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Vivendi — GVT (Holding) — Investor Presentation (November 2010)
32 slides from Vivendi's investor presentation, Nov 29, 2010
Slide 1: Investor Presentation November – December 2010
Investor Presentation November – December 2010 Amos Genish Rodrigo Ciparrone Chief Executive Officer Chief Financial Officer
Slide 2: Presenters
Presenters Founder and CEO since 1999 Amos Genish Over 21 years of experience as a Senior Executive in the technology and CEO telecommunications sectors CFO and d Investor I t Relations R l ti Officer Offi since i 2008 Former Finance Director and Controller of ZF do Brasil, and former CFO of the Rod
Slide 3: Investment Highlights – GVT unique model rolling out most modern network in Brazil
Investment Highlights – GVT develops a unique model rolling out the most modern network in Brazil The macroeconomic environment and the competitive landscape are favorable to GVT’s Attractive markets growth Licenses not subject to price caps or universal service obligations unlike incumbents Lic
Slide 4: Investment Highlights – Our vision and financial outlook
Investment Highlights – Our vision and financial outlook Be the best and fastest growing provider of fixed Communications & Entertainment for Brazilian high‐end Households and Businesses in all key markets Economic sustainability through consistent and attractive return to the shareholder Guid
Slide 5: GVT: a Brazilian Fixed Telecom operator widening its span
GVT: a Brazilian Fixed Telecom operator widening its span… • GVT has had a strong value creation path 4 telecom incumbents used to share the Brazilian market* with a: With new licenses, GVT competes with all of them leading, cost‐benefit and innovative offer Region IV: Nationwide strong customer
Slide 6: Delivering consistently high quality growth
… delivering consistently high quality growth CAGR NET REVENUES 30% 1.699 1,699 R$ millions 28% 1.320 1,320 1 320 375 981 322 769 225 31% Corporate 177 1,324 998 591 756 Retail1 2006 2007 2008 2009 Adjusted EBITDA 256 358 503 656 37% Adjusted EBITDA 33.3% 36.5% 38.1% 38.6% 5pp margin Retail/ 674k 86
Slide 7: Strong and super fast growth in Q3 2010
Strong and super fast growth in Q3 2010, with Revenue growing 47% and Adjusted EBITDA growing 56% y‐o‐y Growth Growth 42% 1,736 NET REVENUES 47% 649 371 R$ millions 1,224 135 442 42% 274 35% 96 1,365 513 48% 950 44% Corporate 347 Retail1 3Q 09 3Q 10 9M 09 9M 10 Adjusted EBITDA 173 270 56% 470 714 52
Slide 8: Brazilian economy expected to continue to grow
Brazilian economy is expected to continue to grow due to internal and external factors… Brazil is already the 8th largest ... based on a stable economic policy and economy and keeps growing... growing commodities' export potential commodities GDP (US$ trillion) % GDP Growth Main drivers of growth 10
Slide 9: Improvement of income distribution and growth of SMEs
... resulting in an improvement of income distribution and spurring growth of SMEs ABC class expected to gain SMEs expected to grow at faster rate 36 million p people p than in p previous yyears Million people Million SMEs 200 199 186 175 19 87 8.7 13 +6% 150 1.0 GVT’s 65 146 Residential 6.6 91 +5%
Slide 10: Booming Mobile, Broadband and Pay-TV subscriber numbers
Booming Mobile, Broadband and Pay‐TV subscriber numbers Mobile Telephony 2009 175.6 (1) 2015 1 (2) 224.1 224 Mobile Broadband 2009 4.5 (1) 2015 61.2 (2) GVT: Market share in the fixed telephony voice, broadband and Pay TV is expected to continue to be small (but relevant) in the Fixed ed Broadband
Slide 11: GVT's strategy – Accelerating growth with quality
GVT’s strategy – Accelerating growth with quality • Be the best and fastest growing provider of fixed Communications & Entertainment for Brazilian high‐ Vision end Households and Businesses in all key markets • Economic sustainability through consistent and attractive return to the shareholder Expan
Slide 12: Expand territorial reach
Expand territorial reach Expand territorial reach Total # of Addresses Addressable market Addressable Market Coverage ABC Households + Business or Homes Passed Total # of Addresses ABC + Corporate in Brazil % Coverage in the total Region III Region I addressable market 11.3 19.8 40% 38% 38% All Braz
Slide 13: Territorial expansion – New Markets growing in importance
Territorial expansion – New Markets growing in participation and importance and major expansion expected in ’11 and ‘12 Expand territorial reach Retail1 Revenue Breakdown Retail1 Revenue in BRL Million per region per region 1,304 15% 27% 12% 24% 315 895 109 493 326 988 133 785 48 85% 73% 88% 76% 278
Slide 14: Keep the edge in the core offer: ultra high speeds at affordable prices
Keep the edge in the core offer: ultra high speeds at affordable prices Keep the edge in the core offer • GVT’s network topology and technology, combining optical fiber rings with a short copper last mile, enable GVT to provide ultra high speeds up to 100Mbps with premium quality and the lowest pric
Slide 15: Competitive bundling strategy
Competitive bundling strategy Keep the edge in the core offer High Speeds at affordable Prices and for all customers The favorable “broadband gap” between GVT and its main competitors is already large and will grow even more in the future 84% of GVT’s base has bundles 90% of new sales has bundles At
Slide 16: Maintain superior service delivery
Maintain superior service delivery Maintain superior service delivery Customers that recommend GVT1 (%) Monthly Churn rate2;3 (%) 49% 49% 1.28% 44% 0.93% 2008 2009 2010 3Q 09 3Q 10 Highest customer Top rating for GVT’s customer engagement by Gallup1 engagement in Brazil 55% • A Survey conducted by t
Slide 17: From a dumb pipe to a smart pipe
From a dumb pipe to a smart pipe Keep the edge in the core offer Voice IPTV (to be launched in 2011) Broadband Music (launched Oct ‘10 with Universal) Video Games (project under discussion with Activision for 2011) GVT‘s Home Gateway (to be launched with IPTV) Pipe Internet Security (launched April
Slide 18: Enter new segments: Pay TV opportunity
Enter new segments: Pay TV is an opportunity for GVT to expand into a growing market, offering to its clients a differentiated service Enter new segments DTH INTERNET Pay TV market is expected to double its size within the next 5 years Pay TV market is facing trends that favor interactive and co
Slide 19: Vivendi's financial and strategic support enables GVT to accelerate growth
Vivendi's financial and strategic support enables GVT to accelerate growth As an independent company, GVT was thinking smaller and more conservatively Vivendi allows GVT to seize opportunities faster GVT’s image has improved due to Vivendi. Vivendi also provides a conduit for GVT to expand its busin
Slide 20: Q3 2010 YTD results and 2011 financial outlook
Q3 2010 YTD results and 2011 financial outlook 2010 Results* (summary of Q3 2010 YTD vs. Q3 2009 YTD): • Record growth rates on Revenue* (42%), Adjusted EBITDA* (52%) and Adjusted EBITDA* margin (+3 p.p.), and net line additions (56%) • Continuously successful territorial expansion outside its ori
Slide 21: Medium term financial outlook for Fixed and Broadband
Medium term financial outlook for Fixed and Broadband 2014 Fixed and Broadband revenues* expected to exceed BRL6bn, i.e. more than 3.5x 2009 revenues > 6.0 Adjusted EBITDA* Adjusted EBITDA* margin > 40% margin a g = 39% 3.2 2.4 1.7 2009 2010 2011 2014 Fixed and Broadband Free Cash Flow (Adjusted EBI
Slide 22: Investment Highlights – GVT unique model rolling out most modern network in Brazil
Investment Highlights – GVT develops a unique model rolling out the most modern network in Brazil The macroeconomic environment and the competitive landscape are favorable to GVT’s Attractive markets growth Licenses not subject to price caps or universal service obligations unlike incumbents Lic
Slide 23: Appendix
Appendix GVT Strategic Plan 3rd draft.ppt 23
Slide 24: Short term opportunities in the competitive arena
Short term opportunities in the competitive arena: Despite possible reaction from competitors and market consolidation in the mid‐term, GVT expects to be able to keep its competitive edge Slim Sli TTelefonica l f i Oi TIM Group Group Voice market is stable Fixed while broadband is growing fast despi
Slide 25: Maintain technology advantage: next generation network
Maintain technology advantage by leveraging and improving our unique next generation local and long‐distance network Maintain technology advantage Next Generation GVT’s network topology and technology, combining optical fiber rings with a short copper last mile, IP Network enables the company to pro
Slide 26: Vivendi's support encourages GVT to accelerate growth
Vivendi's support encourages GVT to accelerate growth Net Revenues: BRL1,736m*, +42% In BRL millions* 9M 2010 9M 2009 Change ((+74% 74% in EUR) Net revenues 1,736 1,224 + 41.8% Broadband service revenues up 78% and Voice revenues up 34% Gross income 1,139 789 + 44.4% 1,030k net adds in lines in serv
Slide 27: Main performance indicators
Main performance indicators* ) * In Brazilian GAAP 27
Slide 28: September 30, 2010 YTD Key Metrics
September 30, 2010 YTD Key Metrics Retail & SME In '000 September 30, 2010 September 30, 2009 Change September 30, 2010 September 30, 2009 Change Total Lines in Services (LiS) 3,846 2,560 + 50,2% Coverage (# of cities) 92 81 11 Retail and SME 2,651 1,773 + 49,5% Region II 75 75 - Voice 1 655 1,655 1
Slide 29: GVT delivered consistently high quality growth (EUR)
GVT delivered consistently high quality growth Figures 2006‐2009 in EUR CAGR NET REVENUES 30% 618 EUR million 28% 498 136 369 122 282 85 30% 65 481 377 Corporate 217 285 Retail1 2006 2007 2008 2009 EBITDA 94 135 190 238 36% EBITDA 33.3% 36.5% 38.1% 38.6% 5pp Margin Retail/ 674k 869k 1 324k 1,324k 1
Slide 30: Strong growth in 3rd quarter of 2010 (EUR)
Strong and super fast growth in the 3rd quarter of 2010, with Revenue growing 76% and EBITDA growing 88% y‐o‐y (Figures 2010 in EUR) Growth Growth 74% 738 76% NET REVENUES 289 157 EUR million 423 60 164 70% 95 66% 35 580 229 78% 329 77% Corporate 129 Retail1 3Q 09 3Q 10 9M 09 9M 10 EBITDA 64 120 88%
Slide 31: Important legal disclaimer
Important legal disclaimer This presentation contains forward-looking statements with respect to the financial condition, condition results of operations, operations business, business strategy, strategy plans and outlook of GVT (Holding) S.A., a subsidiary of Vivendi. Although Vivendi believes that
Slide 32: Vivendi Investor Relations Team
Vivendi Investor Relations Team Jean‐Michel Bonamy Executive Vice President Investor Relations +33.1.71.71.12.04 jean‐michel.bonamy@vivendi.com Paris 42, Avenue de Friedland New York 75380 Paris cedex 08 / France 800 Third Avenue Phone: +33.1.71.71.32.80 New York, NY 10022 / USA Fax: +33.1.71.71.14.
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