Analyst Conference Call 1Q11 - final...2011/05/12 · outcomes and results may differ materially...
Transcript of Analyst Conference Call 1Q11 - final...2011/05/12 · outcomes and results may differ materially...
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12 MAY 2011
1Q11 RESULTS PRESENTATION
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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 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 our 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 of 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.
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Triple Play Penetration already of 57.6% (+2.5pp)
705 thousand Broadband subscribers: 61% penetration (+14.4k)
808 thousand Fixed Voice customers: 68% penetration (+29.9k)
Continued growth in digital subscribers: 85% subscribers with digital services (+2.2pp)
Good ARPU progression, +1.7% yoy after some dilution in 4Q10 (+2.0% qoq)
Good operational performance
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Slowdown in consolidated revenue growth, affected by negative yoy performance of cinema revenues
Very strong improvement in EBITDA
Total CAPEX down by 28%, with end of accelerated investment programme of the last 3 years and completion of major non-recurrent
investments in 2010
Strong FCF improvement, driven by EBITDA growth and CAPEX slowdown
Solid financial performance
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Leading in Triple Play with 57.6% penetration
ZON cable customer profile 1Q11[%]
Growth in 3P customers / Penetration[Thousands, %]
Triple Play
57.6%Double Play
13.9%
Single Play
28.5%
66
ARPU – Recovery after sequential dilution in4Q10
Blended ARPU[Euros]
Multiple service ARPU premium[Euros]
+1.7%
77
Maintaining clear leadership in Pay TV
Source: ZON, ANACOM
Others
(1Q11) (4Q10) (2Q11 =
28 Feb)
(4Q10)
Relative size of Pay TV customer base[Thousands]
88
Digital services still growing well
ZON HD Boxes installed[Thousands]
85% of ZON customers receive
digital services
HD set top boxes installed
represent 70% of the digital cable
subscriber base
Pace of new installations slowing
with net adds of less than 26k
compared with 117k in 1Q10 and
69k in 4Q10
+37.3%
99
Good quarterly sequential growth in BB reinforcing position as leading NGN operator
Broadband customer mix[Thousands, %]
NGN Market Shares[%]
Source: ZON, ANACOM (High speed fixed networks, 21 February 2011; http://www.anacom.pt/render.jsp?contentId=1072290)
ZON74,2%
Others25,8%
134k customers
9% 5%
45% 45%
33%27%
12%23%
635.4 704.7
1Q10 1Q11
2 Mbps 5 - 10 Mbps 20 - 30 Mbps ZON Fibra
47k customers
+10.9%
61% penetration in 1Q11 compared with 54% in 1Q10
1010
Fixed Voice subscriber growth still strong at 25%
Fixed Voice Subs and Penetration[Thousands, %]
Mobile Subscribers[Thousands]
+25.0% +42.5%
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Upgraded 2.9 million Households to Docsis 3
Significant effort over the last 3 years to build a state-of-the-art Network
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Cell/Node splits to increase capacity 4 fold
New fiber network and sites (Zon-In)
New Datacenter
HD Boxes and IRIS interface
Completed
Completed
Completed
Completed
70% of HH now with
HD boxes – 85%
digitalization
1212
A more normalized quarter for Cinemas with less blockbusters than in 2010
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Share of cinema distribution revenues 1Q11 [%]
Cinema Tickets Sold[Thousands]
2 million tickets sold in 1Q11, down 18.4% from
1Q10 but up 3.4% from 1Q09
The decrease in sales is explained primarily by the
significantly lower number of blockbusters in 1Q11
with 2010 being an extraordinarily good year
ZON’s performance was superior to the rest of the
market: total market attendance declined by 21.3%
and total market gross revenues went down by
20.2%
Increase in average revenue per ticket of 2.8% to 4.7
euros.
ZON Lusomundo distributed 6 of the top 10 films in
1Q11 and its share of revenues reached 47%
ZON46.6%
Columbia26.1%
Castello Lopes14.8%
Others3.1%
1313
ZAP posting good results in Angola
Strong customer take-up, over 60k active customers by
the end of 1Q11
During the quarter, ZAP further increased its reach
being distributed by the cable providers in Angola and
Mozambique. ZAP will be distributed potentially to an
additional 20 thousand subscribers
Subscriber growth supported by exclusive distribution of
Portuguese Football League and other key sports content,
and very attractive offer with predominance of Portuguese
language channels
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Financial Review
1515
Slower revenue growth pressured by smaller non-core businesses
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Consolidated Operating Revenues[Millions of Euros]
Pay TV, BB and Voice Revenues[Millions of Euros]
+0.3% +1.5%
Audiovisuals Revenues[Millions of Euros]
Cinema Revenues[Millions of Euros]
(13.1)%+9.8%
161616
Operating Costs 1Q11 / 1Q10[Millions of Euros]
Cost savings materializing
(4.0)%
Operating Costs
(millions of euros) 1Q11 ∆ % Drivers
Other Operating Costs 43.6 (8.3%)Yoy decline of 8.3% and qoq decline of 5.1%. Yoy reduction was achieved through cost control of several General and Administrative
areas
Increase of 2.7% reflects the marginal increase in lower and mid scale salaries implemented in 2010; 5.4% qoq decrease mainly due to
the provision in 4Q10 of bonuses to be paid in 2011
Marginally lower yoy; posting 4.3% sequential decline mostly as a result of the lower level of costs relating to seasonally lower
advertising revenues shared, less royalty charges due to lower level of activity of the cinema business and lower costs related to DVD
sales Commercial Costs 15.2 (8.9%)
Significant sequential decline of 32%. Yoy decline of 8.9% a result of lower level of commercial activity driving lower sales commissions,
supported by more efficient use of available sales channels, reducing relative the weight of more expensive door-to-door sales channels
W&S 14.7 2.7%
Direct Costs 61.1 (0.8%)
171717
Strong margin improvement
EBITDA and EBITDA Margin 1Q11 / 1Q10[Millions of Euros, %]
EBITDA Margin q.o.q.[%]
+8.5%
31.7%
33.3%34.1%
30.1%
34.3%35.3%
35.9%
33.2%
37.1%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
1818
Net Income
Net Income 1Q11 / 1Q10[Millions of Euros]
+9.3%
(millions of euros) 1Q11 ∆ % Drivers
Negative contribution of 2.8 million euros in 1Q11 of Equity Consolidation of Angolan operation
Yoy increase of 4.7% explained by accelerated roll-out of terminal equipment and peak in network related CAPEX in 2010. This investment will
flow through the P&L in the coming years with relatively high levels of depreciation, despite significantly lower levels of CAPEX going forward
Tax benefits for development and investments in NGN had a smaller impact in 1Q11 than in 1Q10, thus generating some discrepancies when
comparing quarterly tax rates
D&A 55.6 4.7%
Net Interest charges and other financial expenses of 7.5 million euros
Income Taxes (3.6)
10.3 26.6%Net Financial Expenses
48.8%
1919
CAPEX coming down to more normalized levels as forecast
Total CAPEX[Millions of Euros]
Baseline CAPEX[Millions of Euros]
(28.3)%
50.1 41.5 41.6 45.2 35.9
3.8 14.9 17.8
33.3
2.9
53.9 56.3 59.4
78.5
38.8
1Q10 2Q10 3Q10 4Q10 1Q11
Baseline CAPEX Non-Recurrent CAPEX
(28.0)%
202020
Net Debt and Capital Structure amongst most conservative in class
Net Financial Debt[Millions of Euros]
Net Financial Debt / EBITDA[X]
2.1x
2.1x
1Q11
2010
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Wrap-up
2222
�Good operating performance in core Triple Play business,
albeit a slowdown being felt, particularly at the start of the
quarter
�Revenues still posting growth, albeit less than in previous
quarters
�Strong EBITDA growth with increased operating leverage,
and room for further margin improvement
�Network fully upgraded and large CAPEX programmes
out of the way
� On track for significant increase in FCF
Wrap-up
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Appendix
Financial Highlights
Operational Highlights
242424
Financial Highlights
(Millions of Euros) 1Q10 1Q11 ∆ y.o.y.
Operating Revenues 213.5 214.1 0.3%
Pay TV, Broadband and Voice 192.6 195.6 1.5%
Audiovisuals 15.5 17.1 9.8%
Cinema Exhibition 15.7 13.6 (13.1%)
Other (10.3) (12.1) 17.5%
EBITDA 73.3 79.5 8.5%
Income from Operations 20.3 24.0 18.3%
Net Income 9.3 10.2 9.3%
CAPEX 53.9 38.8 (28.0%)
EBITDA minus CAPEX 19.5 40.7 109.3%
Net Financial Debt 577.2 641.7 11.2%
EBITDA margin (%) 34.3% 37.1% 2.8pp
CAPEX as % of Revenues 25.2% 18.1% (7.1pp)
Net Financial Debt / EBITDA [x] 2.1x 2.1x n.a.
252525
Operational Highlights
1Q10 1Q11 ∆ y.o.y.
Homes Passed ('000) 3,139 3,207 2.2%
RGUs ('000) 2,950 3,181 7.8%
Triple Play Customers 537 666 24.1%
Basic Subscribers 1,588 1,554 (2.1%)
Fixed Broadband 635 705 10.9%
Fixed Voice 646 807 25.0%
Mobile 81 115 42.5%
Blended ARPU (€) 35.2 35.8 1.7%
Revenues per ticket (€) 4.6 4.7 2.8%
Tickets sold ('000) 2,472 2,016 (18.4%)
Pay T
V, B
road
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José Pedro Pereira da Costa
CFO
Maria João Carrapato
Head of Investor Relations
ZON MultimediaAvenida 5 de Outubro, 208
1069-203 Lisboa, Portugal
Tel.: +351 21 782 47 25
Fax: +351 21 782 47 35
Contacts