2004 media & telecom conference
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2004 Media & Telecom Conference. George Cope President & CEO, TELUS Mobility September 14, 2004. forward-looking statement. - PowerPoint PPT PresentationTRANSCRIPT
George CopePresident & CEO, TELUS Mobility
September 14, 2004
2004 Media & Telecom Conference
2
This presentation and answers to questions contain forward-looking statements about expected future events and financial and operating results that are subject to risks and uncertainties. TELUS’ actual results, performance, or achievement could differ materially from those expressed or implied by such statements. For additional information on potential risk factors including those associated with the potential completion of the Microcell bid, see TELUS’ Annual Information Form, the Offers to Purchase and Circular, and other filings with securities commissions in Canada and the United States.
TELUS disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
All dollars in C$ unless otherwise specified.
forward-looking statement
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about TELUS Mobility
31.8M: Cdn. PopulationLicensed POPs:
29.7M (93%)Network coverage:
Verizon Wireless & NextelStrategic relationships:
best in North AmericaSpectrum position:
only one in Canada (Nextel in US)iDEN Mike network:
coast to coast 1XCDMA footprint:
$1.05B to 1.1B ( 29 to 35%)EBITDA (2004E)1 :
$2.675 to 2.725B ( 13 to 16%)Revenue (2004E)1 :
3.6MSubscribers:
leading Canadian national wireless provider
1 Guidance provided August 6, 2004
4
Canadian subscriber growth re-accelerating
Q2-04Q2-03
4.4%3.5%Penetration gain
1.5M1.2MNet subscriber additions
31.8MPopulation 31.5M
13.9MCdn wireless market 12.4M
43.8%39.4%Penetration
12ME
5
Source: Industry analysts
2003
42%
2007E
55-59%
2004
~46%
13.4Msubs
18-19Msubs
~15Msubs
4 million or more net adds expected over next 3 yrs
Canadian wireless penetration growth prospects
6
$1,617M$1,213M
YTD Q2-04YTD Q2-03
TELUSMobility 31%
TELUSMobility 33%
Source: Company reports. 1 Sum of reported wireless EBITDA for BCE, Rogers Wireless, Microcell and TELUS Mobility
Industry EBITDA up 33% YTD
Total industry EBITDA1
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TELUS Mobility EBITDA & cash flow growth
56% compounded EBITDA growth rate over four years
1 Guidance provided August 6, 2004
$173
$815
20032000
$356
2001
$535
2002
$1,050 to 1,1001
2004E
$(360)
$455
$(288)
$6751
$75
EBITDA
EBITDA less capex($M)
8
Net additions
Net additions up 12% YTD, with 35% postpaid growth
YTD Q2-03
170K
YTD Q2-04
Prepaid
Postpaid
190K
9
Network revenue growth
Network revenue up 20%. Total revenue up 19%
YTD Q2-03
$1,019M
YTD Q2-04
$1,218M
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TELUS Mobility BCE WirelessRogers Wireless
$55
$46$45
Source: Company reports
$58
$48$49
Microcell
$38 $39
ARPU - continued industry leadership
YTD Q2-03
YTD Q2-04
significant premium with positive industry-wide trend
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Price changes continue to roll through the base per minute billing - Jul-02 evening & weekend clock change - Jul-03 select calling features - Jul-04
minutes of use up 21% in 2003, 14% YTD Q2-04 expanding data offering (intercarrier SMS, 1X & RIM) roaming/resale agreements Verizon’s preferred Canadian PCS roaming partner iDEN roaming with Nextel in U.S.
ARPU drivers
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Continued focus on retention evident with postpaid churn down to 1.0% in Q2
Churn low & stable
YTD Q2-03 YTD Q2-04
1.4% 1.4%
blended monthly churn
YTD Q2-03 YTD Q2-04
1.2%1.1%
postpaid-only churn
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3 year contracts improved coverage
significant improvement in drop call rate expanded national footprint
better phones grandfathered rate plans dedicated retention team excellent customer care levels
Churn reduction drivers
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9%11%COA/ Lifetime revenue
1.4%1.4%Blended churn
$58ARPU $55
$382COA $427
YTD Q2-04YTD Q2-03
$4,100
-
$3,900Lifetime revenue
Subscriber economics continue to improve
profitable subscriber growth
15EBITDA growth of 41% & EBITDA margin of 44%
EBITDA growth & margin expansion
Wireless EBITDA
YTD Q2-04
$380M
37%
44%
$534M EBITDA margin1
(network revenue)
YTD Q2-03
1 EBITDA margin on total revenue 34% YTD Q2-03, and 41% YTD Q2-04
16TELUS achieving profitable subscriber growth
$737M1.5M
12ME Q2-04 EBITDA growth
12ME Q2-04subscriber growth
Source: Company reports. Sum of reported net adds & wireless EBITDA for BCE, Rogers Wireless, Microcell, TELUS Mobility
TELUSMobility
40%31%
TELUSMobility
Profitable subscriber growth strategy
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Wireless capex
10%
Capex intensity(total revenue)
YTD Q2-04
$132M
12%
$129M
YTD Q2-03
Capex intensity declining
Continued improvement in capex intensity
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Leading spectrum position - minimal cell splitting CDMA/1X roaming/resale agreements in Central &
Eastern Canada Network digitization largely complete 1X network implemented, voice capacity improvement Mike (iDEN) network largely built out
Capex drivers
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Wireless cash flowYTD Q2-04
$248M
$405M
YTD Q2-03
Cash flow (EBITDA less capex)
Cash flow increased by $158 million or 64% in 1H04
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13%Capex intensity2
EBITDA margin (total revenue) 39-40%
Cash flow yield3 26-27%
2004E1
1 Based on current public guidance2 Capex as % of total revenue3 EBITDA less capex, as a % of total revenue
EBITDA margin (network revenue) 42-43%
9.8%
40.5%
30.7%
YTD Q2-04
43.8%
operating cash flow yield
Attractive wireless cash flow yield above plan YTD
21
31%
21% 20%17%
13% 11%
5%
(1)%
TELUS
Nexte
l
Rogers
Verizo
n
PCS
Cingula
r
AWE
T-Mob U
SA
YTD cash flow yield - North America
Source: Company reports
EBITDA less Capex / Total Revenue
Implied cash flow yield of 26 to 27% in 2004 is best in class
(38)%
Microcell
what’s new?
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Text messaging
Canadians are sending more than 1.1 million text messages a day, up 100% year over year
By 2006, an estimated one billion messages will be sent worldwide every day
Canadians now send more than 50M text messages per month
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Fastap
TELUS Mobility exclusive
World’s first phone and full keypad
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Picture messaging award-winning marketing
campaign
significant share of sales by end of 2004
early usage stats encouraging
Worldwide
29 billion digital images captured this year
2003: One in six wireless phones sold had digital camera
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Download delights
Disney Hockey
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BlackberryNew devices, US roaming on both iDEN & PCS
Blackberry 7750Blackberry 7510 - iDEN
Pushto
Talk
Colourscreen
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North American iDEN Direct Connect
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Attractive industry fundamentals Canadian wireless penetration accelerating No restrictions on spectrum holdings Wireless data market exploding ARPU up, churn down across industry Margins in excess of 40% Free cash flow yields expanding
TELUS Mobility is the most profitable wireless carrier in North
America
Conclusion
questions?