Pharol Sgps S.a. · EURONEXT:PHR
Pharol Sgps — Portugal Telecom SGPS — Merger or Acquisition (July 2010)
24 slides from Pharol Sgps's merger presentation, Jul 28, 2010
Slide 1: Investors Presentation: Sale of Brasilcel and strategic partnership with Oi
Investors Presentation Sale of Brasilcel and strategic partnership with Oi 28 July 2010
Slide 2: Important notice
Important notice This release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not statements of historical fact, and reflect goals of the company's management. The words "anticipates," "believes,
Slide 3: Agenda
Agenda Sale of Brasilcel Strategic partnership with Oi
Slide 4: Highlights of revised offer for Vivo
Highlights of revised offer for Vivo Euro 7,150 million Option A: single payment Option B: 1/3 payment on closing (Euro 2,383 million) put rights minimum 5% return on balance transitional arrangements – services, governance and sale of Dedic PT Call on 10% held by TEF Euro 7,500 million Euro 4,500 m
Slide 5: Telefónica's views on Vivo and PT's board response
Telefónica's views on Vivo PT’s board response (1) (2) Based on article from Wall Street Journal online 17 May 2010 Based on article from Financial Times, 10 July 2007 1 June “Request a Shareholder’s Meeting so that PT’s Shareholders may come to a decision on the offer” “The offer does not reflect t
Slide 6: Highlights of revised offer for Vivo: implied EV/EBITDA multiple
Highlights of revised offer for Vivo Implied EV/EBITDA Multiple 5.7 6.5 7.15 7.50 EV/EBITDA CY+1 Transaction Details 6.3x Oi Acquisition The offer valuation outperformed most major telecom transactions Source: companies release, broker estimates. Note: Vivo offers implied multiples based on consensu
Slide 7: Vivo 2Q10 results: market leader and strong cash flow generation
Comprehensive turnaround plan (e.g., change for GSM technology, brand repositioning) Nationwide coverage with the acquisition of Telemig and Northeast licenses Launch of promotion campaigns and the rise of voice and data penetration 2Q09 19.6% 2Q10 42.8% share of net adds in 1Q10 Significant and sus
Slide 8: Vivo's transaction conclusions
Vivo’s transaction conclusions Leave Vivo on track with good operational performance Crystallise full strategic value of asset Value enhancing transaction
Slide 9: Agenda
Agenda Sale of Brasilcel Strategic partnership with Oi
Slide 10: Oi overview
Oi overview Source: Oi Corporate Presentation and 1Q10 Results Presentation Note: 1. Includes the consolidation of Brasil Telecom (Brt) acquired in 2008 Brazilian Coverage Mobile(1) Wireline(1) Broadband(1) Pay-TV(1) Largest telecom company in Brazil, with more than 62 million customers, and a clear
Slide 11: Brazilian telecom landscape
Brazilian telecom landscape Competitive landscape – Oi market share vs main competitors (1) Wireline Broadband Pay-TV Mobile Total Subs 51% 36% 4% 20% 62.3M Telefonica + Vivo 27% 24% 6% 30% 68.4M Claro + Embratel + Net 15% 25% 51% 25% 60.0M TIM - - - 24% 42.4M GVT 4% 6% - - 2.3M Net Revenues (2) EBI
Slide 12: F2M convergence in the Brazilian market
F2M convergence in the Brazilian market In recent years the Brazilian market has been shifting from wireline to wireless segment, both in terms of subscribers and traffic, as well as in revenues generated However, fixed line operators still hold the upper hand in segments such as broadband as a resu
Slide 13: PT has a strong track record on strategic partnerships
PT has a strong track record on strategic partnerships Extensive expertise in fixed-mobile convergence Successful track record in the Brazilian mobile market Experience of leadership in mobile broadband, evidenced by superior mobile margins Unique expertise on pay-TV Competitive offering of bundled
Slide 14: Transaction structure
Transaction structure Maximum Disbursement Description Call for a capital increase in TNLP at market price amounting to R$12.0 billion: TmarPart to subscribe proportionally to its shareholding PT: up to R$2.0 billion, limited to remaining unsubscribed shares TNLP 2.0 R$ billion Telemar 1.7 Call for
Slide 15: Oi shareholding structure (post-transaction)
Oi shareholding structure (post-transaction) PT Direct Stake: 10% PT Indirect Stake: 14% 24% Economic Stake: 22.38% Telemar Participações S.A. (TmarPart) 10% AG Telecom 19.3%(1) L.F. Tel 19.3%(1) 35% 35% BNDESPar 16.8% Previ Funcef 23.1% Petros Telemar Norte Leste S.A. (TMAR) Tele Norte Leste Partic
Slide 16: Corporate Governance Highlights
Corporate Governance Highlights PT to become a strategic partner of Oi Shareholders agreement to be established at AG / LF level PT will have significant veto rights and will be in a position to make an important strategic contribution Rights attributed to PT will enable it to proportionally consoli
Slide 17: Timeline & precedent conditions
Timeline & precedent conditions Signing of MoU Press release and public announcement Perform due diligence SPA and SHA negotiations Filing with Anatel and with CADE Anatel approval Signing of SPA Signing of SHA Filing of the documents related with the share capital increase to be performed in AG, LF
Slide 18: Pro-Forma 2009 financial highlights
Revenues Pro-Forma 2009 financial highlights Swapping Vivo for Oi, enables PT to monetise value while maintaining a significant exposure to the growing Brazilian market PT Note: FX EUR/ BRL of 2.7674 based on PT’s annual accounts for 2009 average. Source: PT Information, Telemar Company Filings 1. A
Slide 19: Financial rationale
Financial rationale Transaction enables PT to maintain its scale and scope PT’s experience in managing fixed and mobile assets, together with Oi’s strong capabilities will lead to enhanced operational performance Transaction will strengthen PT financials Margin enhancement on EBITDA level following
Slide 20: How will the proposed transaction benefit PT's shareholders?
PT maintains its exposure to high growth Brazilian market, which is strategic to PT, playing an active role in the leading integrated Brazilian player Transaction enables PT to maintain its scale and scope and secure access to technology, innovation and R&D, enabling it to continue to invest in new
Slide 21: Strategic goals: reach, international revenues, leadership
Reach 100 million customers at the end of 2011 Oi has more than 62 million clients, bringing the total customers of PT to 83 million Increase the contribution of international revenues to 2/3 of total revenues Oi would have contributed 41% of PT’s total pro-forma revenues in 2009, thus reinforcing P
Slide 22: Appendix – Supplementary materials
Appendix – Supplementary materials
Slide 23: Current Shareholders Structure
Current Shareholders Structure Notes Tickers in Bovespa and NYSE: TNE (TNLP4 and TNE); BRTP (BRTP4 and BTP), BRTO (BRTO4 and BTM), TMAR (TMAR5) Telemar Participações’ Main Shareholders Founded in 1948, Andrade Gutierrez is one of the largest corporate groups in Latin America, with a footprint in eng
Slide 24: For further information
For further information: Nuno Vieira Investor Relations Director +351 21 500 1701 nuno.t.vieira@telecom.pt www.telecom.pt SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
Portugal Telecom SGPS — Merger or Acquisition (July 2010) on 6ix