Sky Network Television Ltd · NZX:SKT
Sky Network Television — Merger or Acquisition (June 2016)
26 slides from Sky Network Television's merger presentation, Jun 9, 2016
Slide 1: Creating a Leading Integrated Telecommunications and Media Group in New Zealand
For personal use only CREATING A LEADING INTEGRATED TELECOMMUNICATIONS AND MEDIA GROUP IN NEW ZEALAND 9 June 2016
Slide 2: Important Information
IMPORTANT INFORMATION For personal use only Purpose: The purpose of this presentation and the announcement materials released today is to provide a high level overview about the proposed merger of Sky Network Television Limited (“SKY”) and Vodafone New Zealand (“Vodafone NZ”) to form the Combined Gr
Slide 3: Presenters
PRESENTERS For personal use only Presenter Position Peter Macourt SKY Chairman John Fellet SKY Chief Executive Officer and Director Russell Stanners Vodafone NZ Chief Executive Officer Jason Hollingworth SKY Chief Financial Officer 2
Slide 4: Transaction Overview
TRANSACTION OVERVIEW For personal use only • Merger of SKY and Vodafone NZ Proposed transaction • Implemented as a SKY acquisition of Vodafone NZ for a combination of shares and cash • SKY to acquire Vodafone NZ for an Enterprise Value (“EV”) of $3,437m (cash and debt free) – Issue of new SKY shares
Slide 5: SKY is the #1 Subscription TV Operator in New Zealand
SKY IS THE #1 SUBSCRIPTION TV OPERATOR IN NEW ZEALAND For personal use only Snapshot Financial highlights(3) (refer to appendix for further information) • The leading subscription TV operator in New Zealand $m, year- year-ending 30 June FY2016E FY2017E with more than 830,000 subscribers(1) serving a
Slide 6: Vodafone New Zealand is a Leading Full Service Telecommunications Business
VODAFONE NEW ZEALAND IS A LEADING FULL SERVICE TELECOMMUNICATIONS BUSINESS For personal use only Snapshot Financial highlights(3) (refer to appendix for further information) • #1 player in mobile with over 2.35m connections (data, $m, year- year-ending 30 June FY2016E FY2017E voice and messaging)(1)
Slide 7: Creating a Leading Integrated Player Delivering the Best Content Across All Platforms
CREATING A LEADING INTEGRATED PLAYER CAPABLE OF DELIVERING THE BEST CONTENT ACROSS ALL PLATFORMS For personal use only AND DEVICES Content Distribution Customers More than 3.7 million aggregate Complete, Complete , at scale mobile, mobile connections, fixed The best premium content fixed and TV dist
Slide 8: Significant Potential for Packaging Products
SIGNIFICANT POTENTIAL FOR PACKAGING PRODUCTS For personal use only New Zealand triple play underpenetrated relative to other markets(1)(2) (1)(2) 60% 40% 20% 0% New Zealand Australia UK Netherlands US Singapore France Spain Source: Ovum 2015. Company websites (1) Penetration as at May 2014 calculate
Slide 9: Driving Digital Product Innovation, Improving the Customer Experience
DRIVING DIGITAL PRODUCT INNOVATION, IMPROVING THE CUSTOMER EXPERIENCE For personal use only Fibre delivered TV(1) Connected homes(1) Mobile delivered video(1) • Vodafone has the largest • New Zealand is one of the mobile base in New Zealand, fastest growing fibre markets • Ability to deliver world c
Slide 10: Combination of Content and Platform Provides Significant Revenue Synergies
COMBINATION OF CONTENT AND PLATFORM PROVIDES SIGNIFICANT REVENUE SYNERGIES For personal use only Cross-marketing of services between Vodafone NZ and SKY Drive increased penetration of subscription television Make content available as widely as possible and across more delivery platforms Develop new
Slide 11: Significant Cost and Capital Expenditure Synergies
SIGNIFICANT COST AND CAPITAL EXPENDITURE SYNERGIES For personal use only Rationalisation of overlapping functions Utilisation of Vodafone NZ’s technical and network capabilities Sales and marketing efficiencies Access feature rich and lower cost set top boxes Reduce satellite capacity over the mediu
Slide 12: Leveraging Vodafone Group's Global Capabilities
LEVERAGING VODAFONE GROUP’S GLOBAL CAPABILITIES For personal use only Multi-market expertise Purchasing power Fixed / Mobile / TV integration experience Mobile >460m customers ~$18.2bn capex last year(1) Vodafone Group sourced handset Mobile network Fixed network Global connectivity Fixed and TV >13
Slide 13: Vodafone Has a Proven Track Record of Creating Value in Publicly Listed Companies
VODAFONE HAS A PROVEN TRACK RECORD OF CREATING VALUE IN PUBLICLY LISTED COMPANIES For personal use only Vodafone ownership: 65% Vodafone ownership: 40% IPO date: 18-May-2009 IPO date: 09-Jun-2008 + 252% Total value creation since IPO(1) +160% Total value creation since IPO(1) 20 180 +180% +131% 18 1
Slide 14: Transaction Valuation
TRANSACTION VALUATION For personal use only • Vodafone NZ acquired for $3,437m Enterprise Value (cash and debt free) • Issue of new SKY shares to Vodafone corresponding to a 51% shareholding in the Combined Group and a cash payment by SKY of $1,250m Relative valuation metrics(1) Shares issued at a p
Slide 15: Significant Potential Value Creation for SKY Shareholders
SIGNIFICANT POTENTIAL VALUE CREATION FOR SKY SHAREHOLDERS For personal use only Free cash flow accretive(1)(2) Realisation of synergies(2)(3) Underlying Free Cash Flow per share (prior to synergies) Estimated NPV of synergies SKY Combined Group ~$435m ~$850m +8% 37.5 cents 34.7 cents ~$415m FY 2017E
Slide 16: Funding Impact and Dividend Policy
FUNDING IMPACT AND DIVIDEND POLICY For personal use only Funding impact Dividend policy(3) • Pro-forma FY2016E Net Debt / Underlying EBITDA • Payout ratio policy of 85-100 % of Free Cash Flow of 2.0x • Dividend payout subject to: • Debt facilities of up to $1.8bn provided by a subsidiary of Vodafone
Slide 17: Governance and Management
GOVERNANCE AND MANAGEMENT For personal use only • 5 directors from SKY to remain on the board – Peter Macourt to remain as Independent Chairman – 3 other independent directors – John Fellet (current CEO of SKY) Combined Group Board • 4 directors from Vodafone to join the SKY Board – Serpil Timuray (
Slide 18: Transaction Process
TRANSACTION PROCESS For personal use only 9 June 2016 • Announcement of proposed transaction Week beginning 13 June 2016 • Notice of Meeting and Explanatory Memorandum expected to be made available Early July 2016 • SKY special meeting of shareholders • SKY entitled to pay a final dividend of up to
Slide 19: Appendix
For personal use only APPENDIX
Slide 20: Growing Mobile Data Consumption Partly Driven by Video
GROWING MOBILE DATA CONSUMPTION PARTLY DRIVEN BY VIDEO For personal use only Growing mobile data consumption… …driven by digital video consumption New Zealand mobile data usage, MB per month per Global mobile data traffic by application, Total petabytes / connection(1) month, % of total traffic (2)
Slide 21: Key Terms of Proposed Transaction
KEY TERMS OF PROPOSED TRANSACTION For personal use only Proposed transaction to be implemented through a Sale and Purchase Agreement, as summarised below: • 405m(1) new SKY shares at $5.40 per share to Vodafone, giving Vodafone 51% ownership of Combined Group Consideration • $1,250m cash payable by
Slide 22: Compendium of Financial and Operating Measures
COMPENDIUM OF FINANCIAL AND OPERATING MEASURES Vodafone NZ Group SKY Group Adjustments and eliminations Combined Group Pro forma Pro forma Pro forma Pro forma Pro forma Pro forma Pro forma For personal use only historical prospective PFI Historical prospective PFI historical prospective PFI historic
Slide 23: Key Financial Assumptions
KEY FINANCIAL ASSUMPTIONS For personal use only The assumptions below are a summarised version of the key assumptions underlying the FY2017E Combined Group forecasts. The Notice of Meeting and Explanatory Memorandum will contain the final version of the forecast and pro forma financial and informati
Slide 24: Key Financial Assumptions (Cont.)
KEY FINANCIAL ASSUMPTIONS (CONT.) For personal use only Telecommunications (Vodafone NZ) • Mobile customer connections increasing 1.3% to 2,385k, driven by ongoing growth in Consumer Postpay and Enterprise with continued customer demand for data sharing plans • Fixed line customer connections increa
Slide 25: Key Risks
KEY RISKS For personal use only Neither the proposed transaction itself, nor the business of the Combined Group going forward, is without risk. Key risks include the following. Full details of the risks will be set out in the Notice of Meeting and Explanatory Memorandum, Memorandum , which is expect
Slide 26: Glossary
GLOSSARY For personal use only ARPU • Average revenue per user Bn or bn • Billions Cents • Cents (New Zealand currency unless stated otherwise) Combined Group • SKY following the Acquisition, reflecting the inclusion of the Vodafone NZ business Free Cash Flow • Cash generated from operations less ca
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