1H 2015 Strategy & Results Presentation -...
Transcript of 1H 2015 Strategy & Results Presentation -...
2
This document has been prepared by Iliad S.A. (the "Company”) and is being furnished to you solely for your information and personal use.
This presentation includes only summary information and does not purport to be comprehensive.
The information contained in this presentation has not been subject to independent verification. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein.
None of Iliad S.A., its affiliates or its advisors, nor any representatives of such persons, shall have any liability whatsoever (in negligence or otherwise) for any loss arising from any use of this document or its contents or otherwise arising in connection with this document or any other information or material discussed.
This presentation contains forward-looking statements relating to the business, financial performance and results of Iliad S.A. These statements are based on current beliefs, expectations or assumptions and involve unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those described in such statements. Factors that could cause such differences in actual results, performance or events include changes in demand
and technology, as well as the ability of Iliad S.A. to effectively implement its strategy.
Any forward-looking statements contained in this presentation speak only as of the date of this presentation. Iliad S.A. expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this presentation to reflect any change in events, conditions, assumptions or circumstances on which any such statements are based unless so required by applicable law.
Disclaimer
3
1H 2015 Highlights
A unique and robust long-term model
Broadband
Mobile
Financials
A solid performance delivered
Clear NGN
commitments
France’s leading recruiter for 14 quarters
in a row
A strong 4G player
Brisk growth effectively managed, resulting in a
strong financial performance
Net adds 123k
Net-add market share*
36%
Net adds 820k
Market share 16%
4G population coverage
> 50%
Revenues +7%
EBITDA up 16% to €725m
Mobile services revenues
+23%
>20% of subscribers
on VDSL2
* Company estimates
4
June 2014
Subscriber KPIs
- Broadband 5,735,000 5,868,000 5,991,000
- Mobile 9,095,000 10,105,000 10,925,000
Total number of subscribers 14,830,000 15,973,000 16,916,000
Other Broadband KPIs (end of period)
Broadband ARPU (incl. promos) €35.80 €35.10 €34.50
Freebox Revolution ARPU (excl. promos) > €38.00 > €38.00 > €38.00
Another Strong Commercial Performance
Dec. 2014 June 2015
6
Excellent 1H for the broadband business, despite a fiercely competitive landscape
Successful launch of the Freebox mini 4K that did not impair the success of the premium offer
Dilutive effect of promotional offerings leading to a Group ARPU of €34.50
Iliad market share – June 2015
Iliad 1H 2015 net-add market share*
23% 36%
Broadband: Strong Momentum
A growing subscriber base in a competitive environment
* Company estimates
7
Quality/Customer Experience
Ever more attentive to our subscribers
Ongoing investment in customer care
400 jobs created in 1H 2015 in France
Some 6,500 people dedicated to assistance services
A streamlined nationwide distribution network
48 Free Centers – covering major French cities
Some 1,600 SIM card dispensers set up in stores across France –
available in the Maison de la Presse and Mag Presse store networks
and Free Centers
Innovative services
Face-to-Free service: a customized assistance service via webcam
enhancing the customer experience and simplifying communication
with the Freehelper
Special assistance available for the hard of hearing
8
Freebox mini 4K – The Best Entry-price Product
An original offer to replace the Freebox Crystal for €29.99/month
ADSL2+/VDSL2/FTTH – WiFi up to 450 Mbps
Compact format: 11 x 15 x 3.5 cm
4K – Ultra High Definition Player
Powered by Android TVTM - GoogleTM Cast ready
Calls to landlines in 106 countries
More than 200 TV channels included, o/w 50 HD channels
Freebox Replay
Voice search remote control
Hotline & Home technical assistance
Multi TV offer
Option of receiving TV services on a second TV from
a Freebox Revolution for €1.99/month
A successful replacement of the entry-price product
9
Straightforward Offers and a Rational Market Approach
2 straightforward offers available in c.90% of France – compatible with all technologies
ADSL2+, VDSL2 and FTTH up to 1Gbps*.
Differentiating through innovation & simplicity:
Freebox mini 4K – The most innovative entry-price product
Ø First triple-play box in the world with 4K and Android TVTM
Ø Only €29.99/month
A well-established maverick positioning in a highly competitive market
Freebox Revolution - Leading innovation almost 5 years after its launch
Ø Most advanced triple-play box including Blu-rayTM, NAS server
with a hard drive, FreePlugs, gamepad, calls to mobiles, etc.
A selective and profitable promotion policy to attract price-sensitive subscribers
* Available only on bridge mode.
10
ADSL 2+: Leading operator in terms of unbundling footprint
More than 7,500 unbundled Central Offices
Unbundling footprint covering of 87% of the French population
More than 1,500 new unbundled Central Offices over the last 12 months
Pushing the Next-Generation Network Experience
* Available for subscribers who have a Freebox Revolution or a Freebox mini 4K and an eligible telephone line
Providing better bandwidth for subscribers
Ø More than 20% of our subscribers now have access to higher Internet speeds
through VDSL2
Ø Higher Internet speeds: 100Mbps* download and 40Mbps* upload
Ø All of subscriber connection nodes now have VDSL2 equipment
Increasing our FTTH commitments
Ø Dense areas: 230 optical nodes with a potential coverage of more than 3.4m FTTH plugs –
migration path improving
Ø Non-dense areas: Stepping up co-financing arrangements with Orange – agreement to
cover 4.5m homes – 700k plugs available as of June 2015
Ø Ready to accelerate subscriber migrations
Ultra Fast Broadband
12
3,600
5,205
6,795
8,040
9,095
10,10510,925
1H 2012 2H 2012 1H 2013 2H 2013 1H 2014 2H 2014 1H 2015
16%
Mobile: France’s Top Net Recruiter for 14 Quarters in a Row
Undisputed leader for recruitments * Total subscribers excl. MtoM Source: Operators & ARCEP
Free market share* – June 2015
16% market share at end-June 2015 with nearly 11m subscribers
Ø Leading recruiter since launch in January 2012 – 820k net adds during 1H 2015 whereas the overall French market lost 183k subscribers*
Nb. of subscribers – 1H 2012 - 1H 2015
Positive changes in the subscriber mix
Ø Improved subscriber mix with more new subscribers taking up the €19.99 plan
Ø First subscribers moving up from the €2 plan to the €19.99 plan observed in 1H 2015
13
An Enhanced Offer for our Subscribers
1st no-commitment mobile plan including roaming in all EU countries
Unlimited plan (€19.99) works for 35 days/year per country at no extra charge (SMS/MMS,
calls & 3G Internet with 3GB) across the EU as well as in Canada and Israel
374 price reductions for incoming and outgoing communications (calls, SMS, MMS & data)
Unlimited messages from Europe and French overseas departments to French mobiles
14
Focusing on Mobile Subscriber Satisfaction
Top-mark satisfaction rate
Best recommendation rating
Source: IFOP, Satisfaction with technical quality of mobile offer survey, 15th-24th of July 2015
15
3G coverage rate x2 in 3 years to around 80% of the French population at end-June 2015
More than 2,100 3G sites opened over the last 12 months
5,266 sites in service at end-June 2015
4G > 50% population coverage
c.4,000 sites: No.3 in France
Number of Free Mobile’s 4G sites:
Strong momentum for 4G coverage in 2015
Migration from 3G to 4G: mobile network designed from the outset to use the latest technologies (an all-IP NGN)
Almost 1,900 new 4G sites opened in 1H 2015
Around 60% population coverage expected by end-2015
Building a High-Quality & High-Value Network
824 2,099 3,991
Dec. 2013 Dec. 2014 June 2015
x1.7 x1.9 1,411
June 2014
x1.4
16
Rapidly increasing coverage since 2014
4G Reality
Free’s 4G subscriber base ramped up
2.4m 4G subscribers, i.e. c.22% of the subscriber base
Strong increase in data usage: average of 2.2GB monthly data consumption per user
Offering strong bandwidth vs. benchmark
Source: nPerf 2Q France mobile 4G Internet connection barometer
1H 2014 1H 2015
17
A balanced and improving portfolio of frequencies
In December 2014 Iliad was granted 5MHz in the 1,800MHz frequency band
From May 2016 the 1,800MHz frequency portfolio should further increase to 15MHz (following the ARCEP decision
on the refarming process on July 30, 2015)
A confirmed interest in the upcoming 700MHz auction
A clear path towards independency
A 3G network covering c.80% of the French population as of end-June and on-track to reach 90% population
coverage by end-2017 – in accordance with the terms of the Group’s license
Discussions under way with Orange (overseen by the regulator) on the gradual phase out of national 3G roaming
A topic that needs to be discussed and assessed in light of:
Ø The RAN-Sharing agreement in force between NC-SFR and Bouygues Telecom
Ø The 4G roaming provided by Bouygues Telecom to NC-SFR
Towards Network Independency
19
Strong Financial Performance
* Excl. Other operating income and expense
Double-digit growth in profitability
Group revenues
€2,160m
+7%
EBITDA
€725m
+16%
EBIT*
€330m
+17%
Profit for the period
€163m
+16%
Cash from operations before tax & WCR
€721m
+17%
20
Group revenues
(€ millions)
Broadband revenues
Revenue Growth on the Back of Solid Fundamentals
Mobile revenues
Another sharp rise in Mobile
revenues, up by 18%
+ 820k new subscribers
+ Higher-value subscriber mix
driving services revenue up
by 23%
7% growth in Group revenues
during 1H 2015 (8% excl.
handsets)
+ High market share gains
+ Mobile: more than 40% of
Group revenues
1H 2014 1H 2015
1,279 1,285
+0.5%
1H 2014 1H 2015
746
880
+18.1%
1H 2014 1H 2015
2,020
2,160
+6.9%
Strong top line growth, with revenues reaching a record high of c.€2.2bn
Ongoing growth for Broadband
activities
+ 123k new subscribers attracted
by the Group’s offers
- Dilutive effect of promotional
offerings & pricing environment
21
Group Profit
(€ millions)
Group EBITDA
Significant Improvement in Profitability
Group EBIT
Robust Group EBITDA and a
wider EBITDA margin (+270 bps)
+ Fast-growing Mobile business
leading to better coverage and a
significant improvement in the
Mobile EBITDA margin
+ FTTH network rollout & scale
effect on fixed costs base for both
Broadband and Mobile
- Dilutive impact of enhanced
commercial offerings
A 17% year-on-year
increase in Group EBIT
+ Driven by EBITDA growth
- Dilutive contribution of Mobile
- Higher D&A due to new assets
(network, 4G license)
A 16% increase
in Group profit
+ In line with Group EBIT
- Negative impact of
increase in corporate
tax rate
1H 2014 1H 2015
624
725
+16.2%
1H 2014 1H 2015
281 330
+17.2%
1H 2014 1H 2015
140 163
-1
30.9%
33.6%
+16.4%
22
Strong Investments Backed by Robust FCF
(€ millions)
Group cash from ops before tax & WCR
Total CAPEX FCF
721
(613)
(80)
Group WCR
Other (interest, non-
rec.)
(48)
(67)
(47)
Operating FCF
675
Taxes
1H 2014 1H 2015
615
721
1H 2013
599 +3%
1H 2012
422 +42%
+17%
Strong growth in Group cash from operations before tax & WCR
23
1,064 1,023 1,084
1,162
1.16x 0.85x 0.84x 0.84x
2012 2013 2014 1H 2015
Net debt (€m)
Group leverage
A Solid Financial Profile
A unique positioning
Recurring subscription-based revenues
Critical mass reached in the Mobile business, with 16% market share
A proven track record of growing top line and profitability
An entrepreneurship-owned company
A very solid financial structure
Total equity of €2.5bn
Leverage kept below 1x EBITDA
Strong liquidity position (> €1.5bn)
24
1,2502,519
3,122
5,266
40%
50%
67%
80%
1H 2012 1H 2013 1H 2014 1H 2015
Nb. of 3G sites Mobile coverage (% of population)
3,6006,795
9,09510,9255,147
5,518
5,7355,991
8,747
12,313
14,83016,916
1H 2012 1H 2013 1H 2014 1H 2015
Mobile Broadband
Nb. of Subscribers (‘000s)
417586 624
725
28.9%
32.0%30.9%
33.6%
1H 2012 1H 2013 1H 2014 1H 2015
EBITDA (€m) Margin (%)
Revenues (€m)
320601 746 880
1,130
1,2351,279
1,2851,444
1,8292,020
2,160
1H 2012 1H 2013 1H 2014 1H 2015
Mobile Broadband
Delivering Profitable Growth
CAGR: +24.6% CAGR: +14.4%
* Incl. intersegment revenues
*
* *
*
25
Operational and Financial Outlook
Broadband
Achieve a 25% share of the landline broadband market in the long term
Step up the pace of FTTH rollouts
Mobile
Deploy more than 1,500 sites in 2015
Reach a 4G coverage rate of around 60% of the French population by end-2015, 4 years before our coverage
commitment deadline
Achieve a 25% market share in the long term
Group
Achieve more than 10% growth in consolidated EBITDA in 2015
2H 2015 CAPEX in line with 1H 2015
Achieve consolidated EBITDA margin of over 40% by the end of the decade