Vivendi Se · EURONEXT:VIV
Vivendi — Investor Presentation (June 2007)
37 slides from Vivendi's investor presentation, June 2007
Slide 1: Introduction to SFR
Introduction to SFR June 2007 Pierre Trotot - Senior Executive Vice President - Finance & Administration IMPORTANT NOTICE: INVESTORS ARE STRONGLY ADVISED TO READ THE IMPORTANT LEGAL DISCLAIMER AT THE END OF THIS PRESENTATION.
Slide 2: Agenda
Agenda 1. Overview and recent developments 2. SFR Strategy 3. Financials 1
Slide 3: Agenda
Agenda 1. Overview and recent developments 2. SFR Strategy 3. Financials 2
Slide 4: SFR group structure
SFR group structure 56% 44% 100% 40% * 30% 30% Market and investors * subject to competition authority approval/ fixed and ADSL operations 3
Slide 5: SFR: A profitable growth model (1/2)
SFR: A profitable growth model (1/2) Strong number 2 mobile operator in France (1/2) 35% customer base market share 38% value market share (network revenues) Value market share 2002-2006 45% 44% 44% 43% 43% 37% 38% 38% 38% 38% 18% 18% 19% 19% 17% 2002 2003 2004 2005 2006 SFR Orange Bouygues Tele
Slide 6: SFR: A profitable growth model (2/2)
SFR: A profitable growth model (2/2) Strong number 2 mobile operator in France (2/2) Only French operator to increase its EBITDA in 2006 Highest EBITDA margin in France at 40% of revenues Strong 41% EBITDA share EBITDA share 2002-2006 47% 48% 48% 45% 45% 39% 41% 39% 38% 38% 14% 14% 14% 15% 14%
Slide 7: 2006 performance
2006 performance Mobile revenue growth: +0.5% to €8,666 million Organic Regulatory €8,693M growth impacts €8,678M Other Organic mobile growth: + 5.0% Mobile growth incl. regulatory impacts: +0.5% Total revenue decline: 2005 2006 -0.2% Mobile EBITDA up 8.0% to €3,465M, up 4.2% excl. non recurring
Slide 8: Q1 2007 update
Q1 2007 update Best commercial MNO performance of the French market: 27k total net adds, of which 91k new contract customers Success of the launch of the Happy Zone offer Mobile internet strategy at work z 3.1M 3G customers end of March 2007 z Launch of VMCC / modem offer based on SFR 3G / 3G+
Slide 9: Levers for growth (1/2)
Levers for growth (1/2) Fixed to mobile Success of the Happy Zone offer substitution Voice AUPU: +5.5% in Q1 2007 vs. Q1 2006 at 326 min / month / customer VNOs Number of VNO customers x4.2 at 756k end of March 2007 Number of 3G customers x2.3 to 3.1M end of March 2007 Data revenues amount
Slide 10: Levers for growth (2/2)
Levers for growth (2/2) Increased stake in Neuf Cegetel to 40% - successful IPO in October 2006 Broadband (18% Neuf Cegetel ADSL market share, 23% after acquisition of Club Internet in Internet progress) Launch of ADSL SFR option in April 2007 FTTH investment to be shared with Neuf Cegetel O
Slide 11: SFR key strengths
SFR key strengths 17.9 M customers at the end of December 2006 (+4% vs. LY) with improved customer mix (65% contract vs. 63.3% in Dec-05) 3G: largest HSDPA network in Europe with 65% coverage N.1 in customer satisfaction and customer care in 2006 (TNS Sofres - BearingPoint) N.1 in network qu
Slide 12: March 2007 key Metrics (1/2)
March 2007 key Metrics (1/2) Q1-2007 Q1-2006 Growth ™ Customers (in '000) 17 910 17 328 + 3,4% Vodafone live! Customers (in '000) * 6 423 5 268 + 21,9% 3G customers (in '000) 3 133 1 352 x 1,3 EoP market share * 34,4% 35,6% – 1,2 point ™ 12-month rolling blended ARPU (€/year) ** 450 479 –
Slide 13: March 2007 key Metrics (2/2)
March 2007 key Metrics (2/2) Q1-2007 Q1-2006 Growth ™ Voice usage (min / month / customer) * 326 309 + 5,5% Number of SMS sent (M) 1 726 1 561 + 10,5% Number of MMS sent (M) 40 43 – 6,2% Net data revenue 13,9% 13,5% + 0,4 point as a % of network revenues (%) ** ™ Prepaid acquisition cost (
Slide 14: Agenda
Agenda 1. Overview and recent developments 2. SFR Strategy 3. Financials 13
Slide 15: Market trends
Market trends Mobility and internet are the two growth drivers for internet / telecom sector Internet / telecom market evolution 2006 – 2010 estimates (source: Idate) 2006 2010 Internet Internet and data Mobile and data 16% 19% Mobile 53% 58% 31% 23% Fixed Fixed Market: €35.4 bn Market est.: €39.1 b
Slide 16: SFR vision (1/3)
SFR vision (1/3) « Mobile centric » 94% of SFR customers take their mobile Continuity of usage phone everywhere through a personal and More than 1/3 of SFR customers use unconstrained service their mobile phone outside France, at least once a year 77 % of mobile users think that mobile Mobilit
Slide 17: SFR vision (2/3)
SFR vision (2/3) “mobile centric” Technical convergence Continuity of usage Technical convergence through a personal and vs through a fixed point unconstrained service Mobility is the core of SFR’s The “box” is the core of service service offering vs offering Entry point: the person vs Entry point:
Slide 18: SFR strategy (1/2)
SFR strategy (1/2) A. Develop SFR customer base: Develop customer intimacy Launch segmented and tailor-made offers Keep strong momentum in Enterprise services B. New reach: Fixed to mobile substitution « Mobile centric » Development of Mobile Internet Launch of broadband internet offer C
Slide 19: SFR strategy (2/2)
SFR strategy (2/2) Voice / Fixed to Mobile Internet ADSL Mobile Internet + substitution Audience models SFR Core Offerings Option Happy Zone Internet access SFR existing mobile offer GSM / 3G – 3G+ Web / TV 2G 2G // 3G-3G+ 3G-3G+ // WiFi WiFi // WiMAX WiMAX ADSL ADSL Voice Mobile Internet Æ Internet
Slide 20: Mobile growth: Voice and data usage growth with 3G (1/3)
A- Mobile growth: Voice and data usage growth with 3G (1/3) 3G: more capacity for voice usage z AUPU is up 10.5% in 2006 to 327 min / month / customer z +19% in network traffic One of the largest EU HSDPA network to date: 65% HSDPA coverage 3G+: quantum leap in user experience for data z A deb
Slide 21: Mobile growth: Data usage (2/3)
A- Mobile growth: Data usage (2/3) Messages Visio Music SMS and MMS: News z +10.5% of SMS and –6.2% of Video & TV MMS in March YTD-2007 vs. March YTD-2006 Games: z 600 games available, 1.25 M Games games downloaded in March YTD-2007 Enterprise services TV / Vidéo: z 80 channels (CanalSat and T
Slide 22: Mobile growth: Enterprise segment (3/3)
A- Mobile growth: Enterprise segment (3/3) Strong development of enterprise activity z +16% lines Strong dynamism on large accounts z Renault, SPIE, Danone Strong increase in market shares Strong development of Mobile data z PC Mobile Connect Card: +69% vs 2005 z Blackberry®: +86% vs 2005 z
Slide 23: New reach: Fixed to Mobile substitution (1/5)
B- New reach: Fixed to Mobile substitution (1/5) Continuity of mobile usage at home and around enabled by 3G / 3G+ capacity Happy Zone assets: z Offerings with discounted tariffs for calls made from home z Customers keep their favorite handset z Large success in other European countries Option
Slide 24: New reach: Mobile internet (2/5)
B- New reach: Mobile internet (2/5) Internet is naturally extended into mobile (1/2) Increasingly proven business models Experimental / new business models Share Share & & Communication Search Search & & Create Communication eCommerce Create Shared Shared eCommerce Communication Communication // Con
Slide 25: New reach: Mobile Internet (3/5)
B- New reach: Mobile Internet (3/5) First success: ongoing deals with fixed Internet players: First success: SFR music strategy: z Music both on mobile and PC: Top 3 of legal downloading platforms in France Success of “SFR Jeunes Talents” 24
Slide 26: New reach: Internet, launch of ADSL offer (4/5)
B- New reach: Internet, launch of ADSL offer (4/5) SFR launched ADSL offerings in April 2007 z An option on top of mobile offerings z Continuity of mobile services on the internet z Strong focus on customer service with “connect” assistance Strong assets in fixed and ADSL: zTélé2 France acquisit
Slide 27: New reach: Fixed and Internet, Neuf Cegetel (5/5)
B- New reach: Fixed and Internet, Neuf Cegetel (5/5) SFR is the 1st shareholder of Neuf Cegetel with a 40% stake (average acquisition cost of €12.5 / share) Revenues up 5% to €2.8bn: z Mass market: +18% at €872M z Enterprise: +7% ay €971M Neuf Cegetel revenue breakdown Revenues, €m Key market in
Slide 28: Operational Excellence: cost control (1/3)
C- Operational Excellence: cost control (1/3) Cost control to prepare future growth Capex Opex & customer base evolution 2002 – 2006 z 3G / 3G+ already cover 65% of 131 126 French population 116 108 Base 100 Decrease in fixed and variable Opex in 2002 92 89 87 86 costs z Multi-year cost reductio
Slide 29: Operational Excellence: cost control (2/3)
C- Operational Excellence: cost control (2/3) Cost control to prepare future growth Prepared for future cost structure adjustments z UMTS strategy (incl. 900 MHz / site sharing / improvement of quality / decrease in costs of 3G infrastructure) z Transition to an “all IP” network core infrastructur
Slide 30: Operational Excellence: distribution (3/3)
C- Operational Excellence: distribution (3/3) Distribution is key to support mobile, fixed and ADSL strategy More than 750 mobile shops in 2006 z Strong geographical coverage z Secure higher quality of sales z Opportunity to sale additional services ADSL and fixed Digital content Insurance …
Slide 31: Conclusion
Conclusion SFR has strong assets … z A close relationship with its 17.9 million mobile customers z A strong brand z A good quality of its 2G and 3G/3G+ networks z A deep commercial network: 750 SFR stores z A customer care service ranked number 1 in satisfaction surveys z A 40% stake in the first
Slide 32: Agenda
Agenda 1. Overview and recent developments 2. SFR Strategy 3. Financials 31
Slide 33: Simplified P&L statement – SFR Group
Simplified P&L statement – SFR Group IFRS in millions of euros 2005 2006 0 6 vs 0 5 2007 Guidance Revenues 8 693 8 678 -0,2% “Revenues: Slight decline, despite strong regulated price o.w. mobile revenues 8 623 8 666 +0,5% cut (-21% cut of voice MT rates)” Reported EBITDA* 3 209 3 449 +7,5% EBITDA m
Slide 34: Simplified Cash Flow Statement – SFR Group
Simplified Cash Flow Statement – SFR Group IFRS 2007 Guidance in millions of euros 2005 2006 0 6 vs 0 5 EBITDA* 3 209 3 449 7,5% CAPEX net 923 1 133 22,8% CFFO 2 268 2 430 7,1% “CFFO: Stable” Net debt 2 235 2 256 nm * Actual 2005 included €(115)M non recurring items **GSM licence of €278M renewed in
Slide 35: March 2007 update: Q1 Performance
March 2007 update Q1 Performance €2.096 bn revenues in March YTD 2007 (–1.8% vs LY but -0.9% on network revenues at €1.998 bn) Excluding the impact of the regulated tariffs decrease, the YoY growth of network revenues would have been +2.6% Organic Regulatory €2,016M growth €1,998M impacts Organi
Slide 36: Vivendi IR Team
Vivendi IR Team Daniel SCOLAN Executive Vice President Investor Relations +33.1.71.71.14.70 daniel.scolan@vivendi.com Paris New York 42, Avenue de Friedland 800 Third avenue 75380 Paris cedex 08 / France New York, NY 10022 / USA Phone: +33.1.71.71.12.33 Phone: +1.212.572.1334 Fax: +33.1.71.71.14.16
Slide 37: Important Legal Disclaimer
Important Legal Disclaimer This presentation contains forward-looking statements with respect to the financial condition, results of operations, business, strategy and plans of Vivendi. Although Vivendi believes that such forward-looking statements are based on reasonable assumptions, such statement