Pharol Sgps S.a. · EURONEXT:PHR
Pharol Sgps — Portugal Telecom SGPS — Q4 2005 Earnings Presentation
22 slides from Pharol Sgps's earnings presentation, Mar 10, 2006
Slide 1: Portugal Telecom Results Presentation Fourth Quarter 2005
Portugal Telecom Results Presentation Fourth Quarter 2005 [5] 7 March 2006
Slide 2: Safe Harbour
a Safe Harbour This release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are not statements of historical fact, projects" and "targets" and similar words ere intended to identify these statements, which necessari
Slide 3: Fourth Quarter 2005 Highlights
Fourth Quarter 2005 Highlights [Ero million 4Q05 4004 yoy qoq 2005 200 yoy ‘Operating Revenues 1715 1557 10% = 5% «= 6.385 5,967 7% Wireline S40 «575 6% = 3% «= 2214-2305 4% MN 397415 -8% 3% 1557 1608 -3% Vivo 620437 «42% «= 19% © 20371599 27% PM 158 162 -2% 2% 2B 595M EBITDA 710 557 «27% «= 17% »=
Slide 4: Revenue growth underpinned by Vivo, PTM and favourable FX
« Revenue growth underpinned by Vivo, PTM and favourable FX Revenues {Euro milion) 6365 (7.0%) Portugal Telecom > Operating revenues increased by 7.0% yoy in 2005 to €6,385mn, underpinned by Vivo and PTM. > Wireline net retail revenues (wireline retail revenues less corresponding telecom costs) rema
Slide 5: EBITDA increase driven by Wireline and PTM
EBITDA increase driven by Wireline and PTM EBITDA {Euro milion) iti reuse mveewe | > EBITDA increased by 5.6% yoy to €2,496mn wecoryegesee | in 2005, as a result of the growth in wireline Wiaiss es and multimedia. > The increase in wireline EBITDA is explained al by the increase in prior years servi
Slide 6: Net income increased by 5% in 2005
o Net income increased by 5% in 2005 ama Incomefrom operations Cuttaient Other non recuiting Na financials Equityin affiates Income tax Minories Discontinued operations 05 Net Income (Euro milion] (4.9%) Portugal Telecom > Net income increased by 4.9% yoy to €654mn in 2005, in line with EBITDA growt
Slide 7: Capex growth related to broadband and 3G rollout, as well as increased investment in Pay-TV
m Capex growth related to broadband and 3G rollout, as well as increased investment in Pay-TV Capex {Euro milion) Portugal Telecom ‘Cepocty expansn, Tota of DRT. COMA overay aS J] Trees nn related to 2tanspondes (423.9%) > Capex increased by 23.9% in 2005 to €943mn, equivalent to 14.8% of operating
Slide 8: EBITDA minus Capex slightly decreased with the growth in Capex
@ EBITDA minus Capex slightly decreased with the growth in Capex compensating the improvement in EBITDA EBITDA - Capex (Euro million) ae > EBITDA minus Capex decreased by 3.1% yoy to. €1,552mn in 2005, equivalent to 24.3% of operating revenues. > Wireline improvement in EBITDA minus Capex partly com
Slide 9: Net debt increase as a result of extraordinary healthcare contribution
Net debt increase as a result of extraordinary healthcare contribution Net Debt [Euro mition} os 3573 > Net debt increased by €99mn to €3,673mn in Temiffmcw) 2005, primarily as a result of €300mn bedi} + tn externas extraordinary contribution for healthcare Aeqstions neste cone obligations, the curr
Slide 10: Gross unfunded related to PRBs increased due to change in actuarial assumptions
Gross unfunded related to PRBs increased due to the change in the actuarial assumptions and to higher curtailment Pensions Gross Unfunded {Euro ition) > Gross Unfunded increased by €314mn to €2,637mn in 2005, primarily due to the change in ii aa actuarial assumptions (discount rate) and the curtailm
Slide 11: Fourth Quarter 2005 Operating Highlights
Fourth Quarter 2005 Operating Highlights 4005 4004 yoy oq 2005 200 yoy Mainines (¥) 44784377 2% 0% 4478 «4.377 2% ‘Main Lines Net Adds (1) 7 65-89% © -71% «= 101 151 -33% ADS. Fetal (1) 585-382 58% = 7% SBS 88Z BH ADS. Petal Net Adds (i 38 70-46% -19% = 204.221 -8% Pricing Rans (i) 1795 «S47 89% «=
Slide 12: Wireline financial highlights
Wireline financial highlights Revenues [Euro million} s 575 540 e . rant a EBITDA > {Euro million) t=] a = oot rm Capex a) Es) Operating revenues fell by 6.1% yoy to €540mn in 4005, reflecting lower traffic revenues. Excluding the impact of lower F2M interconnection rates, operating revenues would h
Slide 13: Wireline operational highlights
Wireline operational highlights Main Lines thousand) a4 4377 sa waa i ie 8 a le ot om (+2.3%) > Total main lines increased by 2.3% yoy in 4Q05 to 4,478 thousand, boosted by ADSL Retail customer growth. ADSL retail totalled 585k at the end of 2005. > PT has upgraded the customers’ broadband speed by
Slide 14: TMN financial highlights
TMN financial highlights Revenues Eure mien] > Operating revenues decreased by 4.3% yoy to €397mn in 4Q05, reflecting the fall in 404 415 interconnection rates. Excluding the impact of lower interconnections rates, operating revenues ‘would have increased by 1.9% yoy in 4005. ake | 6 > EBITDA declin
Slide 15: TMN operational highlights
TMN operational highlights Total customers increased by 5.1% yoy in 4Q05 to 5,312 thousand, reflecting the expansion of 3G and the low cost operator “UZO”. 51% of the net additions in 4005 were postpaid customers. MOU grew by 2.3% yoy in 4Q05 underpinned by campaigns to promote usage. ARPU declined
Slide 16: Vivo financial highlights
Vivo financial highlights Revenues 3.158 ® 404 4005 EBITDA {RS million) vs r) Capex {RS milion 856 753 > Operating revenues increased by 8.5% yoy to R$3,426mn in 4005, as a result of the increase of equipment sales, related to the higher weight of high-end handsets sold and the increase in prepaid e
Slide 17: Vivo operational highlights
Vivo operational highlights Customers [thousand] 26543 22s cn 4005 168 148 4004 4005 Postpaid ARPU [Reais] x C] E) > Customers increased by 12.3% yoy to 29.8mn, with market share at the end of 4005 being 44.4% in areas of operation. > MOU and ARPU were impacted by the negative evolution of incoming
Slide 18: PTM financial highlights
PTM financial highlights Revenues (Eure milion} te = @ 404 4005 EBITDA Esomey a; @ 474 4004 4005 Capex 02 ® (Eure milion] wo 404 4005 (18) Portugal Telecom > Operating revenues decreased by 2.3% yoy to €158mn in 4005, following the customer disconnections related to bad debt. > EBITDA increased by 9
Slide 19: PTM operational highlights
PTM operational highlights Customers Mouser > Pay-TV customers totalled 1,479 thousand at the 389 17 end of 2005, approximately 42% of the TV households in Portugal. > Homes passed totalled 2,666 thousand in 4005. PTM has initiated a project to expand its cable network, aiming to increase the number
Slide 20: Sustainable dividend policy underpinned by strong operational and financial performance
Sustainable dividend policy underpinned by strong operational and financial performance Dividend per Share (Eurecents} > 2005 dividend proposal of 475 cents, representing an increase of 36% against 475 2004. 7 > 48% compound annual dividend growth in the last four years. 2 > Conclusion of the 10% sh
Slide 21: Outlook 2006-08
Outlook 2006-08 v Revenue Growth + Cost savings + Capex and working capital optimisation will lead to: ~ EBITDA growth from 3% to 5% (CAGR) over the 2006 ~ 2008 period — Cumulative operating cash flow of €5.0-5.5bn between 2006 and 2008 = Strategic initiatives increasing EBITDA by +€150mn and +€100m
Slide 22: Searchable text section of graphics shown above
Searchable text section of graphics shown above Po rtugal Telecom Results Presentation Fourth Quarter 2005 7 March 2006 [LOGO] Sa fe Harbour This release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are not state
Portugal Telecom SGPS — Q4 2005 Earnings Presentation on 6ix