4q19 earnings presentation · 4q19 earnings presentation b2b: continued growth of data and it...
TRANSCRIPT
4Q19 Earnings Presentation
4Q19 Earnings Presentation 2
Highlights 4Q19
+1.1%Telco Revenues
+1.3%Consolidated Revenues
+2.8%Telco EBITDA
+2.4%EBITDA
+78.1%Operating CF1
+5.7%Total CAPEX1
• Good RGU growth in 4Q19, with particularly strong performance in mobile and robust Pay TV net adds;
• Solid Consolidated Revenue performance, with consistent revenue growth of 1.1% in Telcos and 1.8%
in Cinemas & Audiovisuals;
• EBITDA continues to grow above revenues driving margin expansion of 0.3pp in 4Q19;
• Technological investments on track with expansion of FttH network and mobile network upgrade
complete.
1. Including Leasings.
4Q19 Earnings Presentation 3
I. Solid operating performance
II. Positive financial performance in a mature market context
Agenda
4Q19 Earnings Presentation
10
1416
14
3
7
13 12
24
6
9
-3
0
2
6
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19
3023
39
6
-18
20
40 42
-22
-7
0
-22
-34
-1
19
-5
52
30
38
28
1621 21
47
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19
-2
2
5
2
-7
0
14
7
3
7
1112
23
18
9
-5 -5 -6
-10-8
-3 -3-1
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19
3023
39
6
-18
20
40
-22
-7
0
-22
-34
-1
19
52
3038
28
1621 21
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Mobile Pre-Paid Post-Paid
10
1416
14
3
7
13
24
69
-30
2
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Fixed Broadband Fixed Voice
-2
25
2
-7
0
14
3
7
11 12
23
18
-5 -5 -6
-10-8
-3 -3
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Total Pay TV Fixed Access DTH
Good performance in Fixed Pay TV, fewer disconnections in DTH and strong growth in Mobile
Solid operating performance
4
Mobile Net Adds [Thousands]Fixed Access Pay TV - Net Adds [Thousands] Fixed BB and Fixed Voice Net Adds [Thousands]
4Q19 Earnings Presentation
10091
8076808687
747873
8896
84807478
89797573
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q19
2Q
19
3Q
19
4Q
19
5
Pay TV growth led by increase in addressable households and continued decline in churn
14-12
9
73 6775 76
57
33
68
40
238 15
269*
38
15
66
103
150
5543
-14-17
-60
710
1517
1410 11
1511
6 5 4 37
11
12
2 3
-3 0
-2 0
-1 0
0
1 0
2 0
3 0
-4 0
-2 0
0
2 0
4 0
6 0
8 0
1 0 0
1 20
1 4 0
1 60
1Q
14
2Q
14
3Q
14
4Q
14
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
New HH Passed Fixed Access Pay TV
Fixed Residential Churn [Rebased, 1Q15 = 100]NOS network expansion / Fixed Pay TV Net Adds [Thousands]
150
5548
79
37
12
2 3
18
9
-3 0
-2 0
-1 0
0
1 0
2 0
3 0
0
2 0
4 0
6 0
8 0
1 0 0
1 20
1 4 0
1 60
4Q18 1Q19 2Q19 3Q19 4Q19
Solid operating performance
4Q19 Earnings Presentation
Convergent+Integrated Subscribers, RGUs per Sub [Thousands, Unit]
6
Momentum for more flexible, made to measure tariff plans continues to drive integrated subscriptions, supporting residential ARPU and offsetting international call cap pressure
Convergent+Integrated Penetration of Fixed Access Subscribers [%]
Fixed Residential ARPU [Euros]
43.9 44.1 44.2 44.1 44.0
4Q18 1Q19 2Q19 3Q19 4Q19
57.9%
58.5%
59.2% 59.1%
59.8%
4Q18 1Q19 2Q19 3Q19 4Q19
889.8 896.1 907.1 914.8 930.7
5.0 5.0 5.0 5.1 5.1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10. 0
500.0
550.0
600.0
650.0
700.0
750.0
800.0
850.0
900.0
950.0
1,000.0
4Q18 1Q19 2Q19 3Q19 4Q19
Solid operating performance
4Q19 Earnings Presentation
Mobile Subscribers [Thousands]
7
Growth in post-paid subs and yoy decline of pre-paid net losses driving higher mobile net adds
Mobile Net Adds [Thousands]
2,051 2,051 2,029 1,995 1,994
2,672 2,710 2,738 2,754 2,775
4,723 4,761 4,768 4,750 4,769
2Q18 3Q18 4Q18 1Q19 2Q19
Pre-Paid Post-Paid
2,029 1,995 1,994 2,013 2,008
2,738 2,754 2,775 2,796 2,843
4,768 4,750 4,769 4,809 4,851
4Q18 1Q19 2Q19 3Q19 4Q19
Solid operating performance
6
-18
20
40 42
4Q18 1Q19 2Q19 3Q19 4Q19
4Q19 Earnings Presentation
Innovative commercial launches in 4Q19
8
Solid operating performance
Matosinhos is the first NOS 5G city
Our 5G network pilot is 100% operationalin Matosinhos, positioning NOS as a
leader in the rollout of this technology
New ScreenX Concept(270-degree screen)
NOS Cinemas once more pioneered newformats for the Portuguese cinema fans
Product of the Year 2020 AwardsConsumers have again elected
products and services as Product of the Year
Nova rede móvel
5G ready
ExperiênciaTV
Gestão contaApp NOS
App NOSCinema
4Q19 Earnings Presentation
B2B: Continued growth of data and IT revenues, offsetting drag from more traditional telecom services
Corporate IT Revenues [Rebased, 1Q15 = 100]
IT services are driving a shift in revenue mix in the Corporate Segment, already
representing 20% of revenues
9
Solid operating performance
NOS was presented with the award, recognizing its
positioning and strategy in delivering private cloud services to Corporate customers, combining HPE technology and
and service management
B2B Total RGUs [Rebased, 1Q15 = 100]
The B2B segment overall has shown continued growth
0
50
100
150
200
250
300
1Q1
5
2Q
15
3Q
15
4Q
15
1Q1
6
2Q
16
3Q
16
4Q
16
1Q1
7
2Q
17
3Q
17
4Q
17
1Q1
8
2Q
18
3Q
18
4Q
18
1Q1
9
2Q
19
3Q
19
4Q
19
100
105
110
115
120
125
130
135
140
1Q1
5
2Q
15
3Q
15
4Q
15
1Q1
6
2Q
16
3Q
16
4Q
16
1Q1
7
2Q
17
3Q
17
4Q
17
1Q1
8
2Q
18
3Q
18
4Q
18
1Q1
9
2Q
19
3Q
19
4Q
19
CloudCibersecurity
MobilityPlan
IoT
Office 365 Analytics
4Q19 Earnings Presentation
3.26 3.23 3.21 3.17 3.14
0.12 0.15 0.18 0.22 0.25
1.05 1.11 1.15 1.22 1.25
4.43 4.48 4.53 4.61 4.65
4Q18 1Q19 2Q19 3Q19 4Q19
Total network coverage [%] Mobile Single RAN Upgrade
10
Technological investments: FttH rollout on track; Mobile Single RAN upgrade complete
Modernization complete (≈ 100% sites)
FttH32%
Solid operating performance
On 4 February 2020 NOS announced it had signed a Letter of Intent with Vodafone framing the negotiation principles for a mobile network sharingagreement:
• Sharing of mobile network assets that are currently held or will be held, maintaining strategic control of network;
• The purpose of the agreement is to enhance investment efficiency, drive broader and faster nationwide coverage, and reinforce servicesproviding more benefits for customers.
3.4 3.4 3.4 3.3 3.3
0.1 0.1 0.15 0.18 0.220.7 0.7 0.7 0.8 0.9
4.1 4.1 4.1 4.2 4.3
3Q17 4Q17 1Q18 2Q18 3Q18
HFC HFC and FttH FttH
4Q19 Earnings Presentation
2,542.2
1,847.2
2,249.7
2,764.0
2,408.5
4Q18 1Q19 2Q19 3Q19 4Q19
NOS Audiovisuais distributed 7 out of theTOP 10 movies in 4Q19
11
Slowdown in Cinema ticket sales but pickup in Distribution market share
NOS Cinema Tickets Sold [Millions]
Note: Portuguese Operations.
-5.3%
Attendance 4Q19 yoy
-2.1%
Gross Box Office Revs 4Q19 yoy
NOS Audiovisuais Main Films Distributed in 4Q19NOS Cinema YoY Growth [%]
60%Attendance Market Share in 4Q19
61%GBO Market Share in 4Q19
Solid operating performance
4Q19 Earnings Presentation 12
I. Solid operating performance
II. Positive financial performance in a mature market context
Agenda
4Q19 Earnings Presentation
389.8
369.8377.8 380.4
394.3 394.9
2.3%
1.1%1.0% 1.1% 1.1% 1.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
200.0
250.0
300.0
350.0
400.0
4Q18 1Q19 2Q19 3Q19 4Q19 4Q19*
13
Consistent performance in Telco revenues, deceleration in Consolidated Revenues due to slowdown of AV & Cinema in the quarter
Positive financial performance in a mature market context
Consolidated Revenues and YoY Change [Millions of Euros, %] Telco Revenues and YoY Change [Millions of Euros, %] AV & Cinema Revenues and YoY Change [Millions of Euros, %]
* Revenues adjusted for the regulatory imposition of international call caps within Europe.
408.9
385.3396.4 403.4
414.0 414.7
2.5%
0.6%
1.8%2.1%
1.3% 1.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
200.0
250.0
300.0
350.0
400.0
450.0
4Q18 1Q19 2Q19 3Q19 4Q19 4Q19*
29.8
25.829.1
33.630.3
0.4%
-5.0%
14.0%15.6%
1.8%
-10.0%
-5.0%
0.0%
5.0%
10. 0%
15. 0%
20. 0%
25. 0%
30. 0%
35. 0%
0.0
5.0
10. 0
15. 0
20. 0
25. 0
30. 0
35. 0
40. 0
4Q18 1Q19 2Q19 3Q19 4Q19
4Q19 Earnings Presentation
245.5 241.1 242.0 247.3 250.6
127.6112.7 112.8 115.3
129.3
4Q18 1Q19 2Q19 3Q19 4Q19
2.3%
1.1%1.0%
1.1% 1.1%
2.9%
1.9%1.8%
1.4% 1.3%
4Q18 1Q19 2Q19 3Q19 4Q19
2.9%
0.9%
1.8% 0.9%
2.3%
3.5%
0.9%
1.7%
1.5%
2.5%
4Q17 1Q18 2Q18 3Q18 4Q18
Not Adjusted Adjusted*
242 240 241 246 245
118 109 114 109128
4Q17 1Q18 2Q18 3Q18 4Q18
Consumer Business & Wholesale
14
Improved performance in the Consumer segment and continued growth in B2B, mitigating drag from EU international call caps
Telco Revenue Growth [%]
Positive financial performance in a mature market context
Adjusted* Consumer and B&W Revenues and YoY Change [Millions of Euros, %]
2.5% 2.1%1.3% 1.3%8.0% 1.3%3.9% -0.6%
* Revenues adjusted for the regulatory imposition of international call caps within Europe.
0.7% 5.8%
4Q19 Earnings Presentation
132.6
160.7171.2 173.4
135.7
32.4%
41.7%43.2% 43.0%
32.8%
0.0%
10. 0%
20. 0%
30. 0%
40. 0%
50. 0%
60. 0%
70. 0%
80. 0%
90. 0%
100.0%
50. 0
70. 0
90. 0
110.0
130.0
150.0
170.0
190.0
4Q18 1Q19 2Q19 3Q19 4Q19
15
Consolidated EBITDA growth driven by consistent Telco EBITDA performance
Consolidated EBITDA, EBITDA Margin [Millions of Euros, %] Telco EBITDA, EBITDA Margin [Millions of Euros, %]
+2.4%yoy
+2.8%yoy
Positive financial performance in a mature market context
AV & Cinema EBITDA, EBITDA Margin [Millions of Euros, %]
-1.5%yoy
118.3
147.4
158.2 157.7
121.7
30.4%
39.9%41.9% 41.5%
30.9%
20. 0%
25. 0%
30. 0%
35. 0%
40. 0%
45. 0%
50. 0%
55. 0%
60. 0%
50. 0
70. 0
90. 0
110.0
130.0
150.0
170.0
4Q18 1Q19 2Q19 3Q19 4Q19
14.313.3 13.0
15.7
14.0
47.8%51.6%
44.8% 46.7% 46.3%
0.0%
10. 0%
20. 0%
30. 0%
40. 0%
50. 0%
60. 0%
70. 0%
80. 0%
90. 0%
100.0%
0.0
2.0
4.0
6.0
8.0
10. 0
12. 0
14. 0
16. 0
18. 0
4Q18 1Q19 2Q19 3Q19 4Q19
4Q19 Earnings Presentation 16
Positive financial performance in a mature market context
Operating Costs [Millions of Euros]
130.8 152.7 129.4 136.2 133.4
96.4
123.6
95.2 89.0 96.6
227.3
276.3
224.6 225.2 230.0
3Q18 4Q18 1Q19 2Q19 3Q19
Direct Costs Non-Direct Costs
Revenues & EBITDA yoy growth [%]
152.7129.4 136.2 133.4
159.8
123.6
95.2 89.0 96.6
118.5
276.3
224.6 225.2 230.0
278.3
4Q18 1Q19 2Q19 3Q19 4Q19
EBITDA continues to outgrow revenues due to cost discipline and operational transformation
0.6%
1.8%2.1%
1.3%
-0.5%
1.1% 1.2%
0.7%
2.1%
2.8%
3.4%
2.4%
1Q19 2Q19 3Q19 4Q19
0.6%
1.8%2.1%
1.3%
-0.5%
1.1% 1.2%0.7%
2.1%
2.8%
3.4%
2.4%
1Q19 2Q19 3Q19 4Q19
Revenues OPEX EBITDA
4Q19 Earnings Presentation
(2.0)
(101.6)
(5.1) (6.6) (4.5)(3.3)
(123.3)
(3.9) (5.6)
5.8
(140.0)
(120.0)
(100.0)
(80.0)
(60.0)
(40.0)
(20.0)
0.0
20.0
Share of JV
results
D&A Other
expenses
Net Fin.
Expenses
Income
Taxes
Net Income lower yoy due to impairment led D&A increase in the quarter
Consolidated Net Income [Millions of Euros] Cost breakdown below EBITDA [Millions of Euros]
17
Positive financial performance in a mature market context
-57.3%yoy
2
(102)
(5) (7) (5)
0 0 0 0 0
(120.0)
(100.0)
(80.0)
(60.0)
(40.0)
(20.0)
0.0
20.0
Share of JV
results
D&A Other
expenses
Net Fin.
Expenses
Income
Taxes
4Q18 4Q19
12.7
42.5
47.7 47.9
5.4
4Q18 1Q19 2Q19 3Q19 4Q19
4Q19 Earnings Presentation
Total, Telco and AV & Cinema CAPEX Excl. Leasing Contracts[Millions of Euros]
Technical CAPEX, % of Telco Revenues [Millions of Euros, %] Customer CAPEX, % of Telco Revenues [Millions of Euros, %]
Higher CAPEX in 4Q19 reflects phasing of telco projects and cinema refurbishment
18
12.5% 13.4%12.5%15.4%12.1%
Positive financial performance in a mature market context
80.8 85.4 92.5 87.0 81.7
6.8 6.37.7
7.35.5
87.6 91.7100.2
94.387.3
1Q18 2Q18 3Q18 4Q18 1Q19
Telco AV & Cinema
27.8 31.6 30.4 35.626.6
19.4
36.1
18.216.0
23.9
47.1
67.7
48.6 51.7 50.6
3Q17 4Q17 1Q18 2Q18 3Q18
Baseline NW Exp, Subst, Integration & Others
87.0 81.7 89.5 83.6 89.7
7.35.5
5.68.7
10.094.3
87.395.2 92.2
99.7
4Q18 1Q19 2Q19 3Q19 4Q19
26.132.8
38.530.6 34.2
22.6 12.1
19.6
16.918.4
48.744.9
58.1
47.552.6
4Q18 1Q19 2Q19 3Q19 4Q19
38.3 36.8
31.4
36.1 37.0
9.8% 10.0%8.3% 9.5% 9.4%
0.0%
5.0%
10. 0%
15. 0%
20. 0%
25. 0%
30. 0%
35. 0%
40. 0%
0.0
5.0
10. 0
15. 0
20. 0
25. 0
30. 0
35. 0
40. 0
45. 0
4Q18 1Q19 2Q19 3Q19 4Q19
4Q19 Earnings Presentation
FCF improves yoy to 2.4 million euros due to positive working capital seasonality
19
EBITDA- Total CAPEX Total Excl. Leasings [Millions of Euros] Free Cash Flow [Millions of Euros]
+78.1%yoy
Operating Cash Flow* [Millions of Euros]
-6.0%yoy
* After lease payments.
Positive financial performance in a mature market context
0.3
42.9
57.1
44.4
2.4
0.0
10. 0
20. 0
30. 0
40. 0
50. 0
60. 0
4Q18 1Q19 2Q19 3Q19 4Q19
38.3
73.5 76.181.2
36.0
0.0
10. 0
20. 0
30. 0
40. 0
50. 0
60. 0
70. 0
80. 0
90. 0
4Q18 1Q19 2Q19 3Q19 4Q19
11.4
49.1
65.2
57.9
20.4
0.0
10. 0
20. 0
30. 0
40. 0
50. 0
60. 0
70. 0
4Q18 1Q19 2Q19 3Q19 4Q19
4Q19 Earnings Presentation
1,347 million EurosNet Debt Including Leases
3.1 yearsTotal Average Maturity
1.3%
1.9xNet Financial Debt / EBITDA After Leases
214.8 million EurosCash and Liquidity Position*
Net Financial Debt, Net Financial Debt/EBITDA After Leases [Millions of Euros, X]
Average Cost of Debt [%]
Leverage ratio steady, with cost of debt reducing further yoy and qoq
20* Includes non-issued financing lines.
1,094 million EurosNet Financial Debt
Positive financial performance in a mature market context
1.6% 1.7%1.5%
1.4%1.3%
4Q18 1Q19 2Q19 3Q19 4Q19
1,042.9 1,003.4
1,130.3 1,089.3 1,093.6
1.9x 1.8x2.0x 1.9x 1.9x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
4.0x
175.0
375.0
575.0
775.0
975.0
1,175.0
1,375.0
4Q18 1Q19 2Q19 3Q19 4Q19
4Q19 Earnings Presentation
115%
247%
190%
116%100% 98%
2014 2015 2016 2017 2018 2019
Proposal
14.016.0
20.0
30.0
35.0
27.8
2014 2015 2016 2017 2018 2019
Proposal
97% 100%
114%125% 127%
100%
2014 2014 2015 2016 2017 2018
Dividend proposal of 100% EPS
Dividend Per Share [Euro Cents]
21
Positive financial performance in a mature market context
27.8 euro cent dividend proposal, corresponding to 100% of Net Income, 98% of FCF and to a 6.2% Dividend Yield
Payout as % of Net Income [%] Payout as % of FCF [%]
4Q19 Earnings Presentation
4Q19 Earnings Presentation