Sonaecom Sgps Sa · EURONEXT:SNC
Sonaecom Sgps Sa — Sonaecom — Investor Presentation (October 2003)
40 slides from Sonaecom Sgps Sa's investor presentation, October 2003
Slide 1: Sonaecom Management Presentation
Sonaecom Management Presentation October 2003
Slide 2: Shareholders and Group Structure
Shareholders and Group Structure Sonae SGPS : 82,79% Free Float : 17,21% Sonaecom Market Cap : 468 million euros (02/10/03) Total Headcount: 2.394 (46) Legal, HR, Finance, Accounting, Treasury, Shared Services Division Communication, Facilities, Customer Service, IT/IS Single Transmission Network 46
Slide 3: Corporate Governance
Corporate Governance Sonaecom Board of Directors 5 Non-Executive Directors 4 Executive Directors (o.w. 3 independent) Paulo Azevedo - CEO Belmiro de Azevedo - Chairman Antonio Casanova Antonio Borges (independent) Chris Lawrie David Bain Luis Filipe Reis Jean-François Pontal (independent) Richard O’
Slide 4: Generic Guidelines
Generic Guidelines Improve competitive Improve profitability position of each Guarantee future growth business Find new growth Execution Culture Focus on Cash Change regulation opportunities Achieve outstanding Minimize cash Be an active player by Relentlessly pursue operational efficiency. consumpt
Slide 5: Consolidated Financial Highlights
Consolidated Financial Highlights
Slide 6: Turnover
Turnover Consolidated Turnover (€ millions) Contributions to Consolidated Turnover 384 394 SSI OTHERS PUBLICO 5% 0% +3% 7% CLIX 5% 202 205 200 196 199 OPTIMUS 183 73% -1% NOVIS 10% 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 HoH QoQ Contributions to Consolidated Turnover 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 2Q03/2Q02 Op
Slide 7: EBITDA
EBITDA — Sonaecom continues to achieve important cost Consolidated EBITDA (€ millions) savings principally through: 1H03 64 – greater use of Group synergies 16% – improved operating processes 1H02 +103% 34 31 – focused cost control 8% 24 30 15% 17% 19 12% 16 — Reductions in OPEX have come from: 12 7
Slide 8: Shared Services
Shared Services — As regards Group synergies, Sonaecom has achieved important savings through implementation of shared services. – Back Office Integration – Administrative and financial functions – Human Resource and PR – Regulation and Legal – Facilities – Middleware Integration – Customer service
Slide 9: Net Results
Net Results Consolidated Net Results after minorities (€ millions) 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 — Improved EBITDA -4 +71% -7 — Lower financial expenses -11 -15 — Lower provisions for financial -16 -18 -16 + 64% investments HoH QoQ -31 — As a percentage of Turnover, net losses have reduced from -8%
Slide 10: FCF Drivers
FCF Drivers Consolidated EBITDA (€ millions) 1H03 — Improved profitability 64 — Lower CAPEX 16% 1H02 +103% 34 31 30 17% EBITDA - CAPEX (€ millions) 8% 15% 24 19 12% 16 12 9% +80% 8% 7% 20 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 12 + 155% 8 Consolidated CAPEX (€ millions) 68 +185% 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03
Slide 11: FCF Drivers
FCF Drivers — Improved working capital management — Lower interest expense Working Capital (€ millions) Consolidated FCF (€ millions) 67 69 57 49 -22% -5 52 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 -4 -9 -12 78% 32 -23 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 -43 +86% -66 11
Slide 12: Capital Structure
Capital Structure Total Shareholders’ Funds (€ millions) 417 — Stable to improving capital structure 411 405 365 299 — Improvements in FCF generation 276 — Capital increases at Optimus and Sonaecom during 2002 Q102 Q202 Q302 Q402 Q103 Q203 Consolidated Net Debt (€ millions) 599 597 — Reduction in Co
Slide 13: Capital Structure
Capital Structure EBITDA / Interest Paid Net Debt / EBITDA 10,6 x 9,3 x 7,5 x 7,5 x 5,7 x 4,9 x 5,0 x 3,9 x 3,9 x 3,2 x 2,8 x 2,7 x Q102 Q202 Q302 Q402 Q103 Q203 Q102 Q202 Q302 Q402 Q103 Q203 — Net Debt / Annualized EBITDA improved to 2,8x in 2Q03: — In addition, Interest cover increased from 3,9x i
Slide 14: Summary
Summary — Sonaecom has delivered excellent performance in all its key operating and financial indicators in spite of low topline growth; — These results are the consequence of a Group wide management effort to continue to achieve improvements in operating processes and systems and to deliver additio
Slide 15: Mobile
_ Mobile October 2003
Slide 16: Mobile Competitive Landscape
Mobile Competitive Landscape ¾ Optimus entered the market 5 years ago, 10 years later than TMN and 6 years later than Vodafone. Since launch it has captured 26% of new market entrants and is one of the most successful third operators in Europe with a market share of over 22%. TMN Vodafone Optimus 2Q
Slide 17: Key Drivers for Optimus' Success
4 Key Drivers for Optimus’ Success Dedicated teams, products, distribution channels Segmentation and processes for key segments Consistently at the forefront of innovative product Innovative Offer and service launches; first to roll-out data products in Portugal Intensive use of innovative sales cha
Slide 18: Delivering Results: FCF drivers
Delivering Results FCF drivers Optimus Turnover Optimus EBITDA 608 107 1% 32% reduction increase 67 298 295 51 23% 18% margin 17% margin margin 1H02 FY02 1H03 1H02 FY02 1H03 Optimus FCF Optimus CAPEX 92 9 21% reduction 1H02 FY02 1H03 -3 45 36 129% Improvement -31 1H02 FY02 1H03 18
Slide 19: Preparing the future (1/2): New image
Preparing the future (1/2) New image ¾ In 1H03, Optimus relaunched its brand image and repositioned all its stores and merchandising. “FOLLOW YOUR FEELINGS” 19
Slide 20: Preparing the future (2/2): Mobile Data Push
Preparing the future (2/2) Mobile Data Push Data is key to Optimus’ strategy, representing 10,4% of customer revenues in 1H03. Optimus has launched many new data applications and services amongst which : Multimedia Messages All Optimus Zone mobiles have Camera Video recorder Portal Zone Location
Slide 21: Fixed
Fixed October 2003
Slide 22: Background
Background ¾Launched in January 2000 with liberalisation of the fixed market; ¾Initially full-service communications provider for all market segments; ¾Own infrastructure strategy; ¾Challenging 3 years: ¾ Consistent delays in effective liberalization; ¾ Ineffective implementation of regulatory measu
Slide 23: Novis Today (1/2)
Novis Today (1/2) ¾ Novis has repositioned its business to focus on core segments, SoHos and SMEs, wholesale business – clear path to profitability; ¾ Two separate management structures have been created: ¾ Novis Telco ¾ Mainroad ¾ Significant restructuring has been implemented along with aggressive
Slide 24: Novis Today (2/2)
Novis Today (2/2) ¾ Novis is a key provider of communication and network management services for the Sonaecom Group; ¾ Novis leads altnets in its key market segments : SME and SoHo market ¾ An opportunistic approach is taken towards other key markets; Market Share (# Clients) – 2nd semester 2003 Res
Slide 25: FCF drivers: Novis stand-alone
FCF drivers Novis stand-alone Novis Service Revenues (mn €) Novis EBITDA (mn €) 140 8% growth 1H02 FY02 1H03 69 75 -5 71% improvement -18 1H02 FY02 1H03 -28 Novis CAPEX (mn €) Novis FCF (mn €) 27 1H02 FY02 1H03 74% reduction -10 18 69% 5 -34 reduction in cash burn 1H02 FY02 1H03 -47 25
Slide 26: Internet and Media
Internet and Media October 2003
Slide 27: Clix
Clix ¾ Launched 1999 as an access based ISP ¾ Rapidly achieved clear leadership in the only liberalized Internet market in Portugal – narrowband. ¾ However, with broadband solutions, heavy Internet users are migrating to the new broadband offers which are majority controlled by the incumbent and nar
Slide 28: Broadband landscape
Broadband landscape ¾Portugal is characterised by high levels of cable penetration (68% of homes end 2Q03). ¾In addition, the only ADSL residential offer available is 100% based on PT’s wholesale offer which is not economically viable for alternative operators to compete. Cable Accesses per Operator
Slide 29: FCF drivers: Clix stand-alone
FCF drivers Clix stand-alone Clix Turnover (mn €) Clix EBITDA (mn €) 36 4% growth 1H02 FY02 1H03 18 -1 17 -3 79% improvement 1H02 FY02 1H03 -6 Clix CAPEX (mn €) Clix FCF (mn €) 1,1 1H02 FY02 1H03 68% reduction -2 0,6 -3 42% 0,2 reduction in cash burn -5 1H02 FY02 1H03 29
Slide 30: Público
Público — Público is the leading reference daily newspaper in Portugal. 83% of Público’s readers belong to classes A, B and C1 (43% of population). — In 1Q03, Público increased its level of average paid circulation by 14% compared with the same quarter of 2002. Average Paid Circulation Market Share
Slide 31: Público: New Revenue Initiatives and Restructuring
Público New Revenue Initiatives and Restructuring — Público’s management dedicated significant effort to restructuring the business. — Between 1Q02 and 1Q03. — headcount reduced by 6% — staff costs cut by circa 10% — 2003 continues to be an extremely challenging year with the slump in advertising. —
Slide 32: FCF drivers: Publico stand-alone
FCF drivers Publico stand-alone Público Turnover (mn €) Público EBITDA (mn €) 41 52% growth 115% improvement 26 0,1 17 1H02 FY02 1H03 -0,5 -1,0 1H02 FY02 1H03 Público CAPEX (mn €) Público FCF (mn €) 7,3 0,9 95% reduction 1H02 FY02 1H03 3,1 115% increase 0,2 -6,2 1H02 FY02 1H03 -7,8 * In 2002, 6mn eu
Slide 33: Software and Systems Integration
Software and Systems Integration October 2003
Slide 34: S&SI Businesses
Businesses S&SI ¾Telecom ¾Retail systems ¾Provider of ¾B2B platform systems integrator and corporate IT specialized in integrator and software integrated indirect software developer. solutions. goods developer 34
Slide 35: Software & Systems Integration
Software & Systems Integration S&SI Turnover (mn €) S&SI EBITDA (mn €) 46 19% 11% growth 6,1 reduction 30 25 4,0 3,6 1H02 FY02 1H03 1H02 FY02 1H03 ¾S&SI has high growth potential and is already generating positive net results: ¾ net profits of 2 million euros in 1H03 (4,2 million euros in 2002). ¾Ma
Slide 36: Regulation
_ Regulation October 2003
Slide 37: Regulation
Regulation ¾ After more than a year without relevant regulatory decisions, the Regulator has started to take more positive measures. ¾ Notwithstanding these positive signs, there are some critical competitive distortions that remain unresolved: ¾ 3 overriding concerns ¾ Mobile “network effect” ¾ Bro
Slide 38: Room for Growth
_ Room for Growth October 2003
Slide 39: Room for Growth
Room for Growth ¾ Sonaecom has room to deliver further improvements in profitability : ¾ improved processes , ¾ greater Group synergies, ¾ cost reductions, ¾ improved working capital management, ¾ controlled CAPEX. ¾ We are confident that we will achieve consolidated FCF break-even in full year 2003
Slide 40: Room for Growth
Room for Growth ¾ In addition there are various opportunities for revenue growth to kick-in: ¾ Economic recovery; ¾ Regulatory breakthroughs; ¾ Mobile data; ¾ Improved IT spend; ¾ ULL. ¾ We are hopeful of a more positive defence of telco liberalisation by ANACOM and the new Competition Authority 40