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Telenet, where the future starts today

From volume to value – improved decision making Kristof Claes, Lead Business Controller

Why The need for change

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Telenet Context

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Never give up…

John F. Kennedy

“The time to repair the roof is when the sun is shining.”

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Raising standards means PREPARING FOR THE FUTURE

The challenge is to go from GROWTH TO GROWTH without falling into decline

The secret of constant profitable growth Raising standards

4

B

A

Are you about to reach point A ? Do you have plans to accelerate your growth ? Why raise the standard?

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Key Financials From innovating challenger to a mature innovator

0

500

1.000

1.500

2.000

2.500

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Revenue

0

200

400

600

800

1.000

1.200

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Adj EBITDA

2007-2013: historical consolidated IFRS financials / 2014-2017: analyst consensus compiled on July 8, 2014 and based on estimates of 18 sell-side analysts

11.7

4.5

14.6

4.4

% rolling CAGR

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The story of Telenet A strong brand and service offering

Legacy Telenet Network

Interkabel Network = acquired Oct 1, 2008

+ 1/3rd of Brussels

Strong network

Product leadership

Internet Broadband

Telephony Fixed

Television Cable & Digital

Mobile Tel & Internet

All-in-one Digital

Speed leadership vs DSL

Transparant rate plans

The ultimate viewing experience

Enjoy the freedom of 3G & WiFi

Best value for your

money

Service is key

Our people

Solid financials

• Fully upgraded bi-directional Hybrid Fiber Coax (HFC) network, Fiber to the node

• Covering 2,9M HH (63% of BE)

• 2,8M homes passed with our cable (98% reach)

• 2,3M unique customers (81% cable penetration)

• Strong diversified MT • Balance btw long track record and outside

experience • Great company culture, promote from within

• Strong revenue growth and significant runway ahead

• Sustained focus on efficiency and disciplined cost control

• Prudent balance sheet management

• Customer loyalty closely measured • Management reward system based on

satisfaction levels • Leading service levels thru efficiency

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Finance vision requires transformational change Ahead of the curve

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Proactive value driver Scorekeeper

Firefighting Structured processes

Steward and stakeholder Catalyst of change

Individuals Team

Lots of data Actionable insights

From … 'Keeping up' To … ‘Ahead of the Curve'

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Pro-actively respond to changing demands 2014 ambition

Finance, Procurement and Supply Chain to add sustainable value and increase business partner satisfaction through excellence in service, cost and quality

ROLE

Finance, Procurement and Supply Chain on the move to proactively respond to the changing demands of Telenet's future

2014 AMBITION

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Ahead of the curve Sustainable value growth and increased business partnership through 8 initiatives with clear deliverables / KPIs

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Design and implement 3yr planning horizon as part of LRP Deliver structured link of 3y strategic action plan with budget Implement regular scenario planning with adequate tools Set up “Are we on track” analyses

Shape 3-year planning horizon

2016 targets closely monitored

Run cost control program incl. synergy exploration with LGI Implement enhanced investment planning based on RoI logic Hardwire continuous improvement and cost awareness Alignment with Capex Rolling Project

Stabilize RoS and improve continuously

€x M OCF increase

Propose, align and implement binding 'Financial calendar' Propose, align and implement streamlined budget process with binding

deadlines and clear input processes

Fix budget process

Binding budgeting calendar for Telenet

Establish a cash lab for ongoing cash analytics and mgmt Run dedicated TWC & cash program assessing cash levers Strengthen cash & TWC awareness for continuous improvement

Hunt for Cash

€x M FCF increase

Align definitions across departments and with LGI Establish E2E alignment between Controlling, BO & BI Define business unit P&Ls (carve-out TfB) Establish BI tiger team to ensure delivery of commitments

Create E2E business insights

Max 10 crisp dashboards, align P&Ls and 50 key definitions

Execute transition to US-GAAP Set up training program on US-GAAP also covering remaining reporting in

IFRS

Convert to US-GAAP

US-GAAP as standard for all internal reporting

Perform capability & high potentials screening Compile manual for HR leadership planning in Finance Foster top talent attraction for Finance

Attract, keep & develop talent

Fin leadership program, Fin competency map

Perform Finance health check and clarify all interfaces (roles and responsibilities) within department and beyond

Take full ownership of risk governance Procure 2 Pay LG Project Prepare Fusion implementation

Clear Finance health dashboard, Risk Gov. implemented

Prepare Finance for the future 1

2

3

4

5

6

7

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From volume to value - part 1 2. Creating E2E business insight

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Business office objective Report with business insight, facilitate performance drivers & scenario planning

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BO objectives

Create P&L review with business insights

Facilitate drill-down of performance gaps

Facilitate scenario planning / value analysis

Design summarized management reports that include key business drivers

Provide a clear indication of the status of (value based) KPI’s with a identification of risks and opportunities

Description Example

Assist the business responsible in calculating the effects of different scenarios on the P&L

Provide management with clear insights into what specific parts of the business are responsible for under- or over-performance and assist in defining necessary actions

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Business office From multiple operational reports to a single management report for RMD & SLT

Currently there is a multitude of operational reports which are shared with the RMD management team inhibiting an optimal

steering of the Residential market

Current situation

In the future the amount of operational reports will be reduced and the remaining reports will only be used by the operational

teams to manage the day-to-day business

Dashboard Hotspot

Triing Dashboard

SLT & RMD

Entertain-ment report

Mobile report Fixed report

Yelo TV dashboard

CI+ Sales Dashboard

Daily KPI Dashboard

Future situation

Op

era

tio

nal

ste

eri

ng

Tact

ical

& s

trat

egi

c st

ee

rin

g

With this project we aim to create 3 reports for RMD and consolidate them for RMD and SLT to facilitate tactical & strategic steering

Exam

ple

rep

ort

s

Exam

ple

rep

ort

s M

anag

emen

t r

epo

rts

Dashboard Hotspot

Triing Dashboard

Daily KPI Dashboard

SLT & RMD

Entertain-ment

Mobile Fixed

Yelo TV s dashboard

CI+ Sales Dashboard

Daily KPI Dashboard

Other

Daily KPI Dashboard

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Step by step approach for business KPI reporting Ensure managebility and acceptability

• Base

• List price revenue • Other revenue • PAC & PRC • SAC & SRC

• Base

• List price revenue • Key KPIs on customer dynamics (e.g. Whop & Whoppa report)

Q2-2014 ~ Q4-2014

Leve

l of

man

agem

ent

insi

ghts

~ Q2-2015

Volume focus - Household Volume dynamics translated into value indicators,

based on list price

Extend business steering from volume & list pricing

to ROI based steering

Exam

ple

s

1 PAC = Promotion Acquisition Costs; PRC = Promotion Retention Costs; SAC = Subscriber Acquisition Costs; SRC = Subscriber Retention Costs

1 2 3

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Business office value driver tree Facilitating deep understanding of impact initiatives allowing proactive steering

Value driver analysis

Input for strategy 1. Develop different scenarios 2. Estimate impact of scenarios based on

impact on value drivers 3. Optimize strategy and initiatives based on

impact assessments

• Understand historic performance based on value drivers

• Analyze value driver trends

• Analyze and understand sensitivity of value driver and its impact on financial results (short, medium term)

• Understand impact of initiatives

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Business office value driver tree Facilitating deep understanding of results and performance drill downs

Revenue Residential

Revenue

Entertainment

Revenue

Fixed

Revenue

Mobile

ARPU

Fixed

Customer base

Fixed

Churn

Fixed

Gross adds

Fixed

EBITDA Residential

Costs Residential

EXAMPLE

Δ € 0

Δ € -/- 100

Δ € -/- 100

Δ € 0

Δ € -/- 100

Δ € 0

Δ € -/- 100

Δ € 0

Δ € 0

€ -/- 100

Acquisition

Fixed

Cross-sell

Fixed

Upgrade

Fixed

Downgrade

Fixed

Partial churn

Fixed

Migrations

Fixed

Customer churn

Fixed

Δ € -/- 90

TIER

MIX

& M

ULT

IPLA

Y M

IX

Δ € 0

Δ € 0

Δ € 0

Δ € 0

Δ € 0

Δ € 0

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Business office Critical success factors

• xx

Management commitment

Focus and simplicity Focus on clear links between financial and non financial drivers

Select performance indicators that are easy to understand

Ensure clear link with P&L that is well understood by BO and controlling

Focus only on metrics that are easy to measure and for which information is available

Management needs to commit to drive and support implementation of the performance management framework (KPI/prioritisation has to be accepted within the company)

Management has to be available for decision-making, validation of and participation in project work

Collaborate intensively to employees directly involved in the performance management implementation (especially BI, controlling and business)

Require involvement and education of an internal Business Office experts to build up knowledge in-house

Establish regular progress meetings as part of a structured governance process (monthly)

Clear division of responsibilities between Control, Business Office and BI shop

Knowledge and communication

Governance

From volume to value – part 2 Polaris, a Business Intelligence perspective

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Creating sustainable growth Based on strategy with expensive innovation

Deliver an Amazing Customer Experience underpinned

by a Superior Pipe

Amazing Customer

Experience

Superior Pipe

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Realizing an amazing customer experience Data is the key

It is all about making it personalized

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Polaris as a strategy Data as company asset, a cube with value driven BI applications

Cube characteristics

Consistent Comparable – reusable Connected

Single version of the truth

Pricing

definition

Channel Balancing

Management

Migration of

products

Customer lifetime

value Call Driver

analysis

Shift to

e-care

Network roll out

optimizer

Device usage

monitor

Orion – TfB

reporting

Interactive

dashboard

Simulation

tool

P&L statement

per channel

Scenario

analysis

Commissioning

Target

migrations

Profiling

Commissioning

CLV

model

Costs

drill-down Usage

simulation

Performance

management

Forecasting

model

Automated

analysis

Dashboard for

e-care development

Geographical

map

Usage per

household

Forecasting

model

NPV/payback

In-house

performance

Mobile usage

Overall

TfB reporting

Campaigns

Ongoing

Telenet From volume to value – some final thoughts

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Telenet tomorrow – Adapting to change Delivering an Amazing Customer Experience Superior Pipe

COLLABORATE & COOPERATE

BUSINESS PARTNERING

FOCUS

Thank you Q&A