WIND Financial Results

Transcription

1 WIND 2005 Financial Results March 31,

2 The following presentation is provided to you (each referred to hereafter as a Recipient ) for information purposes only and should not be relied upon by the Recipients and no liability, responsibility, or warranty of any kind is expressed, assumed or implied by Wind for the accuracy, inaccuracy, interpretation, misinterpretation, application, misapplication, use or misuse of any statement, claim, purported fact or financial amount, prediction or expectation (together referred to as Information ) and does not constitute an offer to sell shares or other securities or the solicitation of an offer to buy shares or other securities, nor shall there be any offer or sale of shares or other securities in any jurisdiction in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. In addition, we also draw each Recipients attention to the fact that this presentation contains forward-looking statements regarding Wind and its future business. Such statements are not historical facts and may include opinions and expectations about management s confidence and strategies as well as details of management s expectations of new and existing programs, technology and market conditions. Although Wind believes its opinions and expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, not all of which will be exhaustively explored in this presentation or elsewhere. Accordingly, the Recipients should not regard such statements as representations as to whether such anticipated events will occur nor that expected objectives will be achieved. The Recipients are reminded that all forward-looking statements in this presentation are made so on the date hereof and for the avoidance of doubt Wind does not undertake to update any such statement made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For the avoidance of doubt, Wind does not accept any liability in respect of any such forward-looking statements. The breakdown between fixed and mobile segment has been obtained through an estimated allocation of shared costs, and does not arise from a cost accounting system. This breakdown may not be used for the purpose of determining two separate cash generating units/segments. During the acquisition process, 2

3 Wind in Growing to the next level Strong operational and financial performance Stable Total Revenues over previous year, +3.1% organic revenues growth (excl. Turnover contribution) Service revenues up 4.1% with acceleration of growth in H2 2005, notwithstanding termination rate cuts Strong adjusted EBITDA growth +18% with margin as a % of revenues (net of TOC) increasing from 28.1% to 32.2% Strong growth in mobile revenues and customer base Continued growth in both direct voice (+40%) and broadband subscribers (+77%) with stable ARPUs Libero, leading Italian internet portal with over 21 million registered users Capex efficiencies due to economies of scale and scope with Orascom Strong Ownership and new organisation Acquisition by Weather Investments and synergies with Orascom Telecom New top management with proven track record 3

4 Management team Chairman Mr Naguib Sawiris Chief Executive Officer Mr Paolo Dal Pino Chief Financial Officer Mr Luigi Gubitosi Chief Operating Officer Mr Jere Calmes Head of Mobile Business Unit Mr Fabrizio Bona Head of Fixed & Portal Business Unit Mr Khaled Bichara 4

5 New Group Structure Weather Investments II S.àr.l. Other Equity Investors 26.1% 71.1% Weather Investments S.p.A. 100% Wind Acquisition Holdings Finance S.p.A. 100% Wind Acquisition Finance S.p.A. 100% 2.8% 50% + 1 share Commercial Brands 5

6 Mobile performance 6

7 Mobile Growing CB and Usage Subscribers/market share Mobile EBITDA margin (m) 4,3% 15,5% 16,4% 17,0% 18,5% 11,6% 11,6 7,9 8,7 9,6 4,8 19,1% 13,7 21,2% 39,0% 42,9% 1,3 3,5 5, Noi Market share ARPU i-mode subscribers growth 22,5 21,3 18,6 19,0 19,1 18,6 2,4 2,3 2,4 2,5 19,7 18,8 2,5 2,4 Data (000's) 113% CAGR ,1 16,7 16,7 16,1 17,2 16,4 Voice (1) (1) Q1 05 Q2 05 Q3 05 Q4 05 Und. Q ,2 Underlying Voice ARPU for Q4 05 (net of termination rate cuts from September 1, 2005) Q1 05 Q2 05 Q3 05 Q4 05 (1) Adjusted for reclassification of wholesale revenues Note: All revenues (Tlc) and EBITDA adjusted for turnover contribution 7

8 Mobile On-net strategy success On-net strategy Noi Customer Base growth Push tariffs promoting on-net traffic to create community effect (000 s) Wind SIM to become primary SIM Parallel promotion of i-mode and VAS add-on packages % of total customers Tangible benefits Noi option suite further enhanced Launch 0 Feb 04 Jun 04 Dec 04 Jun 05 Dec 05 Average Minutes of Use A strong proposition for the customers that keeps acquisition costs low 80,6 87,6 109,2 121,6 Increase in incoming traffic and recurring revenues from monthly fees Higher margins coupled with higher usage

9 Fixed-line performance 9

10 Fixed Voice growth fuelled by ULL (000s) Voice subscribers Q1 05 Q2 05 Q3 05 FY 05 Direct CS CPS Key results Strong increase in direct customer base Stabilization of CPS customer base and decrease in CS customer base 488 active ULL sites covering 27% of total population Increased importance of direct customers Increased usage and ARPU through segmented bundled offers at competitive prices Fixed-internet bundles tie-in customer with a strong proposition More focus on higher margin customers Fixed line ARPU Voice Market Share 05 * ( ) 39,6 36,3 37,9 37,6 37,4 38,1 31,7 8,5 9,9 9,7 10,0 11,1 10,2 6,7 25,0 27,8 28,0 27,9 27,4 28,5 27,9 TI Wind Fastw eb Albacom Tele2 Other 9% 3% 3%5% 2% 78% Q1 05 Q2 05 Q3 05 Q Voice Data Note: All revenues and EBITDA adjusted for turnover contribution * Share of mkt value Source: IDC, January 06 10

11 Fixed Internet driven by BB and Portal Broadband subscribers 107% CAGR (000s) Q1 05 Q2 05 Q3 05 Q4 05 Broadband ARPU ( ) 41,2 23,4 20,1 17,8 18,4 19,2 Key results Impressive broadband growth driven by best price-performance proposition i.e. launch of 12 Mbit broadband service Significant improvement in broadband penetration and ULL access Success of fixed-internet-mobile bundles i.e. TuttoIncluso Decrease in narrowband customers No.1 Italian internet portal, Libero, with over 21 million registered users, a unique sales channel to migrate NB to BB xdsl access Mkt share 05 Other Tiscali Fastweb Wind T.I. 4,6% 5,5% 5,1% 4,6% 6,3% 6,8% 7,5% 10,3% 76,5% 72,8% Q1 05 Q2 05 Q3 05 Q Source: IDC, January 06 11

12 Regulatory Update 12

13 Regulation - Termination rates reduction Mobile to Mobile ( cent/min) 18,75 18,75 18,08 18,08 12,10 14,95 12,90 11,20 11,09 9,97 9,54 8, Jul 06 Jul 07 (1) Jul 08 (1) TIM, Vodafone Wind Status In January 2006, AGCOM confirmed the asymmetric treatment of operators in the mobile termination market at least until 2009 Pressure on revenues but minimal margin impact in 2006 and 2007 Significant improvement over previous draft proposal which indicated abolishment of asymmetry by 2007, with termination rates of 8.7 cent Decision on regulation of H3G mobile termination rates due in July 2006 (1) Wind forecasts, based on formula stipulated by AGCOM regulations 13

14 Wind Financial Review 14

15 Strong revenue growth Adjusted Revenues Mobile revenues (1) ( mln) % ( mln) % Fixed revenues (1) ( mln) 1,784 1,708 1, , Fixed Tellas (net of I/C) (1) TLC service revenues (CPE and Other revenues not included) 15

16 Strong Q4 05 Performance Revenues Adjusted EBITDA ( mln) 4.5% ( mln) 14.2% Q4 04 Q4 05 Q4 04 Q

17 Optimizing operating leverage Operating cost improvements ( mln) 88,0% 80,1% 74,4% 68,0% 3,450 3, , , Cost of services Lease and rental costs (1) Personnel COGS (2) Other % of adjusted revenues Trends Cost of services falling due to higher proportion of direct customers and reduction in termination rates Lease and rental costs slightly up driven by increased number of direct customers and hence higher local access costs paid to T.I. Reduction in outsourcing services costs (e.g. call center, billing, collection) Reduction in personnel costs with increase in salaries for contract renewal more than offset by reduction in headcount (1) Net of capitalized costs (2) Primarily allowance for doubtful accounts, turnover contribution provision and risk provisions 17

18 Consistent EBITDA growth Adjusted EBITDA/margins 32,2% ( mln) 28,1% 21,2% Mobile EBITDA / Margin 21,2% 39,0% ,9% Turnover Contr Fixed EBITDA / Margin (incl. Tellas) Tellas EBITDA 13,4% ,9% 16,0% Turnover Contr EBITDA split from Management View; Margins net of Turnover Contribution 18

19 Capital expenditure Capex Adjusted EBITDA Capex ( mln) 19,7% 20,5% ( mln) 343 (1) ,5% (1) Capex by nature ( mln) 872* ,2-10.7% Tellas Fixed 779 8,6 117,4 254,3 Common 230,2 464,9 423 Mobile % of adjusted revenues (1) Excluding capitalized financing transaction costs * 2004 Normalized Capex excluding Enel.net Capex accrued before purchase of the company by Wind 19

20 Capitalisation (Wind Acquisition Finance S.p.A.) ( mln) Pro forma as of June 30, 2005 As of December 31, 2005 Pro-forma for Second Closing and HY Tap Cash and Equivalents (28) (90) (90) Pro-forma FY 2005 Adj EBITDA (0.1x) UMTS Debt 217 FS Debt 233 Tellas & Other Net Debt Senior Debt 5,671* 5,764 5, x Total Senior Debt 6,145 5,726 5, x Second Lien x Total Senior + Second Lien 6,845 6,426 6, x Senior Notes 1,250 1,253 1, x WAF Net Cash (3) (3) (3) Net Debt 8,092 7,677 7, x 2005 adjusted EBITDA 1,502 mln *A1 fully drawn except 328 mln (Second Closing) 20

21 Debt Maturity Profile* mln Senior Second Lien High Yield Notes Tellas Approximately 70% of Senior Credit Facility and Second Lien are fixed at an average rate of 5.82% The remaining portion of the Senior Facility is at a floating rate with average margin of 3.14% The High Yield Bonds are at 9¾ for the 950 mln tranche and 10¾ for the US$650 mln tranche (avg. rate at 9.52%) *Adjusted for Second closing and High Yield tap issue in Feb 06 21

22 Guidance 2006 Initiatives 2006 guidance Grow mobile customer base further through on-net and data services Noi Italy i-mode Complete roll-out of UMTS network in line with license requirements and commercial demand Launch Video over DSL offering Launch VoIP services Expand ULL footprint to over 40% of homes reached by year end Mid to high single digit TLC revenue growth Adjusted EBITDA growth in 8% to 10% range 2006 Capex around 800 mln and further capital expenditure unit cost reduction Positive cash flow generation Undrawn 400m RCF Continue growth in mobile business Evidence of fixed business turnaround Immediate 220 mln pre-payment of Senior Debt 22