Empresa Nacional De Telecomunicaciones S.a. · BCS:ENTEL
Empresa Nacional De Telecomunicaciones — Investor Presentation (May 2024)
53 slides from Empresa Nacional De Telecomunicaciones's investor presentation, May 2024
Slide 1: Corporate Presentation
Empresa Nacional de Telecomunicaciones S.A Corporate Presentation Contacts: Paula Raventós, Investor Relations Officer ir@entel.cl 1
Slide 2: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation May 2024 1. Overview and Strategy 2. Our commitment to sustainability 3. Consolidated Results 4. Annexes 2
Slide 3: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation May 2024 1. Overview and Strategy • Overview • Mobile leadership in Chile • Mobile challenger in Perú • Growth opportunity in FTTx • B2B opportunities 2. Our commitment to sustainability 3. Consolidated Results 4. Annexes 3
Slide 4: Entel company overview and history
Empresa Nacional de Telecomunicaciones Entel is a leading technology and telecommunications company founded in 1964 with operations in Chile and Peru. Within an Investment grade rating by international rating agencies and listed on the Santiago Stock Exchange, it’s shares are part of IPSA index, wit
Slide 5: Celebrating 60 years in Chile and 10 years in Peru
We are extremely proud to celebrate 60 years in Chile and 10 years in Peru this 2024 Year 1964 Year 2014 Creation of Entel Launch after Valdivia earthquake operations Chile Peru under Entel Peru Multicarrier Entel deployed 4G 60 network years First operator in Latin America to launch 3G and 10years
Slide 6: Our executive team
Our executive team Antonio Buchi CEO José Luis Poch Julián San Martín Marcelo Bermúdez Mario Nuñez Roberto Thompson Sebastián Dominguez VP for B2C VP for Digital CFO VP for B2B VP for Human Resources VP for Technology & Businesses Operations Francisca Florenzano Manuel Araya Oscar Zahri Alexis Licci
Slide 7: Latest Events 2023
Latests Events 2023 FNE approves fiber Partnership with 5G phase II committed Dow Jones Merco Ratings – 1° transaction Starlink project Sustainability Index Telecom in Chile The transaction was valued by Soon, millions of LTE Entel was the first operator to For the eighth consecutive In this opportu
Slide 8: Latest Events Q1-24
Latest Events Q1-24 Entel’s FTTx: Fastest mobile Recognized as Top Chile 3D: Entel, as the Sustainability “La fibra de los chilenos” network in Chile Employers most valued telco Yearbook 2024 brand After regulatory approval, According to nPerf (1) , Entel For the second year in a row, Entel was reco
Slide 9: Shareholders and stock performance
Shareholders and stock performance Entel shareholders Structure Stock performance % Entel including dividends IPSA 130% 18,68% 14,06% 125% 120% As of 12,94% As of 12,83% December March 115% 2022 54,86% 2024 54,86% 110% 13,63% 18,14% 105% 100% 95% Altel Pension Funds Foreign Investor Others 90% Janua
Slide 10: Strong presence in Chile and Peru: mobile users and RGU
Strong presence in Chile and Perú: More than 20 million mobile users and 500K RGU Mobile users (Th.) +16.6% 46% of total mobile users 13% of total RGU 19,907 20,322 20,199 18,738 17,326 9,126 8,795 8,169 Prepaid 8,933 8,934 11,527 12,030 Postpaid CAGR 1Q20-1Q24 ∆ 1Q23-1Q24 9,804 10,781 8,392 -2.2% -
Slide 11: Consolidated revenue snapshot: distribution per business unit
Consolidated revenue snapshot: LTM as of march distribution per business unit Mobile Fixed TI + Digital Wholesale 2.624 CLP Bn 65% B2C 9% 35% B2B 6% Segment Segment 21% 38% 67,0% 91% 35% 81% B2C 2% 19% B2B 18% Segment Segment 15% 52% 33,0% 15% 98% Entel Consolidated Business/service views correspond
Slide 12: Good positioning in spectrum holding in both countries
Good positioning in spectrum holding in both countries Spectrum Share(1) Spectrum Share(2) % % Op.3 Op. 3 Entel Chile Entel Peru spectrum holding 25,1% spectrum holding 27,6% 28,2% 700 30 MHz 700 30 MHz 32,8% 900 10 MHz 800 22,4 1900 60 MHz AWS 40 MHz 2600 40 MHz 1900 35 MHz 8,0% 35001 100 MHz 2300
Slide 13: Entel is constantly seeking to maximize the value of its assets
Entel is constantly seeking to maximize the value of its assets 2019 - 2021 2021 - 2022 2022 - 2023 Towers Datacenter Fiber • Maximizing the value of tower • Housing business threatened by the arrival • Neutral network strategy infrastructure by increasing the tenancy of hyperscalars in Chile and Pe
Slide 14: Entel purpose and key objectives
Entel purpose and key objectives We exist to bring closer the infinite possibilities of technology, and thus, responsibly transform society Grow Peru's mobile Grow in home and Technological and Maintain leadership Take Digital business to achieve B2B connectivity quality leadership in in Mobile Busi
Slide 15: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation May 2024 1. Overview and Strategy • Overview • Mobile leadership in Chile • Mobile challenger in Perú • Growth opportunity in FTTx • B2B opportunities 2. Our commitment to sustainability 3. Consolidated Results 4. Annexes 15
Slide 16: Long trend of sustained leadership in Chilean mobile market
Long trend of sustained leadership in Chilean mobile market Mobile service revenue share in Chile (1) (%; anual share from 2016-2023 and last available Q) Entel Op. 2 Op. 3 Op.4 Several waves of competition have gone through, including the irruption of 41.5 40.4 a very aggressive competitor in 2016
Slide 17: Market leadership brings better profitability
Market leadership is not only about pride, it´s about better profitability It allows sustained financial outperformance in the mobile business Mg [EBITDA – CAPEX] Leader v/s rest of the industry (1) (63 Countries, Omdia’s sample data of 2022) Leaders’ average mobile [EBITDA – CAPEX] mg of 22% (2) 8.
Slide 18: Leadership is about loyalty and service experience
Leadership is about loyalty, built upon superior service experience It enables us to build a premium in customer loyalty, a key success factor Postpaid port out rate Entel v/s rest of industry in Chile (1) B2C port-out self declared reasons in Chile (2) (Average 1Q24) +0.8p.p Rest of Industry 2.0% v
Slide 19: Investing has allowed us to have the best network
Our commitment to continue investing has allowed us to have the best network… key element for leaders Mobile network experience in Chile - Far more complex than just download speed Entel Chile’s Mobile CAPEX (No. of dimensions won over experience and consistency measured dimensions) (CLP $ Billion)
Slide 20: Powerful brand and top-class customer experience
Sustained leadership with a powerful brand and top-class customer experience Chile Mobile Brand Power (1) Chile Mobile Postpaid Customer Satisfaction (2) (Points) Entel Op 2 (Points) Entel Op 2 Op 4 Op 3 Op 4 Op 3 32 30 30 61 57 58 55 55 53 23 22 22 44 43 21 21 20 35 15 30 30 15 29 14 1Q22 2Q22 3Q22
Slide 21: Leadership reflected in ARPU
Leadership is also reflected in other key business indicators as ARPU Mobile service blended ARPU in Chile (1) (CLP) Entel Op 2 Op 3 Op 4 ARPU leadership based in brand, quality and revenue management 7.080 7.040 6.830 Further erosion in ARPU is always -3,0% feasible in this industry, however Chile’
Slide 22: Starlink direct-to-cell alliance
Connecting people is in our DNA, that's why we go further and further to bring our commitment… everywhere! Soon, millions of smartphones in Chile and Peru will be able to access direct to cell (D2C) satellite coverage, provided by the commercial alliance signed between Entel and SpaceX STARLINK (1)
Slide 23: Maintaining the lead in Chilean mobile is key
Maintaining the lead in Chilean mobile business is key… but we also want to capture some growth opportunities 23
Slide 24: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation May 2024 1. Overview and Strategy • Overview • Mobile leadership in Chile • Mobile challenger in Perú • Growth opportunity in FTTx • B2B opportunities 2. Our commitment to sustainability 3. Consolidated Results 4. Annexes 24
Slide 25: In Entel Peru, we aim to keep growing in revenue share
In Entel Peru, we aim to keep growing in service revenue share, as we have done in recent years We entered in the Peruvian market in 2014 with the goal of expanding our business into a growing market, transforming status quo dominated by two players In the last 10 years Entel changed significantly t
Slide 26: Revenue share and EBITDA growth story in Peru
Successful revenue share and EBITDA growth story, not without difficulties along the way now becoming the second largest operator in the mobile business in Peru Mobile service revenue share Entel Peru EBITDA margin (%; annual share from 2014-2023 and last available Q) Entel Op. 3 (%) Op. 2 Op.4 50.8
Slide 27: Maintaining loyalty levels close to the leader in Peru
Maintaining loyalty levels close to the leader, with narrower gaps than in Chile Average mobile postpaid port out rate in Peru (%) Op. 2 Op. 3 Entel Op.4 2.8 2.7 Market leader in Peru does not show such a strong GAP (~0.3pp) with 2.4 competitors as Entel does in Chile 2.3 2.3 2.3 2.3 (~0.6pp) 2.0 2.
Slide 28: Brand power and customer experience in Peru
Brand power and customer experience as key indicators to foster growth in a competitive market Mobile Brand Power (1) Mobile Postpaid NPS (2) (Points) Entel Op 2 Op 3 Op 4 (Points) Entel Op 2 Op 3 Op 4 30 30 30 31 26 27 24 27 28 27 27 26 20 25 22 17 24 13 23 11 22 8 9 8 21 21 19 -16 -18 -18 -20 -23
Slide 29: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation May 2024 1. Overview and Strategy • Overview • Mobile leadership in Chile • Mobile challenger in Perú • Growth opportunity in FTTx • B2B opportunities 2. Our commitment to sustainability 3. Consolidated Results 4. Annexes 29
Slide 30: Growth opportunity in FTTx through nationwide footprint
Growth opportunity in FTTx through accelerated and efficient access to nationwide footprint Protect mobile business in a competitive environment facing integrated operators Lower churn rate of integrated customers Key drivers for operating on a neutral shared FFTH network: 1 2 3 Cost sharing and Rev
Slide 31: Strategic agreements to enhance FTTx business
Strategic agreements to enhance FTTx business in Chile and Peru FTTx coverage 2022 Future FTTx coverage 154 K 1.2 Mn +5.2 Mn 4.3 Mn Home passed Home passed Home passed in Home passed in with own rollout with own rollout 2026E 2024E 1. Subject to the approval of the corresponding entities 31
Slide 32: Chile fiber transaction approved in December 2023
In Chile, the regulator approved fiber transaction in December 2023 Where we aim for a 20%-25% market share in the mid term FTTx Market Share (1) Key levers for success 4Q20 4Q23 % Change 20-23 We aspire to become the “Fibra de los Becoming the chilenos”, mirroring our current standing in 1° Op 49.4
Slide 33: Peru agreement with KKR and Telefónica
In Peru, we reached and agreement with KKR and Telefónica (1) New revenue opportunity to accompany growth of our mobile business FTTH connections FTTH Market Share (2) (Thousands) (%) 2,015 9.1% 12.9% 3.8% 31.1% 86.0% 15.4% 1,225 19.0% 2021 50.9% 2023 637 20.8% 12.4% 318 24.6% 196 91 2018 2019 2020
Slide 34: Capitalizing the power of our brand and service quality
Capitalizing the power of our brand and service quality Chile: FTTH Brand Power Q1-24 (1) Entel Chile FTTH’s key dimensions of general satisfaction (2) (points) (average weight of dimensions in general satisfaction in 2023) +0,7 18,2 4,9% Others 17,5 10,8% Price & value for money 13,2 33,2% Failure
Slide 35: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation May 2024 1. Overview and Strategy • Overview • Mobile leadership in Chile • Mobile challenger in Perú • Growth opportunity in FTTx • B2B opportunities 2. Our commitment to sustainability 3. Consolidated Results 4. Annexes 35
Slide 36: B2B opportunities
B2B opportunities We have restructured our approach to B2B segment, splitting into two separate business units: • Entel Digital • B2B Connectivity 36
Slide 37: B2B Digital Business Opportunity
digital B2B Digital Business Opportunity Entel Digital, a specialized digital/IT business unit focused on growth and creating cutting-edge digital solutions We strategically divest from datacenter infrastructure, to focus on new growing digital services (cybersecurity, video analytics solutions, hyb
Slide 38: Portfolio already delivers real life solutions
Part of the portfolio already delivers real life solutions, with potential for growth IoT - Analytics IoT – Advanced Analytics - NBIoT Monitor fleets in real time and Intelligently monitor, control and consolidate high-value metrics in one optimize natural resources. place • Comply with DGA regulati
Slide 39: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation May 2024 1. Overview and Strategy 2. Our commitment to sustainability 3. Consolidated Results 4. Annexes 40
Slide 40: Our commitment to Sustainability
Our commitment to Sustainability, aligned with our purpose and embedded in our business strategy 41
Slide 41: Entel continues its path into ESG performance
2 Entel continues its path into ESG performance 2023 Integrated Annual Report Entel Reutiliza tour in the Los Lagos Region Our fouth integrated report, which provides a This year, the initiative expects to visit 106 cities, comprehensive overview of its operations, compared to the 56 it visited in 2
Slide 42: Recognized by S&P, Merco, Brinca among others
…which has been recognized by S&P, Merco, Brinca among others Positive performance in Corporate Sustainability Assessment (CSA), S&P1 ESG Recognitions 2023 Pts. Top 20% in 2023 CSA 100 Part of the Dow Jones 90 Sustainability Indexes in its Chile 80 and MILA Pacific Alliance categories. Entel is #1 t
Slide 43: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation May 2024 1. Overview and Strategy 3. Our commitment to sustainability 3. Consolidated Results 4. Annexes 44
Slide 44: Snapshot of Entel Financials
Snapshot of Entel Financials Results as of March 2024 Consolidated Revenues 2,624 Chile Revenue EBITDA CAPEX Billion CLP 20.2 million 1,752 594 351 ∆ % 1Q23 1) (0.6%) Mobile lines 33.9% 21% EBITDA Mg. of revenues Consolidated EBITDA (31.9% Billion CLP Billion CLP Proforma Billion CLP 818 31.1% 10.5
Slide 45: Entel Group consolidated results
Entel Group consolidated results Revenues EBITDA & EBITDA Mg (CLP $ billion) (CLP $ billion, %) Pro forma EBITDA2 of CLP Organic 2022 heavy influenced Organic by Data center sale for $ $182 Billion, Ebitda Mg 544 Bn Nonorganic1 29.6% excluding 1Q23 bad Nonorganic 1,282 3,138 debt and one-time expens
Slide 46: Stable core revenues, adjacent businesses sensitive
Stable core revenues, yet adjacent businesses sensitive to economic conditions Consolidated Revenues (CLP Bn) Mobile Service Fixed Handset Others -18.0% Despite a heightened competition in Excluding Data 3,138 Center sale in 2022 Chile and Peru, mobile service revenue and FFTH sale in 2023 -2.7% is
Slide 47: Significant cost pressures in recent years
En recent years, we have experienced significant cost pressures Main costs of operations (2) (CLP $ Billion) +4.7% In Chile, cost increase due to higher USD exchange 1,223 rate and inflation could potentially impact on 1,168 2024E Consolidated EBITDA margin in -1,2pp QoQ there is an increase in ener
Slide 48: Investment plan focused on top rated network
Investment plan focused on maintaining top rated network Consolidated CAPEX (1) Consolidated CAPEX/revenue by business (CLP $ billion) Peru Mobile Home Others 15.0% Chile 548 20,1% 18,5% 476 151 118 13,5% 13,1% 396 358 2,1% 3,5% 3,3% 3,1% 2023 2024E 2023 2024E CAPEX / 18.5% 20.1% revenue %(2) (1) En
Slide 49: Net debt and leverage at a healthy level
Net debt and leverage remained at a healthy level, in line with our Inv. Grade rating Cash inflow from fiber sale had a positive impact on financials Net financial debt NFD/LTM EBITDA(1) (CLP $ Billion) (N° of times) DFN/EBITDA Including IFRS16 -27% 1,749 3.46 1,649 1,592 3.28 3.18 2.60 1,208 2.43 2
Slide 50: Healthy debt profile and fully hedged against FX
Healthy debt profile and fully hedged against FX Debt Maturity Profile (USD $ Mn) International Bonds (144A) Bank Debt Entel Chile Local Bonds Bank Debt Entel Perú 400 400 321 275 281 278 227 146 281 281 278 70 59 13 13 13 13 13 40 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 203
Slide 51: Strategic Objectives
Strategic Objectives 1 – Mobile business 2 – Entel Perú 3 – FTTH Enhance leadership in the Continue growing to achieve a To achieve a 25-30% share in mobile business to ensure larger operational scale that Chile and 15-20% in Peru, by sustained generation of better allows us to reach an EBITDA provi
Slide 52: Corporate Presentation
Empresa Nacional de Telecomunicaciones S.A Corporate Presentation Contacts: Paula Raventós, Investor Relations Officer ir@entel.cl 53
Slide 53: Thank You!
Thank You! Upcoming events Results 2Q 2024 August 5, 2024 Results 3Q 2024 November 4, 2024 Results 4Q 2024 January 29, 2025 Investor Day TBD 54
Empresa Nacional de Telecomunicaciones — Investor Presentation (May 2024) on 6ix