Iliad 2004 Results Announcement

Transcription

1 Iliad 2004 Results Announcement

2 2004 Key Events Financial performance Profitable growth stronger in Revenues up 68% 2004 EBITDA up 103% 2004 Net income up 21% Operating performance ADSL subscribers growth stronger than announced 1 million subscribers reached in December 2004 instead of June 2005 Freebox technology unmatched Canal + broadcast agreement signed 2

3 Pursuing Growth and Profitability In 000 FY 2003 FY 2004 Var. Revenues 293, , % EBITDA 53, , % EBIT 34,967 53, % Income before Tax 33,830 60, % Net Income 33,875 40, % 3

4 Internet Sector

5 Freebox: The Only Integrated Triple-Play Offer in France 747,700 Freebox Users 600,000 Phone Users 75,000 Subscriptions (Canal+, CanalSat and Paying Channels) /month Dec Dec Number of Freebox installed 100, ,700 % of Total ADSL Subscribers 21% 70% Total ADSL Subscribers 485,000 1,064,000 5

6 Free: Broadband Innovation for the French Residential Market Introduction of ADSL 2+ Launch of 1 st ADSL 2+ platform during 3 rd quarter Mbps bandwidth ADSL 2+ transitioning 100% of DSLAMs by end % of Freebox since September 2004 Launch of Canal + and Canalsatelitte Broadcast Integration of best TV premium package available Testimony to Freebox / DSLAMs security and anti-piracy features Proof of Freebox TV service quality HDTV Live test with France Télévisions in November

7 Focus on ADSL 2+ Technology ADSL2+ Doubles the Maximum Data Rate ADSL 2+ ADSL Loop Length (KMS) 16% 23% 20% 15% 4% 10% 7% 5% Free Subscribers Distribution 7

8 Focus on Canal + Partnership and HDTV Broadcasting Canal + / CanalSat : A Balanced Partnership HDTV on ADSL 2+ Subscription ADSL2+ Network ADSL2+ Network Canal + CanalSat HDTV 1 Box 1 Remote Control 2 Contracts / 2 Bills 8

9 Free: Delivering Reliable Subscriber Growth Management is focused on delivering absolute growth and a target market share of 17 to 20% by was 2 nd of 3 critical years in market share grab Churn remained low throughout the year 150, , , ,000 1Q Q Q Q

10 Free: Leading Alternative ADSL Operator in a Fast Growing Market In subscribers million 6.1 Telecom Italia Club-Internet Cegetel Tele2 Tiscali % 1.4 7% 54% 73% 17% 47% 9Telecom AOL Free Wanadoo Dec Dec Dec Source: France Télécom (Excl. TurboDSL), Companies 10

11 Competition: Free s Single Offer as a Marketing Strategy /512K /8Mbs + Voice /512K VOICE over Freebox TV over Freebox 20Mbps ADSL2+ CANAL+ on Freebox /512K /1MB Dec Jun Dec Jun Dec

12 March 2005: ADSL Market Overview The best premium offers in unbundled areas: Monthly Line Rental None Monthly Charge Bandwidth 20 Mbps 8 Mbps 5 Mbps 8 Mbps 8 Mbps Telephony offer Free unlimited local and National calls Free unlimited Local and National Calls Not available Free unlimited Local and National Calls Free unlimited Local and National Calls TV Offer 90 Free TV channels No TV No TV 40 Free TV channels No TV CPE Available at no cost 3.00 per month per month Total Monthly Cost Triple Play Dual Play Internet Only Triple Play Dual Play Source: Websites, companies, excluding temporary promotional offers 12

13 March 2005: ADSL Market Overview The cheapest offers in unbundled areas: Monthly Line Rental None Monthly Charge Bandwidth 20Mbps 512 Kbps 1 Mbps 8 Mbps 8 Mbps Telephony offer Free Local and National Calls Not available Not available Not available Not available TV Offer 90 Free TV Channels Not available Not available Not available Not available CPE Available at no cost per month Total Monthly Cost Triple Play Internet Only Internet Only Internet Only Internet Only Source: Websites, companies, excluding temporary promotional offers 13

14 Free: Efficient Marketing Strategy Free s offer attractivity remained the strongest in , Wanadoo Neuf Cegetel AOL Tele2 Free Source: Secodip, TNS Sofres Gross Marketing Expenses ( millions) Net adds 14

15 Network Extension: Reaching Further Fibre-optic network build out A total of 17,000 kms / 10,000 kms added in 2004 Central Office reach expanded from 162 to 410 COs in 2004 Additional 150 COs to be connected by summer 2005 (to 560) A clear extension path until end new COs Fiber IRUs signed with 24 local authorities 45,000 subscribers to be unbundled, based on December 31,

16 Unbundling as a Core Strategy 1,064,000 Number of FT Sites Connected (Number of Subscribers) 99, % 33.6% 163, % 485, , ,300 Dec Dec Dec Dec Dec Dec

17 Telephony Sector

18 OneTel: Accelerating Subscribers Growth in 2004 Increased marketing budget fuelled subscribers' acquisition 335, ,000 Dec Dec Focus on improving billing (Direct Debit) and decreasing unpaid ratio 2005 should be a year of consolidation 18

19 Kertel: Clear Contribution to the Group Constant increase of prepaid cards sales H1 03 H2 03 H1 04 H2 04 First Used Cards La Poste partnership stronger in 2004: Kertel cards available in 100% post offices since H

20 Financials

21 Delivering Growth and Profitability In 000 FY 2003 FY 2004 Var. Revenues 293, , % EBITDA 53, , % EBITDA Margin 18.3% 22.1% - EBIT 34,967 53, % Income before Tax 33,830 60, % Net Income 33,875 40, % 21

22 Internet Sector Accounting for Growing Part of Revenues and Margin In million REVENUES EBITDA Internet Sector Telephony Sector Other 22

23 Group EBITDA Margin Improvement In million EBITDA 18.3% 22.1% EBITDA growing by 102.6% year-on-year Positive impact from Internet sector and growing unbundled customers ratio Margin pressure from telephony and other sector

24 Internet Sector: Iliad s Growth Engine A stable pricing structure in ADSL ensures revenue growth in line with subscriber growth In million Access Revenues Hosting and Advertising Intersegment and other Access revenues up 82% at million Of which 70% ADSL linked Of which 13.5 million from Freebox TV and Voice services 24

25 Internet Sector: EBITDA and EBIT Margin Improvement In million EBITDA EBIT 24.9% 8.5% 16.0% 6.4% X X % of revenues excluding intersegment 25

26 Internet Sector: 2004 Financial/Accounting Changes DSLAM depreciation period shortened to 3 years Universal Service charge based on 0.43% of telecom revenues Net impact on 2004 EBITDA: 1.4 million Application of 5.5% reduced VAT rate on audiovisual revenues 56% of unbundled subscribers revenues (equipped with freebox) Paying channels and options 26

27 Telephony: Strong Revenue Growth, EBITDA Commitment Kept REVENUES EBITDA % 16.2% Fixed Telephony and Prepaid Cards Other 27

28 From EBITDA to Net Income In Var. EBITDA 53, , % EBIT 34,967 53, % Income before Tax 33,830 60, % Net Income 33,875 40, % Tripling of depreciation charges due to heavy network and customer equipment investments since 2003 Positive financial results from /USD rate improvement and IPO proceeds investment Extraordinary income from: Sale of building: 1.6 million Agreement with Siris: 2.6 million Positive resolution of provisioned FT/Onetel litigation: 1.2 million 28

29 Significant CapEx in 2004 Peak CapEx year in 2004: 1 million subscribers reached earlier than anticipated Significant part of CapEx linked to FT cabling fees due to migration from Option 5 to Option 1 FT cabling fees reduced from 78.7 to 50 (full ULL) or 55 (partial ULL) from Feb Freebox-for-all strategy Transition to ADSL 2+ 29

30 Cash Flow: Proceeds from the IPO Accelerated Growth In million Operating Cash flow WCR Variation IPO Net debt increase Dividends CAPEX Cash Increase 30

31 Significant CapEx in 2004 Operating cash flow cover growth CapEx, not network NETWORK CapEx GROWTH CapEx OPERATING CASH FLOW Fiber + IRUs FT Rooms Trans. Eq. Total Freebox + DSLAMS FT Cabling Frees Total OPCF 31

32 A Strong Balance Sheet Structure for the Industry Assets Fixed assets Other current assets Cash and equivalents Liabilities Total shareholders equity Provisions Borrowings Other Liabilities (incl. Accounts Payables)* Total Dec * Including intangible and tangible assets suppliers 32

33 Outlook

34 2005 Outlook Internet ARPU: Reach 1.5 million subscribers by end 2005 Expand fiber optic network to reach 1,000 FT sites Free cash-flow break-even during 2005 Propose final 2004 dividend of 11.5 cents at the annual shareholder meeting 34