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Unitymedia Group Q3 2008

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Presentation Transcript:

Unitymedia Group
Q3 2008 Investor Call Presentation
November 19, 2008
2
This Presentation and any materials distributed in connection herewith (the “Presentation”) include forward-
looking statements. Forward-looking statements are statements regarding or based upon our management’s
current intentions, beliefs or expectations relating to, among other things, Unitymedia’s future results of
operations, financial condition, liquidity, prospects, growth, strategies or developments in the industry in which
we operate. By their nature, forward-looking statements are subject to risks, uncertainties and assumptions that
could cause actual results or future events to differ materially from those expressed or implied thereby. These
risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and
events described herein.
Forward-looking statements contained in this Presentation regarding trends or current activities should not be
taken as a representation that such trends or activities will continue in the future. We undertake no obligation to
update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise. You should not place undue reliance on any such forward-looking statements, which speak only as
of the date of this Presentation.
This Presentation does not constitute or form part of, and should not be construed as, an offer for sale or
subscription of or solicitation of any offer to buy or subscribe for any securities of Unitymedia or its affiliates, and
neither this document nor any part of it shall form the basis of, or be relied upon in connection with, or act as an
inducement to enter into, any contract or commitment whatsoever. The information contained in this
Presentation is subject to change without notice. No representation or warranty, express or implied, is made as
to the fairness, accuracy, reasonableness or completeness of the information contained herein and no reliance
should be placed on it.
3
A Triple Play Business at the Heart of Europe
Operating in attractive regions of Germany
8.7 million homes passed
Independent end-to-end infrastructure
Growth markets Broadband and Pay TV
Large basic cable subscriber base
76% HH coverage, 54% BCS penetration
75% upgraded for triple play at end of Q3
Upsell potential to Unity3play
0 2 4 6 8 10 12
Footprint
Households
Homes Passed
Homes Upgraded
BCS Subscribers
3Play Subscribers
11.4m Households
8.7m Homes
6.5m 2008e: >80%
4.7m
3play Upside Potential
(million)
1.4m New Service RGUs
Marketable Customer Base at Q3 2008
4
Operating and Financial Highlights
Unitymedia Cable – strong Q3 RGU and earnings growth compared to prior year:
New Service RGUs up 70% and total RGUs up 7%
Revenues up 18% to €219 million
Adjusted EBITDA up 18% to €101 million (EBITDA margin of 46%)
Capex of €60 million at 27% of revenues in line with strong RGU growth
With upgraded Aachen & Wiesbaden networks on track for >80% upgrade by year end
Q3 arena:
Satellite subscriber base of 221,000 in line with expectations
€69 million total revenue
Adjusted EBITDA of €7 million
Q3 Consolidated Group:
Total revenue of €288 million
Adjusted EBITDA of €108 million
Net income of €16 million
5
RGU Development – Unitymedia Cable
RGU Development
Blended ARPU
Note: Excludes arena RGUs; ARPU including subscription fees, excluding installation fees
Strong New Service RGU
growth and increasing ARPU
contribution
New Service RGUs up 70%
yoy and 11% in quarter
Blended ARPU of €13.09 up
18%:
New Services account for 24%
of ARPU
Basic Cable ARPU of €9.94 up
8% driven by ‘08 price increases
4,844 4,762 4,733 4,712 4,655
800 942 1,083 1,224 1,357
5,643 5,704 5,816 5,936 6,013
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008
RGUs(´000)
Basic Cable New Services
9.17 9.27 9.60 9.58 9.94
1.93 2.19 2.53 2.89
3.15
11.11 11.46
12.14 12.47
13.09
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008
ARPU(€)
6
Digital Television Development
Digital TV Basic and Pay RGUs
Digital TV Pay ARPU
Ongoing digitisation:
Momentum established
24% of basic cable base
Discounted digital access
Unity3play bundling
Upsell into Digital TV Pay:
23% up on prior year
Improving pay content
Digital TV Pay ARPU down
13% with entry tiers unbundled
Some Bundesliga churn at
expiration of 2 year contracts
Launched “Kids package” and
new foreign language content
in Q4
Note: Excludes installation fees and digital access fees
164
334
440 515 586
430
456
485
516
531
593
789
925
1,031
1,116
0
200
400
600
800
1,000
1,200
Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008
RGUs(´000)
Digital TV Basic Digital TV Pay
11.15 10.99
10.10 10.00 9.72
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008
ARPU(€)
7
Internet Development
Internet RGUs
Retail Internet and 2Play ARPU
Strong Internet growth:
RGUs 120% up on prior year
44k retail net adds in Q3
28k MMA adds in Q3
2Play ARPU stable in 2008
Further value added
services launched, such as
security and online back-up
Successful DSL switcher
campaign started in Q3
78 112 132 165 193
158
199
244
282
326
236
311
376
447
519
0
100
200
300
400
500
600
Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008
RGUs(´000)
Wholesale MMA Retail Broadband
15.21
13.80
11.59
15.32 14.82
36.36
33.34
30.73 31.87 31.30
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008
ARPU(€)
Retail Broadband Broadband 2play
8
Telephony Development
Telephony RGUs
Telephony and 2Play ARPU
Telephony RGU growth:
130% up on prior year
47k net adds in Q2
Over 90% of Internet adds
also take telephony
Telephony stand-alone offer
Combined broadband and
telephony ARPU stable
throughout 2008
134
175
222
261
308
0
100
200
300
400
Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008
RGUs('000)
21.14
19.54 19.13
16.55 16.49
36.36
33.34
30.73 31.87 31.30
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008
ARPU(€)
Telephony Broadband 2play
9
Unitymedia Cable Outlook
Strong growth in new services expected to continue:
Unity3play and digitisation momentum established
Sales and Marketing investments continuing to increase with growth
New product development in 2009
Network >80% upgraded to bi-directional capacity by year-end
Piecemeal pursuit of smaller L4 cable acquisitions (below €10m each)
10
Q3 2008 Financial Performance
11
Q3 2008 Unitymedia Financial Overview
Q3 2008 Financial Overview
(1) Net debt is a Company measure and is the nominal value of bonds and bank liabilities less cash on hand. Net debt is presented exclusive of amortized transaction costs and including repurchased but not retired
debt securities and therefore differs from the lower amount shown in the EU-IFRS and IFRS financial statements. Net debt includes €236.0 million par value of the NRW/Hesse Notes which have been repurchased
by the Company as of Q3 2008 but not retired; arena including €103m of restricted cash for DFL Guarantee.
2007
(in €m) UM Cable arena UM GmbH UM GmbH
Total revenues 219 69 288 273
Cost of materials and services (34) (3) (37) (35)
Personnel expenses (26) (0) (26) (23)
Other expenses (57) (59) (116) (134)
Operating Costs (117) (62) (179) (192)
EBITDA 102 7 109 81
Depreciation and amortization (60) (1) (61) (58)
Financial result (29) 1 (28) (37)
Taxes on Income (2) (2) (4) 26
Profit/(Loss) for the period 11 5 16 12
Operating Metrics
Adjusted EBITDA 101 7 108 99
Adjusted EBITDA Margin 46% 10% 36% 36%
Capex 60 0 61 38
% Revenues 27% 0% 21% 14%
Net debt
(1)
1,850 (127) 1,723 1,739
Quarter ended Sept 30,
2008
12
200.4
208.9
185.9
194.2
219.3
75.0
100.0
125.0
150.0
175.0
200.0
225.0
Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008
BCS New Services Carriage Fees Other
BCS New Services Carriage Fees Other
Unitymedia Cable Revenue
€219m revenue, up 18%
on prior year
New Services revenue
now accounts for 20% of
total revenue
Revenue increase from
New Services growth
BCS price increases
Higher Premiere and public
broadcaster carriage fees
Further diversification of
revenue mix
Quarterly Revenues
Revenue Split
Q3 2008Q3 2007
(1)
(1)
(1) Includes own work capitalized, installation fees and other operating income
7%
15%
72%
6%
20%
10%
63%
7%
13
317
377
0
100
200
300
400
LTM Q3/2007 LTM Q3/2008
AdjustedEBITDA(€m)Unitymedia Cable Adjusted EBITDA
Adjusted EBITDA - Quarterly
LTM Q3 Adjusted EBITDA
+19%
€101m Adj. EBITDA, up
18% on prior year
EBITDA increase from
New Services growth
BCS price increases
Incremental carriage fees
Operating leverage
Revenue growth partially
offset by
Increased customer
acquisition
’07 and ’08 pricing churn
46% Cable Adjusted
EBITDA margin in Q3
Operating leverage funding
growth
Stable margin despite
growth path
85.3 82.8
94.7 98.7 100.9
0
20
40
60
80
100
120
Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008
AdjustedEBITDA(m€)
14
7.2 10.6 8.3 9.8 13.9
13.6
14.6
9.0
14.9
12.6
21.2
30.6
24.1
24.3
33.4
42.0
55.7
59.9
41.4
49.0
0.0
15.0
30.0
45.0
60.0
75.0
Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008
CableCapex(in€m)
Core Netw ork & Other Capex Upgrade / Netw ork Development CPEand In-house Wiring
Unitymedia Cable Capex
Capex at 27% of revenues
Capex of €60m, ~80%
upgrade or demand driven
€15.8m CPE & SAC
€17.6m In-house Wiring
€12.6m Upgrades
€13.9m Core & Other (incl.
€2.2m small L4 acquisitions)
Additional share
acquisition of €49m for
Aachen & Wiesbaden
networks
Low maintenance Capex
Capex - Quarterly
Capex Split Q3 2008
Growth Capex
Note: CPE = Customer Premises Equipment
23%
56%
21%
Core Netw ork & Other Capex Upgrade / Netw ork Development CPEand In-house Wiring
15
Q3 2008 arena Financial Overview
arena Financial Overview €7m Adjusted EBITDA in Q3
Profitable stand-alone
satellite platform
221k subscribers
€1.4m EBITDA on stand-alone
basis in Q3
Expect further churn in
arenaSAT sub base in Q4 as
2-year contracts expire
Launched new modular
packages with up to 25
channels and introduced DVD
flat rate as a free bundle
(1) Includes installation revenues, revenues from air time sales, set-top box sales and other revenues
(2) Includes arenaSAT satellite subscription fees excluding public viewing revenues
(in €m) 2008 2007
Revenues
Satellite revenue 15.5 20.1
Wholesale revenue 2.2 4.9
Total subscription revenues 17.6 25.0
Premiere share revenue 18.1 24.0
Sublicense revenue 32.1 38.6
Other revenue
(1)
0.0 1.0
Own work capitalised 0.0 0.0
Other income 1.4 1.4
Total revenues 69.3 90.0
EBITDA 7.1 (4.1)
Adjusted EBITDA 7.1 13.7
Capital Expenditures 0.6 0.3
RGU information
arenaSAT RGUs (in '000s) 221 334
arenaSAT ARPU
(2)
18.74 17.86
Quarter ended Sept 30,
16
€ million
Q3 '08 Q3 '07 Q3 '08 Q3 '07
Unitymedia Cable EBITDA 102.1 84.9 294.7 264.0
arena EBITDA 7.1 (4.1) 30.8 (70.4)
EBITDA - Unitymedia Group 109.2 80.9 325.4 193.6
Depreciation and Amortization (61.0) (57.6) (184.3) (170.1)
Net Financial Result (28.1) (37.3) (46.2) (110.6)
Income Taxes (3.8) 26.2 (22.2) 19.3
Profit/(Loss) for the period 16.4 12.1 72.7 (67.8)
Quarter YTD
Unitymedia Group Net Income
Net Income – Unitymedia Group €109m consolidated Q3 ’08
unadjusted EBITDA
D&A up due to higher fixed
and intangible asset base
Improved Q3 Financial
result due to lower net
interest expenses from FRN
buybacks and one-time
FRN gains of 2.2m
Income taxes in Q3
primarily related to accrued
trade tax and corporate
income tax expenses, 2007
due to the revaluation of
deferred tax liabilities
(German tax reform)
17
€ million Quarter YTD
Q3 '08 Q3 '07 % Q3 '08 Q3 '07 %
Unadjusted EBITDA 109 81 35% 325 194 68%
Premiere (18) (24) 175 (67)
Other W/C (22) (44) 17 9
Interest & Tax (23) (23) (141) (123)
Operating Cashflow 46 (10) 376 13
Capex (60) (42) 43% (151) (117) 29%
Share Acquisitions (49) - (49) -
Gains on disposals - - 42 -
Financing (81) - (218) (55)
Change in Cash (144) (52) 0 (159)
Opening Cash 371 338 227 444
Closing Cash 227 286 227 286
Cash Flow Summary – Unitymedia Group
Simplified Cash Flow
1) Includes deferred share revenue, offset in Q1 2008 by €244m book value of share disposal
2) Includes €21m Tele Columbus transaction tax paid in Q2 2008
(1)
(2)
18
Credit Statistics
LTM Net Leverage Ratios:
Unitymedia Cable 4.9x
Unitymedia Group 4.1x
LTM Net Leverage Ratios under
IFRS when deducting
repurchased FRNs:
Unitymedia Cable 4.2x
Unitymedia Group 3.5x
Primacom networks paid from
cash on hand in Q3
Capex, capex commitments and
acquisitions likely to exceed
Premiere share proceeds – no
expected buyback offer
requirement
Credit Profile
Note:
(1) Incl. nominal €236m repurchased FRNs; according to IAS 39 deducted from indebtedness on balance sheet
(2) Net debt is a Company measure and is the nominal value of bonds and bank liabilities less cash on hand. Net debt is presented exclusive of
amortized transaction costs and including repurchased but not retired debt securities and therefore differs from lower the amount shown in the EU-
IFRS and IFRS financial statements. Net debt includes €236.0 million par value of the NRW/Hesse Notes which have been repurchased by the
Company as of Q3 2008 but not retired; arena including €103m of restricted cash for DFL Guarantee.
(in €m)
Unitymedia
Cable
Unitymedia
Group
Cash 100.3 227.3
Revolver - -
Senior Secured Term Loan 100.0 100.0
UM Hessen/NRW FRN due 2013
(1)
1,275.0 1,275.0
Senior Credit Facilities 1,375.0 1,375.0
UM Senior Notes 575.1 575.1
Total Nominal Value of Debt 1,950.1 1,950.1
Net Debt (2)
1,849.9 1,722.8
Credit Statistics (1) (2)
:
LTM Adjusted EBITDA 377.1 421.1
Net Senior Debt / LTM Adjusted EBITDA 3.4x 2.7x
Net Total Debt / LTM Adjusted EBITDA 4.9x 4.1x
LTM Adjusted EBITDA / Pro Forma Interest 2.5x 2.7x
Quarter ended Sept 30, 2008
19
Contact Information
Unitymedia GmbH
Investor Relations
Aachener Strasse 746 - 750
50933 Cologne
Germany
Tel.: + 49 (0) 221 37792 196/151
Fax: + 49 (0) 221 37792 871
investor.relations@unitymedia.de
www.unitymedia.de