RESULTS PRESENTATION 10 MAY 2012 Disclaimer This presentation - - PowerPoint PPT Presentation

10 MAY 2012

1Q12 RESULTS PRESENTATION

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

 Very resillient core Triple Play business despite tough macro headwinds  Efforts to contain costs and CAPEX are evident in solid financial performance  New growth options beginning to show interesting results

3

1Q12 Highlights

 Record growth in cable with 26 thousand net adds  Strongest quarter since 2010 in RGU growth with 65.8 thousand net adds

4

Very encouraging RGU growth

• 20
• 10

+0 +10 +20 +30 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Pay TV – Cable Net Adds

[Thousands]

RGU Net Adds

[Thousands]

33.9 31.5 43.8 58.5 65.8 1Q11 2Q11 3Q11 4Q11 1Q12

 716 thousand Triple Play customers, up 7.5% yoy  120 thousand IRIS customers, 10% of cable customer base  Strong take-up of entry-level bundles with analogue switch-off

5

Good take-up of high-end IRIS bundles and entry-level offers

Triple Play Customers

[Thousands]

536.7 666.0 715.7 45.6% 57.6% 59.4%

• 30

1Q10 1Q11 1Q12

 Broadband Net Adds of 9.4 thousand to 749 thousand subs  62.1% penetration of customer base  53% offers greater than 20 Mbps and 32% higher or equal to 30 Mbps  ZON Online #1 in Portuguese App store

6

Robust net additions in Broadband and Fixed Voice

Broadband Subscribers

[Thousands, % of Penetration of Cable Base]

635.4 704.7 748.6 54.0% 61.0% 62.1%

1Q10 1Q11 1Q12

Fixed Voice Subscribers

[Thousands; % of Penetration of Cable Base]

 Fixed Voice Net Adds of 37.5 thousand to 921.4 thousand subs  74.9% penetration of customer base  Huge success of new fixed voice app for free fixed line calls out of the home

646.1 807.5 921.4 54.3% 68.2% 74.9%

1Q10 1Q11 1Q12

 Basic ARPU from core TV, BB and Voice services increased 0.6% yoy  Adjusting for the impact of entry level

• ffers, basic ARPU would have increased

by 2.4%.  Success of lower ARPU, entry level,

• ffers and continued pressure from

discretionary premium ARPU (-15.3%) led to decline in Blended ARPU of 2.2%

7

Resilience of Basic ARPU

Basic, Premium and Blended ARPU

[1Q11 = Base 1]

• 2.2%

+0.6%

• 15.3%

0.80 0.85 0.90 0.95 1.00 1.05 1.10 1Q11 2Q11 3Q11 4Q11 1Q12

Blended ARPU Basic ARPU Premium ARPU

Cinema Exhibition: Outperforming the market in a tough year

Source: ZON, ICA – Gross Revenue Data adjusted for VAT rate change in cinema tickets.

Cinema tickets sold and revenue per ticket

[Thousands, Euros]

1Q12 Performance of Gross Revenues and Attendance

[%]

 Average revenue per ticket: + 2.1% in 1Q12  Cinema Exhibition gross revenues were down 12.8% in 1Q12, with the market as a whole falling by 14.6% yoy

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• 12.8%
• 14.5%
• 14.6%
• 14.9%

Gross Revenue Attendance

ZON Market

2,016 2,094 2,372 2,260 1,725 4.7 4.9 5.1 4.8 4.8

1Q11 2Q11 3Q11 4Q11 1Q12

Tickets Sold

• Avg. Revenue Per Ticket

Source: ZON, ICA

9 9

Audiovisuals: Maintaining clear leadership

Cinema Distribution gross revenues market share 1Q12

[%]

ZON 46.0% Columbia 24.3% Big Picture 2 16.4% Others 13.3%

 ZON distributed 4 of the Top 10 movies shown in cinemas in Portugal in 1Q12  46% market share of cinema distribution gross revenues  New distribution agreements established with Universal for home video and with MGM Studios for both theatrical and home video distribution

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Growing distribution network  13 own stores  Over 500 agents / points

• f sale

 Door-to-door sales force

• f 200 people in Angola

ZAP – posting good results in Angola

ZAP Subscribers

[Thousands]

Very strong operational performance EBITDA breakeven reached in 1Q12 ZAP – the most recognized brand in the market Strong focus on Portuguese Language content

ZAP Stores

1Q11 2Q11 3Q11 4Q11 1Q12 2 8 12 13 June 2010 December 2010 June 2011 December 2011

11 11

Solid revenue performance

Consolidated Operating Revenues

[Millions of Euros]

Yoy change in Pay TV, BB and Voice Revenues

[%] 1.5%

• 3.0%
• 2.5%
• 2.8%
• 1.9%
• 4%
• 3%
• 2%
• 1%

0% 1% 2%

1Q11 2Q11 3Q11 4Q11 1Q12

 Flat consolidated revenue performance yoy  Proportionate consolidation of Angola JV in 1Q12 (6.4 million euros)  Slowdown in pace of decline of Triple Play revenues

214.1 214.2 1Q11 1Q12

+0.0%

12 ARPU Revenues Growth

[1Q11 = Base 1]

12

Growth in underlying core ARPU revenues

ARPU Revenues split

[%]

0.80 0.85 0.90 0.95 1.00 1.05 1Q11 2Q11 3Q11 4Q11 1Q12

Total Basic Premium

• 1.0%

+1.8%

• 14.3%

83% 85% 17% 15% 1Q11 1Q12

Basic Revenues Premium Revenues

 Basic ARPU revenue growth of 1.8%  Premium revenues down 14.3% yoy putting pressure on total revenues  Premium revenues now represent 15% of ARPU revenues down from 17% in 1Q11

13 13

17.1 17.1 1Q11 1Q12

+0.5%

13.6 11.8 1Q11 1Q12

(13.7)%

Solid Audiovisuals revenues; pressure on Cinema revenues

 Cinema revenues affected by combination of:

• Macro pressure and consumer environment
• VAT increase (6% to 13%) on cinema tickets
• Fewer blockbuster and 3D movies

Cinema Revenues

[Millions of Euros]

Audiovisuals Revenues

[Millions of Euros]

14 14

134.6 134.5 1Q11 1Q12

Costs savings materializing

Consolidated Operating Costs

[Millions of Euros]

 Excluding proportionate consolidation of Angolan JV, OPEX fell by 3.9% to 129.3 million euros

Consolidated Operating Costs Excluding Angolan Operation [Millions of Euros]

(0.1)%

134.6 129.3 1Q11 1Q12

(3.9)%

15 15 Operating Costs excluding Angolan Operation [Millions of Euros]

Cost savings materializing

14.7 13.6 1Q11 1Q12 61.1 57.7 1Q11 1Q12 15.2 13.3 1Q11 1Q12

W&S Direct Costs Commercial Costs Other Op. Costs

Operating Costs ex Angola (millions of euros) 1Q12 Δ % Drivers

Other Operating Costs 44.7 2.6% Excluding the impact of the consolidation of the Angolan Operation, like for like Other Operating Costs would have grown by 2.6% albeit important savings were achieved in several General and Administrative areas, namely customer service, maintenance and repairs Commercial Costs 13.3 (12.8%) Excluding the impact of the Angolan Operation commercial costs would have fallen by 12.8%, mainly due to a decrease in the level of COGS, commissions and marketing costs W&S 13.6 (7.5%) Direct Costs 57.7 (5.5%) Excluding the effect of the proportionate consolidation of the Angolan JV as from 1Q12, W&S like for like would have fallen by 7.5% reflecting a one-off effect and the effort in the Portuguese operation to contain the level of costs and headcount

• Excl. the impact of the consolidation of the Angolan JV, like for like direct costs would have fallen by 5.5%, driven by a reduction in

Programming Costs of 6.6%, due to the lower level of premium subscriptions, as well as the renegotiations of content contracts 43.6 44.7 1Q11 1Q12

(7.5)% (5.5)% (12.8)% +2.6%

16 16

Strong improvement in EBITDA margin

 Core Pay TV, Broadband and Voice margin grew by 2pp yoy to 39.5%  Group Margin remained relatively flat due to lower contribution from other domestic businesses and consolidation of Angolan JV

Group EBITDA, EBITDA Margin

[Millions of Euros, %]

Pay TV, Broadband and Voice EBITDA and EBITDA Margin [Millions of Euros, %]

73.4 75.5

37.5% 39.5%

1Q11 1Q12 79.5 79.7

37.1% 37.2%

1Q11 1Q12

+0.2% +3.0%

35.4% 39.5% 34.3% 37.2% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Pay TV, Broadband and Voice Group

EBITDA Margin

[%]

17

10.2 10.3 1Q11 1Q12

+1.7%

Net Income

[Millions of Euros]

Net Income Growth

(millions of euros)

1Q12 Δ % Drivers

In 1Q11 ZON had a negative contribution from the consolidation of the Angolan Operation of 2.8 million euros, which does not appear in this line anymore. For comparative purposes, the equivalent impact for 1Q12 was a negative contribution at the EBT level of 1.3 million euros, therefore reducing considerably the negative impact from 2011 Income Taxes (4.6) (8.3) (19.1%) Net Financial Expenses 29.3% D&A in line with the levels recorded in 1Q11 amounting to 55.9 million euros. D&A is still relatively high due to the significant accelerated CAPEX cycle of the 2008-2010 period Effective P&L tax rate of 30% due to the higher corporate tax rate applied to companies surpassing pre-defined taxable income thresholds as a result of austerity measures for 2012/2013. In ZON´s case, the company was generally affected by an increase of 0.5 pp to 29.5%. D&A (55.9) 0.7% Net interest costs remained flat at 6 million euros in 1Q12.

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Continued reduction of CAPEX to more normalized levels as forecast

38.8 29.6

15.1 9.1 19.1 18.9 1.7 1.6 2.9 1Q11 1Q12

Pay TV, BB and Voice Infr. Terminal Equipment Other Baseline CAPEX Non-Recurrent CAPEX

Total CAPEX

[Millions of Euros]

Total CAPEX, Total CAPEX / Operating Revenues [Millions of Euros, %]

(23.7)%

38.8 29.6

18.1% 13.8%

1Q11 1Q12

 CAPEX levels significantly down on previous years as forecast, with the conclusion of major investment programmes regarding the network upgrade and the roll-out of next generation customer equipment  CAPEX as percentage of total revenues at 13.8% in 1Q12, and at 15.4% as percentage

• f Triple Play revenues

19

Strong improvement in OCF

5.7 0.2 (9.2) (22.3) 37.4 1Q11 ∆ EBITDA ∆ CAPEX ∆ Non-Cash Items and Working Capital 1Q12

Operating Cash Flow After Investment

[Millions of Euros]

+ 31.7 M €

 Strong improvement in OCF led by solid EBITDA performance, decline in CAPEX, and lower Working Capital investment when compared with 1Q11

20 20 Change in Net Financial Debt

[Millions of Euros]

Solid Capital Structure, 2.1x Net Financial Debt / EBITDA

644.6 23.4 621.2 1.7 2.4 7.5 12.9 12.7 50.1 637.5 1Q12 International Business Consolidation 1Q12 Ex. International Business Other Items Income Taxes Paid Net Interest Paid Long Term Contracts Non-Cash Items and Working Capital EBITDA-CAPEX 2011

Improvement led by solid EBITDA and decline in CAPEX Consolidation of Net Debt of the Angolan Operation 2.1x Net Financial Debt / EBITDA at the end of 1Q12

21

 Despite the difficult macroeconomic environment, ZON continues

to post good results in its domestic businesses

 Good operational performance of the core Triple Play business with

good growth in cable base

 Despite slowdown of Premium subscriptions, optimization of cost

structure has enabled continued EBITDA growth

 Strong FCF with very strong quarterly Cash Flow momentum  Excellent results of the Angolan business, on track for EBITDA

positive contribution in 2012

Wrap-up

Appendix

Financial Highlights Operational Highlights

23 23

(Millions of Euros) 1Q11 1Q12 ∆ y.o.y. Operating Revenues 214.1 214.2 0.0% Pay TV, Broadband and Voice 195.6 191.9 (1.9%) Audiovisuals 17.1 17.1 0.5% Cinema Exhibition 13.6 11.8 (13.7%) International

• 6.4

n.a. Other (12.1) (13.0) 7.4% EBITDA 79.5 79.7 0.2% Income from Operations 24.0 23.7 (1.0%) Net Income 10.2 10.3 1.7% CAPEX 38.8 29.6 (23.7%) EBITDA minus CAPEX 40.7 50.1 23.0% Net Financial Debt 641.7 644.6 0.5% EBITDA margin (%) 37.1% 37.2% 0.1pp CAPEX as % of Revenues 18.1% 13.8% (4.3pp) Net Financial Debt / EBITDA [x] 2.1x 2.1x n.a.

Financial Highlights

24 24

Operational Highlights

25

José Pedro Pereira da Costa CFO Maria João Carrapato Head of Investor Relations ir@zon.pt ZON Multimedia Avenida 5 de Outubro, 208 1069-203 Lisboa, Portugal Tel.: +351 21 782 47 25 Fax: +351 21 782 47 35

Operational Highlights