The Belief Project IR deck Final
Transcript of The Belief Project IR deck Final
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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
All information set forth in this presentation, except historical and factual information, represents forward‐looking statements. This includes all statements about the company’s plans, beliefs, estimates and expectations. These statements are based on current estimates, projections and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward‐looking statements. Important factors that may affect these forward‐looking statements include, but are not limited to: The ability of U.S. Cellular to successfully grow its markets; the overall economy; competition; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded U.S. Cellular’s debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; risks and uncertainties relating to possible future restatements; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, the ability to obtain or maintain roaming arrangements with other carriers, roaming revenue and terms, the availability of handset devices, or the mix of products and services offered by U.S. Cellular. Investors are encouraged to consider these and other risks and uncertainties that are discussed in documents filed with the SEC, which are incorporated by reference herein.
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Market EnvironmentMary N. Dillon
A Winning Strategy
The Belief ProjectSM Portfolio
Financial Assumptions and Expectations
Strategy to Differentiate
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Strong Foundation Built Around Differentiating the Customer Experience
Our greatest asset is our culture
Dynamic Organization• Based on a simple concept: leadership excellence
creates associate passion leading to customer advocacy which drives superior results
Strong customer satisfaction and industry leading Net Promoter Scores
Award‐winning network
Innovative solutions for consumers that elevate the customer experience and create a human relationship
Current Offers• Free Incoming Calls, Text & Pix
• Battery Swap
• Free My Contacts Backup
• Overage Protection
• 30‐day Guarantee
• Freedom to change plans without signing a new contract
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Multiple Factors Have Created Significant Market Pressures
Economic Realities• Cloudy employment picture
• High consumer debt
• Reduced disposable income
Industry Realities• High penetration
• Consolidation
• Commoditization
• Declining switcher pool due to apathy and inertia (vs. loyalty)
Consumer Realities• Declining consumer confidence (feeling under siege)
• Cell phone dependent
• Functionally satisfied switchers
• Lack of differentiation between carriers
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Leverage our understanding of consumers to create a differentiated strategy
Unique value proposition should:• Leverage our core strengths – ten years building
customer‐focused culture
• Show our customers “what’s in it for them” through our touchpoints, offers and experience
• Focus on building loyal advocates
• Balance focus on gross adds with a focus on gaining and retaining high‐ARPU customers
Multiple Factors Have Created Significant Market Pressures
We must uniquely position U.S. Cellular given the increasing competitiveness, consolidation and commoditization in our industry
Build on Our Strengths to Create a New Value Proposition
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Market Environment
A Winning Strategy
The Belief ProjectSM Portfolio
Financial Assumptions and Expectations
Strategy to DifferentiateAlan D. Ferber
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Strategy Development and Delivery Approach
• Quantitative research and in‐depth psycho‐cultural interviews
• New segmentation, targeting, and brand positioning
• Re‐launch the brand
• Lay foundation for future enterprise strategy
• Develop Battery Swap and Overage Protection for future launch
• Complete proprietary research to facilitate new benefit bundles
• Develop business case to support new strategy
• Complete requirements, development, testing and training
• Launch
PHASE 1
PHASE 2
PHASE 3
PHASE 4
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Proprietary Research and Consumer Demand Modeling
Overall objective was to optimize the value proposition to create reasons for customers to switch to U.S. Cellular
Specifically, we wanted to:• Define consumer demands in the marketplace
• Develop solutions for these demand gaps that align with U.S. Cellular’s competencies and brand positioning
• Quantify the impact of the solutions that will lead to higher acquisition and financial returns for U.S. Cellular
• Develop the vision and implementation priorities to get it done
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New Model
Replace the traditional model of contracts and the penalty of early termination fees with the incentive of rewards
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The optimized value proposition eliminates contracts while driving acquisition, retention and loyalty through protection and rewards
New Value Proposition
No Contract Required after Two Years
Limited Minutes
Overage Protection Unlimited Calling
Unlimited Minutes
Phone Replacement (Premium Plans)
Points‐Based Rewards Program
Rewards Include:• Accelerated phone upgrades• Free phones• Free ringtones and ringbacks
• Free accessories• Free companion lines• Overage forgiveness
$50 Overage Cap
3%/5% Discount for Automatic Payment and Paperless Billing
Battery Swap
Note: = Features already available= Features available 10/1
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Market Environment
A Winning Strategy
The Belief ProjectSM PortfolioJohn K. Coyle
Financial Assumptions and Expectations
Strategy to Differentiate
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No Contract After The First
Continue to provide promotional prices on new phones, without requiring a new contract
With the new “One and Done” contract policy, new customers who fulfill an initial two‐year commitment with U.S. Cellular never have to sign a contract again
Existing customers can simply finish the remainder of their current contract on one of our new National Single Line or Family Belief Plans without extending it
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Belief Rewards
All postpaid customers on Belief Plans can earn Belief Points simply for being a customer
The points can be redeemed for:• Early phone upgrades
• Phones
• Accessories
• Additional lines on family plans
• Ringtones and ringback tones
• Overage forgiveness
Customers are automatically enrolled and start receiving points when they sign up for any U.S. Cellular Belief Plan
Belief Points are earned based on a customer’s monthly service plan, the number of lines on the account, and how long they’ve been a customer
No membershipfees, no enrollment fees, no blackout dates, no expiration1
1. As long as remains an active U.S. Cellular® customer
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Belief Plans: Postpaid Plans – Single Line Consumer
VOICEUNLIMITED BASIC
$69.99/mo
350 BELIEF POINTS/moUpgrade Phone as Early as
14 MONTHS
Unlimited MinutesPay‐As‐You‐Go
Messaging: $0.25/msgDaily Data: $3/day
VOICE/MSGPREMIUM$89.99/mo
550 BELIEF POINTS/moUpgrade Phone as Early as
12 MONTHS
Unlimited MinutesUnlimited MessagingDaily Data: $3/day
Phone Replacement
VOICEBASIC
$49.99/mo
100 BELIEF POINTS/moUpgrade Phone as Early as
17 MONTHS
700 MinutesPay‐As‐You‐Go
Messaging: $0.25/msgDaily Data: $3/day
VOICE/MSGESSENTIAL$69.99/mo
350 BELIEF POINTS/moUpgrade Phone as Early as
14 MONTHS
1000 MinutesUnlimited MessagingDaily Data: $3/day
VOICE/MSG/DATAPREMIUM PLUS$109.99/mo
750 BELIEF POINTS/moUpgrade Phone as Early as
11 MONTHS
Unlimited MinutesUnlimited Messaging
Data PlusGPS Navigation
Phone Replacement
VOICE/MSG/DATAESSENTIAL PLUS
$89.99/mo
550 BELIEF POINTS/moUpgrade Phone as Early as
12 MONTHS
1200 MinutesUnlimited Messaging
Data PlusGPS Navigation
UNLIMITED
MINUTES
LIMITED
MINUTES
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VOICEUNLIMITED BASIC
$119.99/mo
525 BELIEF POINTS/mo40 pts each additional line/moUpgrade One Phone as Early as
12 MONTHS
Unlimited MinutesPay‐As‐You‐Go
Messaging: $0.25/msgDaily Data: $3/dayAdd a Line: $40/mo
VOICE/MSGPREMIUM$139.99/mo
675 BELIEF POINTS/mo40 pts each additional line/moUpgrade One Phone as Early as
11 MONTHS
Unlimited MinutesUnlimited MessagingDaily Data: $3/dayAdd a Line: $40/mo
Phone Replacement
VOICE/MSG/DATAPREMIUM PLUS$179.99/mo
850 BELIEF POINTS/mo50 pts each additional line/moUpgrade ONE Phone as Early as
10 MONTHS
Unlimited MinutesUnlimited Messaging
Data PlusGPS Navigation
Add a Line: $50/moPhone Replacement
Belief Plans: Postpaid Plans – Family ConsumerUNLIMITED
MINUTES
VOICEBASIC
$69.99/mo
275 BELIEF POINTS/mo15 pts each additional line/moUpgrade One Phone as Early as
14 MONTHS
900 MinutesPay‐As‐You‐Go
Messaging: $0.25/msgDaily Data: $3/dayAdd a Line: $10/mo
LIMITED
MINUTES
VOICE/MSGESSENTIAL$99.99/mo
475 BELIEF POINTS/mo25 pts each additional line/moUpgrade One Phone as Early as
13 MONTHS
1200 MinutesUnlimited MessagingDaily Data: $3/dayAdd a Line: $20/mo
VOICE/MSG/DATAESSENTIAL PLUS$139.99/mo
675 BELIEF POINTS/mo40 pts each additional line/moUpgrade One Phone as Early as
11 MONTHS
1500 MinutesUnlimited Messaging
Data PlusGPS Navigation
Add a Line: $40/mo
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Phone Replacement
Customers on Premium or Premium Plus Plans who bring in their accidentally broken or malfunctioning phones can get the same or a similar model
If a customer’s phone is lost or stolen, they can receive a same or similar replacement phone for $100
Phone Replacement is available in store at participating U.S. Cellular retail locations and through customer service. If a replacement phone isn’t available in store, it will be shipped to arrive the next business day
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Auto Pay and Paperless Billing Discount, Overage Cap and Overage Forgiveness
Auto Pay and Paperless Billing Discount• 5% ACH discount/3% credit card discount
Overage Cap• Prevents voice overage charges from exceeding
$50 for anyone with a National Single Line plan or $150 for a Family Belief Plan
• Covers voice usage
Overage Forgiveness• Reward program benefit redeemed
by using points
• Allows customers to wipe out all overage (voice, data, & text) when redeemed
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Drive online sales and support• Enhanced USCellular.com
Device supply chain transformation • New third‐party logistics provider
• Lower costs
• Improved forecasting and planning
• Improved customer experience
Provide faster new service and product introduction
• Unified billing and operation support system
Develop deeper and more customized relationships • New customer relationship management system
• New enterprise data warehouse
Enablement Initiatives to Support the Program
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Market Environment
A Winning Strategy
The Belief ProjectSM Portfolio
Financial Assumptions and Expectations Steven T. Campbell
Strategy to Differentiate
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Subscriber Composition
A rapid mix shift to new plans will be driven by both migration and acquisition
The Belief Project Postpaid Subscribers
Other Subscribers
Millions
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2
1
2010 2011 2012 2013 2014
Postpaid Customer Mix by Count
The introduction of these offerings is expected to drive overall growth of the customer base
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Adoption by Bundle Type
Customers on “Voice Only” plans drop off over time as customers adopt more plans with messaging and data
Voice Only Subscribers
Voice and Messaging
Voice, Messaging and Data
2009 2010 2011 2012 2013 2014
100%
80%
60%
40%
0%
20%
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2010 Financial Effects
All costs and revenue impacts associated with The Belief Project have been included in 2010 guidance all year
Development and implementation costs for the new proof points
Increased advertising to create awareness
Initial deferral of revenue Belief Points (reward program) at time of migration to new plans
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Program designed so higher incremental costs are attached to the higher‐ARPU plans
• Phone replacement on premium plans only
• Higher monthly reward points associated with higher‐ARPU plans
“Word of mouth” expected to support traditional advertising
Consistent with our strategy to increase margins
Future Financial Effects
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More customers in our stores … incremental gross postpaid additions of at least 10%
• Value proposition provides remedies for industry’s most consumer‐dissatisfying pain points
• Enhanced customer experience to back up the new value proposition
Customers spending more … incremental growth in ARPU
• Bundled voice, messaging, and data plans
• Considerable value in higher‐end plans creating incentive to move up the structure
Customers staying longer … contributing to an improvement in already low postpaid churn
• Creating a “bank” of value for the customer which reaches highest point at greatest risk of churn
• Walking away means signing up elsewhere with a new two‐year contract as well as the absence of other benefits
Expected Results
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Market Environment
A Winning StrategyMary N. Dillon
The Belief ProjectSM Portfolio
Financial Assumptions and Expectations
Strategy to Differentiate
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Spent 10 years building a customer‐focused culture
Builds on our strengths and extensive research
Exemplifies smart business by means of cutting‐edge customer research to deliver programs that solve customer needs and create advocacy
U.S. Cellular continues to strengthen its reputation not by building walls to keep customers in, but by bringing innovative solutions to consumers that elevate the customer experience and create a human relationship, not a contractual one
Drive long‐term profitable growth
A Winning Strategy – Believe in Something Better