Investors’ Presentation · 2020-07-21 · Infrastructure 54% Services 46% 4 B2B,...

Investors’ Presentation2Q20

Axtel – Public Information

Agenda

I. Axtel Overview

II. Financial Improvement

III. Axtel’s Strategy

2Axtel – Public Information

I. Axtel Overview

Axtel – Public Information 3

Infrastructure54%

Services46%

4

B2B, infrastructure-based Company


~78% Enterprise

Services Unit (Alestra) – Revenue Breakdown

US $620 mm & US$ 209 mmPs. 12,598 mm & Ps. 4,255 mm

LTM 2Q20* Revenues & EBITDA

+40,600 km+22,000 km LD & 18,600 km Metro

Fiber Network

49% service business unit (Alestra)

Infrastructure Unit – Revenue Breakdown

EBITDA Government22%

Enterprise78%

Alestra49%

Others51%

* PF Data Center business

61

294

175

Towers Mass Market Data Centers

Proceeds (US$ mm)

(1) Without tower sale, merger-related expenses nor data center sale benefit. | (2) Includes merger-related expenses of Ps.429 million.

840 225

2017 2018 2019

3,460 4,169 4,466

Milestones - Delivering Results & Aligning to Industry Trends

• Value maximization with average EV/EBITDA multiple of 12.0x

• Net leverage decreased from 4.0x in 2Q17 to 2.8x in 2Q20

Non-essential Monetizations: Value Creation & Improved Capital Structure

Positive Track-recordBusiness Separation: Capture

Opportunities and Maximize Value

• EBITDA growth in line with business plan and market expectations

• Unmatched brand awareness & portfolio aligned to address fastest-growing segments

• Differentiation

• Maximize value & growth potential of assets

Combining positive performance, delivering on strategic projects and aligning with industry trends

TowerSale

(in MXN$ mm)

(2)

Services Infrastructure

Business Unit Business Unit

▪ > 18,000 Customers

▪ Valued added Services

▪ Digital Transformation

▪ ~ 50 Customers

▪ Wholesale Connectivity & Passive Infrastructure

4.0 3.6 3.6 3.7

3.4 3.2

2.8 4Q174Q18

2Q17

ND/EBITDA(1) (x)


2Q20

HIGHEXPOSURE

Global Covid-19

Impact Heatmap

Effects due to COVID-19

6

(1) Does not include government segment(2) Other: Property Developers (China), Protein & Agriculture, Services Companies, Steel Producers, Technology HardwareSource: Moodys.com/coronavirus

Axtel 2019 Revenues(1)

~13%

~43% ~25%

ApparelAutomotive Manufacturers

Automotive SuppliersConsumer Durables

Gaming

BeveragesChemicals

ManufacturingMedia

Metals & MiningOil & Gas /Oilfield Services

Other 2)

Lodging / Leisure & Tourism(Includes Cruise Lines)Passenger AirlinesRetail (non food)Global Shipping

Construction / MaterialsDefenseEquipment & TransportationRentalPackagingPharmaceuticalsReal Estate, REITSFood / Food RetailTelecomsWaste Management

POTENTIAL POSITIVE IMPACTInternet service companies, Retail (online), Gold Mining

• Increased demand for broadband; over 380 customersincreased capacity.

• Growth in cybersecurity, cloud and collaborationsolutions.

• Impact from tourism, entertainment and SMEs.

• Government segment: austerity measures; increase incollection (additional 30 days).

• YTD impact due to supporting customers: Ps. 28M inrevenues and Ps. 75M in NWC investment.

CommercialCoronavirus Impact on Sectors

Only 13% of revenues from high-exposure sectors


Operations / Others

• “Axtel Digital” project.

• Competitive process next steps on hold; Internal phase ofphysical separation continues.

• 85% of personnel in Home Office.

• Contingency Volunteer Fund.

• Control of Expenses and Capex.

II. Financial Improvement


586500

142 1763 22

157

Net Debt 2024 Notes(Dlls)

Bancomext(Ps)

IFRS 16 Short-termLoans

Others Cash

4.0

3.6 3.6 3.7

3.4 3.2

2.8

2Q'17 4Q'17 2Q'18 3Q'18 4Q'18 4Q'19 2Q'20

8

Debt & Liquidity Profile (as of 2Q20)

Debt Composition (as of June’20)

Net Debt: US$ 586 MAcc. Pay. Alfa: US$ 4 M

Liquidity

• Cash as of June 30, 2020: US $144 M (+US $13 M restricted cash)

o ~US $56 M from data center transaction

• Committed line facility: US $49 M disposed

• Disposed short-term bank facilities: Ps. 315 M

• FX FWDs for coupon Nov’20 & Capex July-Oct’20

o US $31 M @ 22.3 Ps/USD

2666

14 12

511

15 22 39 40

2020 2021 2022 2023 2024 2025 2026 2027 2028

Bancomext Others 2024 Notes

Leverage Evolution (Net Debt / EBITDA*)

Maturity Profile

(1) With normalized cash balance.* Without tower sale, merger-related expenses, data center sale, spectrum transaction.

(1)

Avg. life: 4.3 yrs

(in US $mm)


4,037 3,940

967 984

170 106

153 203

1,129 922

939 1,164

225

207

YTD19 Infrastructure Services YTD20

YTD Revenues & EBITDA by business unit (as of 2Q20)

+7%

YTD’19 YTD’20

(1) Pro forma Data Center transaction. (2) Excludes Ps. 2,021M from Data Center sale & Ps. 90M spectrum transaction.

-2%

Government+2%

Voice-23%

Others+3%

YTD’19 YTD’20

5,004 4,924

Enterprise

Gov’t

9

(1)

Enterprise-2%


Services

+24% -18%

2,068 2,086

Infrastructure

Services

+1%(2)

(1)

Revenues – total revenues increased 1%

EBITDA – in line with expectations

Infrastructure

(in MPs)

(in MPs)

2,317 2,485 168

Recurrent-16% Non-recurrent

III. Axtel’s StrategyStrategy & Improved Capital Structure


Specialization and automation of strategic

services’ value chain

Accelerate market penetration on digital

innovation services

Digitalization to improve efficiency

Main connectivity provider for mobile networks and data

centers

Strategy Focused on Maximizing Value

Maximize Value

Be theprincipal digital transformation

enabler of enterprise and

government segments

Be the leading neutral

fiber optic network operator in a high growth

market

ServiceUnit

Infrastructure UnitSeparation in 2

business units:

- Differentiation

- Maximize value & growth potential

Organic and inorganic growth of

cybersecurity and IT services

Long-term solid profitability vehicle


Functional Separation: Capture Opportunities and Maximize Value

SERVICES (“ALESTRA”) INFRASTRUCTURE (“AXTEL NETWORKS”)

Telecom ITNetwork

Connectivity Collaboration

Managed Networks

VPN LAN Ethernet

Unified Comm.

System Integration

Cloud

DRP IT Infrastructure

Hybrid cloud

Cybersecurity

PerimeterInternalNetwork

Enterprise and Government

IP Transit

Fiber(Dark & Lit)

Spectrum WholesaleAccess

Fiber tothe Tower

Fiber to theData Center

• >18k customers

• Value-added services

Expand expertise organically and/or inorganically:

- Cybersecurity

- Digital Transformation

- Systems Integration

• ~50 customers

• Wholesale connectivity and passive infrastructure

Wholesale / Operators (Including Alestra Services)

VideoConference

Wi Fi SD-WANProductivityapplications

40,600 km

22,000 km (LD)

18,600 km (Metro)

Largest neutral operator

Standard Services

VoiceInternet

Migration


1) Source: AV&CO (2019).

FTTx Mass Market Divestment 2

Tower Sale 1

Sale to Televisa (~80%) in December 2018 andMegacable (~20%) in May 2019

▪ Km: 5,800 km of FTTx (fiber-to-the-home or business)

▪ Proceeds: 5,863 MPs (~5,450 MPs net proceeds)

▪ Customers: ~280,000

Non-strategic Asset Divestments – Focused Strategy & Indebtedness Reduction

Data Centers’ Alliance with Equinix3

Valuation: 175 Mdlls (~157 Mdlls net proceeds*)

Includes assets and operations of 3 Data Centers

- 3 large-scale colocation customers

Joint-Marketing agreement:

- Develop marketing opportunities for IT Solutions, datacenter and network services; exchange sales leads ofthe enterprise segment and joint participation ingovernment segment projects

142 towers sold to ATC in 2017; 12 additionaltowers in 2018

▪ Proceeds: 61 Mdlls (~55 Mdlls net proceeds)

Apodaca

Querétaro

* Exclude ~US $5M of related expenses and US $13M of funds held in escrow, to be released in 12 months


Investors’ Presentation · 2020-07-21 · Infrastructure 54% Services 46% 4 B2B,...

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Transcript of Investors’ Presentation · 2020-07-21 · Infrastructure 54% Services 46% 4 B2B,...