PLAY COMMUNICATIONS FY2… · Q4 2019 and FY 2019 Results Investor Presentation 26 February 2020. 2...
Transcript of PLAY COMMUNICATIONS FY2… · Q4 2019 and FY 2019 Results Investor Presentation 26 February 2020. 2...
1
PLAY COMMUNICATIONS Q4 2019 and FY 2019 Results Investor Presentation
26 February 2020
22
Disclaimer
This presentation has been prepared by PLAY Communications S.A.’s and its subsidiaries
(together the “PLAY Group”). The information contained in this presentation is for information
purposes only. This presentation does not constitute or form part of and should not be construed
as an offer to sell or issue or the solicitation of an offer to buy or acquire interests or securities of
PLAY Group companies or affiliates in any jurisdiction or an inducement to enter into investment
activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or
be relied on in connection with, any contract or commitment or investment decision whatsoever.
Certain financial data included in the presentation are “non-IFRS financial measures.” These non-
IFRS financial measures may not be comparable to similarly titled measures presented by other
entities, nor should they be construed as an alternative to other financial measures determined in
accordance with International Financial Reporting Standards. Although PLAY Group believes
these non-IFRS financial measures provide useful information to users in measuring the financial
performance and condition of its business, users are cautioned not to place undue reliance on
any non-IFRS financial measures and ratios included in this presentation. Financial data are
presented in zloty rounded to the nearest thousand. Therefore, discrepancies in the tables
between totals and the sums of the amounts listed may occur due to such rounding. The figures
included in this press release are unaudited.
Forward Looking Statements
This presentation contains forward looking statements. Examples of these forward
looking statements include, but are not limited to statements of plans, objectives or goals
and statements of assumptions underlying those statements. Words such as “may”,
“will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “believe”, “continue”, “probability”,
“risk” and other similar words are intended to identify forward looking statements but are
not the exclusive means of identifying those statements. By their very nature, forward
looking statements involve inherent risks and uncertainties, both general and specific,
and risks exist that such predictions, forecasts, projections and other forward looking
statements will not be achieved. A number of important factors could cause our actual
results to differ materially from the plans, objectives, expectations, estimates and
intentions expressed in such forward looking statements. Past performance of PLAY
Group cannot be relied on as a guide to future performance. Forward looking statements
speak only as at the date of this presentation. PLAY Group expressly disclaims any
obligations or undertaking to release any update of, or revisions to, any forward looking
statements in this presentation, except as required by applicable law or regulation. No
statement in this presentation is intended to be a profit forecast. As such, undue reliance
should not be placed on any forward looking statement.
3
Agenda
Q&A SESSION
FINANCIAL PERFORMANCE
CONCLUSIONS
BUSINESS PERFORMANCE
4
BUSINESS PERFORMANCE
Jean-Marc HarionCEO of Play (P4 Sp. z o.o.)
4
5
2019: a record year for PLAY
▪ Operating revenue increase by 3% YoY
▪ All time highest adj. EBITDA with 2.436m PLN up 13% YoY
▪ Record FCFE of nearly 929m PLN despiteincreased cash capex and taxes
▪ 15.3 million reported customers
▪ Blended ARPU up 1.5% YoY
▪ Churn decreased to 0.75%
▪ 5G Ready population coverage up 5pp to 48%- and 1st 5G city in Poland
▪ Leverage decreased to 2.7x LTM adj. EBITDA
6
PLAY 2022 strategy
#1DIGITAL
OPERATOR
Best digital experience
Company 100% digitized
#1MOBILE-CENTRIC
CONVERGENCE
Home Internet and TV
Mobile Devices
#1LEAN AND 5G-READY
NETWORK
Network independence
Most cost-effective network
Profitable growth:EBITDA growth every year
CAN DO Challenger attitude
CLOSE Customer obsessed
CLEAR Cost-conscious
7
Enrichment of mobile-centric products and services portfolio
BIZNES BOX PRO
Solution for SME reflectingupon more-for-more strategy:
richer data transmission packagescombined with optional smartphones / routers
and virtual SIM cards management option
PLAY NOW TV BOX
32k active users with averageviewing time of 2 hours per day
HOMEBOX TV: Mobile-centric package combining mobile plan with Wireless to the
Home (WTTH) with Play NOW TV BOX option
PLAY360 & PLAY360 MAX
Phone repair and Value-Added Services package expanded with all-in offer for high-end
smartphone users
1m customers have subscribed for Screen Protection Insurance
MORE-FOR-MORE
New post-paid, pre-paid and mix mobile plans presented in Q2 2019 reflecting upon
more-for-more strategy:significantly higher data transmission at
reasonably increased prices
8
37% of PLAY network sites upgraded to5G READY, providing
48% population coverage withInternet speeds of up to 900 Mbps
Accelerated preparation for 5G
NETWORK SYNCHRONISATION
5G prerequisite real-time network synchronisation implemented in
100% of PLAY network sites
5G READY 5G IS HERE
5G in Gdynia deployed on 2100 MHz Bandwith the dynamic frequency sharing system
100+ base stations were upgraded to 5G technology in Tricity (Gdansk, Sopot, Gdynia)
NETWORK ROLL-OUT
865 new sites in total added to PLAYfootprint in 2019, providing LTE population
coverage on own network of 98.7%
99
Network roll-out and upgrades
NETWORK ROLL-OUT…
▪ Number of sites (EoP):
▪ 4G LTE population coverage (EoP):
5,1375,746
7,003
7,868
2016 2017 2018 2019
+1,257
92.1%93.4%
96.7%
98.7%
2016 2017 2018 2019
+3.3pp
+609
+1.3pp
+2.0pp
...AND IMPLEMENTATION OF 5G READY
1,2511,708
2,310
2,900
Q1 2019 Q2 2019 Q3 2019 Q4 2019
+602
+590
▪ Number of 5G Ready sites (EoP):
▪ 5G Ready population coverage (EoP):
11.7% 13.4%
43.3%48.3%
Q1 2019 Q2 2019 Q3 2019 Q4 2019
+5.0pp
+457
+1.7pp
+865
+29.9pp
1010
Progress of National Roaming switch off
28 cities with one National Roaming network switched off
▪ 20% of population
▪ 66% of total traffic transferred to PLAY
4 cities with full National Roaming switched off in
▪ 3% of population
▪ All customers transferred to PLAY network
National Roaming with Polkomtel terminated in December 2019without visible customer experience impact
▪ 100% of population
▪ 55% of Data on Device transferred to PLAY
Overall National Roaming traffic decreased YoY by 34%for Data on Device and 41% for voice
ON TRACK TO FULL SWITCH OFF EoY 2021
11
Further progress in digital
PoS DIGITALISATION
80% fully digitalized transactions(vs. 76% EoP Q3 2019)
PLAY24
4.9 million active accounts(vs 4.3mln EoP Q3 2019)
Recently enriched with native payments (BLIK, GPay, Apple Pay), support for WOŚP and Shake-to-Play loyalty feature
ONLINE RETENTION
5% digital B2C retention(vs. 2.7% in Q4 2018)
E-INVOICE
66% of e-invoice with B2B partners(vs. 48% EoP Q4 2018).
17% of all invoices booked automatically using robot.
1212
Customer base reflecting continuous focus on contract subscribers
15.3m
Total customers
12.9m
Stable YoY
Active customers
10m
Contractcustomers
▪Contract customer base up to 10 million (+1.3% YoY), including 9.3 million active contract subs (+3.8% YoY)
▪Active pre-paid customer base reduced by 1.8% YoY, partly due to migration to post-paid+125k YoY
65.5% of total customers
85% of total customers
The largest mobile network in Poland
1313
Spotlight on increasing existing customer base value
40.4%
-1.6pp YoY
Bundledshare
0.75%2
-0.03pp YoY
Contract churn
+1.5% YoY
Blended ARPU
PLN 32.81
1 Presented for active subscribers on average monthly basis over the period of 12 months of 2019; for detailed definition please refer to the Report;2 Presented for reported subscribers on an average monthly basis; for detailed definition please refer to the Report
▪Contract ARPU in 2019 up by 0.3% YoYto PLN 37.7
▪Contract churn improving YoY to 0.75%
▪Slight decrease in bundled share dueto change in reporting of mobile internet bundles
1414
Full Year: All time best performance across all financial metrics
Key financial figures for FY 2019
PLN 2,436m
+12.8% YoY
Adjusted EBITDA
PLN 929m
+13.8% YoY
FCFE
PLN 7,041m
+3% YoY
Operating Revenue
PLN 867m
+16.4% YoY
Net profit
Margin 34.6%Usage revenue
+5.4% YoY
▪Revenue up by 3% YoY driven mostly by 5.4%
increase in usage revenue
▪Adjusted EBITDA increased 12.8% YoY on the
backdrop of reduced national and international
roaming costs, lower acquisition costs, partly
offset by higher network maintenance, payroll
and marketing costs
▪Net profit up by 16.4% YoY, driven by higher
adj. EBITDA
▪ FCFE up 13.8% YoY fueled by adj. EBITDA
increase despite higher cash capex and taxesMargin 12.3%
1515
Q4 2019 Stable quarterly results
Key financial figures for Q4 2019
PLN 570m
+6.5% YoY
Adjusted EBITDA
PLN 169m
FCFE
PLN 1,800m
Stable YoY
Operating Revenue
PLN 166m
-17.7% YoY
Net profit
Margin 31.7%Usage revenue
+5.6% YoY
▪Revenue stable YoY, increased usage revenue offset by sales of goods and other revenue
▪Adjusted EBITDA increase mainly thanks to reduced national roaming costs
▪Net profit down 17.7% YoY due to higher income tax charge
▪FCFE down 20.4% mainly due to decrease in payables
Margin 9.2%
-20.4% YoY
1616
2019 Guidance overachieved despite two upward revisions
Adj. EBITDA
Revenue
FCFE2
Cash CAPEX1
Continuous EBITDA annual growth until 2022
11-13% until 2021,down to 10% after rollout
High cash conversion rate compared to European
telecoms
PLAY 2019-2022 ambition
1 Play defines Cash Capex without frequency reservation cash outlays2 Post-lease payments, excluding cash out for purchase of 3S, which we exclude from FCFE calculation as exceptional item
PLN 2,436m
PLN 848m
PLN 929m
+2.9%
FY 2019 Results
> PLN 2.4bn
~ PLN 850m
> PLN 900m
Close to +2.5%
FY 2019 Guidance (Q3’19)
Distribution to Shareholders
40-50% of FCFE ConfirmedConfirmed
PLN 2.2-2.3bn
Up to PLN 800m
PLN 670-750m
Growth below2018 result
40-50% of FCFE
FY 2019 Guidance (Q1’19)
17
FINANCIAL PERFORMANCE
Holger PüchertCFO of Play (P4 Sp. z o.o.)
17
1818
6,839
7,041
+202
+11 -11
2018 Usage revenue IC revenue Sales of goodsand other revenue
2019
Revenue increase of 2.9% driven by usage
948 990 1,020 1,012
3,969
320 333 331 342
1,327
418 436 445 446
1,745
Q1 2019 Q2 2019 Q3 2019 Q4 2019 FY 2019
Usage Interconnection Sales of goods
7,041
1,686 1,759 1,796 1,800
OPERATING REVENUE (PLNm)
+2.9% YoY
KEY REVENUE DRIVERS (PLNm)
+ 5.4% + 0.8% - 0.7%
1919
2,159
2,436
+213
+148-84
2018 Service revenueimpact
Roaming costsimpact
Other impacts 2019
31.6%
Adjusted EBITDA driven by improving service margin
576 644 645 570
2,436
Q1 2019 Q2 2019 Q3 2019 Q4 2019 FY 2019
ADJUSTED EBITDA (PLNm)
% Margin 34.6%
31.7%35.9%36.6%34.2%
34.6%
+12.8%YoY
KEY ADJ. EBITDA DRIVERS (PLNm)
% Margin
2020
Cash capex reflects network roll-out and accelerated 5G Ready upgrade
1 Excl. cash outflows in relation to frequency reservation acquisition
122211 181
23896
150126
197129
167202
200
139
123241
214
2016 2017 2018 2019
Q1 Q2 Q3 Q4
NETWORK EXPANSION REDUCES NATIONAL ROAMING
176.3 192.3
272.1
182.9
5,137
5,746
7,003
7,868
9,500
2016 2017 2018 2019 End of 2021
National Roaming Cost (PLNm) Base stations
848
751
651
486
7.9% 9.7% 11.0% 12.0% % 4G LTE PopulationCoverage
92.1%
93.4%
96.7%
98.7%
99.9%
CASH CAPEX1 (PLNm)% CAPEX/Sales
Indicative target level
NR with Polkomtel ended
in December 2019
NR with Orange and T-Mobile to be switched off by mid and end
of 2021, respectively
2121
Consolidation of 3S Group
▪ Established in 2002, built its own optical fiber
network of around 4 thousand km and the Data
Centre Cluster with 6 objects of ~2.7 thousand
sqm net floor space in total,
▪ Main business is fiber network based data
transmission and IT services based on its
own data centres in Warsaw, Katowice, Kraków
and Bytom,
▪ The company serves ca. 2.8 thousand business
clients,
▪ Acquired for cash consideration of PLN 330.5m
on 19 August 2019.
3S HIGHLIGHTS
▪ Revenue contribution of PLN 30.5m
▪ Adjusted EBITDA contribution of PLN 10.0m
▪ Cash capex increase of PLN 6.1m
▪ Fair value of acquired assets of PLN 475m,
goodwill recognized at PLN 191m
CONSOLIDATION IMPACT ON FY 2019 RESULTS
2222
PLN millions Q4 2018 Q4 2019 Change % FY 2018 FY 2019 Change %
Operating Revenue 1,807 1,800 (0.4%) 6,839 7,041 2.9%
Service revenue 1,295 1,354 4.6% 5,083 5,296 4.2%
Sales of goods and other revenue (Handsets) 512 446 (13.0%) 1,756 1,745 (0.7%)
Expenses (1,006) (936) (6.9%) (3,785) (3,612) (4.6%)
Interconnect costs (344) (340) (1.1%) (1,361) (1,342) (1.4%)
National roaming (67) (45) (33.2%) (272) (183) (32.8%)
COGS (Handsets) (430) (388) (9.8%) (1,442) (1,437) (0.3%)
Contract costs, net (Commissions) (102) (103) 0.8% (421) (405) (3.8%)
Other services costs, incl. Int' roaming and content (63) (60) (4.0%) (289) (245) (15.2%)
Contribution margin 801 864 7.8% 3,054 3,429 12.3%
G&A and other1 (259) (308) 18.7% (894) (1,023) 14.4%
EBITDA 542 556 2.6% 2,160 2,406 11.4%
EBITDA adjustments (7) 14 n/a (1) 30 n/a
Adjusted EBITDA 535 570 6.5% 2,159 2,436 12.8%
Depreciation and amortization (205) (242) 18.1% (789) (906) 14.8%
Finance income 0 6 5,862.1% 2 1 (27.3%)
Finance costs (91) (90) (0.5%) (375) (346) (7.6%)
Profit before tax 247 230 (6.9%) 998 1,155 15.7%
Income tax charge (45) (63) 41.8% (253) (288) 13.7%
Net profit 202 166 (17.7%) 745 867 16.4%
Earnings per share (PLN) 0.8 0.7 (17.8%) 2.9 3.4 16.4%
Summary of financials
1 Other operating income less other operating costs
2323
FCFE fueled by adjusted EBITDA despite higher cash capex & taxes
1 Cash capital expenditures excluding cash outflows in relation to frequency reservation acquisitions and purchase price for acquisition of 3S Group (PLN 330.5m)2 Comprising cash interest paid on loans, and other debt
FCFE (post lease payments)for FY 2019 higher by 13.8% YoYas a combination of:
▪ Increased Adjusted EBITDA
▪ Higher cash capex related to frontloading of 5G Ready network upgrades
▪ Higher cash taxes due to higher taxable income and no IPO related costs tax benefits (compared to 2018)
The measures presented are not comparable to similarly titled measures used by other companies. Free cash flow to equity (post lease payments) does not reflect all past expenses and cash outflows as well as does not reflect the future cashrequirements necessary to pay significant interest expense, income taxes, or the future cash requirements necessary to service interest or principal payments, on our debts. We encourage you to review our financial information in its entirety and notrely on a single financial measure. See in Report “Presentation of Financial Information—Non-IFRS Measures” for an explanation of certain limitations to the use of these measures
(PLN m) Q4 2018 Q4 2019Change
(%)FY 2018 FY 2019
Change (%)
Adjusted EBITDA 535 570 7% 2,159 2,436 13%
Total cash capital expenditures1 (241) (214) -11% (751) (848) 13%
Total change in net working capital and other, change in contract assets, change in contract liabilities and change in contract costs
79 (34) -143% 43 46 7%
Cash interest2 (71) (62) -13% (286) (257) -10%
Cash taxes (48) (36) -25% (153) (229) 49%
Lease payments (41) (56) 35% (197) (220) 12%
Free cash flow to equity (post lease payments) 213 169 -20% 816 929 14%
2424
Deleveraging thanks to high cash generation and adj. EBITDA growth
1 LTM Adj, EBITDA as of December 31, 2019 of PLN 2,436m; 2 LTM Adj. EBITDA as of September 30, 2019 of PLN 2,401m; LTM Adj. EBITDA as of June 30, 2019 of PLN 2,312m; 4 LTM Adj. EBITDA as of December 31, 2018 of PLN 2,159m; 5 principal plus interest; 6 including IFRS 16 impact, capitalization of leases
As of December 31, 2018
As of June 30, 2019
As of September 30, 2019
As of December 31, 2019
PLNmxLTM Adj.
EBITDA4 PLNmxLTM Adj.
EBITDA3 PLNmxLTM Adj.
EBITDA2 PLNmxLTM Adj.
EBITDA1
Senior term loan5 6,052 2.80x 5,880 2.54x 5,772 2.40x 5,155 2.12x
Notes - - - - - - 751 0.31x
Other debt 30 0.01x 31 0.01x 63 0.03x 27 0.01x
- Cash and cash equivalents
(354) (0.16x) (127) (0.05x) (46) (0.02x) (294) (0.12x)
Total net financial debt 5,728 2.65x 5,784 2.50x 5,789 2.41x 5,639 2.31x
Leases6 985 0.46x 993 0.43x 1,011 0.42x 992 0.41x
Total net debt 6,713 3.11x 6,777 2.93x 6,800 2.83x 6,631 2.72x
3.11
2.962.93
2.83
2.72
2.65
2.51 2.50
2.41
2.31
December 2018 March 2019 June 2019 September 2019 December 2019
Total net debt / LTM Adj. EBITDA Total net financial debt / LTM Adj. EBITDA
Further deleveraging despite network rollout and acquisition of 3S group
25
CONCLUSIONS
Jean-Marc HarionCEO of Play (P4 Sp. z o.o.)
25
26
PLAY to establish „TowerCo”,a dedicated subsidiary to host existing and
future passive network infrastructure
Fixed broadband Friendly User Trial based on agreement with Vectra just started
Commercial launch in H1 with addressable target footprint of ca. 3.7m households
Our operating and forward-looking targets for 2020
TOWERCO
1st 5G IN POLAND
PLAY 1st to launch 5G commercially in Poland(16 cities in Q1)
Play will mix 5G Ready, 5G Legacy (2.1 GHz)and 5G (C-Band) to serve its customers
FIXED BROADBAND
Thanks to 5G Ready footprint we canupgrade to 5G at minimal cost
at the pace of handset penetration
Ready to purchase one block of 80MHz during the forthcoming 3.48-3.80 GHz (C-Band) tender
THOUGHTFUL CAPEX SPENDING
27
FY 2020 Guidance
Adj. EBITDA
Revenue growth
FCFE2
Cash CAPEX1
Continuous EBITDA annual growth until 2022
11-13% of revenue until 2021,down to 10% afterwards
High cash conversion rate compared to European telecoms
PLAY 2019-2022 ambition
1 Play defines Cash Capex without frequency reservation cash outlays2 Post-lease payments, excluding cash out for purchase of 3S, which we exclude from FCFE calculation as exceptional item
PLN 2.5-2.6 bn
PLN 850-900m
(~12% of revenue)
> PLN 800m
+ 2-3%
FY 2020 Guidance
Distribution to Shareholders
40-50% of FCFE 40-50% of FCFE
PLN 2,436m
PLN 848m
(12% of revenue)
PLN 929m
+2.9%
FY 2019 Results
Confirmed
Driven by growing Service margin, partly offset by higher opex (network, payroll)
Network capex rebalanced from radio to fiberbackhaul (3S) and core (5G), increase in
digitalisation
Impacted YoY by temporary increased cash capex (5G, digitalisation) and significantly
higher cash taxes
Comments
Intention as per 2019-2022 ambition
Usage revenue growth partly softened by softer increase in handset sales
Q&A Session
28