
[%]
Average revenue per ticket: -3.9% in 3Q12 Cinema Exhibition gross revenues were up 2.9% in 3Q12, with the market as a whole growing by 0.4% yoy
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2.9% 0.5% 0.4%
- 3.2%
Gross Revenue Attendance
ZON Market
2,372 2,260 1,725 1,714 2,383
5.1 4.8 4.8 4.9 4.9
04 05 05 05 05 05 05 05 05 05 05 50 10 00 15 00 200 25 00 3003Q11 4Q11 1Q12 2Q12 3Q12
Source: ZON, ICA
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ZON Audiovisuais: Reinforcing leadership in Cinema Distribution
Cinema Gross Revenues by Distributor - Market Share 3Q12
[%]
ZON distributed 7 of the Top 10 movies shown in cinemas in Portugal in 9M12 63.6% market share of cinema distribution gross revenues in 3Q12 Sale of content rights to FTA channel
- perators pressured by the cutbacks on
their programming grids
ZON 63.6% Columbia 17.7% Big Picture 2 14.1% Others 4.7%
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ZAP – strong performance, above expectations
Very strong operational performance EBITDA breakeven reached in 1Q12 Net Income breakeven reached in 3Q12, ahead of schedule
ZAP Customers
3Q11 4Q11 1Q12 2Q12 3Q12
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ZAP’s success is based on (1): more advanced technology, strong local presence...
ZAP has the most advanced set-top-boxes in the market: Zapper HD+DVR, Zapper HD+ and Zapper SD Strong local presence:
- Angolan company, with a local team of 260 people
- In Angola, 10 own stores, 200 door-to-door salespeople, 610 agents, call-centre
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ZAP’s success is based on (2): ...more Portuguese content, strong investment in marketing
ZAP offers more Portuguese-spoken content, for all pockets, and is supplied by the major national and international content suppliers:
- ZAP Mini: 40 channels, 21 of which in Portuguese
15 USD / month
- ZAP Maxi: 86 channels, 42 of which in Portuguese
30 USD / month
- ZAP Premium: 117 channels, 61 of which in Portuguese
60 USD / month Strong investment in marketing and communication, locally developed, turning ZAP into one of the most recognized brands in the Angolan market
3Q12 Financial Performance
22 22
Solid revenue performance
Consolidated Operating Revenues
[Millions of Euros]
Positive consolidated revenue performance yoy: +0.8% African JV (30%) reaching revenues of 9.1 million euros in 3Q12
213.7 215.3 3Q11 3Q12
+0.8% +0.7%
639.2 643.9 9M11 9M12
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Pay TV, BB and Voice revenues continue to show good resilience in face of the difficult macro context
Pay TV, Broadband and Voice Revenues
[Millions of Euros]
Pay TV, Broadband and Voice Revenues down 3.2% yoy in 3Q12 and 1.8% in 9M12, in a very challenging macroeconomic context
191.4 185.4 3Q11 3Q12
(3.2)%
578.6 568.2 9M11 9M12
(1.8)%
24 ARPU Revenues Growth
[3Q11 = Base 1]
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Growth in underlying core ARPU revenues
ARPU Revenues split
[%]
Basic ARPU revenue decrease of 1.5% Premium revenues down 13% yoy putting pressure on total revenues Premium revenues now represent 14% of ARPU revenues down from 16% in 3Q11
- 3.3%
- 1.5%
- 13.0%
0.80 0.85 0.90 0.95 1.00 1.05 3Q11 4Q11 1Q12 2Q12 3Q12
Total Basic Premium
84% 86% 16% 14% 3Q11 3Q12
Basic Revenues Premium Revenues
25 25
Audiovisuals and Cinema revenues: performance ahead of the market
Despite the difficult macroeconomic environment placing pressure on the number of spectators, the more appealing films exhibited during 3Q12 enabled an improvement in revenue trends The Audiovisuals business was negatively affected by the reduction in sales to FTA channel operators, who have been cutting back on their programming grids
Cinema Revenues
[Millions of Euros]
Audiovisuals Revenues
[Millions of Euros]
16.5 16.2 3Q11 3Q12 17.6 15.7 3Q11 3Q12
(2.1)% (10.7)%
52.3 50.4 9M11 9M12
(3.7)%
44.5 39.9 9M11 9M12
(10.5)%
26 26
Costs savings materializing
Excluding proportionate consolidation of Angolan JV, OPEX fell by 3.1% to 129.9 million euros in 3Q12 and to 389.3 million euros in 9M12
Consolidated Operating Costs Excluding African Operation
[Millions of Euros]
134.1 129.9 3Q11 3Q12
(3.1)%
401.6 389.3 9M11 9M12
(3.1)%
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15.3 14.3 3Q11 3Q12
27 Operating Costs excluding African Operation
[Millions of Euros]
Cost savings materializing
W&S Direct Costs Commercial Costs Other Op. Costs
(6.7)%
61.2 61.2 3Q11 3Q12
+0.0%
13.1 13.0 3Q11 3Q12
(0.8)%
44.5 41.4 3Q11 3Q12
(7.0)%
Operating Costs ex Africa (millions of euros) 3Q12 Δ % Drivers
Other Operating Costs 41.4 (7.0%) Excluding the costs from consolidation of the African JV, other operating costs fell by 7% yoy. Some relevant savings were achieved in core areas of the domestic business such as support services, as a result of the implementation of a number of efficiency improvement measures at the contact center level, maintenance and repairs and other SGA (6.7%) Direct Costs 61.2 0.0% The decline in W&S is explained mostly by a reduction in the average number of employees of 5.4%, which occurred mostly within the cinema division on the back of the weaker operating environment as discussed earlier in this report, and of an ongoing process of
- ptimization of the number of employees per multiplex
Excluding the impact of the consolidation of the African Operation, Direct Costs would have remained flat, due to a combination of higher Programming costs related to the UEFA Euro 2012, higher royalty fees paid for Cinema Distribution on the back of a stronger 3Q12 and lower telecom costs due to efforts to optimize the use of telecom infrastructure Commercial Costs 13.0 (0.8%) Excluding the impact of the African Operation, commercial costs would have decreased by 0.8% W&S 14.3
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Improvement in core Pay TV, BB and Voice EBITDA margin
Core Pay TV, Broadband and Voice margin grew by 1.5pp yoy to 39.9% Group Margin remained relatively flat due to lower contribution from other domestic businesses and consolidation of Angolan JV, whose contribution was already remarkable
Group EBITDA, EBITDA Margin
[Millions of Euros, %]
Pay TV, Broadband and Voice EBITDA and EBITDA Margin [Millions of Euros, %] EBITDA Margin
[%]
79.6 79.7
37.2% 37.0%
30 % 31 % 32 % 33 % 34 % 35 % 36 % 37 % 38 % 39 % 40 % 30 40 50 60 70 80 903Q11 3Q12
+0.2%
73.6 74.0
38.4% 39.9%
30 % 32 % 34 % 36 % 38 % 40 % 42 % 30 35 40 45 50 55 60 65 70 75 803Q11 3Q12
+0.6%
35.3% 39.9% 34.3% 37.0% 17.1% 11.2% 2.6% 23.5% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Pay TV, BB and Voice Group Aud + Cin International
29 Net Income
[Millions of Euros]
Net Income Growth
9.1 9.6 3Q11 3Q12
+5.1%
(millions of euros)
3Q12 Δ % Drivers
In 3Q11 ZON had a negative contribution from the consolidation of the African Operation of 2.0 million euros, which does not appear in this line anymore. For comparative purposes, the equivalent impact for 3Q12 was a positive contribution at the EBT level of 0.7 million euros, with 3Q12 thus representing the first quarter of break even at the Net Income level for the African Operation D&A somewhat lower at 52.6 million euros, compared with 55.5 million euros in 3Q11 although D&A is still relatively high due to the significant accelerated CAPEX cycle of the 2008-2010 investment cycle D&A 52.6 (5.1)% Income Taxes 5.8 46.8% Income Taxes in 3Q12 were 5.8 million euros representing an effective P&L tax rate of 36.9%, above the general corporate tax rate of 29.5% due to a few one-off corrections in 3Q12. The accumulated tax rate for 9M12 is 34.7%, in line with expectations for the effective tax rate for FY12 Net Financial Expenses 11.9 13.4% Net Interest costs and other financial charges registered an increase of 41% led by a combination of higher average cost of debt and financing charges as a result of refinancing secured
28.5 29.6 9M11 9M12
+3.9%
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Continued reduction of CAPEX to more normalized levels as forecast
Total CAPEX
[Millions of Euros]
Total CAPEX, Total CAPEX / Pay TV, BB and Voice Revenues
[Millions of Euros, %]
CAPEX levels significantly down on previous years as forecast CAPEX as percentage of total revenues at 11.7% in 3Q12, and at 13.6% as percentage
- f Pay TV, BB and Voice revenues, in line with the sector average for maintenance and still
including some growth related investment
19.9 15.9 10.3 6.6 1.4 2.7 3.4
35.1 25.2 3Q11 3Q12
Pay TV, BB and Voice Infr. Terminal Equipment Other Baseline CAPEX Non-Recurrent CAPEX
(28.1)%
109.3 82.5
18.9% 14.5%
00 % 05 % 10 % 15 % 20 % 25 % 00 20 40 60 80 10 129M11 9M12
(24.5)%
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Strong improvement in OCF
EBITDA - CAPEX
[Millions of Euros]
Strong improvement in EBITDA-CAPEX led by solid EBITDA performance and the decline in CAPEX, as forecast
44.5 33.1 50.1 51.1 54.5 3Q11 4Q11 1Q12 2Q12 3Q12
+22.6%
32 32
Solid Capital Structure, 2.1x Net Financial Debt / EBITDA
Change in Net Financial Debt
[Millions of Euros]
Net Financial Debt of 650.5 million euros on 3Q12 Net Financial Debt / EBITDA of 2.1x Average cost of financing of 4.87% in 9M12 2.01 years of average maturity
650.5 0.5 8.4 9.9 6.2 20.6 54.5 660.4 3Q12 Other Items Income Taxes Paid Net Interest Paid Long Term Contracts Non-Cash Items and Working Capital EBITDA-CAPEX 2Q12
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Good operational performance of the core Triple Play business with
strong take-up of higher value-added bundles, IRIS, despite continued pressure in premium channel subscriptions;
Leading in innovation: the first operator in the World to launch the 7-
day recording functionality: Timewarp;
Strong growth in ZAP, generating revenues of 9.1 million euros (30%)
and an EBITDA margin of 23.5% in 3Q12;
EBITDA-CAPEX growing as forecast – focus on Cash Flow
improvement.
Wrap-up
Appendix
Financial Highlights Operational Highlights
35 35
Financial Highlights
(Millions of Euros) 3Q11 3Q12 ∆ y.o.y. 9M11 9M12 ∆ y.o.y. Operating Revenues 213.7 215.3 0.8% 639.2 643.9 0.7% Pay TV, Broadband and Voice 191.4 185.4 (3.2%) 578.6 568.2 (1.8%) Audiovisuals 17.6 15.7 (10.7%) 52.3 50.4 (3.7%) Cinema Exhibition 16.5 16.2 (2.1%) 44.5 39.9 (10.5%) International
- 9.1
n.a.
- 22.8
n.a. Other (11.9) (11.1) (7.0%) (36.3) (37.4) 3.2% EBITDA 79.6 79.7 0.2% 237.6 238.2 0.3% EBITDA Margin 37.2% 37.0% (0.2)pp 37.2% 37.0% (0.2)pp Pay TV, Broadband and Voice 73.6 74.0 0.6% 220.1 223.6 1.6% EBITDA Margin 38.4% 39.9% 1.5pp 38.0% 39.3% 1.3pp Cinema and Audiovisuals 6.0 3.6 (40.4%) 17.5 11.8 (32.8%) EBITDA Margin 17.6% 11.2% (6.4)pp 18.1% 13.0% (5.0)pp International
- 2.1
n.a.
- 2.9
n.a. EBITDA Margin n.a. 23.5% n.a. n.a. 12.6% n.a. Income from Operations 24.1 27.1 12.4% 73.3 78.2 6.6% Net Income 9.1 9.6 5.1% 28.5 29.6 3.9% CAPEX 35.1 25.2 (28.1%) 109.3 82.5 (24.5%) EBITDA minus CAPEX 44.5 54.5 22.6% 128.3 155.7 21.4% Net Financial Debt 668.3 650.5 (2.7%) 668.3 650.5 (2.7%) CAPEX as % of Revenues 16.4% 11.7% (4.7)pp 17.1% 12.8% (4.3)pp Net Financial Debt / EBITDA [x] 2.1x 2.1x n.a. 2.1x 2.1x n.a.
36 36
Operational Highlights
Note: Figures refer to Portuguese Operations
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José Pedro Pereira da Costa CFO Maria João Carrapato Head of Investor Relations ir@zon.pt ZON Multimedia Rua Ator António Silva, 9 1600-404 Lisboa, Portugal Tel.: +351 21 782 47 25 Fax: +351 21 782 47 35