Empresa Nacional De Telecomunicaciones S.a. · BCS:ENTEL
Empresa Nacional De Telecomunicaciones — Q4 2023 Earnings Presentation
57 slides from Empresa Nacional De Telecomunicaciones's earnings presentation, February 2024
Slide 1: Corporate Presentation
Empresa Nacional de Telecomunicaciones S.A Corporate Presentation Contacts: Paula Raventós, Investor Relations Officer Santiago Uauy, Investor Relations Analyst ir@entel.cl
Slide 2: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation February 2024 1. Overview and Strategy 2. Consolidated Results 3. Our commitment to sustainability 4. Leader Telco in Chile 5. Growing player in Perú 2
Slide 3: 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 4: 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 5: Latest Events
Latests Events 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 opportunity,
Slide 6: Shareholders and stock performance during 2023
Shareholders and stock performance during 2023 Entel shareholders Structure Stock performance during 2023 % 125% 18.68% 14.34% 120% 12.57% 115% As of As of 12.83% December December 2022 54.86% 2023 54.86% 110% 18.23% 105% 13.63% 100% Ex dividend date $94 per share 95% Altel Pension Funds Foreign Inv
Slide 7: Strong presence in Chile and Perú
Strong presence in Chile and Perú: More than 20 million mobile users and 500K RGU Mobile users (Th.) +11.3% 47% of total mobile users CAGR 20,062 20,477 20,246 11% of total RGU 18,185 18,185 9,128 8,955 8,343 Prepaid -0.9% 8,663 8,663 10,933 11,522 11,903 Postpaid 9,522 9,522 +5.7% 4Q20 4Q20 4Q21 4Q
Slide 8: Good positioning in spectrum in both countries
Good positioning in spectrum 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 1700 40 MHz 2600 40 MHz 1900 35 MHz 8,0% 35001 100 MHz 2300 30 MHz
Slide 9: 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 Technological and Maintain leadership Grow in home Take Digital business to achieve quality leadership in in Mobile Business business in a mu
Slide 10: Sustained leadership in Chilean mobile market
Long trend of sustained leadership in Chilean mobile market… a matter of great satisfaction 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 a very agg
Slide 11: Market leadership and 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 (63 Countries) Leaders’ average mobile [EBITDA – CAPEX] mg of 22% 8.0 pp 22.0% Entel Chile’s 5-year avera
Slide 12: Healthy cash margins in Chile over time
This has enabled Entel in Chile to deliver healthy cash margins over time, under a wide variety of scenarios Entel Chile’s EBITDA after leases and (EBITDA after leases – CAPEX) organic margin without home business and DC (%) EBITDAL Mg (EBITDAL-CAPEX) Mg Average EBITDAL-CAPEX 34.4% 35.8% 35.3% 35.7%
Slide 13: 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) (As of September 2023) +0.7p.p Industry 1.8% v
Slide 14: Commitment to investing for 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 Mobile Network CAPEX in Chile complex than just download speed (CLP $ Billion) 5G Network 4G Network Cross-functional networks (No. of dimensions gained
Slide 15: Leadership reflected in other key business indicators
Leadership is also reflected in other key business indicators Mobile service blended ARPU in Chile (1) (CLP) Entel Op. 2 Op. 3 Op.4 ARPU leadership based in brand, quality 7,472 and revenue management 7,080 6,956 6,844 Further erosion in ARPU is always 6,325 feasible in this industry, however Chile’
Slide 16: Capturing growth opportunities
Maintaining the lead in chilean mobile business is key… but we also want to capture some growth opportunities
Slide 17: Entel Peru: growing revenue share to achieve scale
In Entel Peru, we aim to grow in revenue share, in order to achieve scale in our mobile business We entered in the peruvian market in 2014 with the goal of expanding our business into a growing market, dominated by two players Our strong value proposition in terms of brand and overall experience has
Slide 18: Revenue share growth story in Peru
Successful revenue share growth story, not without difficulties along the way now becoming the second largest operator in the mobile industry in Peru Mobile service revenue share (%; annual share from 2014-2023 and last available Q) Entel Op. 2 Op. 3 Op.4 39.0 38.6 36.5 36.6 37.2 39.9 38.7 37.7 38.6
Slide 19: Progressively improving customer loyalty
Progressively improving customer loyalty, key success factor Average mobile postpaid port out rate in Peru (%) Market leader in Peru does not show Entel Op. 2 Op. 3 Op.4 such a strong GAP with competitors as Entel does in Chile. Historically, we consistently found 2.4 2.3 2.4 2.5 ourselves trailing
Slide 20: Reaching scale with additional +3 pp revenue share
Focus to a fairly reachable scale with additional +3 pp of revenue share Challenging but feaseble objective that would lead us to better profitability EBITDA margin according to revenue share of 2nd best operator Scale challenge (%) Entel Peru´s 2025-2027 target Expanding the brand Mg EBITDA In orde
Slide 21: Growth opportunity in FTTH through nationwide footprint
Growth opportunity in FTTH through accelerated and efficient access to nationwide footprint Key drivers for operating on a neutral shared FFTH network: CAPEX, asset monetization, cost sharing and faster expansion Lower CAPEX Asset monetization by Cost sharing and intensity operators accelerating cov
Slide 22: Strategic agreements to enhance FTTx business
Strategic agreements to enhance FTTx business in Chile and Peru FTTx coverage 2022 FTTx coverage 2024E1 154 K 1.2 Mn +2 Mn 4.3 Mn Home passed Home passed Home passed and Home passed with own rollout with own rollout +5.2 Mn in 2026E 1. Subject to the approval of the corresponding entities 22
Slide 23: Chile fiber transaction approved; 25% market share aim
In Chile the regulator approved fiber transaction in December 2023 Where we aim for a 25% market share in the mid term FTTH Market Share Key levers for growth % Change 3Q20 3Q23 20-23 We aspire to become the go-to alternative Becoming the 1° Movistar 49.4% 44.3% -5.1% for FTTH, mirroring our current
Slide 24: Peru agreement with KKR and Telefónica
In Peru we reached and agreement with KKR and Telefónica New revenue opportunity to accompany growth of our mobile business FTTH connections FTTH Market Share (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 2021 2022
Slide 25: Capture B2B digital opportunities: Entel Digital
Capture B2B digital opportunities where telco´s have a right to play Entel Digital We strategically divest from datacenter infrastructure, to focus on new growing digital services (cybersecurity, video analytics solutions, hybrid-cloud services, wide range of IoT solutions, SAS alliances, etc) We ha
Slide 26: Narrow Band IoT growth opportunity in B2B
Narrow Band IoT (NB-IoT) – Growth oportunity in B2B Narrowband IoT (NB-IoT) is a mobile radio technology belonging to LPWA (Low-Power Wide-Area) networks that allows for longer battery life, lower device costs, and improved coverage in indoor and outdoor areas. What use cases does it enable? Smart S
Slide 27: Digital portfolio delivering 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 28: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation February 2024 1. Overview and Strategy 2. Consolidated Results 3. Our commitment to sustainability 4. Leader Telco in Chile 5. Growing player in Perú 28
Slide 29: Snapshot of Entel Financials
Snapshot of Entel Financials Results as of December 2023 Consolidated Revenues 2,573 Chile Revenue EBITDA CAPEX Billion CLP 20.2 million 1,733 592 34.1% 342 ∆ % 22(1) (-2.7%) Mobile lines 19.7% EBITDA of revenues Consolidated EBITDA Billion CLP Billion CLP Mg. Billion CLP 762 29.6% 10.6 million Bill
Slide 30: Entel Group consolidated results
Entel Group consolidated results Revenues EBITDA & EBITDA Mg (CLP $ billion) Other Gains1 (CLP $ billion, %) EBITDA Mg Ex. other gains 2022 heavy influenced by Data center sale for $ -18% 544 Bn 2022 impacted by 3,138 +66% Data center sale and 2,460 545 2,573 2023 by fiber, bad 51 1,282 2,147 21 deb
Slide 31: Consolidated revenue distribution for 2023
Consolidated revenue distribution for 2023 Chile Mobile 46.0% Perú Mobile 31.0% Chile Fixed 16.3% Other Revenues 2.7% Mobile revenues are the core business in Chile Wholesale 2.0% Chile and Peru. Contributing +75% of consolidated revenues. Perú Fixed 1.1% Fixed services are an important source of re
Slide 32: Stable core revenues, adjacent businesses sensitive
Stable core revenues, yet adjacent businesses sensitive to economic conditions Consolidated Revenues (CLP Bn) Mobile Service Fixed 3,138 Handset Others Despite a heightened competition in 597 Chile and Peru, service revenue still 2,460 2,573 growing but at a slower pace 99 -2.6% 51 2,147 510 487 530
Slide 33: Cost pressures associated with inflation
En recent years, we have experienced significant cost pressures associated with inflation Main costs of operations2 (CLP $ Billion) CAGR In 2023, we launched an internal 1,336 2023- 2022 7.5% 1,268 program to become leaders in 133 Others 8.9% 117 efficiencies. The first significant 1,106 113 Bad deb
Slide 34: Investment plan focused on top rated network
Investment plan focused on maintaining top rated network Consolidated Capex Consolidated Ebitda - Capex (CLP $ billion) (CLP $ billion) 767 515 476 445 122 118 314 327 370 93 286 96 2020 2021 2022 2023 393 353 358 Rationale of investments 274 ▪ Capex mostly driven by demand and technologies. ▪ Focus
Slide 35: Healthy leverage amid intensive CAPEX cycle
Sustaining a healthy leverage amids intensive CAPEX cycle Cash inflow from fiber sale had a positive impact on financials Net financial debt NFD/LTM EBITDA(1) (CLP $ Billion) (N° of times) Including IFRS16 1,749 1,598 1,649 1,592 Cash from 3.46 Fiber sale for 3.28 3.18 CLP $ 412 Bn 3.00 1,148 2.60 2
Slide 36: Healthy debt profile and fully hedged against FX
Healthy debt profile and fully hedged against FX Debt Maturity Profile (USD $ Mn) International Bonds Bank Debt Entel Chile 400 400 Local Bonds Bank Debt Entel Perú 317 321 308 281 252 146 281 281 308 74 252 97 14 14 14 14 14 40 14 14 14 14 14 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2
Slide 37: Positive cash flow in a challenging environment
Positive cash flow In a challenging environment Consolidated Cash Flow1 (CLP $ Millions) 2023 2022 • Lower EBITDA explained by one time costs in 1Q23 EBITDA 763,562 1,282,013 and weaker handset revenue % of revenues 29.6% 40.9% • Sale of fiber in Chile IFRS16 (143,608) (134,864) 2023 • Capex displac
Slide 38: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation February 2024 1. Overview and Strategy 2. Consolidated Results 3. Our commitment to sustainability 4. Leader Telco in Chile 5. Growing player in Perú 38
Slide 39: Our commitment to Sustainability
Our commitment to Sustainability, aligned with our purpose and embedded in our business strategy 39
Slide 40: A history of business entangled with sustainability
Entel, a history of business entangled with sustainability Entel was established in the aftermath of the 1960 Valdivia Earthquake 1964 Entel was founded to connect people First Satellite Radio Station 1969 Live broadcast of the moon landing, only country in LATAM “Todo Chile Comunicado” Project 1,40
Slide 41: Steps into our 2030 ESG strategy
During 2023 we have taken important steps into our 2030 ESG strategy… Sustainability Inclusive Proud supporter Bond Reporting Attention of Santiago 2023 USD +600 Mn use for access Sign language assistance for Strengthen 4G and 5G to basic infrastructure and communication between networks and providi
Slide 42: Recognized by S&P, Merco, Brinca
…which has been recognized by S&P, Merco, Brinca among others Positive performance in Corporate Sustainability Assessment (CSA), S&P1 ESG Recognitions 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 telco
Slide 43: Awards and recognitions
Awards and recognitions Top Employer Chile Merco ESG Recognized as one of the 17 companies with the best 9th place in the general list of best reputational labor practices in Chile. We were certified with the companies and at the head of the Top Employer Chile 2023 seal telecommunications industry i
Slide 44: 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 45: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation February 2024 1. Overview and Strategy 2. Consolidated Results 3. Our commitment to sustainability 4. Leader Telco in Chile 5. Growing player in Perú 45
Slide 46: Steady growth in postpaid and FTTH subscribers
Steady grow in postpaid and FTTH subscribers Mobile users (Th.) +13.9% Postpaid Market Share1 CAGR 10,166 10,421 10,594 9,300 9,300 3,483 3,294 Prepaid -3.8% 3,636 3,491 3,491 36.6% As of 7,300 3Q23 63.4% 6,530 6,938 Postpaid 5,809 5,809 +10.1% Others 4Q20 4Q20 4Q21 4Q22 4Q23 RGU (Th.) FTTH Market S
Slide 47: Stable results despite a challenging scenario
Stable results despite a challenging scenario Excluding other gains and proceeds from assets sale Revenues Revenue and EBITDA by business as of 2023(1) (CLP $ billion) +1.2% 1,642 1,663 1,682 1,446 Mobile Businesss 73% Fixed Business 27% 2020 2021 2022 2023 20% 40% 60% EBITDA & EBITDA Margin (CLP $
Slide 48: Entel maintains leadership and lower port out
In a highly competitive market, Entel maintains leadership and lower port out Mobile service revenue Share(1) Postpaid monthly port-out rate(2) % % 1.80% 1.72% 39.4% 39.8% 40.5% 40.5% 40.0% 1.59% 1.60% 1.51% 1.44% 1.28% 25.7% 25.3% 25.3% 25.0% 25.0% 20.5% 21.5% 1.00% 18.6% 20.5% 20.8% 0.92% 0.87% 0.
Slide 49: Leadership in brand power, ARPU and market share
Sustained leadership in brand power, ARPU and market share Brand Power(1) Market Share mobile connections (2G – 5G) (1) (Points) (%) 35 31 40 28 29 30 25 22 22 35.5% 35.0% 34.9% 23 21 22 34.5% 34.3% 20 20 35 15 14 15 14 30 10 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 25.2% 25.4% 25.3% 25.6% 24.9% ARPU Mobile Se
Slide 50: Main challenges in Chile
Main challenges in Chile Industry leaders Customers Undisputed leaders in the mobile On a continuous journey to provide business, challenged to maintain the best experience to our clients. leadership in a highly competitive Our positive perception stems market and a slowing post- from our closeness
Slide 51: Agenda
Empresa Nacional de Telecomunicaciones Agenda Corporate presentation February 2024 1. Overview and Strategy 2. Consolidated Results 3. Our commitment to sustainability 4. Leader Telco in Chile 5. Growing player in Perú 51
Slide 52: Robust growth of mobile base in Peru
Robust growth of mobile base leverages market presence Mobile users (Th.) +8.6% Postpaid Market Share1 CAGR 9,895 10,057 9,652 8,885 8,885 5,492 5,472 5,049 -0.6% Prepaid 5,172 5,172 As of 25.1% 74.9% Others 3Q23 4,403 4,585 4,603 Postpaid +5.5% 3,713 3,713 4Q20 4Q20 4Q21 4Q22 4Q23 RGU (Th.) Prepaid
Slide 53: Positive trends in Perú despite one-time events
Despite one-time events in 2023, positive trends in Perú Excluding other gains and proceeds from assets sale Revenues Revenue and EBITDA by business 2023 (1) (USD $ million) -8.6% 1,094 1,096 1,002 Mobile Businesss 94.3% 794 Fixed Business 5.7% 20% 40% 60% 80% 2020 2021 2022 2023 EBITDA & EBITDA Mar
Slide 54: Key Indicators: brand and network indicators
Key Indicators: Powerful brand and network indicators to foster growth Brand Power(1) Network Indicators (2) (Points) (%) 35 30 30 30 9.98 30 4G 27 25 26 27 Average 12.74 24 23 23 20 20 20 21 Speed 11.92 2° 15 (November-23) 9.52 3Q22 4Q22 1Q23 2Q23 3Q23 Mbps ARPU Mobile Services(1) (USD) 79.88 8 4G
Slide 55: Second largest operator in mobile service revenue share
Entel has became the second largest operator in mobile service revenue share Mobile service revenue Share(1) Postpaid monthly port-out rate(2) % % 38.6% 2,76 37.6% 37.3% 37.5% 2,62 2,57 2,57 2,51 2,49 2,47 2,48 26.5% 26.3% 26.4% 24.6% 2,33 23.4% 23.6% 23.8% 24.1% 2,20 2,17 2,08 2,04 1,99 1,97 12.5%
Slide 56: Main Challenges in Peru
Main Challenges in Peru Closing the gap Scale Challenges Continuing the path to increase Continuing to grow our mobile revenue share, supported by our base and achieve EBITDA margins customer-centric approach and close to 30% in the upcoming network coverage. years Opportunity in FTTH1 Technology Op
Slide 57: Thank You!
Thank You! Upcoming events Results 1Q 2024 May 6, 2024 Results 2Q 2024 August 5, 2024 Results 3Q 2024 November 4, 2024 Results 4Q 2024 January 29, 2025 Investor Day TBD 57
Empresa Nacional de Telecomunicaciones S.A. (Entel) — Q4 2023 Earnings Presentation on 6ix