bnpp high yield conference 2008 10 january 2008. 2 introduction company overview shareholders and...
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BNPP High Yield Conference 2008
10 January 2008
2
Introduction
• Company overview
• Shareholders and Management
• Strategy
• Market position
• Financials
• Q&A
3
Sweden
Finland
RussiaEstonia
Belarus
Poland
Bitė is a Mobile Network Operator in Lithuania and Latvia
Bitė Group figures
Latvia• 2.3m inhabitants• 11.9% GDP growth 06• GDP pr. capita € 7,070
Lithuania• 3.4m inhabitants• 7.7% GDP growth 06• GDP pr. capita € 6,996
Source: Hansabank, Q1 2007
Company overviewShareholders and
ManagementStrategy
Marketposition
Financials Q&A
Norway
Denmark
Germany
Numbers in milions 2006 Q4 2006 - Q3 2007
Customers 1.3 1.1Service Revenue € 154.7 € 175.8 EBITDA € 29.8 € 36.7
4
Bitė Business Snapshot
Company overviewShareholders and
ManagementStrategy
Marketposition
Financials Q&A
Key Operational Data (EoP Q3 2007) Bite Lithuania Bite Latvia
Bite Finance International
Group
Start of Operations 1995 2005
Population Network Coverage 100% 92%
Subscribers ('000) 1,036 93 1,129
Employees (FTE's) 520 98 619
Key Financial Data (EURm) (Q4 2006-Q3 2007) Bite Lithuania Bite Latvia
Bite Finance International
Group
Service Revenue 167.2 9.0 175.8
EBITDA 51.6 (14.1) 34.8
Margin % 31% -157% 20%
CAPEX 27.7 14.2 41.9
5
Mid Europa Partners has a History of Successful Mobile Telecom Investments
• On February 9, 2007 a wholly owned subsidiary of funds advised by Mid Europa Partners acquired Bité from TDC
• Mid Europa Partners is a leading private equity investment firm focused on investing in large, cash generative enterprises operating primarily in Central and Eastern Europe
• Unparalleled track-record in investing in mobile telecom assets in Central Europe. Key sector investment highlights include
1999 2001 2006
Invested in Oskar (No 3 mobile operator in theCzech Republic)
Invested in Orange Slovakia (No 1 mobile operator in Slovakia)
Invested in Connex(No 1 mobile operatorin Romania)
Invested indirectly inT-Mobile CZ (Joint leader in theCzech Republic)
Company overviewShareholders and
ManagementMarket
positionFinancials Q&A
2007
Invested inBite
And One (3rd operator in Austria)
Strategy
6
Bruno Ducharme
Chairman of Supervisory Board
• Former President and CEO of Telesystem International Wireless (“TIW” – parent company for MobiFon and Oskar)
• Formerly non-executive director of TIM Hellas S.A.• Currently non-executive director of One GmbH
Martin Amtoft ChristensenChief Financial Officer
• Joined Bité as CFO in 2004• Finance Director within TDC from 2001 - 2004
James J. JacksonMember of Supervisory Board
• Former CFO of MobiFon S.A. from 1997 – 2005, while under TIW and Vodafone ownership
• CFO of Oskar from 1999 – 2001, involved in the build out and service launch and early stage debt and equity financing
• Non-executive director of Neo Material Technologies Inc. and Duluth Metals Limited
Experienced Management with Telecoms Background
Kenneth CampbellChief Executive Officer and Chairman of the Management Board
• Former Chief Marketing Officer with MobiFon S.A. and Vodafone Romania and a member of the Marketing Board of the Vodafone Group
• Former Chief Commercial Officer of Orascom Telecom in Tunisia
• Former Director and Vice President for Corporate Strategy and Marketing of MobiNil in Egypt
Company overviewShareholders and
ManagementMarket
positionFinancials Q&A
Fred Hrenchuk Chief Executive Officer, Bite Latvia
• Former Chief Technology Officer with Vodafone Czech Republic
• Held various executive positions with Oskar Mobile and MobiFon
Strategy
7
Bite Strategy
Marketposition
Financials Q&ACompany overviewShareholders and
Management
Profitable growth and cash flow generation
Achieve parity in network quality and distribution presence
Establish strong organization, leveraging off of existing Lithuanian infrastructure
Capitalize on one of the highest tariff structures in Europe
Increased revenue share through value focus while securing new growth as human penetration rises
Sound investment criteria - focus on financial return, achieving growth while controlling costs and CAPEX
Leverage best-in-class network in offering the highest quality value-added products & services including high-speed mobile broadband to drive future ARPU growth
Continue to maintain service quality leadership and maintain leading customer satisfaction levels to further improve customer retention and maintain lower than market churn rates
Continue growth in post paid residential market share
Maintain strong post paid business position and grow ARPU of existing customer base
Maintain market share and grow ARPU in pre paid segment
Latvia (start-up)Lithuania (FCF growth)
Common Principles
Strategy
8
• Fixed line penetration in both Latvia and Lithuania is below CEE average•In Lithuania 48% of households have mobile but
not fixed telephony (highest in EU)
•In Lithuania PC penetration went from 5% in 2000 to 37% in 2006•Broadband penetration is growing (32% in 2006)
•Real GDP Growth increases disposable income and increases demand for mobile services•MoU still low compared to price levels
Key Market Drivers
Voice Traffic Growth
Low Fixed Penetration
Data Usage
•Both markets have 3 mobile operators•GSM spectrum is fully allocated•MVNO and SP’s are all on Bite Network and have
relative weak position
3 Player Markets
Marketposition
Financials Q&AStrategyCompany overviewShareholders and
Management
9
3 mobile operators in both markets
LatviaLithuania
Marketposition
Financials Q&A
Positioned as customer service leader
Perceived as being the quality alternative to Omnitel
Strong in Business segment Aggressor in Residential
postpaid segment Stable fair share of prepaid
market
Positioned as the largest and strongest
Perceived as being the incumbent
Strong in all segments
Positioned as the price leader Perceived as being lower
quality than competitors Low Business market share Strong in prepaid market
Positioned as the new alternative and customer service leader
Perceived as being lagging behind the competition on quality
Growing in all segments
Positioned as the largest and strongest
Perceived as being the incumbent
Strong in postpaid
Positioned as the price leader Perceived as being lower
quality than competitors Low Business market share Strong in prepaid market
StrategyCompany overviewShareholders and
Management
10
GDP pr. Capita Average Growth 2003-2007E
8.2%10.4%
0%
2%
4%
6%
8%
10%
12%
Lithuania Latvia
Customer Satisfaction Lithuania Q3 2007
57%
49% 48%
40%
45%
50%
55%
60%
Bite Omnitel Tele 2
SAC in Lithuania in % of Service Revenue
12%10% 9%
0%2%4%6%8%
10%12%14%
1H 2006 2H 2006 1H 2007
Bite Finance International EBITDA (EURm)
12.0
17.2 18.5
0.0
5.0
10.0
15.0
20.0
1H 2006 2H 2006 1H 2007•Market Share• Lithuania 30% revenue share• Latvia ~5% SIM share
•Highest Quality Perception•Excellent network
coverage• SAC reduction•Margin improvement in
Lithuania•Turnaround in Latvia
•Revenue Growth of 20%•EBITDA growth of 40%•Free Cash Flow
improvements
• Outstanding GDP Growth
• Lithuania 7.7% in 2006• Latvia 11.9% in 2006
•Growing Purchasing Power
Investment Thesis
High Macroeconom
ic Growth
Strong Market Position
Rising Cash Profile
Established Track Record
Marketposition
Financials Q&AStrategyCompany overviewShareholders and
Management
11
57%
49%48%
40%
45%
50%
55%
60%
Differentiating through customer experience
Improving Latvian PositionStrong Lithuanian Position
Bité has most satisfied customers
Marketposition
Financials Q&AStrategy
4
5
6
7
8
9
10
May-0
6
Jun-
06Ju
l-06
Aug-
06
Sep-
06
Oct-06
Nov-06
Dec-06
Jan-
07
Feb-
07
Mar-0
7
Apr-0
7
May-0
7
Jun-
07Ju
l-07
Aug-
07
Sep-
07
Oct-07
Nov-07
Bite LMT Tele 2
Network Perception is improving
Source: SKDS, Q4 2007
40%
50%
60%
70%
80%
90%
100%
Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07
Bite LMT Tele 2
Total Awareness is growing
Company overviewShareholders and
Management
12
Financial performance is improving Bité Lithuania and Bité Latvia Consolidated
147.0
175.8
Q4 05 - Q3 06 Q4 06 - Q3 07
+28.8 €m~
+20%
EBITDA - CAPEXEBITDASERVICE REVENUE CAPEX
Figures in millions euro. The grey bubbles show the growth year over year in absolute numbers and %.
Marketposition
Financials Q&AStrategy
26.2
36.7
Q4 05 - Q3 06 Q4 06 - Q3 07
+10.5 €m~
+40%40.7
41.9
Q4 05 - Q3 06 Q4 06 - Q3 07
+1.2 €m~
+3%
-14.5
-5.2
Q4 05 - Q3 06 Q4 06 - Q3 07
+9.3 €m
Company overviewShareholders and
Management
13
Lithuania – The Profitable Growing Business
13,392
10,710
14,192
15,297
11,995
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Q3 06 Q4 06 Q1 07 Q2 07 Q3 070.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
EBITDA EBITDA as a % of Service revenue
EBITDASERVICE REVENUE
Figures are in thousands euro.
Marketposition
Financials Q&AStrategy
40,201
40,813
43,036
44,431
38,953
36,000
37,000
38,000
39,000
40,000
41,000
42,000
43,000
44,000
45,000
Q3 06 Q4 06 Q1 07 Q2 07 Q3 07
Company overviewShareholders and
Management
14
Latvia – The New Start Up
-2,921
-3,500-3,660 -3,621
-3,350
-4,000
-3,500
-3,000
-2,500
-2,000
-1,500
-1,000
-500
0Q3 06 Q4 06 Q1 07 Q2 07 Q3 07
EBITDASERVICE REVENUE
Figures are in thousands euro.
Marketposition
Financials Q&AStrategy
994
1,433
1,828
2,511
3,241
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Q3 06 Q4 06 Q1 07 Q2 07 Q3 07
Company overviewShareholders and
Management
15
Capital Expenditure Bité Lithuania and Bité Latvia Consolidated
EBITDA - CAPEXCAPEX
Figures are in thousands euro.
Marketposition
Financials Q&A
10,092
13,959
9,975
8,9059,036
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Q3 06 Q4 06 Q1 07 Q2 07 Q3 07-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
CAPEX CAPEX as a % of revenue
599
-7,100
-1,667
1,201
2,960
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
Q3 06 Q4 06 Q1 07 Q2 07 Q3 07
15.0%
20.0%
25.0%
30.0%
StrategyCompany overviewShareholders and
Management
16
Bite Finance International Group leverage is decreasing
Net debt to Consolidated EBITDA
Marketposition
Financials Q&A
9.1
8.07.4
6.0
At acquisition Q1 Q2 Q3
Note: "At acquisition" Net debt to Consolidated Bite Group EBITDA ratio is calculated based on actual audited Bite Group consolidated figures for Y2006. Quarterly ratios are calculated on annualized EBITDA for Bite Finance International Group.
StrategyCompany overviewShareholders and
Management
17