Empresa Nacional De Telecomunicaciones S.a. · BCS:ENTEL
Empresa Nacional De Telecomunicaciones — Investor Presentation (September 2023)
51 slides from Empresa Nacional De Telecomunicaciones's investor presentation, September 2023
Slide 1: Corporate Presentation
Empresa Nacional de Telecomunicaciones S.A Corporate Presentation September 2023 Contacts: Paula Raventós, Investor Relations Officer Santiago Uauy, Investor Relations Analyst ir@entel.cl
Slide 2: Table of Contents
Table of Contents 1. Entel Overview 2. Leader Telco in Chile 3. Growing in Peru 2
Slide 3: Empresa Nacional de Telecomunicaciones
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: Building a resilient shareholder base
Building a resilient shareholder base Entel shareholder's structure Stock performance Others 125% Entel 14.4% IPSA 120% 115% Foreign Investors 13.6% 110% Altel1 54.9% As June 2023 105% 17.2% 100% Ex dividend date Pension Funds $94 per share 95% 90% Jan - 23 Sept - 23 With a market capitalization of
Slide 6: More than 20 million mobile users and 620K RGU
More than 20 million mobile users and 620K RGU Mobile users (Th.) +16.4% 47% of total mobile users CAGR 2Q23- 20,062 20,478 20,238 13% of total RGU 2019 17,385 18,185 9,128 8,955 8,633 Prepaid -2% 8,663 9,305 10,933 11,522 11,605 Postpaid 8,080 9,522 +11% 2019 2020 2021 2022 2Q23 RGU (Th.) -25.2% 83
Slide 7: Good positioning in spectrum in both countries
Good positioning in spectrum in both countries Spectrum Share Spectrum Share2 (%) (%) 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 1700 40 MHz 1900 60 MHz 1900 35 MHz 2600 40 MHz 2300 30 MHz 8,0% 35001 100 MHz 2500 40 MH
Slide 8: 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 9: Long trend of sustained leadership in Chilean mobile market
Long trend of sustained leadership in Chilean mobile market… we are very proud about it Mobile service revenue share in Chile (1) (%; anual share from 2016-2022 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 aggress
Slide 10: Market leadership is about better profitability
But market leadership is not only about pride, it´s about better profitability It allows sustained financial outperformance in the mobile business Mobile [EBITDA – CAPEX] mg GAP leader v/s rest of the industry 2022 (x axis country, y axis GAP in pp, N = 39 countries) Leaders’ average mobile 50pp [EB
Slide 11: 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 36.1% 34.5% 33.6% 32.0%
Slide 12: Leadership is about loyalty, built upon superior 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 industry port-out self declared reasons in Chile (2) (2022 monthly average) Handsets Custo
Slide 13: Leadership is also reflected in other key business indicators
Leadership is also reflected in other key business indicators Mobile service blended ARPU in Chile (1) (CLP) Entel P1 P2 P3 ARPU leadership based in brand, quality 7,472 and revenue management 7,080 6,956 Further erosion in ARPU is always 6,325 feasible in this industry, however Chile’s 5,957 curren
Slide 14: FTTx strategic approach to be successful and profitable
FTTx strategic approach to be successful and profitable Capitalizing on our strong brand position, distribution channels and know how for home internet services Key to protect our profitable mobile service business, under a market scenario of integrated competitors Financial success requires partner
Slide 15: Growth opportunity in FTTH through nationwide footprint
Growth opportunity in FTTH through accelerated and efficient access to nationwide footprint Low internet household penetration in Chile and Peru (70% and 33% in 2022) opens growth opportunity (Average OECD 87%) Both markets with one or two dominant players Window of opportunity due to technological
Slide 16: Strategic agreements to enhance FTTx business in Chile and Peru
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 16
Slide 17: In Entel Peru, we aim to grow in revenue share
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: Successful revenue share growth story
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 2014-2022 and last available Q) Entel P1 P2 P3 50.8 49.9 45.3 38.5 37.6 36.9 35.7 35.8 41.7 35.0 35
Slide 19: Progressively improving customer loyalty
Progressively improving customer loyalty, key success factor Average mobile postpaid port out rate in Peru (%) Entel P1 P2 P3 Market leader in Peru does not 2,7 show such a strong GAP with competitors as Entel does in Chile. 2,3 2,3 2,3 2,1 Historically, we consistently found 2,1 2,2 2,0 2,2 2,0 our
Slide 20: Focus to a reachable scale with additional +3 pp of 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 ord
Slide 21: 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) For t
Slide 22: Entel is constantly allocating their assets
Entel is constantly allocating their assets And developing strategic transactions Towers Data Center Fiber Optic1 • Maximizing the value of tower • Housing business threatened by the arrival • Expanding FTTx coverage rapidly through infrastructure by increasing the tenancy of hyperscalar in Chile an
Slide 23: Snapshot of Entel financials
Snapshot of Entel financials Results as of June 2023 Consolidated Revenues 1,231 Chile Revenue EBITDA CAPEX Billion CLP 20.23 million 830 268 32.3% 177 ∆ % 6M221 (-6.3%) Mobile lines 21.4% EBITDA of revenues Consolidated EBITDA Billion CLP Billion CLP Mg. Billion CLP 325 26.4% 10.46 million Billion
Slide 24: Entel Group consolidated results
Entel Group consolidated results Revenues EBITDA & EBITDA Mg (CLP $ billion) Proceeds from Chile and Peru (CLP $ billion, %) Ebitda Mg. Data center of CLP $545 Bn +66% +28% 3,138 6M22 includes proceeds from 1,282 Chilean data centers for CLP $485 2,460 -63% 2,147 -32% 876 1,800 772 684 1,231 49% 325
Slide 25: Consolidated revenue distribution as of June 2023
Consolidated revenue distribution as of June 2023 Chile Mobile 46.6% Peru Mobile 30.3% Chile Fixed 16.5% Chile Wholesale 2.7% Mobile revenues are the core business in Others Revenues 1.8% Chile and Peru. Contributing 75% of consolidated revenues. Peru Fixed 1.1% Fixed services are an important sourc
Slide 26: Stable core revenues, yet adjacent businesses sensitive to economic conditions
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 growing but at a slower pace 51 2,147 510 55 487 Decline in hand
Slide 27: Consistent EBITDA amidst intensified competition and rising costs
Consistent EBITDA amidst intensified competition and rising costs EBITDA Net Profit (CLP Bn, %) Other gains/losees (CLP Bn) Organic Net Profit (2) 1,282 Extraordinary profit 545 876 772 457 684 486 384 361 752 737 325 84 643 75 390 -16.6% 43 16 347 +84% 73 25 42 59 14 2020 2021 2022 1H22 1H23 2020 2
Slide 28: Investment plan focused on maintaining top rated network
Investment plan focused on maintaining top rated network Consolidated Capex Consolidated Ebitda - Capex (CLP $ billion) (CLP $ billion) 767 515 518 445 122 139 93 314 327 370 212 96 2020 2021 2022 LTM as 2Q23 393 379 353 Rationale of investments 274 ▪ Capex mostly driven by demand and technologies.
Slide 29: Sustaining a healthy leverage amids higher inflation and intensive CAPEX
Sustaining a healthy leverage amids higher inflation and intensive CAPEX Ratios are expected to decline during 2H23 given higher cash inflows Net financial debt (Net Financial debt)/ EBITDA(1) (CLP Bn, %) Including IFRS 16 1,749 EBITDA LTM no longer captures proceeds from data center sale 3.46 1,426
Slide 30: Manageable maturity profile, positive ratings and stable outlook
Manageable maturity profile, positive ratings and stable outlook Debt Maturity Profile (USD Mn) International Bonds Bank Debt Chile 400 400 Local Bonds Bank Debt Perú 321 330 281 270 249 223 146 281 146 103 77 15 15 15 15 15 40 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 20
Slide 31: Positive and sustainable consolidated cash flow from operations
Positive and sustainable consolidated cash flow from operations % 2022 figures positively CLP Bn 2020 2021 2022 1H 22 1H 23 impacted by data center sale for 1H23-1H22 CLP $544 Bn in Chile and Peru. EBITDA (Inc. IFR16 and cash from asset sale (1)) 624 671 1,196 854 256 (70%) On the contrary, 2023 aff
Slide 32: Positive cash flow
Positive cash flow In a challenging environment 558 Simplified cash flow (CLP $ Billion) 2021: includes 5G licences for CLP 100,375 million 409 and tower sales for CLP 20,830 million. 2022: includes sale of Chile Data center for CLP 485,684 and Peru Data Center for CLP 59,366 263 million. 2023: Incl
Slide 33: Table of Contents
Table of Contents 1. Entel Overview 2. Leader Telco in Chile 3. Growing in Peru 33
Slide 34: Steady grow in postpaid and FTTH subscribers
Steady grow in postpaid and FTTH subscribers Mobile users (Th.) +15.1% Postpaid Market Share1 CAGR 10,166 10,421 10,467 9,092 9,300 3,636 3,483 3,379 Prepaid -5% 3,491 36.4% 4,115 As of 2Q23 63.6% 6,530 6,938 7,088 Postpaid 4,978 5,809 +11% Others 2019 2020 2021 2022 2Q23 RGU (Th.) FTTH Market Share
Slide 35: Stable results despite a challenging scenario
Stable results despite a challenging scenario Excluding proceeds/losses from asset sales Revenues Revenue and EBITDA by business as of 2Q231 (CLP $ billion) +1.3% 1,642 1,663 1,446 Mobile Business 73% -0.9% 838 830 Fixed Business 27% 2020 2021 2022 6M22 6M23 20% 40% 60% EBITDA & EBITDA Margin (CLP $
Slide 36: Entel consistently ranking #1 in market share and revenue share
Entel consistently ranking #1 in market share and revenue share Mobile Market Share (Postpaid)1 Mobile Service Revenue Share1 35.6% 35.8% 36.1% 36.3% 36.4% 39.8% 39.8% 39.5% 40.5% 40.5% 26.0% 26.2% 25.9% 25.7% 25.4% 25.0% 25.3% 25.7% 25.3% 25.0% 16.0% 15.4% 15.3% 15.1% 15.2% 13.9% 13.1% 13.0% 12.8%
Slide 37: Positive indicators and strong presence across technologies
Positive indicators and strong presence across technologies Brand Power1 29% 35 30 32 5G 0% 30 43.4% of total connections 43% 25 22 (June-23) 22 27% 20 21 21 15 15 14 20% 10 2Q22 3Q22 4Q22 1Q23 2Q23 4G 20% 32.7% of total Entel P2 P3 P4 connections 33% (June-23) 25% ARPU Mobile Services2 (CLP $th.) 2
Slide 38: Main challenges in Chile
Main challenges in Chile Industry Leader 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 a
Slide 39: Table of Contents
Table of Contents 1. Entel Overview 2. Leader Telco in Chile 3. Growing in Peru 39
Slide 40: Robust growth of mobile base leverages market presence
Robust growth of mobile base leverages market presence Mobile users (Th.) +17.8% Postpaid Market Share1 CAGR 9,895 10,057 9,772 8,885 8,293 5,492 5,472 5,255 +0.4% Prepaid 5,172 As of 5,191 25.1% 74.9% Others 2Q23 4,403 4,585 4,517 Postpaid +11% 3,102 3,713 2019 2020 2021 2022 2Q23 RGU (Th.) Prepaid
Slide 41: One-time events impacted Peru results in 2023
One-time events impacted Peru results in 2023 Excluding proceeds/losses from asset sales Revenues Revenue and EBITDA by business as of 2Q231 (USD $ million) +0.2% 1,118 1,120 Mobile Business 94% 811 -14.2% 596 511 Fixed Business 6% 2020 2021 2022 6M22 6M23 20% 40% 60% 80% EBITDA & EBITDA Margin (USD
Slide 42: The gap with the second largest operator continues to narrow
The gap with the second largest operator continues to narrow Mobile Market Share (Postpaid) Mobile Service Revenue Share 25.9% 25.9% 26.1% 25.2% 25.1% 24.5% 23.9% 24.4% 25.1% 25.2% 29.2% 29.2% 28.6% 29.0% 28.8% 27.6% 28.5% 27.7% 25.5% 25.2% 31.4% 31.7% 32.0% 32.5% 32.4% 35.9% 35.8% 36.1% 37.4% 37.6%
Slide 43: Regional growth opportunity
Regional growth opportunity B2C Postpaid base distributed by cluster A B C Iquitos Peru population 51% 31% 18% Entel subscribers (MM) 2.1 0.9 0.3 Cluster A -4.9% +3.6% +1.4% % of total subscribers 63.0% 27.5% 9.5% Cluster B Market share 29.4% +2.9% 21.5% +4.2% 12.8% +2.5% Cluster C % ∆ 2Q23/4Q19 Clu
Slide 44: Key Indicators
Key Indicators Good performance in brand perception and network indicators Brand Power1 Network Indicators2 35 30 10.18 30 4G 27 25 Average 13.00 23 20 20 Speed 11.97 2° 15 (June-23) 9.08 2Q22 3Q23 4Q22 1Q23 2Q23 Mbps ARPU Mobile Services1 (USD) 79.59 8 4G 6.7 6.8 78.17 7 Latency 2° 6 5.6 79.38 5.3
Slide 45: Main Challenges in Peru
Main Challenges in Peru Closing the gap Scale Challenges Continuing on 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
Slide 46: Entel, 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 47: Our commitments
Today we have recently reformulated our strategy Currently working out with business&operations teams renewed portfolio projects and goals Socially Environmentally Economically Inclusive Sustainable Responsible Our commitments • Building a diverse, agile, stimulating and Addressing climate change by
Slide 48: Awards and recognitions
Awards and recognitions Top Employer Chile Merco ESG International certification that evaluates human Monitor of corporate reputation lists Entel as the talent management practices leader in ESG reputation for the industry in Chile and #21 among all. Dow Jones Sustainability Index Open Signal Recogn
Slide 49: 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 multi- Business scale of operation
Slide 50: Summary of strategic objectives
Summary of strategic objectives Mobile business Digital business 1 4 Continue providing the best network From 4% to 10% of consolidated revenues, with experience, throughout necesary investments services that we can provide for both in the technological shift, to keep our Oper.FCF countries. Aiming
Slide 51: Thank You!
Thank You! Upcoming events Results 3Q 2023 November 6, 2023 Results 4Q 2023 January 24, 2024 For more information, visit our webpage 51
Empresa Nacional de Telecomunicaciones — Investor Presentation (September 2023) on 6ix