Royal KPN NV · EURONEXT:KPN
Royal KPN NV — KPN — Investor Presentation (August 2009)
33 slides from Royal KPN NV's investor presentation, August 2009
Slide 1: Company presentation KPN
Company presentation KPN August 2009
Slide 2: Safe harbor
Investor Relations Safe harbor Non-GAAP measures and management estimates This presentation contains a number of non-GAAP figures, such as ‘existing’ and ‘disposed’ revenues and other income, EBITDA and free cash flow. These non-GAAP figures should not be viewed as a substitute for KPN’s GAAP figure
Slide 3: Agenda
Investor Relations Agenda KPN profile Results Q2 2009 Strategy 3
Slide 4: KPN profile: Market leader in the Netherlands, mobile challenger abroad
Investor Relations KPN profile1 Market leader in the Netherlands, mobile challenger abroad The Netherlands Germany Belgium Wireless Position 3 Position 3 Position 1 Market share 15.5% Market share >17% Market share ~50% Customers 18.2m Customers 3.5m Wireline • ‘Challenger’ network operator • ‘Chall
Slide 5: KPN profile FY 2008 (cont'd)
Investor Relations KPN profile FY 2008 (cont’d) Market leader in the Netherlands, mobile challenger abroad Revenues € 14.6 bn KPN1 EBITDA € 5.1 bn Revenues € 10.5 bn Mobile Revenues € 4.1 bn The Netherlands1 EBITDA € 3.7 bn International EBITDA € 1.5 bn Revenues € 4.1 bn Revenues € 3.2 bn Consumer E
Slide 6: Operating principles
Investor Relations Operating principles Executing our strategy along clear principles Country-specific strategies Customer focus Multi-branding / distribution Price • Strategy tailored to local markets • Services based on customer needs Value • Integrated market leader in NL • No technology push • S
Slide 7: Financing principles
Investor Relations Financing principles Prudent financing policy and strong focus on shareholder remuneration Prudent financing policy Growing dividend per share Share repurchases • Combining attractive • Targeting dividend per share of • Using surplus cash for share shareholder remuneration and € 0
Slide 8: Share price performance
Investor Relations Share price performance Strategies executed by KPN leading to market outperformance Shareholder returns KPN share price outperformance2 € ‘Back to growth’ • Track record of delivering 2008-2010 14 shareholder value ‘Attack-Defend-Exploit’ • Returning excess cash to 12 2005-2007 sh
Slide 9: KPN the Netherlands: Historic perspective
Investor Relations KPN the Netherlands: Historic perspective “Innovative” strategy to drive value in most competitive market Position Proactive strategy • Revitalized commercial strategy • Competition from 4 other Mobile operators Mobile 2004 – Launch of multi-brands to service all • Pressure on all
Slide 10: KPN the Netherlands: Achievements
Investor Relations KPN the Netherlands: Achievements Leading position through successful strategy Consumer market Business market • Consumer strategy delivering results • Solid revenue and profitability trends up to – Revenue decline stopped per Q4 ’08 Q2 ’09, current economic climate brings – Shift
Slide 11: Mobile International: Historic perspective
Investor Relations Mobile International: Historic perspective Challenger strategy to unlock value from market dominated by competition Position Challenger strategy Customer • Target segments through multi- 2002: targeting brands, create brand preference • Outrun and outnumbered by competition – Low
Slide 12: Mobile International: Achievements
Investor Relations Mobile International: Achievements Impressive turnaround through challenger strategy Successful customer targeting Distribution strengthened • Multiple brands launched with leading position • MVNOs with strong and new distribution per segment channels launched on our network – Sim
Slide 13: Agenda
Investor Relations Agenda KPN profile Results Q2 2009 Strategy 13
Slide 14: Highlights Q2 2009
Investor Relations Highlights Q2 2009 • Resilient results reflect continued focus on EBITDA and free cash flow, whilst maintaining market shares • Solid performance Dutch Telco business, strong EBITDA growth • Mobile International service revenues flat, Challenger strategy resulting in continued EBI
Slide 15: Economic downturn
Investor Relations Economic downturn Impact predominantly in business market, pre-emptive measures paying off Impact so far Measures taken and results • Consumer • Reduction of ~1,000 FTE in temporary – No material impact, except roaming staff • Business • Tariff reduction of 20% for services – Decl
Slide 16: Group results
Investor Relations Group results Strong profitability across the group, lower revenues mainly due to iBasis € mn Q2 ’09 Q2 ’08 % YTD ’09 YTD ’08 % Revenues and other income (reported) 3,411 3,662 -6.9% 6,807 7,232 -5.9% – Getronics revenues (disposed) - 181 - 14 373 - Revenues and other income (exis
Slide 17: Group cash flow Q2 '09
Investor Relations Group cash flow Q2 ’09 Free cash flow of € 0.7 bn in Q2 ’09 € mn Q2 ’09 Q2 ’08 % • Free cash flow of € 739 mn, Operating result 742 656 13% down 7.4% y-on-y Depreciation and amortization1 580 611 -5.1% – € 75 mn positive effect from Interest paid/received -123 -145 -15% tax prepay
Slide 18: Agenda
Investor Relations Agenda KPN profile Results Q2 2009 Strategy 18
Slide 19: Ambition 2008-2010
Investor Relations Ambition 2008-2010 KPN entering a growth phase with ‘Back to Growth’ strategy ‘Back to growth’ Value 2008-2010 • The Netherlands reaching inflection ‘Attack-Defend- • Continued growth Mobile International Exploit’ • Additional growth from recent acquisitions 2005-2007 • Ahead of t
Slide 20: Outlook
Investor Relations Outlook Confirming EBITDA and free cash flow outlook for 2009 and 2010 Reported1 Outlook Outlook • Focus on EBITDA and cash 2008 2009 2010 flow, rather than revenues • Confirming EBITDA, free cash Revenues and In line with € 14.0 bn € 13.6-13.8 bn flow and dividend projections for
Slide 21: Strategic progress Consumer
Investor Relations Strategic progress Consumer Consumer strategy delivering results ‘Back to Growth’ strategy Achievements H1 ’09 Strengthen position as • Increase in EBITDA and margins leading consumer − Managing customer base for value service provider − Cost reductions from simplification • Net l
Slide 22: Strategic progress Business
Investor Relations Strategic progress Business Solid performance in challenging markets ‘Back to Growth’ strategy Achievements H1 ’09 Benefit from leading • Solid financial performance in challenging position in infrastructure markets − Revenue growth slowing down to 0.2% YTD − Strong growth in EBIT
Slide 23: Strategic progress Getronics
Investor Relations Strategic progress Getronics Improving performance despite challenging market conditions ‘Back to Growth’ strategy Achievements H1 ’09 • Improving revenue and profitability trends − Better than expected in challenging markets Benelux market leader • Created Benelux market leader f
Slide 24: Strategic progress Mobile International
Investor Relations Strategic progress Mobile International Sustained market outperformance through challenger strategy 2006 – 2007 2008 Establishing the business model Refining the business model • Strong top-line growth through focus • Sustained customer growth, driven by new on voice / SIM-only wi
Slide 25: Market outperformance
Investor Relations Market outperformance Clear outperformance in Germany and Belgium in past years Germany Belgium 8.1% Service revenue 6.8% 6.4% 7.3% 7.4% growth (y-on-y) 5.5% 5.4% 6.2% 4.2% 4.1% 2.5% 2.9% 3.1% 0.0% -7.5% -5.7% -2.7% 1% -0.7% -1% -1% -1% 0% -2% -3% -2% -3% -4% -4% -4% -4% -4% -4% -
Slide 26: Strategy going forward: Germany and Belgium
Investor Relations Strategy going forward Confident to achieve outperformance with Challenger strategy Strategy going forward Regional approach • Unlocking substantial untapped market potential through further intensifying execution of Challenger Hamburg strategy Germany Berlin Dusseldorf • Expandin
Slide 27: Rest of World
Investor Relations Rest of World MVNOs in Spain and France on track, Ortel lagging behind but actions taken • Fastest growing MVNO with stable ARPU from value-for-money offers Spain • Growth accelerating following new Simyo marketing campaign • Continued growth from blau and wholesale partners • Exp
Slide 28: Appendix
Appendix For further information please contact KPN Investor Relations Tel: +31 70 44 60986 Fax: +31 70 44 60593 [email protected] www.kpn.com/ir
Slide 29: Personnel
Investor Relations Personnel1 • Decrease of 7,474 FTE y-on-y – Reduction of 643 FTE in the Netherlands (excl. Getronics and acquisitions) – Reduction of 6,595 FTE at Getronics, mainly 43,409 from divestments 42,976 – Reduction of 319 FTE at KPN abroad, 38,919 mainly in call centers 8,372 8,240 36,70
Slide 30: Wireline services
Investor Relations Wireline services Profitability increase driven by managing customer base for value € 29 30 29 30 30 • Managing customer base for value Customer • Stable ARPUs in increasingly value 26 25 26 25 26 competitive markets • Multi-brand strategy targeting different Q1 '07 Q2 '07 Q3 '07
Slide 31: Getronics
Investor Relations Getronics Risk profile substantially improved and strong progress on strategic priorities Revenues by segment • Getronics acquired to create prime 2007 2008 (existing)1 contractor for managed ICT services – Customers increasingly requiring all ~20% ~40% telecom and ICT services fr
Slide 32: Fiber
Investor Relations Fiber Balanced approach in fiber rollout, evaluation of 2x5 cities by end of 2009 Key principles Current status and next steps • Fiber rollout driven by fast return on • Fiber initiatives in 2x5 cities, based on investment and proven customer FttC and FttH demand • Evaluation by e
Slide 33: FttH approach
Investor Relations FttH approach Committed to selected FttH rollout following approval of Reggefiber JV Fiber-to-the-Home • Joint venture with Reggefiber for FttH In-home closed in December Analog / – Following approval from Dutch competition digital TV authority (NMa) Fixed telephony • KPN taking 4