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Vivendi — Investor Presentation (October 2007)
35 slides from Vivendi's investor presentation, October 2007
Slide 1: Introduction to SFR
Introduction to SFR October, 2007 IMPORTANT NOTICE: INVESTORS ARE STRONGLY ADVISED TO READ THE IMPORTANT LEGAL DISCLAIMER AT THE END OF THIS PRESENTATION
Slide 2: Agenda
Agenda 1 SFR ambition and strategy 2 Strategy at work 3 Key financials SFR Presentation – October 2007– 2
Slide 3: SFR ambition and strategy
1 SFR ambition and strategy SFR Presentation – October 2007– 3
Slide 4: SFR key assets
SFR key assets Strong number 2 operator in France 18M customers Strong customer 34% market share (end of June 2007) numbers 3.45M 3G customers Strong momentum in Enterprise segment Fixed and ADSL : 370k ADSL customers (~3% of the ADSL market) + 2.3 million fixed line customers and a long t
Slide 5: Strong number 2 mobile operator in France (1/2)
Strong number 2 mobile operator in France (1/2) 35% customer base market share and 38% value market share (network revenues) end of 2006 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 Telecom Source: operator publ
Slide 6: Strong number 2 mobile operator in France (2/2)
Strong number 2 mobile operator in France (2/2) Strong 41% EBITDA share and only operator to increase its EBITDA in 2006 EBITDA share 2002-2006 Only French operator to increase its EBITDA in 2006 47% 48% 48% 45% 45% Highest EBITDA 39% 41% margin in France at 39% 38% 38% 40% of revenues Strong
Slide 7: SFR group structure
SFR group structure Two supportive shareholders 56% 44% 100% 40% Fixed and ADSL operations France 30% 30% Market and investors SFR Presentation – October 2007– 7
Slide 8: Market trends (1/3)
Market trends (1/3) French Telecom market will continue to grow organically, driven by mobile and Internet 2007 2012 Market total value: Market total value: Two growing €39bn €41bn segments (Internet Fixed/Mobile and Mobile) substitution representing Fixed Fixed €5.4bn growth in 5 voice voice years
Slide 9: Market trends (2/3)
1. SFR ambition and strategy Market trends (2/3) Consumption of Telecom services will evolve towards a personal usage of personalized media/communication services Voice usage growth opportunity Mobile voice usage in the US ~30 min / day Evolution in Telecom services consumption Fixed + mobile voice
Slide 10: Market trends (3/3)
Market trends (3/3) Internet is naturally extended into mobile Increasingly proven business models Experimental / new business models Share Share existing existing && Communication Search Search & & Create Communication eCommerce Create new new shared shared eCommerce Communication Communication //
Slide 11: SFR mobile centric strategy
SFR mobile centric strategy SFR Happy Zone existing GSM mobile 3G/3G+ offer Quality Fixed / mobile substitution: Mobile voice Æ Happy Zone / Office Zone Simplicity Continuity of usage 3G/3G+ Personal USB device Modem 3G/3G+ SFR ADSL USB Modem (Web, TV) Mobile internet Æ Internet at home SFR
Slide 12: Strategy at work
2 Strategy at work SFR Presentation – October 2007– 12
Slide 13: Strategy at work
Strategy at work 3 Newreach New reach Reach profitable growth + through a focused strategy 2 Productsuperiority Product superiority + 1 Operationalexcellence Operational excellence SFR Presentation – October 2007– 13
Slide 14: Operational excellence – Network quality and innovation
Operational excellence – Network quality and innovation SFR strategy benefits from network quality and innovation #1 in network quality in latest 2006 ARCEP (French regulator) survey, for the 3rd consecutive year #1 3G operator in France 3.45 million 3G customers end of June 2007, 65%(*) 3G/3G+
Slide 15: Operational excellence – Customer relationship (1/2)
Operational excellence – Customer relationship (1/2) A strong brand and a close relationship with its 18 million mobile customers SFR image re-boosted by the new brand signature and new advertising campaign z Well received and understood… z …with a strong impact on brand preference Use of new me
Slide 16: Operational excellence – Customer relationship (2/2)
Operational excellence – Customer relationship (2/2) Aligned customer contact points: distribution, call centers, internet website A deep commercial network with more than 750 “Espace SFR” stores z Strong geographical coverage z Secure higher quality of sales z Opportunity to sell additional servi
Slide 17: Operational excellence – Balancing costs to prepare future growth
Operational excellence – Balancing costs to prepare future growth Continuation of multi-year cost saving programs for future growth Capex: 70% of French population covered with 3G / 3G+ Opex & customer base evolution 2002 – 2006 Decrease in fixed and variable Opex costs 126 131 z Multi-year cost
Slide 18: Product superiority – Fixed to mobile substitution (1/2)
Product superiority – Fixed to mobile substitution (1/2) Mass market: Fixed to mobile substitution with the launch of Happy Zone Mobile assets in the battle for fixed / mobile substitution z 94% of SFR customers take their mobile phone everywhere z 59% of SFR customers record their contacts in the
Slide 19: Product superiority – Fixed to mobile substitution (2/2)
Product superiority – Fixed to mobile substitution (2/2) Enterprises: Strong lever for growth SFR enterprises : 10% annual growth at €1 bn SFR One offer revenues z Growth contribution amounting to €100m/year Mobile & sedentary 10% SFR ONE DUO z Strong market share uptake : +1pt/year at 36% in 2007
Slide 20: Product superiority – Mobile Internet (1/2)
Product superiority – Mobile Internet (1/2) Strong push of SFR in Mobile Internet SFR consumers are ready z Massively equipped 13.7 million SFR customers already equipped with internet mobile handsets z Familiar with mobile internet 4.2M Vodafone Live! active customers every month z Frequent inter
Slide 21: Product superiority – Mobile Internet (2/2)
Product superiority – Mobile Internet (2/2) Strong push of SFR in Mobile Internet Strong growth potential data revenues amounting to only 13.4% of mobile service SFR Data revenue (2005-2007E) revenues in H1-07 % data % m obile grow th revenues Moderate growth in data revenue in H1-07 (+3.0%) 200
Slide 22: Product superiority – Mobile data
Product superiority – Mobile data Mobile content services growth driven by messaging, games, TV/video, music and enterprise Messages Messaging Video telephony z +12% SMS in June-07 YTD YoY Games: Music z 600 games available z 2.6m games downloaded in June-07 YTD News TV / Video downloads: Vide
Slide 23: New Reach – Fixed broadband Internet (1/2)
New Reach – Fixed broadband Internet (1/2) Strong assets in broadband Internet Pre-launch of ADSL SFR option in April 2007 z Aggressive offer including Mobile/Fixed convergent services z Continuity of mobile services on the Internet z Strong focus on customer service with “connect” assistance Té
Slide 24: New Reach – Fixed broadband Internet (2/2)
New Reach – Fixed broadband Internet (2/2) A long term partnership with Neuf Cegetel at a glance SFR is the largest shareholder of Neuf First alternative fixed operator Cegetel with a 40% stake (average #1 ADSL alternative operator with acquisition cost of €12.5 / share) 3,032k ADSL customers
Slide 25: New Reach – Other
New Reach – Other SFR seizes and fosters all opportunities for growth Digital Music z Top 5 largest legal music download site in France z Success of “SFR Jeunes Talents” z SFR Music stores : ~500 downloading access points in SFR shops by end 2007 Wholesale activity z Number of VNO customers on S
Slide 26: Key financials
3 Key financials SFR Presentation – October 2007– 26
Slide 27: H1-07 Performance
H1-07 Performance Mobile service revenues up by +0.2% in June-07 YoY, i.e. +3.8% excluding regulatory impacts €4,336m revenues in June YTD 2007 (+0.8% vs. LY) Mobile service revenues June YTD Mobile service revenues at €4,119m Organic Regulatory z +0.2% vs. LY Growth Impacts €4,119m z Excluding
Slide 28: 2006 Performance (1/3)
2006 Performance (1/3) Mobile revenues FY 2006 up by +0.5% FY 2006 YoY, i.e. +5.0% excluding regulatory impact SFR revenues FY 2006 vs. FY 2005 Organic Regulatory €8,693M growth impacts Other €8,678M Organic mobile growth: + 5.0% Mobile growth incl. regulatory impacts: +0.5% Total revenue decline: 2
Slide 29: 2006 Performance (2/3)
2006 Performance (2/3) Stable mobile revenues in 2007 despite the strong regulated cuts Simplified P&L statement – SFR Group in millions of euros, IFRS 2005 2006 06 vs 05 2007 Outlook update Revenues 8,693 8,678 -0.2% Revenues for mobile: o.w. mobile revenues 8,623 8,666 +0.5% “Stable, despite the s
Slide 30: 2006 Performance (3/3)
2006 Performance (3/3) Stable CFFO in 2007 despite launch of DSL activity Simplified Cash-Flow statement – SFR Group in millions of euros, IFRS 2005 2006 06 vs 05 2007 Outlook update EBITDA* 3,209 3,449 +7.5% CFFO: CAPEX net 923 1,133 +22.8% “stable despite launch of DSL activity” CFFO 2,268 2,430 +
Slide 31: Conclusion
Conclusion SFR has strong assets … z A close relationship with its 18 million mobile customers z A strong brand z A good quality 2G and 3G/3G+ network infrastructure z A deep commercial network: more than 750 “Espace SFR” stores z A customer care service ranked number 1 in satisfaction surveys z A
Slide 32: Appendices
Appendices SFR Presentation – October 2007– 32
Slide 33: H1-07 Performance
H1-07 Performance Key metrics H1-2007 H1-2006 Growth Customers (in '000) * 17,980 17,415 + 3.2% Proportion of postpaid customers * 65.8% 64.1% + 1.7 pts 3G customers (in '000) * 3,447 1,574 + 118.9% EoP estimated market share * 34.2% 35.5% – 1.3 pts 12-month rolling blended ARPU (€/year) *
Slide 34: 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 35: 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 stateme