keppel t&t going forward - keppel corporation
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Copyright ©Keppel T&T 2002
Going Forward
Capital Structure& Business Strategy
23 May 200223 May 2002
Keppel T&TKeppel T&T
Copyright ©Keppel T&T 2002
Overview of Capital Structure
Copyright ©Keppel T&T 2002
Current Liquidity Overview
As of March 31, 2002, total net debt of $585 m (a) (b)
– Shareholders funds of $150.1 m
– Net gearing of 3.9x (c)
9 May 2002: Redemption of US$ convertible bond in amountof S$177m
– Funded by short-term loan from Keppel Corp atfavourable interest rate of 1.21% p.a. (3 months)
• Including net debt at M1 and other JCEs, which are accounted for proportionately
• $351M owed to related parties
• All assets including M1 at net book value
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Copyright ©Keppel T&T 2002
Capital Structure Review & StrategyTo strengthen balance sheet
–Reduce debt and improve gearing
To ensure sufficient funds are available to grownetwork engineering into a global business
– Investments of S$100M - $200M planned forNetwork engineering and solutions business overthe next 3 years
To pursue orderly divestments of non-core assets
–Shipping, logistics & investment in M1
Copyright ©Keppel T&T 2002
Divestment PlanShipping business
– Merchant banker engaged as adviser
– Outcome of divestment expected by early 4Q02
Logistics business
– Merchant banker engaged as adviser
– Outcome of divestment expected by 3Q02
Logistics Warehouses
– Ongoing discussions with interested parties
Divestment of M1 stake dependent on favorable marketconditions
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Copyright ©Keppel T&T 2002
Divestment PlanShipping Assets
– 10 ships, book value: $140M, loan: $97M
Logistics warehouses
– Book value: $127M, loan: $43M
M1
– Book Value (35% of M1 NTA): $123M
– Indicative valuation by privatisation IFA is $ 653.7M(for 35%)
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Copyright ©Keppel T&T 2002
MilestonesAfter providing funds for growing the core business (operations andacquisitions),
– By end 2002, gearing ratio expected to be 2 times
– M1 to repay loan of $61M
– Divestment will raise $200M - $250M
– By end 2003, KTT is expected to have no debt
– Divestment will raise $550M - $650M
KTT will continue to evaluate all funding alternatives (including equity)if divestments do not take place as planned or if further capex /acquisition needs arise
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Copyright ©Keppel T&T 2002
Agenda for Business Strategy
Our Track Record
Vision
Market Opportunities
Competitive Landscape
Strategy
Milestones
Next Steps
Copyright ©Keppel T&T 2002
Our Track RecordOffices in 3 continents and 12 countries
90 91 92 93 94 95 96 97 98 99 00 01 02
MicrowaveRadioTransmission
VoiceMessaging
Digital Cellular(GSM & CDMA)
Outdoor and In-building
IT services &Outsourcing
Broadband Wireless
LMDS
UMTSWireless LAN
Voice Portals
Network Optimization
ComputerTelephonyIntegration
HybridFiberCoaxial
CT2
Paging
TrunkRadio
AnalogueCellular
Over a decade of experience in wide field of info-comms technologies
Brunei
China
Vietnam
Indonesia
Philippines
Taiwan
ThailandGermany
USA (CGS)
Luxembourg
Singapore
Malaysia Japan
Copyright ©Keppel T&T 2002
Our Track Record
10 years of track record in network engineering with over 50 majorprojects completed in more than 20 countries
Key customers include major blue-chip telecommunication serviceproviders and equipment vendors in Asia and Europe
Sales & marketing network spanning 3 continents and 15 countries
Key competencies in strategically located centers worldwide
International management team and staff strength of over 700,20 nationalities, 80% tertiary education
Completed over 7000 cell sites, BTS, IBC and microwave hops
Own proprietary processes and tools
Copyright ©Keppel T&T 2002
KT&T’s Vision
To be a leader in
network engineering services and
technology solutions in the
info-communications industry
by delivering best-in-class services and solutions to
our customers
through professionalism and continuous innovation
Copyright ©Keppel T&T 2002
Market Opportunities
Copyright ©Keppel T&T 2002
Telecom Industry Drivers and TrendsDrivers– Deregulation & Convergence of Telecommunications,
Broadcasting & Information Technology Industries
– Digitization & Compression of Information, and the pervasive useof Internet & Wireless Communications
– Globalization on all frontiers including social, cultural & economic
Implications & Opportunities– Service Providers are moving away from provision of pure
connectivity to value-added services in the enterprise space, anarea which they are not familiar with
– Service Providers and Equipment Vendors are focusing on corebusiness and outsourcing more of their operations
Copyright ©Keppel T&T 2002
Rapid and Sustainable Growth
The wireless and wireline communications market isexpected to grow rapidly over the next 5 years
Global Telecoms Market Global Wireless Market
0
1,000
2,000
3,000
2000 2001 2002 2003 2004 2005
Mil
of
Su
bsc
rib
ers
Wireless
Fixed Line
0
400
800
1200
2000 2001 2002 2003 2004 2005
Mil
of
Subs
crib
ers
United States
Europe
Asia
Source: Lehman Brothers' estimates, Industry estimatesSource: Lehman Brothers' estimates, Industry estimates, September 2001, September 2001
Copyright ©Keppel T&T 2002
Capex Spending & Addressable Market
Capex Spending
0
50,000
100,000
150,000
200,000
2001 2002 2003 2004 2005
US
$ M
il
2 / 2.5G Capex 3G Capex Wireline
Spend on Engineering Services & Technology Systems
0
20,000
40,000
60,000
80,000
2001 2002 2003 2004 2005
US
$ M
il
Asia Europe United States
Source: Lehman Brothers' estimates, Industry estimatesSource: Lehman Brothers' estimates, Industry estimates, September 2001, September 2001
For the period 2001 – 2005
Total wireline and wireless capex is expected to be US$871 billion
The engineering services and telecoms technology software market is
estimated to be US$312 billion
Copyright ©Keppel T&T 2002
Capex Spending
0
50,000
100,000
150,000
200,000
2001 2002 2003 2004 2005
US
$ M
il
2 / 2.5G Capex 3G Capex Wireline
Spend on Engineering Services & Technology Systems
0
20,000
40,000
60,000
80,000
2001 2002 2003 2004 2005
US
$ M
il
Asia Europe United States
Source: Lehman Brothers' estimates, Industry estimatesSource: Lehman Brothers' estimates, Industry estimates, September 2001, September 2001
Capex Spending & Addressable Market
Source: Lehman Brothers' estimates, Industry estimatesSource: Lehman Brothers' estimates, Industry estimates, September 2001, September 2001
The engineering services and technology systems marketis traditionally dominated by equipment vendors and
Service Providers’ internal engineering arms.Our available market is increasing significantly as they move toward
outsourcing of engineering services and technology systems.
Copyright ©Keppel T&T 2002
Changing Face of Service Providers
NEW SERVICES• Video-on-demand
• Information-on-demand
• Electronic Commerce
• On-line Banking
• Application Service Provision
• Telemetry
• E-Learning
• Gaming
CONNECTIVITY• Domestic Telephone
• IDD
• Mobile Phone
• Paging
• Fax
• Internet
Traditional Telco
New Generation Service ProvidersNew Generation Service Providers
Copyright ©Keppel T&T 2002
Source: INRA-Telcobus, ISM-Survey, ICN MCM 12 Analysis
E-mail, Fax,V-mail 30%
E-mail, Fax,V-mail 30%
Online Banking15%
Online Banking15%
Location Services15%
Location Services15%
Internet Access13%
Internet Access13%
Information Services10%
Information Services10%
Mobile Office7%
Mobile Office7%
Telematics 1%Telematics 1%Telemetry 5%Telemetry 5%
Payments 1%Payments 1%Games 3%Games 3%
Changing Face Of Service ProvidersNew Generation Mobile Service Providers - Applications Drive Opportunities
Copyright ©Keppel T&T 2002
Globalisation of Service Providers
Germany, Belgium, Canada, China, France, Hong Kong, India,Japan, Russia, Singapore, Ukraine, UK, USA
UK, Australia, Belgium, China, Egypt, France, Fiji, Germany,Greece, Hungary, India, Ireland, Italy, Japan, Kenya, Korea,Malta, Mexico, Netherlands, New Zealand, Poland, Portugal,Romania, South Africa, Sweden, Switzerland, US
Singapore, Australia, Belgium, Taiwan, Thailand, Philippines,Indonesia, India
France, Austria, Belgium, Botswana, Cameroon, China, Denmark,Dominican Republic, Germany, India, Italy, Ivory Coast,Madagascar, Mauritius, Netherlands, Portugal, Romania,Slovakia, Sweden, Switzerland, Thailand, UK, USA
Copyright ©Keppel T&T 2002
Vendors
PWC
Competitive Landscape
DyCom
MasTec Inc
Bechtel
CH2MHill
Qanta
O2Wireless
WFI
LCCI
LemconNetworkTechnology
I TSolutions
TelecomsService Provider
Multi-Industry
Datacraft
SCS
IBM
KPMG Consult
EDS
Aether Systems
724 SolutionsMobilocity
ArcStream
Accenture
CGE&Y
NDC
DeTeCon
Transfield
Nortel PS
Nokia
EcrissonInfoclarus
More Outsourcing Providing more innovative solutions
NewGeneration
ServiceProviders
Network Eng Cos
Diversified E&C Companies
Eng Arms of Telcos
IT Services Companies
Application Developers
Copyright ©Keppel T&T 2002
NetworkTechnology
I TSolutions
TelecomsService Provider
PWC
Relative Competitive Positioning
DyCom
MasTec Inc
Bechtel
CH2MHill
Qanta
O2Wireless
WFI
LCCI
Lemcon
Datacraft
SCS
IBM
KPMG Consult
EDS
Aether Systems
724 SolutionsMobilocity
ArcStream
Accenture
CGE&Y
NDC
DeTeCon
Transfield
Nortel PS
Nokia
EcrissonInfoclarus
KT&T ebizCGS
Radiance
Keppel CommsTrisilco Folec
Echo Broadband
New GenerationService Providers
Multi-Industry
Copyright ©Keppel T&T 2002
NetworkTechnology
I TSolutions
TelecomsService Provider
PWC
Relative Competitive Positioning
DyCom
MasTec Inc
Bechtel
CH2MHill
Qanta
O2Wireless
WFI
LCCI
Lemcon
Datacraft
SCS
IBM
KPMG Consult
EDS
Aether Systems
724 SolutionsMobilocity
ArcStream
Accenture
CGE&Y
NDC
DeTeCon
Transfield
Nortel PS
Nokia
EcrissonInfoclarus
KT&T ebizCGS
Radiance
Keppel CommsTrisilco Folec
Echo Broadband NetworkEngineering
andTechnologySolutions
New GenerationService Providers
Multi-Industry
Copyright ©Keppel T&T 2002
China, Japan & Europe
4. Penetrate market withhigh growth & early
deployment and adoption ofinnovations
Address efficiency andcost effectiveness of
network rollout
NetworkEngineering
South East AsiaGermany
Existing Suite ofProducts & Services
1. Consolidate &integrate existingbusinesses andfocus on existingkey competencies
and target atwireless and fixed linebroadband customers
2. Focus on “homebases” for initial success
and critical mass
Value Proposition
MarketExpansion
KT&T’s StrategyKT&T’s Strategy
NorthAmericas
5. Leverage on in-countrycustomers, partners and
infrastructure tocapitalize onopportunities.
Enhanced Suite ofProducts & Services
3. Offer comprehensivesuite of products &
servicesNetwork
EngineeringOSS
TechnologyEnterpriseServices
Increase “stickiness” ofenterprise customers to Sv Pvdrs’
wireless data solutions.
Intellectual property rights & Innovative solutions & middleware
6. Use IP askey differentiator &
migrate up the valuechain.
Copyright ©Keppel T&T 2002
Building Blocks
NetworkTechnology
I TSolutions
Telecoms Service Provider
EchoBroadband
TrisilcoFolec
KeppelComms
Others
KT&TBusinessSupport
Technology
Voice-DrivenTransactionApplications
LeverageTechnical
CapabilitiesAnd
Know How inEnterprise
Space
KT&TeBiz
ComputerTelephonyIntegrationSolutions
LeverageEnterpriseInnovation,Knowledge
AndCustomer
BaseIn Asia
StrategicOutsourcing
Services
LeverageTechnical
Capabilities
LeverageMNC HQs inN. America
LeverageTelco
CustomerBase in US
Radiance CGS
Network Engineering Solutions
BizApplications
EnterpriseVoice Soln
ITServices
Integration
ApplicationMiddleware
LeverageTechnical
Capabilities
LeverageTelco
CustomerRelations
To beDefined
InnovativeSolutions
AcquireIPR
Copyright ©Keppel T&T 2002
Products and Services
Business &M arketAnalysis
LicenseBidding &Application
AdvancedTechnologyEvaluation &Im plem entation
Network Design& Planning
RF andBroadbandEngineering
NetworkDeploym ent
ProgramM anagem ent
NetworkM anagem ent
NetworkPerform anceM onitoring
NetworkOptim isation
Operations &M aintenance
Billing
Custom er Care
Provisioning
ERP
InfrastructureM anagem ent
Network Engineering
Consultancy
NetworkDesign,
Planning &Deployment
NetworkSupportSolutions
Business SupportSolutions
Operations Support Technology
FOR SERVICE PROVIDERS FOR ENTERPRISES & SERVICE PROVIDERS
Enterprise Service Technology
IT Services & Outsourcing(Call-centre,
technical helpdesk)
Training
Com puter-TelephonyIntegration
Applications(voice driven, transaction-
based applications)
Enterprise Support Solutions
Copyright ©Keppel T&T 2002
Critical Success Factors
Addressable Market
Key Competencies
Sustainable Competitive Advantage
Knowledge-based Business & Intellectual Capital
Global Operations & Processes
Organisation Strategy & Structure
Migration up the Value Chain
Copyright ©Keppel T&T 2002
MilestonesBy 2005
–To have established a core business withglobal operations and sustainable growthpotential
–To achieve a turnover of $ 1 billion
Copyright ©Keppel T&T 2002
Next StepsGrow core business in network engineering andtechnology solutions through
–Consolidation and integration of existingbusinesses
–Organic growth in markets of high potential(eg. China & Europe) and markets of earlyadoption of innovations (eg. Japan)
–Acquisitions and strategic partnerships tostrengthen our value proposition and toposition for emerging market trends