Infratil Limited · NZX:IFT
Infratil — Investor Day (October 2019)
54 slides from Infratil's investor day presentation, October 2019
Slide 1: Investor Day – Vodafone NZ
Investor Day – Vodafone NZ
Slide 2: Vodafone Investor Day Agenda
Vodafone Investor Day Agenda Introduction Marko Bogoievski Vodafone Strategy Jason Paris Q&A Financial Update Kate Jorgensen Business Improvement Programme Matt Crockett Q&A Regulatory Environment Juliet Jones Business and Cloud Lindsay Zwart A 5G future Tony Baird Summary Jason Paris Q&A 2
Slide 3: Strategy Update – Jason Paris
Strategy Update – Jason Paris
Slide 4: We have best-in-class assets to compete
We have best-in-class assets to compete Providing strong potential upsides Strong NZ customer base across categories; Well balanced across business including #1 mobile, #2 BB and consumer segments Significant network and Diversified product set; infrastructure assets; Fixed, Mobile, Cloud, IoT Fixed
Slide 5: Strong New Zealand customer base across all categories
Strong New Zealand customer base across all categories #1 in mobile, #2 in broadband Mobile subscriber share1 Fixed broadband connection share1 Others 26% #2 41% #1 59% Others 74% Balanced portfolio mix Traditional Pay TV connection share Revenue Mix2 15% Enterprise & #2 Wholesale Consumer 48% 52% O
Slide 6: Significant network and infrastructure assets
Significant network and infrastructure assets Across Fixed, Mobile, IoT Extensive network and spectrum position including 5G leadership • 5G launching December in Auckland, Wellington, Christchurch, Queenstown • Over 1,500 mobile cell sites delivering a mix of 2G, 3G and 4G • 98% population coverage
Slide 7: Diversified and differentiated product set
Diversified and differentiated product set Across Fixed, Mobile, Cloud and IoT TV Mobile Cloud IoT Voice Broadband 7
Slide 8: Vodafone Group’s biggest partner market
Vodafone Group’s biggest partner market Gives NZ access to best of both worlds and significant flexibility • Global roaming • VodafoneTV • IoT Platform • Security products • Data Analytics • Vodafone Brand • Artificial Intelligence • Vodafone Procurement 8
Slide 9: Industry dynamics can create new opportunities
Industry dynamics can create new opportunities Players looking at ways to grow returns in capital intensive industry • Improving the utilisation of existing networks • Looking to enhance wholesale and mobile virtual network operator offering and product development • Vodafone already has wholesale a
Slide 10: Competitive but rational market
Competitive but rational market Underpinned by strong economic fundamentals • Industry structure provides strongest correlation to equity returns • Stable 3-player mobile market with multiple retailers and wholesale customers • Relatively stable regulatory environment • Industry dynamics are creatin
Slide 11: The Vodafone transformation is underway
The Vodafone transformation is underway Decisive action taken on many fronts, with some big ‘work-ons’ • Ownership certainty achieved √ • 100% NZ-centric strategy in place √ • Group strategic constraints removed √ • 5G leadership attained √ • Cost reduction delivering ability to reinvest √ • Agile w
Slide 12: Positive early signs
Positive early signs Solid early indicators and successes • New operating model in place and capability step-change underway • On track to deliver $91m of gross cost savings • 10% year-on-year call volume reduction and 70% of queries solved first time • New channel expansion with Noel Leeming to sig
Slide 13: Transforming from old Vodafone to new Vodafone
Transforming from old Vodafone to new Vodafone Turning legacy into opportunity, long-term strategy review underway From manual, complex, Digital, simple expensive to… and low cost From lagging on Leading on Customer Customer Experience to… Experience From missing numbers to… Making numbers 13
Slide 14: Digital, modern, simple and low-cost
Digital, modern, simple and low-cost An opportunity to be a leading modern Telco Complex product, An ambitious but …while stabilising IT architecture and necessary target current state and technical debt to… state… de-risking • Limited velocity, high • Move towards a greenfield • Decouple front and
Slide 15: Leading on Customer Experience (CX)
Leading on Customer Experience (CX) Creating a competitive advantage • Call volumes continuing to decline year on year • ~70% of calls resolved first time • Calls getting more complex • New partners getting up to speed • Investment in new Case Management team
Slide 16: Long term value creation
Long term value creation From missing our numbers • Stabilising commercial performance • Holding churn across all products • Cost reduction to create headroom • Investing in Cloud, Security, VTV, IoT and Procurement • Taking opportunities – e.g. FWA, Multi-brand, 5G, winning key market segments • Ow
Slide 17: Risks to manage or mitigate
Risks to manage or mitigate External and internal factors • Market dynamics • Ongoing commoditisation and price downs • Regulatory changes or investment uncertainty • Funding of free VAS and OTT services • Monetising investment in 5G in core telco and adjacencies • Organisational dynamics • Pace/qua
Slide 18: Our belief
Our belief New Zealand Businesses Digital First >) C Radically Simple ) CAtways Competitive ) (Baisting Customers First )) C Vodafone TV ) C Best Networks ) C Data + Al ) (loud & Security with the people, culture and brand to succeed Our strategy New Zealand Consumers foT Always bre dt of our number
Slide 19: Strong team now in place to deliver on clear plan
Strong team now in place to deliver on clear plan Focus on execution and cadence Jason Paris Kate Jorgensen Matt Crockett Juliet Jones Lindsay Zwart Tony Baird • Chief Executive Officer • Finance Director • Transformation Director • Legal, Regulatory & • Business Director • Technology Director • Joi
Slide 20: Q&A
Q&A
Slide 21: Investor Day – Kate Jorgensen
Investor Day – Kate Jorgensen
Slide 22: Financial performance overview
Financial performance overview Long-term EBITDA growth achievable, dependent on execution • Commercial performance has stabilised, largely through tight operating disciplines and cost reduction • Long-term growth requires execution on business improvement programme, and successful investments, e.g.
Slide 23: Financial Outlook
Financial Outlook Vodafone on track to achieve guidance metrics Summary of Financials ($ Millions) 31 March 2016 2017 2018 2019 2020 F Mobile Revenue 951 953 973 945 Fixed Revenue 841 854 824 793 Other Revenue 171 220 242 248 Total Revenue 1,963 2,027 2,039 1,986 2,000-2,100 Underlying EBITDA1 422 4
Slide 24: Capital Expenditure
Capital Expenditure Vodafone fuelled for growth under new ownership Other Capex 275-325 IT Capex Capex Breakdown ($ Millions) Network Capex 253 229 223 244 44 45 40 30 89 67 72 71 117 111 117 120 2016 2017 2018 2019 2020 F
Slide 25: Operational Overview
Operational Overview Balanced portfolio of Vodafone well positioned to deliver Balanced Portfolio (Revenue Mix)1 11% Enterprise & Fixed Wholesale Wholesale & Other 52% 49% 51% 49% Consumer 52% Business 38% Mobile Consumer 1 Based on 30 September 2019 unaudited results 25
Slide 26: Revenue
Revenue Strong customer base with the highest mobile ARPUs in the industry Subscribers ARPU Prepay 1.4 million $14 Post-pay 1.1 million $47 Broadband 0.4 million $104 1 Based on 30 September 2019 unaudited results
Slide 27: Future Market Growth Trajectory
Future Market Growth Trajectory 1 Vodafone in line with external growth projections for next generation access technologies and mobile post-pay Broadband Connections Mobile Connections Market Spend 2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023 25% 6% 6% 5% 4% 4% 2% 3% 0% 0% 2% -2% 1% -
Slide 28: Looking ahead – the important markers
Looking ahead – the important markers What we view as the key medium-term financial performance levers/measures • Sustainable industry dynamics/structure • Business Improvement Programme execution • Investment incentives and certainty • Competitive trading performance • Growth in Fixed Wireless Acce
Slide 29: Investor Day – Matt Crockett
Investor Day – Matt Crockett
Slide 30: Key beliefs about transformation
Key beliefs about transformation Characteristics of successful transformations 1. You can achieve substantial, 20%+ cost reduction through a holistic transformation approach. 2. However, you can’t cost-cut your way to greatness. 3. Execution is critical. 4. “Business-as-usual” people and processes w
Slide 31: We are building on solid foundations
We are building on solid foundations Focused cost program launched 12 months ago 1 Employment costs 2 Migration off legacy 3 Spend rationalisation 4 Procurement and inputs and outsourcing Property $35m savings were delivered in FY19. The program is on track to deliver $56m of incremental gross savin
Slide 32: We recently enhanced the programme
We recently enhanced the programme With a focus on all business improvement levers The what: The how: all cash improvement clearer line ownership, levers more regular governance, more dedicated resources
Slide 33: A full potential improvement diagnostic
A full potential improvement diagnostic Highlights substantial opportunities Example: tactical Example: transformational opportunities opportunities Build / improve data and Review full product portfolio analytics capabilities to reduce and radically simplify product churn, uplift cross- and up-sell
Slide 34: In FY20 we will launch a full transformation programme
In FY20 we will launch a full transformation programme Addressing four key requirements for success Performance Mindset & Capability Expertise Infrastructure Behavior Change Building
Slide 35: Q&A
Q&A
Slide 36: Investor Day – Juliet Jones
Investor Day – Juliet Jones
Slide 37: A stable and predictable operating environment
A stable and predictable operating environment Relatively stable regulatory settings • Market regulation has been predictable and in line with international experiences • National roaming and mobile co-location regulated on a non-price basis • Cost-based mobile termination rates • The Commerce Commi
Slide 38: Mature legislative framework
Mature legislative framework Amendments to laws passed in 2018 • Amendments to the Telecommunications Act 2001 were passed in November 2018, covering: • Defined process to set regulated fibre pricing for “last mile” fixed access infrastructure post 2022 • Additional consumer safeguards • Regulatory
Slide 39: Spectrum matters
Spectrum matters History of stable renewal processes for spectrum • Renewal process for rights in 1800/2100MHz which expire in 2021 • 2x20 MHz 1800MHz for renewal, cut back by 2x5 MHz • Vodafone to be offered full 2x25 MHz 2100MHz renewal • Government will consider requests to swap 2100 MHz instead
Slide 40: Investor Day – Lindsay Zwart
Investor Day – Lindsay Zwart
Slide 41: Become NZ’s Leading Trusted Digital Partner for Business
Become NZ’s Leading Trusted Digital Partner for Business Helping NZ businesses navigate digital transformations Understanding Customer New technology Cutting Shareholder the Gigabit Experience investment costs value world A skilled & passionate team who are recognised by our customers as the trusted
Slide 42: Vodafone Cloud and Partnering Vision
Vodafone Cloud and Partnering Vision To be NZ’s most trusted digital provider through market leading Cloud Services and Strategic Partnerships Strategic customer Cloud Network Partnership International Procurement Relationships Innovation Strategic partner with Network attached to Strategic Partneri
Slide 43: The market opportunity in Cloud is significant
The market opportunity in Cloud is significant IDC: The New Zealand SaaS market is valued $371m with CAGR over 15% 43
Slide 44: Vodafone is well placed for the Cloud opportunity
Vodafone is well placed for the Cloud opportunity Excellent partnerships in place Exclusive Cloud reseller Xone’s development of agreements with market 5G ecosystem. leading products and Building innovations ready services partners for the future. Access to reselling Proven ability to move with high
Slide 45: Investor Day – Tony Baird
. if Investor Day — Tony Baird ~~? ‘ /
Slide 46: Market leadership in 5G
Market leadership in 5G Bringing the best of the world to NZ • We are well placed to leverage 5G with our spectrum, fibre and network assets • Switching on a large commercial 5G network in December, starting in parts of Auckland, Wellington, Christchurch & Queenstown • Launching with 100 x 5G-enable
Slide 47: 5G is the next generation network technology
5G is the next generation network technology Greater capacity, speed and low latency 5G: The Internet of Things (IoT) Era - 2020 and beyond 4G: The Smartphone - SMS Era - Internet -2010s 3G: The Internet Era - HD, 3D & ultra video - SMS - 2000s - 1-10 GB/second - Internet - SMS 2G: The TXT Era - Vid
Slide 48: 5G unleashes potential of the Internet of Things (IoT)
5G unleashes potential of the Internet of Things (IoT) Vodafone #1 in IoT network connections, with platform advantages
Slide 49: 5G builds on the foundation of 4G
5G builds on the foundation of 4G Expanding use cases from 4G to 5G 49
Slide 50: Already real 5G use cases have emerged
Already real 5G use cases have emerged Leveraging Vodafone Germany, Spain, Italy & UK as partners Buildings & Education & Automotive Manufacturing Health Utilities Integrated Transport Entertainment • 5G V2X A9 Highway • Centralised building • 5G connected robots • Connected • Smart grid • Immersive
Slide 51: 5G delivers efficient network economics
5G delivers efficient network economics Offers exciting potential for lower cost delivery • Will upgrade/improve existing 4G • Enables decommissioning of legacy (e.g. 3G) • Accommodates ongoing explosion in data consumption • Offers additional wholesale opportunities • Low cost option (capex intensi
Slide 52: Summary – Jason Paris
Summary – Jason Paris
Slide 53: Q&A
Q&A
Slide 54: Slide 54