CMD2012 - Niklas Sonkin - Market Area Central Europe and Eurasia
CMD2012 - vetlana Skvortsova - Inessa Galaktionova - Market Area Russia
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Transcript of CMD2012 - vetlana Skvortsova - Inessa Galaktionova - Market Area Russia
Capital Markets Day Inessa Galaktionova, Chief Commercial Officer Tele2 Russia Svetlana Skvortsova, Strategy Director Tele2 Russia
December 12, 2012
63 Tele2 Capital Markets Day 2012
Russia EBITDA CapEx Net sales 30% 42% 32%
• Continue to grow customer base and
maximize the 2G opportunity
• Evaluate possibilities to expand
carefully through new licenses as well
as by complementary acquisitions
• Make progress on technology neutrality
* Figures represent contribution to group; YTD Q3 2012
64 Tele2 Capital Markets Day 2012
What has happened since last CMD?
65 Tele2 Capital Markets Day 2012
Market share development
MTS
MegaFon
Vimpelcom
Tele2
Source: AC&M Consulting, Company data
4.3% 5.0% 5.6% 7.0% 8.4% 9.1% 9.3% 9.5% 9.7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2006 2007 2008 2009 2010 2011 Q1-12 Q2-12 Q3-12
SUBSCRIBERS MARKET SHARE PERCENT
2.7% 3.8% 4.2% 4.9% 6.0% 6.7% 7.0% 7.0% 7.1%
0%
5%
10%
15%
20%
25%
30%
35%
2006 2007 2008 2009 2010 2011 Q1-12 Q2-12 Q3-12
REVENUE MARKET SHARE PERCENT
66 Tele2 Capital Markets Day 2012
Maintained ARPU expansion
MTS
MegaFon
Vimpelcom
Tele2
Source: AC&M Consulting, Company data
0.9
6
0.8
9
0.8
9
0.8
7
0.9
1
0.00
0.50
1.00
1.50
3Q11 4Q11 1Q12 2Q12 3Q12
REPORTED APPM RUB
204 201 220 223 218 229 234
0
50
100
150
200
250
300
350
400
2008 2009 2010 2011 Q1-12 Q2-12 Q3-12
BLENDED ARPU RUB
67 Tele2 Capital Markets Day 2012
Margin improvement and CAPEX slow-down
MTS
MegaFon
Vimpelcom
Tele2
Source: AC&M Consulting, Company data
34% 32% 35%
39% 35% 37% 38%
0%
20%
40%
60%
2008 2009 2010 2011 Q1-12 Q2-12 Q3-12
EBITDA MARGIN PERCENT
22% 20%
9%
15%
12%
3Q11 4Q11 1Q12 2Q12 3Q12
CAPEX/Revenue PERCENT
68 Tele2 Capital Markets Day 2012
Historical Data KPI Benchmarking vs Market
Source: AC&M Consulting, Corporate Reports
Internet Users penetration Consumption (Mb per User)
USB modem sales (‘000)
0
5
10
15
20
25
0
100
200
300
400
500
600
700
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Market Mb per user Tele2 Mb per user
2,152
2,694 2,342
2,890 2,986 3,110
1,497 1,380 1,560
0
1,000
2,000
3,000
4,000
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
27%
30% 32% 32%
34% 35% 37% 37% 37%
36% 37% 37%
34% 34%
37% 39%
37% 36%
20%
25%
30%
35%
40%
45%
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
MTS Internet Users Tele2 Internet Users
96 99 106 107 117 122 120 114
125
0
50
100
150
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Market Data ARPU, RUB Tele2 Data ARPU
Data ARPU
RHS
LHS
69 Tele2 Capital Markets Day 2012 Source: MA FDFgroup, 2Q11-1Q12, Tele2 Regions, Survey
Analysis Mason, Wireless Intelligence
• So far existing data products meet
customer expectations
• Usability is the major focus
• Absence of MBB will not be critical in
approx. 2 years
• >90% of data usage is social
networks, where EDGE speed is
enough for good user experience
Tele2 data capabilities
Smartphone Penetration total Russia
80%
90%
100%
0%
20%
40%
Tele2 MTS Beeline Megafon
VAS Usage Subs that use VASSatisfaction with VAS usage
0%
20%
40%
60%
80%
2010 2011 2012F 2013F 2014F 2015F 2016F
Forecast
91% 88%
89% 89%
70 Tele2 Capital Markets Day 2012
• Monobrand channel development
• Increasing efficiency of local alternative
• B2B and online channels development (higher ARPU and lowest churn)
• Balance between Federal telecom channels and effective alternative
distribution channels
Distribution strategy
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Alternativedealers
MonobrandStands
Federaltelecomdealer
MonobrandModules
Localtelecomdealer
MonobrandShops
On-line
Life Time Value 2012 (RUR)
30% 31% 32%
21% 17% 11%
4% 8% 17%
14% 18% 20%
30% 23% 18% 2% 2%
0%
50%
100%
AC 2010 AC 2011 AC 2012
GI split by channels
Monobrands Monobrand stands On-lineFederal telecom dealers Alternative dealers Local telecom dealersB2B
71 Tele2 Capital Markets Day 2012
Distribution strategy – Own shops
Tele2 Own Shops
• Franchising business model in all rebranded shops
• Full range of products and services
• Average GI increases by 15%
• Higher ARPU, LTV and lower churn
Total: >400 Total: >2000
Megafon
Total: >3000 Total: >4000
>60% GI 44% GI
Tele2 Beeline 42% GI
MTS
49% GI
44% Own Network
56% Agency Network
67% Own Network
33% Agency Network
0% Own Network
100% Agency Network
12% Own Network
88% Agency Network
72 Tele2 Capital Markets Day 2012
Customer data
• Tele2’s own call centers
demonstrate highest customer
satisfaction
• Operational excellence based on
COPC customer service
standards
• World-class service program
across Russian regions
CUSTOMER SERVICE SATISFACTION OVERALL
85%
86%
88%
89%
85%
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12
TELE2 MTS Beeline Megafone
Top-3 on 10 point scale
Source: Mobile Monitoring
73 Tele2 Capital Markets Day 2012
Clear Business Goals Through Evolution
Region’s position Market Share EBITDA No. of regions Targets
Defender Leader in the region
(avg. 46%)
35%
(avg. 47%) 9
Retention,
ARPU protection
Challenger
20%
(avg. 31%)
< 35%
(avg. 31%) 21
Subscribers
acquisition, retention
Newcomer
< 20%
(avg. 17%) < 0 8
Subscribers
acquisition
Defender
Challenger
Newcomer
74 Tele2 Capital Markets Day 2012
44
49
54
ARPU (SEK)
0
5,000
10,000
15,000
20,000
Subscriber Base (‘000 Subs)
0%
10%
20%
30%
40%
50%
Annualized Churn
Old Regions: Sustainable Growth of ARPU and
Subscriber Base +5% Q3’12
vs Q3’11
+3% Q3’12
vs Q3’11
0
100
200
300
400
500
600
Net Intake (‘000 Subs)
75 Tele2 Capital Markets Day 2012
0
500
1,000
1,500
2,000
2,500
3,000
Revenue (SEK ‘000)
Old Regions: Solid Profitability Profile
59% 41%
Market share - Subscribers (Sept'12)
+8% Q3’12
vs Q3’11
Source: internal research, ACM data
0%
10%
20%
30%
40%
50%
60%
0
200
400
600
800
1,000
1,200
1,400
EBITDA (SEK ‘000) and EBITDA % +3% Q3’12
vs Q3’11
Tele2
Rest of the
market
76 Tele2 Capital Markets Day 2012
0
10
20
30
40
50ARPU (SEK)
New Regions: Considerable and Sustainable
Growth
0%
20%
40%
60%
80%
100%
Annualized Churn +7% Q3’12
vs Q3’11
0
200
400
600
800
1,000
Net Intake (‘000 Subs)
0
2,000
4,000
6,000
8,000
Subscriber Base, (‘000 Subs) +22% Q3’12
vs Q3’11
77 Tele2 Capital Markets Day 2012
-65%
-45%
-25%
-5%
15%
35%
-300
-200
-100
0
100
200
EBITDA (SEK ‘000) EBITDA %
0
200
400
600
800
1,000
Revenue (SEK ‘000)
New Regions: Solid Profitability Profile
+78% Q3’12
vs Q3’11
76% 24%
Market share - Subscribers (Sept'12)
+32% Q3’12
vs Q3’11
Source: internal research, ACM data
Tele2
Rest of the
market
78 Tele2 Capital Markets Day 2012
Far East launch
* As of 04.12.2012
New Monobrand Shops
Field Connections
Events with Invited Celebrities
Launch Date Total Subs* Market Share
Sakhalin 05.10.2012 21 133 2.7%
Kamchatka 26.10.2012 13 798 2.5%
Magadan 02.11.2012 6 079 2.4%
Jewish Autonomous
Oblast
09.11.2012 8 271 4.8%
79 Tele2 Capital Markets Day 2012
0% 20% 40% 60% 80% 100% 120%
MTS
Megafon
Beeline
Tele2
0%
50%
100%
150%
2009 2010 2011 2012
0%
50%
100%
150%
2009 2010 2011 2012
Tele2 Russia Cost Efficiency Customers per Employee Sales&Marketing costs / Revenue
Administrative costs / Revenue
• Optimization of organization structures
• Legal & Tax structures optimizations
• New opportunities
• New sales channel development
Base level 2009
Base level 2009
-15%
-37%
Sales & Marketing costs are 15% more efficient in 3 years
Administrative costs are 37% more efficient in 3 years
80 Tele2 Capital Markets Day 2012
Russia
Best-in-class employee
engagement
Yearly survey ”MyVoice” shows
record high engagement levels
and employee satisfaction
2,768 employees
0%
10%
20%
30%
40%
50%
60%
Employee engagement index
Tele2 RU
Global Benchmark
81 Tele2 Capital Markets Day 2012
Current LTE allocations not fully available 1800 MHz offers great potential
700/800 MHz LTE FDD
1800 MHz LTE LTE
2300 MHz LTE TDD
2600 MHz LTE TDD LTE TDD
LTE FDD
LTE FDD
GKRCh
decision
required
Deployed Limited Deployment 2012 LTE Tender Allocations
Source: Russian business press publications
82 Tele2 Capital Markets Day 2012
Global trends for LTE 1800/Technology Neutrality
• LTE on 1800 MHz ensures the quickest start of 4G
• Closes “digital gap” between cities and rural areas
• Technology Neutrality is the most cost-effective way of launching
LTE
• 1800 MHz is the most widely used band for LTE deployments
Source: GSA
130 LTE 1800 devices announced
26
22
8 44
29
1
Phone Module Mobile Tablet
Router Dongles Femtocell
0
10
20
30
40
50
1900 MHz 900 MHz 850 MHzb5
2100 MHz 800 MHzb20
AWS 700 MHz 2.6 GHz 1800 MHz
LTE deployment
83 Tele2 Capital Markets Day 2012
Global trends for LTE 1800/Technology Neutrality
Tele2 succesfully
tested LTE in 1800 MHz
Competitors asked
for permission to
test LTE
Regulator requested
trial results in 3
regions June 1, 2013
Pending question
is when to
implement LTE
84 Tele2 Capital Markets Day 2012
MNP – Mobile Number Portability
MNP is expected to be implemented in
Russia from December 1, 2013
The possible Mobile Number Portability
introduction end of 2013-2014 may allow
Tele2 to benefit from new customer
inflow
There are varying estimates of potential
MNP service user base on the Russian
market
85 Tele2 Capital Markets Day 2012
Existing network support
Significant growth of voice and data
traffic continues and drives
investments both in voice and data
capacity
40% annual
growth
16
17
18
19
20
21
22
23
Jan Feb Mar Apr May Jun Jul Aug Sep
Subscribers, mln
2011
2012
3,000
3,500
4,000
4,500
5,000
5,500
6,000
Jan Feb Mar Apr May Jun Jul Aug Sep
Voice, mln minutes
75
95
115
135
155
175
195
Jan Feb Mar Apr May Jun Jul Aug Sep
Data traffic, TB
2011
2012
18% annual
growth
86 Tele2 Capital Markets Day 2012
Network capabilities
* Source: ROSKOMNADZOR highways coverage measurements 01.10.2012 (for
TELE2 license territory)
Tele2 continues to invest in
coverage improvement to
increase quality perception 86%
87%
88% 88%
85%
86%
87%
88%
89%
Beeline MTS Megafon Tele2
Federal highways coverage*, %
24% 25% 27% 28% 29% 30% 31% 31% 32% 32%
0%
10%
20%
30%
40%
2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12
Territory coverage
86% 87%
90% 90% 91% 92%
92% 93% 93% 94%
80%
84%
88%
92%
96%
2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12
Population coverage
87 Tele2 Capital Markets Day 2012
LTE network readiness
Tech Neutrality tested in 2 regions No impact on 2G service quality
LTE data speed up to 80 Mbps
• 58% of base stations LTE ready
• Transport network 67% LTE ready
All network investments since 2009
are LTE compatible
88 Tele2 Capital Markets Day 2012
Summary • The fastest growing company on the
Russian mobile market
• Unique discounter positioning
• Efficiency KPIs continuously superior to
competition
• Excellent user experience of 2G Voice and
Data
• Good progress towards Technology
Neutrality