Tiscali New Business Plan Analysts Presentation. Milan 11th October, 2006

Transcription

1 Tiscali New Business Plan Analysts Presentation Milan 11th October, 2006

2 SAFE HARBOUR This presentation contains unaudited and/or proforma financial data; it also includes forward-looking information that is subject to risks and uncertainties associated with Tiscali and the Internet sector. This information reflects Tiscali s management expectations, based on currently available information. The forward-looking information reflects certain assumed market parameters and other assumptions, but may differ materially from actual future results. This presentation does not constitute an offer of Tiscali shares. Not for release, publication or distribution, in whole or in part, in or into United States, Canada, Australia or Japan. 1

3 1 Evolution towards the new strategy 2 Country focus and Group structure 3 Creation of customer value through a full IP-Play strategy 4 Financial performance & business plan IP fixed-mobile convergence opportunity 6 Q&A 2

4 Five years of continuous growth in the broadband arena DSL SUBSCRIBERS (000) MILESTONES Aug 2006 Acquisition of VNL Triple play CAGR 91% Mbps offer First DSL VoIP launch (UK) Start LLU unbundling (IT) Launch of Free Internet 2003 (UK) Launch of Bitstream 2004 (IT) Starts LLU unbundling H Adsl Services Launch 3

5 confirmed in first half 06 results H106 H105 % DSL Subscribers % Euro million Revenues % Trading Margin % % 16% 15% 1% Net Result of Cont. Op. (70) (111) 41 n.a. Capex % FCF (44) (65) 21 32% NFP (334) (259) (75) -29% 4

6 Fixed TLC market rapidly changing in the core countries UK+ Italy telecom market ( Bln) Broadband Broadband market market continuing continuing to to growth: growth: by by YE10 YE10 60+% 60+% penetration penetration in in UK UK 50+% 50+% in in Italy Italy IP-based IP-based services services growing growing in in a a stable stable TLC TLC market market Regulatory Regulatory framework framework quickly quickly evolving evolving reinforcing reinforcing opportunities opportunities for for infrastructure infrastructure based based operators operators ,7 6,8 6,9 8,8 9,7 10,0 10,2 9,6 8,8 2,1 3,3 5,4 13,4 12,1 10, Services (B2C+B2B) Internet Access Line Rental VoIP Voice Traffic Source: IDC, Gartner, Tiscali analysis Note (*): figures include: Broadband access, VoIP, Internet Services plus Traditional Voice and Line Rental as a proportion of the projected broadband penetration 5

7 Fixed TLC market rapidly changing in the core countries UK+ Italy telecom market ( Bln) Tiscali view on IP market ( Bln) ,7 6,8 6,9 8,8 9,7 10,0 Services (B2C+B2B) Internet CAGR % 13 Traditional Services Market 10,2 9,6 8,8 Access Line Rental 2,1 3,3 5,4 VoIP Innovative IP Services 13,4 12,1 10,9 15 Market (*) Voice Traffic TISCALI VIEW: By 2010 all broadband customers will have an high-speed access at flat rate inclusive of VoIP and line rental as base service Source: IDC, Gartner, Tiscali analysis Note (*): figures include: Broadband access, VoIP, Internet Services plus Traditional Voice and Line Rental as a proportion of the projected broadband penetration 6

8 Tiscali well positioned to capture the new market opportunities Traditional Services Market Innovative IP Services Market (*) Source: IDC, Gartner, Tiscali analysis Note (*): Tiscali view on IP market ( Bln) CAGR % TISCALI S S STRENGHTS Leading edge Full-IP network and platforms (VoIP and IPTV) Solid brand in innovative services Wide IP customer base 90% current Group revenues from IP products Opportunity to leverage strengths in the new environment figures include: Broadband access, VoIP, Internet Services plus Traditional Voice and Line Rental as a proportion of the projected broadband penetration 7

9 New strategy based upon 3 key pillars, reinforcing Tiscali strategic position P I L L A R S Country Focus Infrastructure Focus IP proposition Focus Focus on UK and Italy Maximization of exit value in The Netherlands, Germany, Czech Republic Simplification of Group structure and organization Acceleration of LLU deployment Nationwide IP coverage through Wholesale/IPstream Leading edge IP platforms and services (VoIP and IPTV) Addressing the total customer spending through an innovative product proposition 1.9 Mln unbundled subscribers in %+ Revenues CAGR

10 1 Evolution towards the new strategy 2 Country focus and Group structure simplification 3 Creation of customer value through a full IP-Play strategy 4 Financial performance & business plan IP fixed-mobile convergence opportunity 6 Q&A 9

11 Focus on UK and Italy RATIONALE Markets with highest expectations on broadband growth 3.3 (*) (*) Mln Customer base, 50+% Broadband broadband customers registered per day 15 Mln households already LLU addressable and 400K subscribers already connected (250K in the last 6 months) 90% brand awareness 800+ Mln monthly page views on portal Note: (*) Includes 400K B2B Wholesale lines. 10

12 Group simplification Head Office Head Office Tiscali Italy Tiscali Italy Tiscali UK Tiscali UK Technical Services Other Activities CEO: M. Mariani CEO: M. Turner Network - CEO: P. Susnik IT CEO: S.Pulvirenti Restructuring of operative units into 3 operating blocks Grouping of all other activities for disposal Head Office resizing (from 90 people to less than 20) RATIONALE 11

13 1 Evolution towards the new strategy 2 Country focus and Group structure simplification 3 Creation of customer value through a full IP-Play strategy 4 Financial performance & business plan IP fixed-mobile convergence opportunity 6 Q&A 12

14 The IP-Play strategy PRODUCT LINES IP-Play Play Strategy Quad IP-Play IP Convergence Develop an aggressive service Triple IP-Play TV Triple IP-Play Mobile suite proposition built on IP Basic Tiscali s native IP capabilities Single IP-Play Data Single IP-Play Voice Double IP-Play Target total IP Network IP Brand IP Portal customer spending IP Customers ENABLERS Future opportunities 13

15 Enablers The IP Network UK Italy LLU Sites Today EOY06 EOY 07 EOY08 Addressable Market -mnhouseholds - STRENGHTS Fully Operational LLU Access Network 100% sites DSL2+ (24Mbps) 100% POTS compatible sites National IP coverage in non LLU areas through Wholesale access Advanced IP platform already available 22,8 25,1 VoIP (Italy & UK) UK Italy 14,8 16,0 13,7 16,0 8,0 9,2 6,8 6,8 9,1 9,1 Today EOY06 EOY 07 EOY08 IPTV available in UK (Italy 2Q07) Among the largest European LLU operators by YE07 14

16 Enablers The Brand STRENGHTS #3 fixed Telco brand in the UK Among top 10 UK Superbrands 90% brand awareness in Italy Among most popular internet brands in Europe Note: 15

17 Enablers The Portal STRENGHTS 40% of total monthly DSL acquisition 10+ Bln s per year 800+ Mln monthly page views 7+ Mln monthly unique visitors 40+ Mln portal revenues Source: Comscore, Netratings 16

18 Marketing plan GUIDELINES Aggressive market proposition (UK and Italy) Innovative product proposition leveraging the IP strengths Transfer of cost advantages to end users Extension of target market (SOHO-SME and high spenders) Triple play launch (Homechoice platform) Option to pursue convergent fixed-mobile opportunity (future MVNO) FOCUS Direct access Aggressive Single-play offers (market preemption) Double and triple IP-play proposition (migration/acquisition) Flat tariffs with transparent price schemes 17

19 Double IP-Play Double IP-Play package 10 MBPS BROADBAND ACCESS INCLUDING: Incumbent Line rental Unlimited broadband traffic VERY AGGRESSIVE FLAT PRICE Wi-Fi home coverage Home Multiline Numbering Softphone Free VoIP National International (via Softphone) 18

20 Triple IP-Play TV Triple IP-Play TV package IP-Play Play TV Offering IP BASIC PACKAGE + DTT free channels + Replay TV Hybrid set-top-box DTT/IPTV Basic package of VOD and thematic channels + IP-Content Premium Offering Premium channels package VOD premium channels and suite PPV soccer games and events VERY AGGRESSIVE Price depending on content suite FLAT PRICE 19

21 Targets RETAIL CUSTOMERS Mn ARPU Average ( ) Narrowband + BB Indirect 2,9 2,5 3,2 2,1 3,5 1,6 CAGR +48% Avg Total Customer Spending 45 CAGR +16% Direct 0,4 1,1 1, Today % Direct 14% 54% customers %AMPU Today % +5 pp ARPU - Direct ( ) CAGR +11% PAYBACK Direct (months) Today Today

22 Milestones and targets UK Nov. 06 Double IP Play launch Dec. 06 Triple IP Play TV launch 1Q 07 Homechoice integration 1Q 08 Milestones Complete LLU network Targets LLU Sites: 800 YE 07; 1,000 1Q 08; Customers (YE 10) 1,8 Mln broadband 1,3 Mln LLU 35% IPTV (on LLU) +3pp market share 22% Revenues CAGR 29% EBITDA margin by YE 10 21

23 Milestones and targets Italy Nov. 06 Double IP Play launch 2Q 07 Triple IP Play TV launch YE 07 Milestones Complete LLU network Targets 630 LLU Sites by YE07 Customers (YE 10) 0,9 Mln broadband 0,6 Mln LLU 18% IPTV (on LLU) +3pp market share 18% Revenues CAGR 23% EBITDA margin by YE 10 22

24 Highlights about Homechoice Roger Lynch 23

25 Homechoice: the leading IPTV service in UK Ownership and control of its end-to-end IPTV service delivery platform Commercial IPTV service launched in September 2004 Currently 45,000 IPTV customers Availability of most relevant content deals in UK in all premium areas: movies, sport, information, kids, music, One of the most advanced and user-friendly programming guide for TV and VOD services HOMECHOICE PRODUCT OFFERING 100+ broadcast and VoD channels 1,000+ movies available on-demand 5,000+ music videos available ondemand Network-based EPG & time-shifted TV Award-winning products and services 24

26 with the widest TV content channels already in place Broadcast TV Basic Video On Demand Premium / Niche services SKY Sky Movies 1, 3, 5, 7, 9 Chelsea Extra BBC News Interactive Movies SVOD Asian Chelsea TV Premium 25

27 and a unique value proposition based on capability of Homechoice in the development of successful proprietary On-Demand channels Genre TVOD Channel Viewing Share Kids On-demand children s content gives confidence to parents #1 Movies On-demand movies offer superior viewing convenience #1 Entertainment On-demand TV lets viewers watch their favourite series at their own pace Music On-demand music personalises music television for the first time Independents #1 Total VOD viewing is hours per month per Homechoice home, as high as viewing of BBC2, Channel 4 or Five in UK multichannel homes 26

28 Demo of Homechoice IPTV service suite 27

29 IPTV syndication: an incremental business opportunity IPTV is developing across Europe as a key strategic enabler for both incumbents and alternative broadband providers Operators typically lack skills and resources to rapidly achieve a foothold in IPTV/Triple Play Homechoice acquisition has allowed Tiscali to gain a unique competence in IPTV and in the development of content agreements and media offer Tiscali has therefore developed a wholesale end to end market proposition that provides potential partners interested in offering IPTV products with a proven platform solution and potential access to its content deals Syndication model will allow to target Tiscali core countries generating additional revenues stream to the IPTV business (target of 500k+ customers by YE 10) 28

30 1 Evolution towards the new strategy 2 Country focus and Group structure simplification 3 Creation of customer value through a full IP-Play strategy 4 Financial performance & business plan IP fixed-mobile convergence opportunity 6 Q&A 29

31 Customer base TOTAL CUSTOMERS (Mn) Direct customers (Mn) CAGR 25% 3,5 1,9 3,0 3,2 0,6 0,6 1,1 Narrowband 1,2 1,0 CAGR= +11% 2006 Pro Forma % on total 47% customers 21% 54% Indirect customers (Mn) 2,9 CAGR -7% Retail DSL 2,1 1,7 2,4 2,1 1, Pro Forma % on total customers 2006 Pro Forma % 53% 46% 30

32 Group Revenues and Margins REVENUES ( Mln) CAGR= +20% GROSS MARGIN ( Mln) CAGR= +22% Pro Forma Pro Forma INDIRECT COSTS ( Mln) CAGR= +9% EBITDA ( Mln) CAGR= +40% % personnel cost on revenues % M&S cost on revenues 2006 Pro Forma % 6% 9% 11% % of revenues 2006 Pro Forma % 18% 26% 31

33 Group Capital Expenditures Total Investments ( Mln) Mix by type (% of cum capex = < 750 Mln) Service & other > 200 >150 < 150 Services & Other 22% Net work 31% Customer Related < 150 M < 250M < 350M Network Customer related 47% 32

34 Detailed figures by country: UK Financials ( Mln) Revenues EBITDA. 454 CAGR= +22% EBITDA % 17% 21% 29% 285 Customers (000) Total Narrowband Indirect Direct. 1,7 0,5 0,8 0,4 1,8 0,4 0,7 0,7 2,1 0,3 0,5 1, % Direct 17% 27% 42% ARPU Average ( ) Capex ( Mln) CAGR= +13% Total Service & Other > Customer related Network Sites Roll-Out

35 Detailed figures by country: Italy Financials ( Mln) Revenues EBITDA. 212 CAGR= +18% EBITDA % 14% 17% 23% 93 Customers (000) Total Narrowband Indirect Direct. 1,3 0,8 0,3 0,2 1,4 1,4 0,6 0,3 0,4 0,3 0,5 0, % Direct 17% 27% 42% ARPU ( /month) Capex ( Mln) CAGR= +15% Total Service & Other Customer related 45 > 30 Network Sites Roll-Out

36 Plan Funding Cash: 52 mln Cash: 75 mln Debt: 386 mln Debt: 251 mln NFP over EBITDA 30/06/2006 Capex Restr. & Fin Cost OCF Capital Increase Disposal 31/12/2006 Capex Restr.& Fin Cost OCF Disposal 31/12/2007 2,39 1,29 1,19 CASH GENERATION > 400 Mln 35

37 1 Evolution towards the new strategy 2 Country focus and Group structure simplification 3 Creation of customer value through a full IP-Play strategy 4 Achievement of solid financial position 5 Financial objectives and business plan IP fixed-mobile convergence opportunity 7 Q&A 36

38 Fixed-Mobile Convergence opportunity New technologies allow a competitive fixed-mobile offer proposition based on IP Integrated networks (Wi-FI Wi-Max) and phones (Wi-Fi/UMTS-GSM) Integrated voice services (VoIP and netphones) Integrated contents ( s, TV) MVNO market is rapidly growing (10% average penetration in Europe EOY10) IP Convergence on mobile services allow to Develop new lines of business increasing revenues and margins Increase fixed customer base loyalty Regulatory environment currently differs in the 2 countries: (UK: MVNO is already commercial. Italy: MVNO not allowed but commercial agreement are in the the final phase of definition) Tiscali is in the final phase to define: Agreement with MNO Management team and operational model Economics 37

39 1 Evolution towards the new strategy 2 Country focus and Group structure simplification 3 Creation of customer value through a full IP-Play strategy 4 Achievement of solid financial position 5 Financial objectives and business plan IP fixed-mobile convergence opportunity 7 Q&A 38