Empresa Nacional De Telecomunicaciones S.a. · BCS:ENTEL
Empresa Nacional De Telecomunicaciones — Investor Presentation (November 2023)
51 slides from Empresa Nacional De Telecomunicaciones's investor presentation, November 2023
Slide 1: Corporate Presentation
Empresa Nacional de Telecomunicaciones S.A Corporate Presentation November 2023 Contacts: Paula Raventós, Investor Relations Officer Santiago Uauy, Investor Relations Analyst ir@entel.cl
Slide 2: Table of Contents
Table of Contents 1. Entel Overview 2. Leader Telco in Chile 3. Growing in Peru 2
Slide 3: Empresa Nacional de Telecomunicaciones
Empresa Nacional de Telecomunicaciones Entel is a leading technology and telecommunications company founded in 1964 with operations in Chile and Peru. Within an Investment grade rating by international rating agencies and listed on the Santiago Stock Exchange, it’s shares are part of IPSA index, wit
Slide 4: Our executive team
Our executive team Antonio Buchi CEO José Luis Poch Julián San Martín Marcelo Bermúdez Mario Nuñez Roberto Thompson Sebastián Dominguez VP for B2C VP for Digital CFO VP for B2B VP for Human Resources VP for Technology & Businesses Operations Francisca Florenzano Manuel Araya Oscar Zahri Alexis Licci
Slide 5: Building a resilient shareholder base
Building a resilient shareholder base Entel shareholder's structure Stock performance % Others 12.5% 14.3% 12.0% 11.5% Foreign Investor 13.0% 11.0% Altel(1) 54.9% As of September 10.5% 2023 17.8% 10.0% Pension Funds 9.5% Entel IPSA 9.0% Jan - 23 Nov - 23 With a market capitalization of USD$1.0 billi
Slide 6: More than 20 million mobile users and 600K RGU
More than 20 million mobile users and 600K RGU Mobile users (Th.) +17.5% 48% of total mobile users CAGR 20,062 20,477 20,358 12% of total RGU 17,326 18,185 9,128 8,955 8,642 Prepaid -1% 8,663 8,934 10,933 11,522 11,716 Postpaid 8,392 9,522 +10% 1Q20 4Q20 4Q21 4Q22 3Q23 RGU (Th.) -30.7% 880 CAGR 85 8
Slide 7: Good positioning in spectrum in both countries
Good positioning in spectrum in both countries Spectrum Share(1) Spectrum Share(2) % % Op.3 Op. 3 Entel Chile Entel Peru spectrum holding 25,1% spectrum holding 27,6% 28,2% 700 30 MHz 700 30 MHz 32,8% 900 10 MHz 1700 40 MHz 1900 60 MHz 1900 35 MHz 2600 40 MHz 2300 30 MHz 8,0% 35001 100 MHz 2500 40 M
Slide 8: Entel purpose and key objectives
Entel purpose and key objectives We exist to bring closer the infinite possibilities of technology, and thus, responsibly transform society Grow Peru's mobile Technological and Maintain leadership Grow in home Take Digital business to achieve quality leadership in in Mobile Business business in a mu
Slide 9: Long trend of sustained leadership in Chilean mobile market
Long trend of sustained leadership in Chilean mobile market… a matter of great satisfaction Mobile service revenue share in Chile (1) (%; anual share from 2016-2022 and last available Q) Entel Op. 2 Op. 3 Op.4 Several waves of competition have gone through, including the irruption of 41.5 a very agg
Slide 10: Market leadership is not only about pride, it's about better profitability
Market leadership is not only about pride, it´s about better profitability It allows sustained financial outperformance in the mobile business Mobile [EBITDA – CAPEX] mg GAP leader v/s rest of the industry 2022 (x axis country, y axis GAP in pp, N = 39 countries) Leaders’ average mobile [EBITDA – CA
Slide 11: Healthy cash margins in Chile over time
This has enabled Entel in Chile to deliver healthy cash margins over time, under a wide variety of scenarios Entel Chile’s EBITDA after leases and (EBITDA after leases – CAPEX) organic margin without home business and DC (%) EBITDAL Mg (EBITDAL-CAPEX) Mg Average EBITDAL-CAPEX Without tower leasing 3
Slide 12: Leadership is about loyalty, built upon superior service experience
Leadership is about loyalty, built upon superior service experience It enables us to build a premium in customer loyalty, a key success factor Postpaid port out rate Entel v/s rest of industry in Chile (1) B2C Entel port-out self declared reasons in Chile (2) (2023 monthly average as of September) H
Slide 13: Consistent leadership in quality and coverage of our mobile network
Consistent leadership in quality and coverage of our mobile network Mobile network experience in Chile - Far more complex than download speed Effective geographical mobile network coverage in Chile (No. of dimensions gained over total measured dimensions) Metropolitan Other Total region regions Over
Slide 14: Leadership is also reflected in other key business indicators
Leadership is also reflected in other key business indicators Mobile service blended ARPU in Chile (1) (CLP) Entel Op. 2 Op. 3 Op.4 ARPU leadership based in brand, quality 7,472 and revenue management 7,080 6,956 6,844 Further erosion in ARPU is always 6,325 feasible in this industry, however Chile’
Slide 15: Capturing some growth opportunities
Maintaining the lead in chilean mobile business is key… but we also want to capture some growth opportunities 15
Slide 16: Growth opportunity in FTTH through nationwide footprint
Growth opportunity in FTTH through accelerated and efficient access to nationwide footprint Low internet household penetration in Chile and Peru (70% and 33% in 2022) opens growth opportunity (Average OECD 87%) Both markets with one or two dominant players Window of opportunity due to technological
Slide 17: FTTx strategic approach to be successful and profitable
FTTx strategic approach to be successful and profitable Capitalizing on our strong brand position, distribution channels and know how for home internet services Key to protect our profitable mobile service business, under a market scenario of integrated competitors Financial success requires partner
Slide 18: Strategic agreements to enhance FTTx business in Chile and Peru
Strategic agreements to enhance FTTx business in Chile and Peru FTTx coverage 2022 FTTx coverage 2024E1 154 K 1.2 Mn +2 Mn 4.3 Mn Home passed Home passed Home passed and Home passed with own rollout with own rollout +5.2 Mn in 2026E 1. Subject to the approval of the corresponding entities 18
Slide 19: In Entel Peru, we aim to grow in revenue share
In Entel Peru, we aim to grow in revenue share, in order to achieve scale in our mobile business We entered in the peruvian market in 2014 with the goal of expanding our business into a growing market, dominated by two players Our strong value proposition in terms of brand and overall experience has
Slide 20: Successful revenue share growth story in Peru
Successful revenue share growth story, not without difficulties along the way now becoming the second largest operator in the mobile industry in Peru Mobile service revenue share (%; annual share from 2014-2022 and last available Q) Entel Op. 2 Op. 3 Op.4 39.0 38.6 36.5 36.6 37.2 39.9 38.7 37.7 38.6
Slide 21: Progressively improving customer loyalty, key success factor
Progressively improving customer loyalty, key success factor Average mobile postpaid port out rate in Peru (%) Market leader in Peru does not show Entel Op. 2 Op. 3 Op.4 such a strong GAP with competitors as Entel does in Chile. 2.5 Historically, we consistently found 2.3 ourselves trailing behind t
Slide 22: Focus to a reachable scale with additional +3 pp of revenue share
Focus to a fairly reachable scale with additional +3 pp of revenue share Challenging but feaseble objective, that would lead us to better profitability EBITDA margin according to revenue share of 2nd best operator Scale challenge (%) Entel Peru´s 2025-2027 target Expanding the brand Mg EBITDA In ord
Slide 23: Capture B2B digital opportunities: Entel Digital
Capture B2B digital opportunities where telco´s have a right to play Entel Digital We strategically divest from datacenter infrastructure, to focus on new growing digital services (cybersecurity, video analytics solutions, hybrid-cloud services, wide range of IoT solutions, SAS alliances, etc) For t
Slide 24: Snapshot of Entel Financials
Snapshot of Entel Financials Results as of September 2023 Consolidated Revenues 1,848 Chile Revenue EBITDA CAPEX Billion CLP 20.3 million 1.233 402 32.6% 261 ∆ % 9M22(1) (-5.1%) Mobile lines 21.2% EBITDA of revenues Consolidated EBITDA Billion CLP Billion CLP Mg. Billion CLP 516 27.9% 10.6 million B
Slide 25: Entel Group consolidated results
Entel Group consolidated results Revenues EBITDA & EBITDA Mg (CLP $ billion) (CLP $ billion, %) Excluding EBITDA Mg 9M22 includes proceeds from data +28% centers for CLP $544 bn +66% Data center Mg. 28.4% 3,138 1,282 -54% -26% 1,110 2,460 2,495 2,147 1,848 772 684 516 44% 41% 32% 31% 28% 2020 2021 2
Slide 26: Consolidated revenue distribution as of September 2023
Consolidated revenue distribution as of September 2023 Chile Mobile 46.1% Perú Mobile 30.9% Chile Fixed 16.3% Chile Wholesale 2.8% Mobile revenues are the core business in Other Revenues 2.0% Chile and Peru. Contributing +75% of consolidated revenues. Perú Fixed 1.1% Fixed services are an important
Slide 27: Stable core revenues, yet adjacent businesses sensitive to economic conditions
Stable core revenues, yet adjacent businesses sensitive to economic conditions Consolidated Revenues (CLP Bn) Mobile Service Fixed 3,138 Handset Others Despite a heightened competition in 597 Chile and Peru, Service revenue still 2,460 2,495 growing but at a slower pace 51 2,147 510 487 585 55 1,848
Slide 28: Consistent EBITDA amidst intensified competition and rising costs
Consistent EBITDA amidst intensified competition and rising costs EBITDA Net Profit (CLP Bn, %) Other gains (CLP Bn) Organic profit (2) 1,282 Extraordinary profit 1,110 545 772 546 684 457 516 404 384 752 737 -8.4% 84 75 643 564 43 16 392 42 59 73 13 +17% 11 2020 2021 2022 9M22 9M23 2020 2021 2022 9
Slide 29: Investment plan focused on maintaining top rated network
Investment plan focused on maintaining top rated network Consolidated Capex Consolidated Ebitda - Capex (CLP $ billion) (CLP $ billion) 767 515 498 445 122 133 93 314 327 370 190 96 2020 2021 2022 LTM as 3Q23 393 365 353 Rationale of investments 274 ▪ Capex mostly driven by demand and technologies.
Slide 30: Sustaining a healthy leverage amid higher inflation and intensive CAPEX
Sustaining a healthy leverage amids higher inflation and intensive CAPEX Cash inflows positively impacted NFD and leverage ratios Net financial debt NFD/LTM EBITDA(1) (CLP $ Billion) (N° of times) Including IFRS16 1,749 EBITDA LTM no longer captures 1,598 1,649 1,592 1,528 proceeds from data center
Slide 31: Healthy debt profile and fully hedged against FX
Healthy debt profile and fully hedged against FX Debt Maturity Profile (USD $ Mn) International Bonds Bank Debt Chile 400 400 Local Bonds Bank Debt Perú 321 330 281 270 249 223 146 281 146 103 77 15 15 15 15 15 40 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 C
Slide 32: Positive and sustainable consolidated cash flow from operations
Positive and sustainable consolidated cash flow from operations In a challenging environment Consolidated Cash Flow Ch$ millions 9M23 9M22 • Lower EBITDA explained by one time cost in EBITDA 515,509 1,109,562 1Q23 and weaker handset revenue % of revenues 27.9% 44.5% • Change in Working Capital expla
Slide 33: Table of Contents
Table of Contents 1. Entel Overview 2. Leader Telco in Chile 3. Growing in Peru 34
Slide 34: Steady grow in postpaid and FTTH subscribers
Steady grow in postpaid and FTTH subscribers Mobile users (Th.) +18.6% Postpaid Market Share1 CAGR 10,166 10,421 10,657 8,986 9,300 3,483 3,484 Prepaid -2.2% 3,636 3,491 36.4% 3,772 As of 2Q23 63.6% 6,530 6,938 7,173 Postpaid 5,214 5,809 +9.5% Others 1Q20 4Q20 4Q21 4Q22 3Q23 RGU (Th.) FTTH Market Sh
Slide 35: Stable results despite a challenging scenario
Stable results despite a challenging scenario Excluding proceeds/losses from asset sales Revenues Revenue and EBITDA by business as of 3Q23(1) (CLP $ billion) +1.3% 1,642 1,663 -1.0% 1,446 Mobile Businesss 73% 1,247 1,234 Fixed Business 27% 2020 2021 2022 9M22 9M23 20% 40% 60% EBITDA & EBITDA Margin
Slide 36: Despite competitiveness, Entel maintains market leadership
Despite competitiveness , Entel maintains market leadership Mobile service revenue Share(1) Postpaid monthly port-out rate(2) % % 1.72% 39.8% 40.5% 40.5% 1.68% 1.68% 39.1% 1.60% 1.55% 1.50% 1.51% 1.48% 1.44% 1.46% 1.37% 1.38% 25.3% 25.3% 25.3% 25.0% 1.28% 1.13% 1.14% 1.12% 1.11% 1.08% 18.8% 20.5% 20
Slide 37: Entel Chile Results: Mobile Business
Entel Chile Results: Mobile Business Sustained leadership in brand power, ARPU and market share Brand Power(1) Market Share mobile connections (2G – 5G) (1) (Points) (%) 35 32 32 40 30 28 25 22 22 34.7% 34.9% 35.0% 34.9% 34.5% 20 35 20 22 20 21 15 14 14 15 30 10 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 24.9% 2
Slide 38: Main challenges in Chile
Main challenges in Chile Industry Leader Customers Undisputed leaders in the mobile On a continuous journey to provide business, challenged to maintain the best experience to our clients. leadership in a highly competitive Our positive perception stems market and a slowing post- from our closeness a
Slide 39: Table of Contents
Table of Contents 1. Entel Overview 2. Leader Telco in Chile 3. Growing in Peru 40
Slide 40: Robust growth of mobile base leverages market presence
Robust growth of mobile base leverages market presence Mobile users (Th.) +16.3% Postpaid Market Share1 CAGR 9,895 10,057 9,701 8,885 8,340 5,492 5,472 5,158 -0.0% Prepaid 5,172 As of 5,163 25.1% 74.9% Others 3Q23 4,403 4,585 4,543 Postpaid +11% 3,177 3,713 1Q20 4Q20 4Q21 4Q22 3Q23 RGU (Th.) Prepaid
Slide 41: Despite one-time events in 2023, positive trends in Perú
Despite one-time events in 2023, positive trends in Perú Excluding proceeds/losses from asset sales Revenues Revenue and EBITDA by business as of 2Q23(1) (USD $ million) +0.2% 1,067 1,069 Mobile Businesss 94.2% -10.8% 774 817 729 Fixed Business 5.8% 20% 40% 60% 80% 2020 2021 2022 9M22 9M23 EBITDA &
Slide 42: Entel Peru becomes 2nd operator in mobile revenue share
Entel Peru becomes 2nd operator in mobile revenue share Mobile service revenue Share(1) Postpaid monthly port-out rate(2) % % 38.7% 38.7% 38.6% 37.3% 37.5% 2.4% 2.4% 26.3% 26.4% 23.8% 24.1% 24.6% 24.6% 2.2% 23.6% 2.1% 24.6% 2.2% 23.8% 24.1% 2.2% 12.9% 1.9% 12.8% 12.3% 12.6% 12.7% 1.9% 2Q21 3Q21 4Q21
Slide 43: Key Indicators
Key Indicators Powerful brand and network indicators to continue growth Brand Power(1) Network Indicators (2) (Points) (%) 35 30 30 30 10.12 30 4G 27 25 26 27 Average 12.83 24 23 23 20 20 20 21 Speed 11.92 2° 15 (August-23) 9.13 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 Mbps ARPU Mobile Services(1) (USD) 79.22
Slide 44: Main Challenges in Peru
Main Challenges in Peru Closing the gap Scale Challenges Continuing on the path to increase Continuing to grow our mobile revenue share, supported by our base and achieve EBITDA margins customer-centric approach and close to 30% in the upcoming network coverage. years Opportunity in FTTH1 Technology
Slide 45: Our commitment to Sustainability
Our commitment to Sustainability, aligned with our purpose and embedded in our business strategy 46
Slide 46: Entel, a history of business entangled with sustainability
Entel, a history of business entangled with sustainability Entel was established in the aftermath of the 1960 Valdivia Earthquake 1964 Entel was founded to connect people First Satellite Radio Station 1969 Live broadcast of the moon landing, only country in LATAM “Todo Chile Comunicado” Project 1,40
Slide 47: Our commitments
Today we have recently reformulated our strategy Currently working out with business&operations teams renewed portfolio projects and goals Socially Environmentally Economically Inclusive Sustainable Responsible Our commitments • Building a diverse, agile, stimulating and Addressing climate change by
Slide 48: Awards and recognitions
Awards and recognitions Top Employer Chile Merco ESG International certification that evaluates human Monitor of corporate reputation lists Entel as the talent management practices leader in ESG reputation for the industry in Chile and #21 among all. Dow Jones Sustainability Index Open Signal Recogn
Slide 49: We exist to bring closer the infinite possibilities of technology
We exist to bring closer the infinite possibilities of technology, and thus, responsibly transform society Grow Peru's mobile Technological and Maintain leadership Grow in home Take Digital business to achieve quality leadership in in Mobile Business business in a multi- Business scale of operation
Slide 50: Summary of strategic objectives
Summary of strategic objectives 1 2 3 Mobile business Home and SOHO B2B Internet Entel Peru Continue providing the best network business Brand “extension”, commercial channel experience, throughout necesary To achieve a 25-30% share in Chile and initiatives and cooperation in network investments in
Slide 51: Thank You!
Thank You! Upcoming events Results 4Q 2023 January 24, 2024 For more information, visit our webpage 52
Empresa Nacional de Telecomunicaciones S.A. (Entel) — Investor Presentation (November 2023) on 6ix