Business plan Accelerating growth. Milan, 13th April 2005

Transcription

1 Business plan Accelerating growth Milan, 13th April 2005

2 Refocusing to accelerate growth Announcement of strategic plan based on 3 key pillars Achievements Tiscali today Growth in ADSL Focus on 5 core countries: FR, DE, IT, NL, UK Selective unbundling 1.65 ml ADSL customers, doubled from 2004 Sold 7 countries for over EUR 120 ml ULL network phase 1 completed in NL, IT, FR. 330K ULL customers Focus on 4 core markets, following the disposal of Tiscali France Czech Republic, market with high growth potential. Spain and TiNet to be sold. Further geographic concentration enhances the ability to accelerate growth February 2004 December 2004 April 2005 Tiscali has successfully implemented the announced plan, and now has decided to further focus its resources to benefit fully of rapid growth in selected countries 2

3 Sale of Liberty Surf to Telecom Italia Agreement with Telecom Italia for the sale of 95.5% stake, subject only to French antitrust approval which is expected in 6/8 weeks Proceeds of EUR 266 million (95.5% stake) of which 90% will be cashed in at closing, based on a 100% valuation of EUR 280 million, which takes into account EUR 28 million of cash resources in LS FY04 revenues were EUR million, EBITDA close to breakeven. Over 1 million active users Telecom Italia will launch a tender offer on remaining 5% ca still floated at Euronext Paris Proceeds will allow reimbursement of 2005 bonds and financing of further growth in key countries, which will create grater value 3

4 A growing market and a prevailing technology: ADSL Consumer Internet subscribers Western Europe Western Europe's Residential BB Technology ml Source: Gartner Dataquest Dial up Broadband ml ml ADSL Cable Other Source: Forrester Research Inc. Business BB Ports in Service Western Europe Broadband penetration Growth ml ADSL Cable Other Source: Gartner Inc. 60% 50% 40% 30% 20% 10% 0% 4% 17% 17% 31% 19% 41% 43% 57% Czech Rep. Germany Italy The Netherlands Source: Forrester Research Inc. Penetration HHs 2004 Penetration HHs % UK 43% 4

5 Market positioning based on Network infrastructure Tiscali Incumbents Corporation Carriers B2B Large & International Medium & SME SOHO Incumbents High end OLO s B2C Low end Cable operators Access Voice Portal VISP NB - BB (CPS VoB) 5

6 AS Level Internet Graph 6

7 Double / Triple Play Strategy Selective unbundling Focused unbundling in key countries, already implemented in The Netherlands and Italy Further investments to increase network coverage to over 50% in Italy, and to extend current coverage in The Netherlands (60%) to over 80%. Start selective unbundling in UK Tiscali has chosen ADSL2 Plus technology (allows to deliver 24Mbps) Bandwidth < 2Mbps 2 to 4Mbps > 6Mbps Triple Play Infrastructure and platform in place Following profitable market proposition Up-selling services packages VoIP services- Double play Tiscali has successfully launched VoIP services in the Netherlands and in Germany Italy and UK following in 2005 ARPU increase, not dilutive on Gross Margin Broadband access- Single play Increase in profitability through migration on ULL networks Competitive price/quality of services 7

8 Tiscali B2C Strategy 2 phase Content VoD TV Total ownership 1 phase CPS Voice Content Download VoIP PC Cross selling Tiscali MovieClub DSL Surf&Phone NB Access BB Access Gross margin 8

9 Tiscali B2B Leverage on access infrastructure networks (xdsl and Dial-up) and national/international IP networks as well as services platforms Access-driven product portfolio B2B Corporation Large & International Medium & SME SOHO IP VPNs Solutions Remote access & Security services Access pack. VAS bundles VoIP bundled with VPNs Wholesale access Support back-office and platforms B2C High end Leverage B2C expertise Low end Access Voice NB - BB (CPS VoIP) VISP 9

10 Tiscali portal Strong brand awareness One of the leading web properties in Europe Main tool to acquire access customers Services Objective Focus on Value Added Services as substantial revenue source with value added services as the main driver Plan Launch of Tiscali Plus a new Services platform focusing on ease of use and tight integration with all Tiscali services Migration of existing transaction based services (fax, sms, phone) on new platform First service to be launched in Q205 Introduction of new revolutionary antispam product Revenue model Subscription-based services with incremental revenues from transactions, >40% gross margin, depending on service Content BROADBAND Objective Enhance access and portal offer with broadband video and music contents, creating stickiness for users Plan Complete roll-out of Tiscali video-on-demand platform, focusing on events and movie content Revenue model Mixed (pay-per-use and subscription), price differentiation between Tiscali and non-tiscali customers NARROWBAND Objective Continuous improvement of content offer to expand reach and create platform for brand advertising 10

11 Tiscali Plus Information about user and last logon Access to Help, Settings and Learning Centre Direct launch of specific online services Instant status on key elements such as mails in Inbox Direct launch of transactional based services like SMS and FAX Tiscali.Plus is a complete online communication tool providing a Care Free way of communicating and sharing files and photo s with friends and family. Opportunity to promote additional services like add-ons 11

12 Plan

13 Business plan: Accelerating growth 15% 14% 14% 14% ml % 12% 11% 10% 9% 8% 8% 12% 10% 11% % 15 6% 10 5% BB Market Lines Tiscali Market Share Tiscali Share of Gross Adds 5 Source: Quintel Study, Tiscali analysis The new business plan is aimed at strengthening the competitive position in Germany, Italy, Netherlands and UK with a differentiated approach in each market The new plan includes additional investments in marketing and network infrastructure to accelerate profitable growth in , when a clear market opportunity is available. 13

14 Key financial targets Revenues GM OPEX EBITDA Net income CAPEX NCF +30% 3-year CAGR due to growth in broadband access and services to residential and business customers From 47%* of revenues in 2004 to 50% in 2007 due to change product mix and introduction of paid services From 37%* of revenues in 2004 to 26% in Increase in marketing expense in 2005 vs 2004 to push growth. Marketing expenses over EUR 450 million in the 3 years EBITDA: +70% 3-year CAGR, due to sale of high margin services and migration of ADSL customers to own network infrastructure Positive in 2005, including capital gains from disposals Over EUR 300 million cumulated Capex from , from 13% of revenues in 2005 to 6% of revenues in cash flow expected to be negative for acceleration of growth in 4 top countries. FY positive FCF in 2006 * Pro-forma figures 14

15 Revenue and EBITDA Growth Revenue Growth ml 1,600 1, Y CAGR 23% ca 657 >800 >1,100 >1,400 >1,600 >1,800 Projected growth of revenues and EBITDA: approach is differentiated in the 4 core markets, the goal is to maximize value creation proforma 2005e 2006e 2007e 2008e 2009e EBITDA Growth ml 11% 5Y CAGR 50% 13% ca 70 >100 18% >190 24% >330 28% >450 30% >540 35% 30% 25% 20% 15% 10% 5% Estimated growth figures % 2004 proforma 2005e 2006e 2007e 2008e 2009e 15

16 Broadband targets Growth of Broadband customers Growth of Broadband customers: By Technology 5,000 4,000 3,000 2, s 3Y CAGR 75% > 1,900 > 2,900 > 3, % 80% 60% 40% 1,000 20% e 2006e 2007e 0% 2005e 2006e 2007e ULL Bitstream Wholesale Targets are residential broadband customers and SMEs Accelerated market penetration through marketing and investments in ULL 16

17 Outlook by market 50% Netherlands EBITDA Margin % 40% Netherlands 30% UK Germ any Italy 20% Italy 10% Germ any UK 0% 0% 10% 20% 30% 40% 50% Bubble Size is the Relative Turnover Capex+ S&M/Sales ratio %

18 Net operating cash flow ML ML 2005e 2006e 2007e EBITDA ML Capex, WC Interests NOCF EBITDA Capex, WC Interests NOCF EBITDA Capex, WC Interests NOCF Investments in to seize growing market opportunity Interest expense decreases due to debt reimbursement Strong cash flow generation from 2007 onwards 18

19 A sustainable financial structure Pro-forma without France Gross Debt (563.8) (313.8) Financial resources Net Debt Net Equity (359.6) (123.6) Gross Debt/Equity Net Debt/Equity Significant decrease in D/E ratio, following the sale of Tiscali France, creates a sustainable financial structure New medium term debt financing of approximately 100 million EUR targeted to pay back the cash component of 2006 Equity-Linked bond and to achieve a balanced capital structure 19

20 Disclaimer This presentation contains un-audited and/or proforma financial data; it also includes forward-looking information that is subject to risks and uncertainties associated with Tiscali and the Internet sector. This information reflects Tiscali s management expectations, based on currently available information. The forwardlooking information reflects certain assumed market parameters and other assumptions, but may differ materially from actual future results. This presentation does not constitute an offer of Tiscali shares. Not for release, publication or distribution, in whole or in part, in or into United States, Canada, Australia or Japan. 20