Sonaecom Sgps Sa · EURONEXT:SNC
Sonaecom Sgps Sa — Sonaecom — Q1 2004 Earnings Presentation
48 slides from Sonaecom Sgps Sa's earnings presentation, June 2004
Slide 1: Management Presentation
Management Presentation June 2004
Slide 2: Group Overview
Group Overview
Slide 3: Who we are
Who we are Sonaecom Market cap 674 million euros (04/06/2004) 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
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 674 (04/06/2004) 773 million euros (04/03/04) Total Headcount: 2.332 (39 Holding Co) Legal, HR,Finance, Shared Services Division Accounting, T
Slide 5: Strong Shareholders
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 Portugal with •Key shareholder at Op
Slide 6: Corporate governance
Corporate governance Best Practices Sonaecom Board of Directors (9) 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) Antonio Casa
Slide 7: Human Resources Group Headcount
Human Resources Group h End March 2004 Fixed 195 Mobile Internet 1029 & Media Headcount 444 2306 Corporate S&SI Centre 597 Board 7: 41 Legal 10 pax; Internal Audit : 8 pax Regulation : 6 pax Others :10 Compared with 2.455 end March 2003 (-6%). 7
Slide 8: Network Roll Out National Backbone – Transmission
Network Roll Out National Backbone – Transmission Novis is the network provider for the Sonaecom Group: V.Castelo BragaMSC Braga Famalicão Guimarães Penafiel • Nationwide optical fibre network connecting almost Porto every major Portuguese cities; S. João daMadeira Aveiro Guarda BSC • Optical intern
Slide 9: Integrated Structure – Shared Services
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 Customer IT / IS Service 2003 •
Slide 10: Consolidated Financial Highlights
Consolidated Financial Highlights June 2004
Slide 11: A Track Record of Delivery: Turnover
A Track Record of Delivery h Sonaecom has delivered growth in turnover …. CONSOLIDATED TURNOVER € millions 838 789 +6% Contributions to same quarter last year Consolidated Turnover 1Q03 % 1Q04 % Optimus 143,5 73% 148,3 72% Novis 19,1 10% 26,8 13% Clix 9,5 5% 7,5 4% 223 221 207 Público Group 13,4 7%
Slide 12: A Track Record of Delivery: OPEX
A Track Record of Delivery h Reductions in OPEX …. CONSOLIDATED OPEX € millions 701 95 678 111 52 42 187 OPEX as % 188 Turnover: 83% 1Q03 177 78% 1Q04 419 162 161 178 161 23 379 24 17 11 10 47 23 11 11 11 42 45 53 48 54 96 99 102 82 84 FY02 1Q03 2Q03 3Q03 4Q03 FY03 1Q04 OPEX ex Interconnect &leased
Slide 13: A Track Record of Delivery: EBITDA
A Track Record of Delivery h Improvements in profitability …. CONSOLIDATED EBITDA 146 € millions EBITDA margin: 21% (15% in 1Q03) +45% 72 same quarter last year Contributions to 45 43 Consolidated EBITDA 1Q03 % 1Q04 % 34 37 Optimus 33,1 111% 40,9 95% 30 Novis -3,1 -10% 1,4 3% Clix 0 0% 0 0% Público
Slide 14: A Track Record of Delivery: Net Results
A Track Record of Delivery h Improvements in profitability …. CONSOLIDATED NET RESULTS FY 2002 1Q03 2Q03 3Q03 4Q03 FY 2003 1Q04 First quarter of positive € millions 0,2 Net Results (2,6) (4,4) (5,4) (6,8) (19,2) +7 million euros same quarter last year (65,1) 14
Slide 15: A Track Record of Delivery: FCF
A Track Record of Delivery h And is FCF positive. CONSOLIDATED FCF FY 2002 1Q03 2Q03 3Q03 4Q03 FY 2003 1Q04 35 35 € millions 9 6 (4) (5) + 10,7 million euros same quarter last year (55) FY 2002 1Q03 2Q03 3Q03 4Q03 FY 2003 1Q04 EBITDA 72 30 34 45 37 146 43 CAPEX 127 22 22 52 27 123 17 EBITDA - CAPEX
Slide 16: Track Record of Delivery: Gross Debt
Track Record of Delivery h Delivery of financial and operating performance has enabled Sonaecom to reduce debt levels and increase its ability to meet financial obligations. GROSS DEBT Gross Debt € millions 474 480 425 The majority of Sonaecom's Liquidity End 1Q04 93 Liquidity Debt is at Optimus: 14
Slide 17: Net Debt / EBITDA and Interest Cover
Track Record of Delivery h Delivery of financial and operating performance has enabled Sonaecom to increase its ability to meet financial obligations. NET DEBT / ANNUALISED EBITDA INTEREST COVER RATIO (Last 4 quarters) 11,5 x 5,3 x 12, x 10,9 x 9,4 x 9,0 x 9,4 x 4,3 x 10, x 3,6 x 7,6 x 8, x 2,9 x 2,
Slide 18: Optimus Debt and Cover Ratios
Track Record of Delivery OPTIMUS GROSS DEBT INTEREST COVER NET DEBT / ANNUALISED EBITDA (Last 4 quarters) € million 13,5 x 14, x 3,9 x 474 425 11,4 x 11,2 x 425 12, x 10,9 x 3,6 x 1 58 9,4 x 42 9,4 x 10, x 3,3 x 8, x 7,1 x 2,9 x 6, x 415 360 367 + 19 % 2,5 x 2,5 x 4, x 41% reduction 2,3 x 2, x ,x 1Q
Slide 19: Highlights of 1Q04 results
Track Record of Delivery h Highlights of 1Q04 results (euros millions) % chg Consolidated Sonaecom 1Q03 4Q03 1Q04 1Q04/1Q03 1Q04/4Q03 FY03 Turnover 196 221 207 6% (6%) 838 EBITDA 30 37 43 45% 17% 146 EBITDA margin 15% 17% 21% 37% 25% 17% EBT (8) (3) 6 173% 317% (8) Net Results (7) (5) 0,2 103% 104%
Slide 20: Subsequent Events
Subsequent Events
Slide 21: Subsequent Events
Subsequent Events h On 23 April, Sonaecom announced the acquisition by Novis of KPNQwest Portugal; h KPNQwest Portugal’s key focus is Internet and hosting services for the business and wholesale market, based on a rented infrastructure; h Strong strategic fit with Novis with no operational or struct
Slide 22: Subsequent Events: KPNQwest Portugal terms
Subsequent Events h Maximum consideration 11.5 million euros; h No Debt / Cash 1,7 million euros; h KPNQwest Portugal has a light efficient operation, which will be fully integrated: h 42 employees h 2003 Revenues of 12,7 million euros; h 2003 EBITDA of 2,7 million euros; h 2003 Net Results 1,5 mill
Slide 23: Regulation
Regulation
Slide 24: Regulation
Regulation h In 1Q04 the Regulator issued project decision requiring PT to implement wholesale ADSL bitstream reference offer; h Existing reference ULL offer could be feasible if significant financial risks minimised for alternative operators; h Wholesale line rental is still not available; h Effect
Slide 25: Looking Forward
Looking Forward
Slide 26: A Strong Platform for the Future
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 whole
Slide 27: A Strong Platform for the Future
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 28: Looking Forward
Looking Forward h 2004 will be another challenging year but starting from a better platform than 2002 or 2003; h We are expectant of 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 level
Slide 29: Appendix
Appendix June 2004
Slide 30: Highlights of Operating Companies 1Q04
Highlights of Operating Companies 1Q04 June 2004
Slide 31: Optimus: Superior Marketing & Execution
Optimus 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% 32% 32% 32% 32% 32% 3
Slide 32: Operating highlights Optimus
Operating highlights Optimus h Optimus delivered strong financial and operating performance in 1Q04: h Customer Revenues grew by 10% in 1Q04 to 93 million euros; h EBITDA margin increased to 26% from 22% in 1Q03; h Importantly, margin improvement was driven mainly by the increase in service revenues
Slide 33: Operating highlights Optimus
Operating highlights Optimus – Customer Revenues grew by 10% to 93 million euros primarily as a result of growth in Traffic leading to na increase in Service Revenues of of 9%; – Data as a percentage of service revenues was 9,1%; h Non-SMS data revenues represented circa 19% of Data revenues in 1Q04
Slide 34: Optimus Financial Highlights
Optimus Financial Highlights TURNOVER EBITDA 147 636 608 140 600 mn euros 120 mn euros 500 107 100 400 + 27% versus 1Q03 + 6% versus 1Q03 80 300 60 46 40 200 174 167 40 35 34 146 149 154 32 100 20 0 0 FY 2002 1Q03 2Q03 3Q03 4Q03 FY 2003 1Q04 FY2002 1Q03 2Q03 3Q03 4Q03 FY2003 1Q04 60 FCF 53 120 mn eu
Slide 35: Novis: Fixed Line Voice Market Shares 1Q04
Novis Superior Marketing & Execution Fixed Line Voice Market Shares 1Q04 Micro-Business SMEs Outras Outras 6,7% 8,5% Novis Jazztel Jazztel 10,9% Novis 40,4% 21,2% 42,5% Total Total Altnets Altnets 30,3% Vodaf 28,4% 18,7% Vodaf 16,3% Residential Oni Oni Outras 19,4% 15,4% Tele2 1% 12,6% share 11% Nov
Slide 36: Operating highlights Novis
Operating highlights Novis h In 1Q04, achieved strong growth in Service Revenues (+23%) and continued to deliver improvements in EBITDA to 800 thousand euros; h Novis Telco Revenues increased by 26% in 1Q04 to 42 million euros and IT revenues at Mainroad declined 1%. h The main drivers of the revenu
Slide 37: Operating highlights Novis
Operating highlights Novis h Novis increased its active customer base by 87% to 229 thousand customers; h Of these, 13 thousand were SME customers and 29 thousand were SoHos, representing increases of 97% and 82% respectively; h 96% of Novis’ active customers were pre-selected at the end of 1Q04; h
Slide 38: Novis Financial Highlights
Novis Financial Highlights Service Revenues EBITDA 160 152 0,5 0,8 140 0,0 140 mn euros (1,9) (1,3) (5,0) (3,4) 120 (6,1) 100 (10,0) + 22% versus 1Q03 80 (15,0) + 4,2 million euros versus 1Q03 60 45 (20,0) 37 38 38 39 40 (25,0) 20 mn euros (27,8) 0 (30,0) FY 2002 1Q03 2Q03 3Q03 4Q03 FY 2003 1Q04 FY
Slide 39: Clix: Traffic Trends
Clix h Since Q4 2002 NB traffic has been decreasing rapidly. h NB Internet Traffic is decreasing faster than Fixed Traffic. Millions of minutes +1% -7% +4% -4% 0% -6% +8% -7% -4% -8% +2% -4% 5.000 4.411 4.438 4.312 4.500 4.135 4.144 4.127 4.196 3.873 3.889 3.741 4.000 3.427 3.506 3.354 3.500 3.000 2
Slide 40: Clix: Broadband Accesses
Clix h Broadband accesses keep increasing at double digit growth. ADSL is increasing faster than Cable, representing already 41% of total BB accesses.. 700.000 600.000 15% 573.456 18% 500.389 Cable ADSL 500.000 14% 425.670 236.000 20% 374.635 400.000 188.100 41% 19% 38% 311.095 145.400 112.296 30% +
Slide 41: Operating highlights Clix
Operating highlights Clix h Lack of effective regulation remains a critical constraint; h ADSL offer still suspended; h The Regulator has at last requested that PT present a reference ADSL bitstream offer, due to be implemented by June; h Clix has sought alternative forms of providing broadband resi
Slide 42: Clix Financial Highlights
Clix Financial Highlights Turnover EBITDA 35,7 35,0 34,0 mn euros 0,0 (0,3) (0,3) 30,0 (1,0) (0) (1) 25,0 (2,0) (2) (2) -20% versus 1Q03 20,0 (3,0) 15,0 (4,0) 9,6 10,0 8,4 7,7 8,3 7,6 (5,0) -1,5 million euros versus 1Q03 5,0 (6,0) mn euros (6,1) ,0 (7,0) FY 2002 1Q03 2Q03 3Q03 4Q03 FY 2003 1Q04 FY 2
Slide 43: Público: Market Share of Circulation
Público 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 daily paper in terms of cir
Slide 44: Operating highlights Público
Operating highlights Público h In 1Q04, Público’s Turnover reduced by 6% to 13 million euros and delivered positive EBITDA of circa 0,1 million euros; h Competition in Associated products has increased significantly thus Público’s Sales of Associated Products declined 8% to 5,9 million euros compare
Slide 45: Público Financial Highlights
Público Financial Highlights Turnover EBITDA 52,0 50,0 mn euros 1,0 0,9 0,5 42,3 0,2 40,0 0,0 (0,1) (0) -6% versus 1Q03 (0,3) 30,0 (1,0) 20,0 (2,0) 13,2 12,9 14,1 11,9 12,6 + 211 thousand euros versus 1Q03 10,0 (3,0) (2,8) mn euros ,0 (4,0) FY 2002 1Q03 2Q03 3Q03 4Q03 FY 2003 1Q04 FY 2002 1Q03 2Q03
Slide 46: S&SI – Main Properties
S&SI – Main Properties S&SI ¾Telecom ¾Retail systems ¾Provider of ¾B2B systems integrator and corporate IT platform integrator and software integrated specialized software developer. solutions. in indirect developer goods 46
Slide 47: Operating highlights S&SI
Operating highlights S&SI h The IT sector started to show signs of improvement in 1Q04; h Pressure on margins started to decline; h S&SI recorded Turnover of 15 million euros, in line with 1Q03; h EBITDA increased 5% to 2 million euros; h In terms of Operating highlights in 1Q04: h WeDo won a contra
Slide 48: S&SI Financial Highlights
S&SI Financial Highlights Turnover EBITDA 70 8,0 mn euros 62 mn euros 60 7,0 6,1 6,3 6,0 50 46 5,0 40 -1% versus 1Q03 +5% versus 1Q03 4,0 30 3,0 20 18 2,0 2,1 15 15 14 15 2,0 1,6 1,6 1,1 10 1,0 0 0,0 FY2002 1Q03 2Q03 3Q03 4Q03 FY2003 1Q04 FY2002 1Q03 2Q03 3Q03 4Q03 FY2003 1Q04 FCF Headcount 8,00 mn