True Corporation Plc. NDR in Hong Kong SCBS & Daiwa July 18-19, 2011

Transcription

1 True Corporation Plc. NDR in Hong Kong SCBS & Daiwa July 18-19, 2011

2 True Group Thailand s convergence lifestyle leader 1 CP Group Public shareholders - Foreign 9.88% - Local 25.39% 64.73% 35.27% 98.91% 99.99% 1/ 99.99% 99.99% Wireless Group Pay TV Wireline/Online Wireline/online Convergence & others 18 mn mobile subs on GSM 1.7 mn subs (93% DsTV; 1.9 mn fixed-line operator in Convergence/bundled packages 1800 MHz 7% cable TV) Greater Bangkok area Digital content, media and online 25% subscriber market share HSPA 850 MHz (former CDMA) 60% subscriber market share Successful mass market 1.2 mn Broadband Internet customers via ADSL, VDSL, games publisher True App Center develops International call services: strategy ~1.1mn subs DOCSIS 3.0 and fiber applications (110+) for ios, 006 (TDM), (VoIP) Advertising is a key growth 36% subscriber market share BlackBerry and Android area Payment channel supporting 120+ payment services 7 mn mobile e-wallet subs Note: 1/ True indirectly holds 99.99% in TrueVisions Group (which holds 99.3% in TrueVisions PLC and 99.0% in TrueVisions Cable PLC) 2/ Subscriber figures as at Mar 31, 2011; Shareholding figures estimated as at June 20, 2011; *Company estimates as of 1Q11

3 Key strategic milestones Transformation from a fixed-line concessionaire to a quad-play operator : Launched cable TV service under UTV; merged with IBC in 1998 to become UBC 2003: Launched Broadband services 2007: Launched the first bundled package True Life Freeview which offered popular convergence package of TrueMove and TrueVisions 2011: Completed Hutch acquisition; started rolling out commercial 3G services 1991: Started fixed-line telephone service under a BTO concession with TOT (first 2 mn lines) 2002: TA Orange launched its cellular service under the Orange brand 2006: TrueMove (rebranded from TA Orange ) achieved nationwide mobile coverage (92%) - Completed UBC tender offer; rebranded as TrueVisions ; expanded pay TV services into the mass market - Created first public Wi-Fi service 2009: First to launch Apple s iphone 3G in Thailand; offered 3G 850 MHz trial service

4 Thai telecom industry s competitive landscape 3 Fixed-line license TOT NTC/NBTC Mobile license Industry regulator CAT Equipment lease And O&M BFKT Wire-line license Fixed-line concessions Mobile 2G concession Mobile 3G Thai Mobile Mobile 2G concessions Mobile 3G CAT Telecom TUC True AIS DTAC RealMove (TrueMove H brand) TT&T TrueMove DPC Type-3 telecom license Concession Concession MVNO/Reseller Concession MVNO/Reseller

5 Group long-term financial trends Service Revenue excl IC* NIOGO 4 *Segment results are presented before intersegment elimination EBITDA EBITDA margin

6 Key investment & growth strategy First mover advantage for 3G mobile services nationwide; expand 2G coverage/capacity in provincial areas with high growth potential (mainly Northeast) Deliver enhanced Broadband double-play with DOCSIS 3.0 cable modems; enhance fiber services for enterprise segment; expand Thailand s largest/fastest Wi-Fi network 3 HDTV to the home; more secure broadcasting technology for pay TV; capture advertising growth potential by further expanding into the mass market 4 Further strengthen convergence platform by developing content and applications to enhance customer loyalty and reduce churn 5 Seek regional business opportunities

7 Hutch acquisition drives 3G expansion nationwide New business structure strengthened with greater operational flexibility and longer operational life (at least 14 years) s commercial launch in Q311 as a reseller of CAT s 3G+ services True positioned to capture growth in smartphone/mobile Internet markets Over 2,000 base stations & 60,000 Wi-Fi hot spots within 2011 True App Center has developed 110+ apps for ios, BlackBerry and Android CAT Lease Agreement Wholesale Agreement Wireless Group Structure 99.99% BFKT Network TRUE Corp Wireless Real Future RealMove (TrueMove H brand) 3G 850 MHz (reseller) 92.5% HWMH 98.91% BITCO Operator 99.86% 99.92% 6 TrueMove 2G 1800 MHz/ 3G 850 MHz trial Marketing Contract 73.92% HCAT CDMA

8 High growth potential in mobile non-voice market 7 Thailand mobile non-voice market forecast Source: Company forecasts Note: DTAC changed its 2009 revenue classification in 2010, resulting in its reported 2009 non-voice revenue being lower

9 Wireless Group targets & strategic outlook 8 Target at least 1 mn 3G subscribers within 12 months; 25 mn by 2025 Capture high value subscribers from Hutch, TrueMove and competitors Mass migration of 2G subscribers forecast in 2014 All 2G subscribers will be migrated within 2020 at the latest Machine-to-Machine usage expected to drive growth from 2020 onwards Revenue market share of 20% in 2013 (15% as at 1Q11, incl. CDMA) Expand footprint in low penetration/high growth potential areas (i.e., Northeast) 25% 15% Projected 3G subs & ARPU Source: Company, BMI market forecast Subs share 29% 20% Minimum 3G commitments Value share Year 1 Year 2 Year 3 Minimum 3G base stations 2,000 3,500 4,500 Population coverage 30% 55% 75% Nominal subscriber capacity ordered by Real Move (mn)

10 Current 3G plan incorporates 2.1 GHz licensing MHz provides the best cost effective mean to deliver efficient 3G services prior to the 2.1 GHz auction (expected in 4Q12 at the earliest) Additional 3G opportunities (i.e., 2.1 GHz) will be considered based on viability, investment cost and shareholder value 2.1 GHz requires minimal incremental investment as most key network components are compatible

11 RO, bank loans to fund 3G development Initial 3G investment will be funded by proceeds from the rights offering ( RO ) RO plan was well-received judging from the subscription rate (110.5%) The recapitalized/strengthened financial position will facilitate future business growth opportunities and improve long-term share price performance A loan agreement (to be finalized in early Q3) will secure long-term funding for 3G expansion and the refinancing of TrueMove s USD bonds. 10 YTD share price performance Jan 4, Bt Dec 30: True notified SET of the Hutch acquisition plan (Bt7.10) Jan 28: True completed Hutch acquisition (Bt6.90) Mar 21-25: Rumors about True s recapitalization plan (Bt6.70 Bt 6.10) Mar 28: RO plan announced (Bt5.70) May 30 Jun 3: Subscription period (Bt 4.52 Bt 4.56) Apr 7: XR date(bt4.78) Jul 13, Bt Dec Jan-11 2-Mar-11 2-Apr-11 2-May-11 2-Jun-11 2-Jul-11 Implied share price (excl. dilution) Jul 13, (Bt 5.51)

12 Regulatory issues 11 Recent court ruling backed legitimacy of CAT-True 3G deal Interim NBTC approved CAT s plan to upgrade equipment to 3G HSPA NBTC expected to be fully established within this year; 3G 2.1 GHz auction not expected before 4Q12

13 Superior fiber optic network yields competitive advantage True Fiber Optic Network in Bangkok Metropolitan Area (BMA) Fiber Optic TN CSN 12 RCU RCU RCU RCU (OSP - Copper) Fiber and advanced electronics = greater reliability and stability Shorter last mile connection improves Broadband performance avg. within 3 km Costly and difficult to replicate Fiber rich (>240,000 core kilometres in BMA; >300,000 km nationwide) RCUs (instead of central offices)

14 pioneers next-generation Broadband New Ultra hi-speed DOCSIS 3.0 service launched in March 2011, with download speeds of Mbps (can increase to 400 Mbps) Difficult to replicate; secures market leadership and facilitates growth Wi-Fi upgraded to 8 Mbps, Thailand s fastest; hot spots expanded to 20,000+ from 18,600 in 1Q11 13 TrueOnline s Broadband Internet Roadmap Broadband subscribers >1.4mn 1.0mn 1.2mn DOCSIS 3.0 FTTx WiMAX Quad Play HD Content NGN/NBN 3.7k 128 Kbps ADSL, VDSL Up to 50 Mbps Up to 400 Mbps DOCSIS 3.0 FTTx 2011 and beyond Up to 1 Gbps NGN/NBN

15 targets & strategic outlook 14 Thailand Broadband market forecast by value 22.4% 18.1% 23.8% 24.7% 16.0% Bt bn F 2012F 2013F 2014F Broadband market size % growth Expect Broadband market value to grow 20-30% in the next few years

16 targets & strategic outlook (cont d) 15 Capture Broadband growth opportunity with new technology and innovation DOCSIS 3.0 to cover 1.5 mn homepasses by year-end, 2 mn within 2012 Leverage double-play platform with TrueVisions co-promotion Expand Wi-Fi hot spots to 60,000, targeting 1 mn subscribers within 2011 Focus on high-value enterprise fiber services, targeting 170 buildings Fixed-line Broadband penetration (as of June 2010) Thailand Broadband penetration forecast Source: BuddeComm, estimates, August 2010 Source: Frost & Sulivan, March 2008

17 focuses on new technology, market segmentation 16 Reinforce leadership of premium market More HD channels, double-play propositions, and interactive TV services New Encryption system; MPEG-4 set-top box replacement starts in 4Q11 Mass market expansion and new convergence campaign to increase upselling opportunities and drive advertising revenue growth MPEG-4 compression technology also frees up transponder capacity, allowing more content, for satellite subscribers Expand into regional markets (e.g., Laos, Vietnam)

18 Advertising offers strong growth opportunities for 17 Thai broadcasting market Advertising spending 2.0% 4.6% 8.8% 5.0% 6.6% 7.9% 14.7% 18.9% 22.7% 7.6% 8.6% 9.6% 10.3% 10.4% 12.5% Satellite TrueVisions Local Cable 84.7% 80.4% 68.1% 62.1% 54.5% Antenna F Source: AGB Nielsen Jun 2010 Source: AGB Nielsen Overall pay-tv advertising to grow 15-20% in 2011 TrueVisions to expand mass market audience to tap lucrative advertising revenue

19 True Group provides unique investment opportunities 18 Thailand s only quadruple-play operator with an unparalleled range of products and services Convergence lifestyle platform strengthened by: 3G 850 MHz nationwide services Leadership of the premium smartphone market DOCSIS 3.0 (double-play) Broadband and pay TV Thailand s largest and fastest Wi-Fi network Exclusive content and applications for True Group customers Market leadership in terms of technological and service innovation

20 1Q11 results

21 1Q11 Group financial highlights 20 (Units in millions of Baht unless otherwise indicated) TrueOnline 1/ TrueMove 1/ TrueVisions 1/ m Consolidated Total Revenue (excl IC) 6,921 8,034 2,475 15,671 % growth Q-o-Q -2.3% 10.2% -0.8% 3.5% % growth Y-o-Y 5.6% 19.9% 4.8% 11.1% Service Revenue (excl IC) 6,638 6,768 2,447 14,200 % growth Q-o-Q -2.6% 12.9% -1.0% 4.0% % growth Y-o-Y 4.1% 11.6% 4.5% 6.6% EBITDA 2,612 1, ,760 % growth Q-o-Q 6.8% 5.0% -0.9% 2.6% % growth Y-o-Y 6.8% -17.0% 9.5% -4.0% Interest expense (544) (866) (221) (1,584) % growth Q-o-Q 0.1% 19.7% 2.9% 10.5% % growth Y-o-Y -9.3% 2.0% 204.9% 7.5% Tax, net (234) (136) (64) (450) growth Q-o-Q 29 (146) 5 (112) growth Y-o-Y (134) (47) (57) (238) NIOGO 2/ 299 (538) 101 (188) growth Q-o-Q (3) 143 growth Y-o-Y 366 (430) (44) (153) NIOGO excl. deferred tax 385 (402) growth Q-o-Q 198 (113) growth Y-o-Y 239 (477) (35) (318) Free Cash Flow (27) growth Q-o-Q (1,008) 3,130 (199) 1,598 growth Y-o-Y Capex ,635 growth Q-o-Q (132) (577) (145) (780) growth Y-o-Y 174 (166) (36) 5 1/ Before eliminations of inter-company transactions 2/ NIOGO: Net income (loss) from ongoing operations

22 Long-term debt level stable Long-term debt composition Net debt-to-ebitda vs. EBITDA coverage 21 Note: 1/ Figures include current portion of long-term debt but do not include financial lease and debt issuance costs 2/ TrueVisions debt includes all L-T loans for the TrueVisions acquisition 3/ 1Q11 figures exclude bridging loans for Hutch acquisition Note: Figures do not include financial leases 1/ 3Q09 Net debt-to-ebitda was adjusted (from 3.0x) to exclude cash raised for refinancing in 4Q10 Bt 1.7 bn of debt repaid in 1Q11; new borrowing of Bt 2.1 bn

23 %FY07 %FY08 %FY09 %FY10 %YoY Service revenue excl. IC +6.8% -4.4% +3.4% -1.2% +10.4% EBITDA +49.2% -24.8% +27.0% -13.7% -17.0% Hutch deal expands service revenue base 22 Service revenue & market share NIOGO 2G CDMA & others % Wireless group revenue market share NIOGO excl. deferred income tax NIOGO EBITDA & EBITDA margin Free cash flow TrueMove Wireless Net IC (845) (32) CDMA & others Wireless Group EBITDA EBITDA margin

24 Postpaid %FY07 %FY08 %FY09 %FY10 %YoY Service revenue excl. IC +10.9% +1.2% +17.8% +9.0% +13.4% Subscribers +31.3% +35.2% +26.3% +7.1% +8.8% Prepaid %FY07 %FY08 %FY09 %FY10 %YoY Service revenue excl. IC +4.3% -7.8% -0.1% -6.6% -8.0% Subscribers +61.6% +21.3% +5.7% +8.4% +9.3% iphone 4 sales drive TrueMove s postpaid net adds 23 TrueMove subscribers & market share TrueMove ARPU Net adds +3,119 +4,502 +2,677 +1,044 +1, ( 000) Prepaid Postpaid % TrueMove market share Postpaid revenue & ARPU Prepaid revenue & ARPU Voice Non-voice Postpaid ARPU Voice Non-voice Prepaid ARPU

25 Smartphone sales continue to drive non-voice growth 24 Non-voice revenue % of service revenue excl. IC FY10 mobile Internet revenue almost doubled, accounting for 1/3 of non-voice revenue Enhanced data network/packages supported rising demand for mobile Internet, smartphones %FY07 %FY08 %FY09 %FY10 %YoY Non-voice revenues +16.9% +7.6% +17.0% +12.8% +26.3%

26 %FY07 %FY08 %FY09 %FY10 %YoY Service revenue +2.3% +6.0% +1.5% -1.3% +4.1% EBITDA -2.3% +5.4% -3.8% -0.5% +6.8% TrueOnline grew strongly YoY despite fixed line decline Service revenue NIOGO 25 EBITDA & EBITDA margin Free cash flow

27 %FY07 %FY08 %FY09 %FY10 %YoY Broadband revenue - Old +41.7% +16.0% +10.8% +9.7% +11.2% Broadband revenue - New +30.7% +11.2% +5.1% +8.6% +13.6% Consumer, enterprise segments drive Broadband revenue Broadband revenue* Broadband customers* & ARPU 26 * Broadband revenue and subscribers were reclassified and restated to include revenues from enterprise business in 1Q11 Nationwide Broadband market share (estimated as of 1Q11) Super Hi-speed sub by speed* *Connection speed for the standard package (Bt599/month) was upgraded from 3Mbps to 4Mbps in Oct 09 and to 6Mbps in Aug 10

28 %FY07 %FY08 %FY09 %FY10 %YoY Service revenue +5.0% +6.4% +1.1% +0.5% +4.5% EBITDA +29.0% +5.5% -1.7% -11.5% +9.5% TrueVisions revenue grows with support from advertising Service revenues NIOGO 27 Advertising Others Subscription & installation EBITDA & EBITDA margin Free cash flow Note: 2009 includes the reversal of over-accrued content-related costs (Bt207mn)

29 %FY07 %FY08 %FY09 %FY10 %YoY Total subscribers +66.6% +41.4% +13.2% +2.5% +4.7% ARPU -9.3% -10.5% -18.4% -7.7% -0.5% Mass market drives full-year subscriber growth 28 Subscribers & ARPU Bundled package subscribers & upselling rate Net adds (28) +7 ( 000) Premium (Platinum, Gold, Silver) Freeview Free-to-air Standard (Knowledge) Blended ARPU % Upselling rate * Upselling rate refers to the upgrading of mass market subscribers to higher-value packages

30 Disclaimer This presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of Discussion of factors that may affect future results is contained in our recent filings with the Securities and Exchange Commission.