Empresa Nacional De Telecomunicaciones S.a. · BCS:ENTEL
Empresa Nacional De Telecomunicaciones — Entel — Investor Day (December 2017)
46 slides from Empresa Nacional De Telecomunicaciones's investor day presentation, Dec 13, 2017
Slide 1: IV Entel's Investor Day
IV ENTEL’S INVESTOR DAY_ Santiago_Chile December 13th, 2017
Slide 2: Contents
CONTENTS_ 1. Entel Snapshot 2. A closer look to mobile in Chile 3. Industry Trends 4. Entel Strategy
Slide 3: 1. Entel Snapshot
1. ENTEL SNAPSHOT_
Slide 4: Snapshot
“Snapshot”_ ENTEL September 2017 Snapshot_ SHAREHOLDER STRUCTURE FINANCIAL FIGURES LTM SEPT’ 17 Market Capitalization(1): USD 2.9bn Total Revenue LTM(2): USD 3.0bn Total EBITDA LTM: USD 677m Mobile Peru; 21.8% 26.9% Altel Inversiones Ltda (2) AMP & Call Pension Funds Center 54.9% & Others; 3.0% Mobi
Slide 5: Entel Snapshot: main business operation figures
ENTEL Snapshot_ MAIN BUSINESS OPERATION FIGURES Consumer Subscribers Sep’ 17: Total Revenue LTM: SME Mobile: 15.0m CLP 1,938bn (USD 3.0bn) Corporate Entel Peru Mobile (m Subsc.): Mkt. Share: Mobile Revenue Distribution (*): 52% 40% CLP 1,478bn 31% 17% 30% 6.3 7.3 53% 3% 0.5 Consumer Corporate 14% 1.
Slide 6: Strong Infrastructure Assets in Chile & Peru
ENTEL Snapshot_ Strong Infrastructure Assets in Chile & Peru SPECTRUM HOLDINGS INFRASTRUCTURE • PoPs evolution: Chile Band Spectrum 700 30 MHz Chile Peru 900 20 MHz 8.1% 1900 60 MHz 3x 4,690 5,070 2600 40 MHz 2012 2017 3,210 3500 100 MHz 180 MHz 250 MHz 805 2012 2017 2012 2017 Peru Band Spectrum • D
Slide 7: Third party awards recognize Entel's performance
Entel Snapshot_ Third party awards recognize Entel’s performance CHILE PERU AWARD DESCRIPTION AWARD DESCRIPTION • Best corporate reputation: 1st place in Telco industry and 6th in general ranking (Nov 2017) • Best corporate reputation: For • Best reputation: 8th place in General second consecutive y
Slide 8: Consolidated Revenue and EBITDA with upward trend mainly due to Entel Perú
ENTEL Snapshot Sept’17_ Consolidated Revenue and EBITDA with upward trend mainly due to Entel Perú Entel Group Revenue Entel Group EBITDA (CLP bn) (CLP bn) 4.5% 7.5% 1,390 1,441 313 321 1,319 277 9M15 9M16 9M17 9M15 9M16 9M17 Source: Internal data as of September 2017. CAGR 9M15 – 9M17 8
Slide 9: Entel Perú, significant revenue growth and sustained EBITDA improvement
ENTEL Snapshot Sept’17_ Entel Perú, significant revenue growth and sustained EBITDA improvement Entel Perú Revenue Entel Perú EBITDA (CLP bn) (CLP bn) 336 40,8% 258 170 -67 -93 -120 9M15 9M16 9M17 9M15 9M16 9M17 Accelerated improvement during Q3 Source: Internal data as of September 2017. CAGR 9M15
Slide 10: Entel w/o Entel Perú: Year 2017 under transition
ENTEL Snapshot_ Entel w/o Entel Perú: Year 2017 under transition. In a highly challenging environment, Entel continuously delivered high levels of margins and returns 1.1% Revenue w/o 1,517 1,560 1,550 -2.1% Entel Perú 1,147 1,123 (CLP bn) 6.7% EBITDA(1) and EBITDA 480 526 546 -4.7% Margin w/o 407 3
Slide 11: Entel w/o Entel Perú: EBITDA margin and cash flow generation remain strong
ENTEL Snapshot_ Entel w/o Entel Perú: EBITDA margin and cash flow generation remain strong (EBITDA-CAPEX)/Revenue w/o Entel Perú % EBITDA margin w/o Entel Perú (%) (%) 20 18.1% 40 34.3% 35.5% 15.8% 15.9% 35 34.5% 15 30 25 10 20 8.9% 15 5 10 5 0 0 2014 2015 2016 9M17 9M15 9M16 9M17 Source: Internal d
Slide 12: Entel w/o Entel Perú: Revenue and EBITDA declined
ENTEL Snapshot Sept’17_ Entel w/o Entel Perú. Revenue and EBITDA declined due to the end of wholesales contracts and decline in overage revenues (data and voice), due to “data buckets” / unlimited offers Revenue w/o Entel Perú EBITDA Entel w/o Entel (CLP bn) Perú -3.6% (CLP bn) -3.6% 383 369 133 128
Slide 13: Simplified FCF reaches break even
ENTEL Snapshot Sept’17_ Simplified FCF reaches break even -6.0 Entel Simplified Free Cash Flow (USD m) + EBITDA - Capex -212.0 - Net financial expenses -261.0 -295.0 -322.0 2014 2015 2016 9M16 9M17 • During July 2016 Entel Perú was awarded a block of 30 MHz in the 700 MHz band, impacting cash flow i
Slide 14: 2. A Closer Look at Mobile in Chile
2. A CLOSER LOOK AT MOBILE IN CHILE_
Slide 15: Chile Mobile Undergoing Process
Chile Mobile Undergoing Process Mobile Subscribers Postpaid Industry Port Out / Postpaid Base – Mobile Industry Average (Thousands) (%) 0.5% 20.4% CAGR annual churn 24,685 24,894 24,931 3Q15-3Q16 1.8 1.7% 1.6% 15,957 -4.5% 1.6 Prepaid 17,491 16,902 1.5% 1.4 1.4% 11.7% 4.8% Postpaid 7,193 7,992 8,974
Slide 16: Chile Mobile Undergoing Process
Chile Mobile Undergoing Process Mobile Subscribers Postpaid Industry Port Out / Postpaid Base – Mobile Industry Average (Thousands) (%) 0.5% 20.4% CAGR annual churn 24,685 24,894 24,931 3Q15-3Q16 1.8 1.7% 1.6% 15,957 -4.5% 1.6 Prepaid 17,491 16,902 1.5% 1.4 1.4% 11.7% 4.8% 1.3% Postpaid 7,193 7,992
Slide 17: Entel sustains revenue share in Prepaid and declined in Postpaid
Chile_ ENTEL sustains revenue share in Prepaid and declined in Postpaid protecting profitability Postpaid Market Share Prepaid Top Ups Revenue Share (%) (%) 39.6% 40 38.0% 36.9% 40 36.2% 35.6% 36.6% 36.2% 36.2% 35 35 30.6% 30.7% 30.4% 29.9% 34.1% 30 32.0% 30 30.5% 25.6% 29.4% 23.8% 25 25 25.6% 25.6%
Slide 18: Postpaid Competitive Dynamics
Postpaid Competitive Dynamics_ Multiple changes… reducing the price gaps over time… protecting profitability... up a point August 16 October 16 June 17 August 17/ Nov 17 Includes promotions with average use. Commercial Price (with IVA). Company C offers only plans w/o handsets. All players offer pla
Slide 19: Commercial Dynamics Entel Chile: positive net portability
Commercial Dynamics Entel Chile_ after new adjustments to the offer structure, with big buckets/unlimited data & much less subsidies the market reacted very positively, with positive net portability since August Postpaid Net Portability (units) 30.000 23.399 20.000 15.212 9.554 10.000 6.971 8.726 5.
Slide 20: Data traffic started to grow significantly
…while data traffic started to grow significantly… 2017 Growth Mobile Data + Fixed Wireless Traffic (TB/Week) 4,000 63,7% 3,612 LTE 3,500 3G 3,000 2,500 2,207 2,000 1,500 1,000 500 0 1 7 1 2 2 3 4 4 1 7 1 2 2 3 4 1 8 5 2 weeks 9 4 1 8 5 Source: Internal Data. 2016 2017 20
Slide 21: Chile Mobile Summary Undergoing Evolution
Chile Mobile Summary Undergoing Evolution • In a highly agressive market, Entel lost postpaid market share protecting price, overages revenues and network quality. • Since August, with a robust network, Entel leads new wave of unlimited offer with good results in postpaid portability • During 2017,
Slide 22: 3. Industry Trends
3. INDUSTRY TRENDS_
Slide 23: Market Trends: Consumers change their habits
Market Trends_ Consumers change their habits Mobile apps High quality video & new ways of watching TV • Mobile data usage is increasing more than the minutes • As video improves their quality, the need for data increases. of use… mobile apps include new features that make • New ways of watching TV,
Slide 24: Video will be responsible for 70% of mobile data growth
Video will be responsible for 70% of the mobile data growth_ Worldwide Mobile Traffic per application per month (exabytes/month) 52 kilobyte (KB) 103 Byte megabyte (MB) 106 Video gigabyte (GB) 109 Social Networks terabyte (TB) 1012 Audio petabyte (PB) 1015 Software download exabyte (EB) 1018 zettaby
Slide 25: TV: The Importance of OTTs
TV_ The Importance of OTTs OTT’s Region Penetration An avaregae [ Linear Traditional Flow ] 150 135 Netflix user sees 124 Programmers 113 47 hours per Studies / TV Player 100 86 100 Client 81 month. Networks 79 78 78 77 77 67 50 33 36 39 25 29 19 12 13 14 6 9 10 0 2015 2016 2017 2018 2019 2020 North
Slide 26: Market Trends: Internet of Things impact on business and network
Market Trends: Internet of Things Impact on the Business and the Network. New needs… new apps… new services Smart The wide array of devices, Manufacturing Connected and industrial applications, High security Health are demanding wireless Coverage Helath/Goverment/ etc networks with different Remote
Slide 27: Trends that drive value creation for Entel
Trends that drive value creation for Entel_ 1. “Data Tsunami” in mobile. Expected CAGR 2017 – 2020 = 50% or more 2. Usage of pre 5G deployment for fixed wireless broadband, using the current spectrum and infrastructure 3. Fiber is a must in high density and medium to high income neighborhoods 4. Dig
Slide 28: 4. Entel Group Strategy
4. ENTEL GROUP STRATEGY_
Slide 29: Entel Group Strategy
Entel Group_ Strategy Strategic Objectives Deliver a simple Leader in $ and unique innovation of Grow and Grow in fixed Grow in IT Maintain Share in service products and consolidate service markets: Development of a Mature Market experience services Peruvian business Home & SME digital services Stra
Slide 30: Fixed Business Revenues: strong evolution in selected areas of growth
Fixed Business Revenues_ Strong evolution in selected areas of growth CAGR 9M15-9M17 15.8% 52 Growth 44 21.6% Segments 35 Revenue Evolution 10.0% (CLP bn) 42 45 37 9M1 9M1 9M1 5 6 7 Entel Hogar* Fixed IP Connectivity SME** *Home: Includes wired and wireless. **Fixed IP Connectivity SME: Includes NGN
Slide 31: Fixed Residential Strategy: BAFI LTE Services & FO
Fixed Residential Strategy _ BAFI LTE Services & FO Optic Fiber + OTT TV BaFi • Fixed internet service, using Pre-5G last • Solution oriented to high density & medium generation network to high income segment in dense areas • Quickly address large segment of the • Cost Efficient Technology for high
Slide 32: Fixed Business: Segmented Approach
Fixed Business_ Segmented Approach Enterprises Home Home (Fiber Optic) (BAFi) (Fiber Optic) CLP 290 CLP 1,400 bn market bn market by 2020 by 2020 • Medium density & • High density & medium to • High density business districts medium/low income high income HH neighborhoods BP Wireless home coverage H
Slide 33: Entel's Integral Transformation: Agility & Efficiency
Entel’s Integral Transformation_ Agility & Efficiency • Entel’s Digital Transformation Program (TDE). New Platforms that enable full transformation: Prepaid in Chile: completely migrated to new platform in October. Prepaid in Peru: to be completed during Q2 2018. Postpaid in Chile: in design s
Slide 34: Digital Transformation impacts usage of Digital Channels
Digital Tranformation impacts usage of Digital Channels Mix of Channels’ Evolution; Total Interactions per year (m; %) 303 Evolution of unique App 25.3% 4% 4% users: 235 12% • October 2016: 448k 193 6% 6% • October 2017: 933k 6% 16% 8% 56% Growth of 108.3% 22% 39% 18% On store Call IVR 47% 34% 24% A
Slide 35: Digital Transformation initial impacts: call center and physical stores
Digital Tranformation Initial impacts_ Decline in Call Center and Reconvertion of Physical Stores Real Transformation of Service Stores Efficiency in CALL CENTER to Retail Stores Call Center Expenses (Inbound)* Revenue coming from Accessories (CLP m) (CLP m) 14,000 13,758 3,000 2,716 12,060 12,000 2
Slide 36: Corporate Traditional IT
Corporate Traditional IT_ High shares in a fragmented market and the development within it make it challenging to achieve growth rates in the high single digits Traditional IT Revenues (CLP bn) CAGR 8.2% 9M15-9M17 40 41 8.2% 35 9M1 9M1 9M1 5 6 7 Corporate Traditional IT* *Does not include Cloud Comp
Slide 37: Digital Services: Source of a New Burst of Growth
Digital Services_ Source of a New Burst of Growth Digital Services Revenues* (CLP bn) CAGR 9M15-9M15 18.2% 16.6 14.1 2.4 54.5% 1.0 11.9 3.8 15.6% 1.0 3.0 2.8 10.2 10.4 13.9% 8.0 9M1 9M1 9M1 5 6 7 Cybersecurity Cloud Digital Solutions *Corporate and SME Revenues. Source: Internal data. 37
Slide 38: New Digital Business Opportunities
New Digital Business Opportunities: Enabled by High Quality, Ubiquitous & Smart Connectivity Digital Business Industry Revenue 2020 (expected) - Chile (CLP bn) 43 102 IoT Cloud 352 Cybersecurity BDA 380 877bn CLP Analytics 38
Slide 39: Entel Perú: Strong growth in subscribers and revenue
Entel Perú_ Strong growth in subscribers and revenue 6,314 5,854 57.6% CAGR 5,187 4,838 2,271 4,519 2,101 4,189 3,688 1,865 2,011 3,130 1,559 1,703 Evolution of 2,543 1,439 Postpaid 1,394 Prepaid Subscribers 1,259 3,752 4,044 (Thousands) 2,630 2,815 2,973 3,176 1,736 2,249 1,285 3Q1 4Q1 1Q1 2Q1 3Q1
Slide 40: Entel Perú captures 1.1pp of revenue share per quarter
Entel Perú_ captures 1,1pp of revenue share per quarter, last 10 quarters 19.2% 16.7% 15.6% 14.5% 12.3% 13.0% 11.6% Market 9.7% 11.9% Share Entel 10.1% Perú (%) 5.9% 4.5% Prepaid 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Postpaid 19.9% 17.8% 15.7% 13.8% Revenue 10.1% 8.8% Share Entel Pe
Slide 41: Growth Ranking of revenue share, global operators
PERU - Entel AUST - T-Mobile (%) Saud - STC NIGE - Airtel MORO - Medi YoY Hong - Hutchison PERU - Entel; 4,90% NIGE - Globacom INDI - Bharti-Airtel ISRA - Pelephone COLO - Comcel Source: Merril Lynch MALA - DiGi.Com US - T-Mobile INDO - Indosat BELG - Proximus NETH - Tele2 GREE - Wind Hellas CHIN -
Slide 42: Growth Ranking: Capturing Market Incomes
THAI - TRUE (%) NIGE - Airtel EGYP - Vodafone ARGE - Movistar PORT - TMN PERU - Claro MALA - Maxis US - T-Mobile BELG - Mobistar PERU - Entel; 3,12% Source: Merril Lynch AUST - 3 Saud - Zain NORW - Telenor CHIN - China COLO - Movistar NETH - KPN CANA - Bell FRAN - Iliad FRAN - Bouygues ITAL - TIM NE
Slide 43: Entel Perú: Looking ahead
Entel Perú _ Looking ahead • Continue quarterly growth of revenue share • Continous devolopment of Brand positioning (Consideration, Preference) • Wireless Fixed Broadband development is a significant opportunity • Improve position in regions • Reach break-even point in 2018 • Efficiency and Agility
Slide 44: Summary and Concluding Remarks
Summary and Concluding Remarks • Strong Evolution in Peru • Transformations process underway …which will enable Entel to: • Growth in the fixed and IT segments Sustain mature markets, with advantage • Despite Competitive Environment in Adapt and Innovate Chile… counts with the long term view T
Slide 45: José Luis Poch
José Luis Poch. December 2017
Slide 46: IV Entel's Investor Day
IV ENTEL’S INVESTOR DAY_ Santiago_Chile December 13th, 2017