Sonaecom Sgps Sa · EURONEXT:SNC
Sonaecom Sgps Sa — Sonaecom — Non-Deal Roadshow (March 2004)
62 slides from Sonaecom Sgps Sa's roadshow presentation, March 2004
Slide 1: Management Presentation
Management Presentation March 2004
Slide 2: Disclaimer
Disclaimer • This presentation is provided for information purposes only and does not constitute, nor must it be interpreted as, a solicitation or recommendation to acquire or dispose of any investment or to engage in any other transaction. Any decision to buy or sell securities is the exclusive res
Slide 3: Agenda
Agenda Who we are 1. A Track Record of Delivery 2. The Foundations for Success 3. A Strong Platform for the Future
Slide 4: Shareholders and Group Structure
Shareholders and Group Structure Sonae SGPS Retail, Real Estate, Wood panels, Telecoms, Tourism Sonae SGPS : 82,79% Free Float : 17,21% Market Cap : Sonaecom 773 million euros (04/03/04) Total Headcount: 2.332 (39 Holding Co) Legal, HR, Finance, Shared Services Division Accounting, Treasury, Communi
Slide 5: Who we are
Who we are Sonaecom Market cap 773 million euros (04/03/04) Media Mobile Fixed S&SI & Internet One of the most The leading challenger to Leading reference daily Leading specialists in successful 3rd operators the incumbent paper, one of the main telco and retail systems in Europe alternative ISPs in
Slide 6: Who we are: FY2003 consolidated turnover contributions
Who we are FY 2003 CONSOLIDATED TURNOVER CONTRIBUTIONS 5% 6% 10% 4% 43 0 € millions 52 75% 34 84 838 626 O P TIMUS NO V IS CLIX P UBLICO SSI O THERS S O NAECO M CO NS O LIDATED
Slide 7: Who we are: FY2003 consolidated EBITDA contributions
Who we are FY 2003 CONSOLIDATED EBITDA CONTRIBUTIONS 103% € millions -5 0 5 -8 0 150 146 OPTIMUS NOVIS CLIX PUBLICO SSI OTHERS SONAECOM CONSOLIDATED
Slide 8: Who we are: FY2003 consolidated FCF
Who we are FY 2003 CONSOLIDATED FCF (stand-alone) 53 € millions 35 FCF POSITIVE IN 2003 3 2 -3 -2 -17 O P TIMUS NO V IS CLIX P UBLICO SSI O the rs & Intra - S O NAECO M G roup CO NS O LIDATED
Slide 9: Agenda
Agenda Who we are 1. A Track Record of Delivery 2. The Foundations for Success 3. A Strong Platform for the Future
Slide 10: A Track Record of Delivery: turnover growth
1. A Track Record of Delivery h Sonaecom has delivered growth in turnover …. CONSOLIDATED TURNOVER € millions 838 789 +6% same quarter last year 223 221 202 205 200 196 199 183 +7% -1% +9% +10% 1Q02 2Q02 3Q02 4Q02 FY 2002 1Q03 2Q03 3Q03 4Q03 FY 2003
Slide 11: A Track Record of Delivery: profitability improvements
1. A Track Record of Delivery h Improvements in profitability …. CONSOLIDATED EBITDA 146 € millions +103% EBITDA margin : 17% 72 45 34 37 30 same quarter last year 24 19 16 12 +138% +81% +88% +126% 1Q02 2Q02 3Q02 4Q02 FY 2002 1Q03 2Q03 3Q03 4Q03 FY 2003
Slide 12: A Track Record of Delivery: OPEX reductions
1. A Track Record of Delivery h Reductions in OPEX …. CONSOLIDATED OPEX € millions 701 678 OPEX as 95 111 %Turnover: 52 -3% 42 89% 2002 187 188 81% 2003 178 176 184 178 177 163 419 162 161 379 19 24 31 23 21 15 12 13 24 17 10 47 13 11 11 42 56 46 43 45 53 11 42 48 100 103 106 110 96 99 102 82 1Q02 2
Slide 13: A Track Record of Delivery: headcount reductions
1. A Track Record of Delivery h Reductions in Headcount …. HEADCOUNT End 2002 End 2003 6,5% reduction Internet & Internet & Media 472 Media 521 Novis Telecom Novis Telecom 199 277 2492 2332 SSI 602 employee SSI 663 employees s Sonaecom Sonaecom SGPS 22 Optimus 1020 SGPS 39 Optimus 1009
Slide 14: A Track Record of Delivery: structurally FCF positive
1. A Track Record of Delivery h And is structurally FCF positive. CONSOLIDATED FCF 35 35 € millions 23 9 (4) (5) (12) (23) +90 mn euros (43) (55) 1Q02 2Q02 3Q02 4Q02 FY 2002 1Q03 2Q03 3Q03 4Q03 FY 2003 1Q02 2Q02 3Q02 4Q02 FY 2002 1Q03 2Q03 3Q03 4Q03 FY 2003 EBITDA 12 19 24 16 72 30 34 45 37 146 CAPE
Slide 15: Debt reduction and net debt / EBITDA
1. A Track Record of Delivery h Delivery of financial and operating performance has enabled Sonaecom to reduce its debt and increase its ability to meet financial obligations. NET DEBT / ANNUALISED EBITDA (x4) Net Debt / Anualized EBITDA (x4) 10,9 x Net Debt YE 2003 7,4 x : € 336 mn 5,8 x 4,9 x 5,3
Slide 16: Interest cover ratio
1. A Track Record of Delivery INTEREST COVER RATIO Interest Cover (EBITDA / Interest Paid) 11,5 x 12, x 10, x 9,4 x 9,4 x 9,0 x •Higher spreads 7,6 x 8, x from Optimus refinancing (2H) 6, x 5, x 4,1 x 3,9 x •Lower Euribor 3,9 x 4, x 2,7 x + 138 % •Lower Gross 2, x Debt ,x 1Q02 2Q02 3Q02 4Q02 FY 2002
Slide 17: Highlights of recent achievements – FY2003 Results
1. A Track Record of Delivery h Highlights of recent achievements – FY2003 Results (euros thousands) Full Year % chg Consolidated Sonaecom 2002 2003 % var. 4Q02 3Q03 4Q03 4Q03/4Q02 4Q03/3Q03 Turnover 788.946 837.742 6% 199.874 222.812 220.641 10% (1%) EBITDA 71.546 145.536 103% 16.233 44.798 36.752
Slide 18: Agenda
Agenda Who we are 1. A Track Record of Delivery 2. The Foundations for Success 3. A Strong Platform for the Future
Slide 19: The Foundations for Success
2. The Foundations for Success Integrated Strong Structure & Shareholders Best Practices Superior Marketing & Execution
Slide 20: Strong Shareholders
2. The Foundations for Success Strong Shareholders Sonae SGPS : 83% / Free float : 17% Sonaecom 46,29% 56,7% 100% 100% 66% * FT 20,2% 43,3% 43,3% 093X (25,7%), IPE Others (5,04%); Maxistar (2,8%) Mgmt(34%) * 52,34% voting rights Sonae SGPS France Telecom •Largest private non-financial Group in Portu
Slide 21: Integrated Structure – One Network
2. The Foundations for Success Integrated Structure – One Network Novis is the network provider for the Sonaecom Group • Network build-out Backbone Transmission Network (2.849 kms fibre completed; pairs) • Investments now • Nationwide optical fibre network connecting maintenance / every major Portug
Slide 22: Integrated Structure – Shared Services
2. The Foundations for Success Integrated Structure – Shared Services h Created in 2000 as a means of achieving important synergies and cost savings across the Group. Back office Integrated Financial & Human Legal & IR & PR 2000 Administrative Resources Regulation Facilities Middleware integration C
Slide 23: Best Practices
2. The Foundations for Success Best Practices Sonaecom Board of Directors 5 Non-Executive Directors 4 Executive Directors (o.w. 3 independent) Belmiro de Azevedo - Chairman Paulo Azevedo - CEO Antonio Borges (independent) Luis Filipe Reis – CEO Telco & Media Jean-Francois Pontal (independent) Antoni
Slide 24: Superior Marketing & Execution: mobile market share
2. The Foundations for Success Superior Marketing & Execution h We have achieved strong market positions in our businesses: Mobile Market Share of EoPs / Penetration Market Penetration 102% 46% 45% 45% 46% 45% 45% 45% 45% 44% 44% 44% 45% 45% 45% 45% 45% 46% 46% 46% 46% 46% 35% 35% 35% 34% 33% 32% 32
Slide 25: Superior Marketing & Execution: fixed line voice market shares
2. The Foundations for Success Superior Marketing & Execution Fixed Line Voice Market Shares 4Q03 SoHos SMEs Jazztel 14,50% Oni 16,60% Novis 39,90% Total Total Oni 25,50% Vodafone; Altnets 17,60% Altnets 28,1% 27,4% Novis Others 4,30% Others 9,30% Tele2 0,00% 42,10% Residential Tele2 Vodafone; Jazzt
Slide 26: Superior Marketing & Execution: narrowband internet access
2. The Foundations for Success Superior Marketing & Execution Narrowband Internet Access Market Share of traffic 42% 45% 41% 43% 45% 46% 47% 31% 28% 32% 30% 29% 28% 27% 27% 27% 27% 26% 26% 26% 26% 1Q02 1Q02 3Q02 4Q02 1Q03 2Q03 3Q03 Clix Market Share NB PT Group Others h Clix is still the leading sta
Slide 27: Superior Marketing & Execution: market share of circulation
2. The Foundations for Success Superior Marketing & Execution Market Share of Circulation 24 Horas 12,93% Diário de Notícias Diário Económico 12,94% 2,75% Público Público 14,53% Daily Circulation Jornal de Notícias 27,46% YtD 54 thousand Correio da Manhã 29,39% Jan / Set 03 h Público is the 3rd dail
Slide 28: Agenda
Agenda Who we are 1. A Track Record of Delivery 2. The Foundations for Success 3. A Strong Platform for the Future
Slide 29: A Strong Platform for the Future: operating growth drivers
3. A Strong Platform for the Future Operating Growth Drivers Media Mobile Fixed S&SI & Internet •FM substitution; •Extraction of value from •Highly dependent on •Expansion and SoHos & SMEs; regulation consolidation of client •Lower real market base in current penetration than reported; •Growth in wh
Slide 30: A Strong Platform for the Future
3. A Strong Platform for the Future Lean and efficient structure Fully financed and Further potential for FCF positive Group synergies Future Other businesses Performance Optimus No longer a cash Enhancement Profitable and drain generating cash Novis Público EBITDA breakeven in Potential upside 2004
Slide 31: Conclusion
Conclusion h 2003 was a very good year for Sonaecom due to management’s commitment to: • Overcome the challenging market environment; • Deliver continued improvement in profitability and FCF; • Continue to grow the business. h Optimus is performing well and exceeding financial targets; h Novis has a
Slide 32: Appendix
Appendix
Slide 33: Stand-alone Financial Highlights
Stand-alone Financial Highlights
Slide 34: Optimus Financial Highlights
Optimus Financial Highlights TURNOVER EBITDA 636 + 37% 147 608 600 140 year-on-year mn euros + 5% mn euros 120 500 year-on-year 107 100 400 80 300 60 46 200 160 174 167 143 154 150 146 149 40 35 34 32 32 24 26 25 100 20 1Q02 2Q02 3Q02 4Q02 FY2002 1Q03 2Q03 3Q03 4Q03 FY2003 1Q02 2Q02 3Q02 4Q02 FY 200
Slide 35: Novis Financial Highlights
Novis Financial Highlights Service Revenues EBITDA 160 +9% 152 ,5 ,0 140 year-on-year 140 (1,9) (1,3) mn euros (5,0) (3,3) (3,4) 120 (6,3) (6,1) (7,0) (10,0) 100 (11,1) + 78% (15,0) 80 year-on-year 60 (20,0) 37 38 38 39 40 33 36 36 35 (25,0) mn euros 20 (27,8) (30,0) 1Q02 2Q02 3Q02 4Q02 FY 1Q03 2Q03
Slide 36: Público Financial Highlights
Público Financial Highlights Turnover EBITDA 1,5 1,4 52,0 1,2 50,0 1,0 mn euros 41,1 + 26% 0,5 0,2 40,0 (0) year-on-year 0,0 (0,0) 30,0 (0,5) (0,4) (0,5) (0,4) (1,0) (0,9) 20,0 (1,5) 13,1 13,2 12,9 11,9 14,1 + 3,7 million euros 9,9 10,8 10,0 7,3 (2,0) year-on-year (2,5) (2,3) mn euros ,0 (3,0) 1Q02
Slide 37: Clix Financial Highlights
Clix Financial Highlights Turnover EBITDA 35,7 35,0 34,0 0,0 -5% (0,3) (0,3) 30,0 mn euros (1,0) (0) (1) year-on-year (1,2) (1,1) 25,0 (2,0) (1,8) (2) (2,1) 20,0 (3,0) 15,0 (4,0) 8,9 9,0 9,4 9,6 +69% 10,0 8,4 8,4 7,7 8,3 (5,0) year-on-year 5,0 (6,0) mn euros (6,1) ,0 (7,0) 1Q02 2Q02 3Q02 4Q02 FY 200
Slide 38: Consolidated Financial Highlights
Consolidated Financial Highlights
Slide 39: 2003 Overview
2003 Overview In 2003 we made significant progress in achieving our main financial and operating goals: As regards financial results we achieved: • 6% growth in consolidated Turnover to 838 million euros; • EBITDA increased more than 100% to 146 million euros representing a 17% margin of Turnover; •
Slide 40: 2003 Overview
2003 Overview At the operating level significant achievements were attained: — Optimus recorded strong performance in all its main financial indicators generating positive full year FCF for the first time; — Novis turned around the business, gained market leadership in all relevent segments and beca
Slide 41: Turnover
Turnover h Consolidated Turnover grew by 6% year-on year to 838 million euros despite constraints to topline growth (economic recession, cut in mobile tariffs, advertising recession, lower NB usage,lower corporate IT spend, no breakthrough in regulation); h The main drivers of growth were customer r
Slide 42: OPEX
OPEX h Significant efforts continued in 2003 to contain and reduce costs; h Total consolidated OPEX (including COGS) fell by 3% in 2003 to 679 million euros notwithstanding the higher revenue volume; h The main cost reductions came from lower Staff Costs, External Supplies and Services and Interconn
Slide 43: EBITDA
EBITDA h Sonaecom continued to deliver significant improvements in profitability in 2003; h Consolidated EBITDA increased 103% year-on-year in 2003 to 146 million euros; h EBITDA margin was 17% in 2003 compared to 9% in 2002. CONSOLIDATED EBITDA € millions 146 +103% 72 45 34 37 30 24 19 16 same quar
Slide 44: EBITDA
EBITDA h Optimus stand-alone: • FY03 EBITDA increased 37% year-on-year to 147 million euros; • Optimus’ EBITDA margin increased to 23% in 2003 from 18% in 2002. h Novis stand-alone (including Mainroad) : • Delivered EBITDA breakeven in 4Q03, in line with guidance, of 0,5 million euros; • Recorded an
Slide 45: EBT
EBT h EBT improved by 81 million euros in 2003 to negative 8 million euros; h Financial results were affected by lower Euribor and lower average spread in 2003 and by higher cash balances resulting from the overall improvement in FCF generation; h Interest payments fell by 15% in 2003 to 15,5 millio
Slide 46: Net Results
Net Results h Consolidated Net Results after Minority Interests improved 71% in 2003 to losses of 19 million euros compared with losses of 65 million euros in 2002; h For the first time Optimus delivered positive net results for the full year of 25 million euros compared with losses of 16 million eu
Slide 47: CAPEX
CAPEX h CAPEX reduced by 3% in 2003 to 123 million euros: h Optimus CAPEX, 110 million euros, includes 38,8 million euros of assets acquired from OniWay. h Of these, 33 million euros are FCF neutral as they are only due to be paid in 2005. h Adjusting for OniWay, total Sonaecom CAPEX was 84 million
Slide 48: FCF
FCF h Sonaecom delivered positive FCF of 35 million euros, an improvement of 90 million euros from negative 55 million euros in 2002; h Optimus was the principal FCF generator, turning in a full year positive FCF result of 53 million euros; h Público and S&SI generated positive FCF and Novis and Cli
Slide 49: Capital Structure
Capital Structure h Significant improvements in Sonaecom’s capital structure and its ability to meet financial obligations were achieved through: – Improvement in profitability; – Increased FCF generation; – Refinancing of Optimus debt facilities in July 2003:
Slide 50: Capital Structure
Capital Structure – Consolidated Gross Debt fell by 6% to 480 million euros and Consolidated Liquidity was 144 million euros, up 8% from132 million euros in 2002; – Consolidated Net Debt reduced 11% to 336 million euros compared with 2002; – Net Debt / EBITDA reduced from 5,3x to 2,3 x; – Interest c
Slide 51: Key Operating Highlights
Key Operating Highlights
Slide 52: Operating highlights Optimus
Operating highlights Optimus h Optimus delivered strong financial and operating performance in 2003: h Customer Revenues grew by 8% in 2003 to 361 million euros; h EBITDA margin increased to 23% from 18% in 2002; h FCF in the year was 53 million euros up from negative FCF of 3 million euros in 2002;
Slide 53: Operating highlights Optimus
Operating highlights Optimus – Subscribers grew by 9% to 2,306 million with net additions of 186 thousand; – Customer Revenues grew by 8% to 361 million euros as a result of: h Subscriber growth; h 2,5% price increase in May; h Higher data revenues. – Data as a percentage of service revenues increas
Slide 54: Operating highlights Novis
Operating highlights Novis h In 2003, Novis achieved all its strategic targets and became EBITDA positive in the last quarter, in line with guidance; h Novis consolidated its leadership amongst alternative operators with market shares of 42,1% of the SoHo market and 39,9% of the SME market; h By the
Slide 55: Operating highlights Novis
Operating highlights Novis h Novis increased its active customer base by 87% to 209 thousand customers; h Of these, 13 thousand were SME customers and 29 thousand were SoHos, representing increases of 97% and 82% respectively; h 97% of Novis active customers were pre-selected at the end of 2003; h T
Slide 56: Operating highlights Novis
Operating highlights Novis h Total service revenues increased by 9% to 152 million euros in 2003 driven by: h 13% increase in Retail Internet revenues; h 97% increase in Wholesale traffic and circuits; h 6% increase in retail telephony. h Wholesale internet contributed negatively to revenues (-5%) d
Slide 57: Operating highlights Clix
Operating highlights Clix h Lack of effective regulation is still a critical constraint; h Under the current conditions for wholesale ADSL, Clix generates negative production margins (-8%) before fixed costs; h As such, Clix was forced to suspend its ADSL offer to new subscribers in January 2004 as
Slide 58: Operating highlights Público
Operating highlights Público h In 2003, Público’s Turnover increased by 24% to 52 million euros and delivered positive EBITDA of circa 0,5 million euros; h The increase was achieved mainly from the continued success of associated products, the launch of new supplements and the increase in Friday’s c
Slide 59: Operating highlights S&SI
Operating highlights S&SI h Throughout 2003, SSI felt significant pressure on revenues and profitabilty due to: h economic downturn; h increased competitive environment; h excess capacity in sector; h subsequent pressure on margins. h Despite the challenging environment, WeDo and Enabler, did well i
Slide 60: Regulation
Regulation h PT continues to face little or no regulatory pressure to its repeated abuse of dominant market position; h Fixed and Internet markets are becoming less and less competitive; h The mobile market may face the same risk if the network effect is allowed to continue to erode smaller operator
Slide 61: Conclusion
Conclusion
Slide 62: Looking Forward
Looking Forward h 2004 will be another challenging year but starting from a better platform than 2002 or 2003; h We are already seeing some signs of economic recovery; h Debt and equity market sentiment is significantly improving; h We are confident that with the productivity and service quality lev