Friday, December 14, 2012

Tele2 Capital Markets Day: highlights

Overall: moving from Discounter to Best Deal and now to Value Champion.

Sweden:
  • Comviq discounter brand, Tele2 Value Champion brand.
  • 3P on OA networks by YE 2013: 600k households.
Norway:
  • Focus on network roll-out. Coverage 75% mid 2013.
  • Auction (800, 900, 1800) coming 13Q1.
Kazakhstan (Tele2 51%, Asianet Holding 49%):
  • EBITDA-breakeven by 13H2.
  • Network coverage 92% in 2015 (today 80%).
Russia:
  • Tele2 leads in 9 regions, is a challenger in 21 and a newcomer in 8.
  • Focus on 2G; quotes:
    • "maximize the 2G opportunity
    • make progress on technology neutrality
    • absence of MBB will not be critical in approx. 2 years
    • >90% of data usage is social networks, where EDGE speed is enough for good user experience"
  • "Evaluate possibilities to expand carefully through new licenses as well as by complementary acquisitions."
  • Tele2 (and others) aims to launch LTE in 1800 band. 58% of its base stations are LTE-ready and 67% of its transport network.
  • MNP is coming to Russia Dec. 1 2013.



Friday, December 07, 2012

Deutsche Telekom Capital Markets Day (3): highlights Germany

General:
  • "We believe highspeed network quality will be key differentiator".
  • Rev stabilisation in 2014.
LTE:
  • Coverage to 85% by 2016 (from 38% now).
  • Peak performance 75 Mb/s in 800, 150 Mb/s in 1800 band.
  • Capex 1800 70% lower than HSPA (in terms of capex per Mb/s)
Fiber (FTTC):
  • Speed FTTC max 50/10 Mb/s, with vectoring 100/40 Mb/s
  • Capex FTTC + vectoring 70% lower than FTTH (in terms of capex per home).
Hybrid access (FTTC with vectoring and LTE in 1800 band):
  • Down: FTTC + LTE 200 Mb/s (100 each), ADSL + LTE 116 Mb/s (16 + 100).
  • Up: FTTC + LTE 90 Mb/s (40 + 50), ADSL + LTE 51 Mb/s (1 + 50).
  • Vectoring and hybrid prolong copper lifecycle up to 10 years.
Mobile targets 2015:
  • Smartphone LTE sales 67% share (now 4%).
  • 10m contract subs (+47%) (now 6.8m).
  • Service rev EUR 7bn (+ 2-3%), market share 35%.
Fixed:
  • Focus on wholesale to secure network utilization.
  • Targets 2015:
    • 2.7m fiber subs (+240%), market share 43%
    • 3.0m Entertain subs (+60%)
    • Connected home rev EUR 5.4bn (+2%).
    • Growth initiatives (cloud, intelligent networks, De-Mail, M2M) rev EUR 0.7bn.
    • Total growing rev EUR 9.2bn (+1.7%)
    • Total rev EUR 22.2bn (from 22.7 in 2012), o/w >40% from growth.
                              2012  2013  2014  2015
REVENUE TEL DLD               22.7              22.2
          BASIC               15.2              13.0
          GROWTH               7.5               9.2
            CONNECTED HOME     5.3               5.4
            MOBILE DATA        2.0               3.0
            INITIATIVES        0.2               0.7

OPEX                          13.9              13.8
  DIRECT COST                  4.8               5.1
  INDIRECT COST                9.1               8.7

EBITDA MARGIN                   40    40    40    40

CAPEX   TEL DLD                3.6   3.4   4.1   4.3
          BASIC                                  3.2
          FTTC                                   1.1



Deutsche Telekom Capital Markets Day (2): highlights Europe

Market revenues estimates 2012-2015 from EUR 65 to 67 billion:
  • Blue Ocean CAGR +6%
    • mobile internet EUR 4 to 6 bn
    • connected home EUR 10 to 11 bn
    • IP services EUR 5 to 8 bn
    • B2B/ICT EUR 17 to 19 bn
  • Red Ocean CAGR -6%
DT targets:
  • Blue Ocean CAGR 2012-2015 12% and raise to 28% share of rev.
  • Red Ocean: indirect cost redux cum EUR 0.6bn (6%) by 2015, direct cost decrease 2% by 2015.
One DT Europe strategy:
  • All IP: "All-IP transformation represents the creation of a simplified and standardized network", separation of OSS and BSS.
  • B2B 'Big Bang'
  • Mobile internet, innovation: targets 11 NatCos with LTE coverage of at least 60% (today 4 with 30%).
  • 'Cost revolution', operational excellence: Shared service centers, IT supply centers
"Differentiated steering of NatCos, according to market position, to create relevant focus"; 4 NatCo clusters:
  • Senior leaders (Greece, Hungary, Croatia, Macedonia): stabilize topline, "Increase Blue Ocean topics revenue share" (the growth areas), radical opex redux
    • Macedonia: capex redux.
  • Junior leaders with a challenge in mobile (Romania, Slovakia, Montenegro): FMC, radical opex redux.
    • Romania: smart TV, B2B FMC
  • Mobile runner-ups (Poland, CR): Increase market share.
    • Poland: boost B2B
  • Smart attackers (NL, Albania, Austria): increase revenue (esp. B2B, mobile data), reduce capex.
    • NL: unconventional attacker, boost efficiency, "network performance is only a hygiene factor"
    • Austria: leading attacker.
Focus from quarterly EBITDA to 'cash contribution' (i.e. EBITDA - capex). Focus on revenue + cost.

Targets 2012-2015:
  • Revenue CAGR organic +1.4% (reported -0.6% as a result of regulation) to EUR 14bn in 2015.
  • Traditional from 81 to 72% share, growth areas from 17 to 24%, B2B/ICT from 3 to 4%.
  • Capex stable at EUR 1.7bn (excl. spectrum).

Deutsche Telekom Capital Markets Day (1): highlights overall

From Deutsche Telekom's Capital Markets Day.
  • Dividend to be lowered.
  • Capex to be stepped up, focus on LTE and FTTC.
  • Focus on cloud, partnerships with Microsoft (Office 365) and Box (Box Business).
  • Growth markets: B2B/ICT, mobile data, TV; will go to 40-45% of rev by 2015 (2010: 24%).
  • Revenues to return to growth by 2014 (Germany stabilising, USA only from 2015).
  • Dividend policy to be reviewed for 2015, will be a mixture/choice of cash dividend and share-based dividend.
  • Net debt/EBITDA 2.0-2.5, equity ratio 25-35%.
  • Germany: "High-speed Internet access on a scale never seen before", LTE (150 Mb/s, coverage 85% by 2016), FTTC (coverage 65% by 2016 or 80% incl public co-funding; with vectoring 100 Mb/s; capex 2013-2020 EUR 6bn), hybrid LTE + vectoring (hybrid-box, 200/90 Mb/s), EBITDA-margin to 40%, market shares 35% in mobile service rev and 43% in BB lines.
  • USA: LTE (2x20 MHz; capex $4bn; coverage 225m pops YE 2013; MVNO platform), agreement with Apple (from 2013). MVNOs 12Q3: 3.9m subs (+11%), rev $126m (+15%). B2B 12Q3: 6.3m subs (+5%), target 2013 growth 8-10%.
  • MetroPCS: subs to be migrated by 15H2, CDMA to be recommissioned, spectrum to be re-farmed for LTE, DAS network (6k nodes) to be upgraded to HSPA+ and LTE, addressable pops to 280m.
  • USA targets mid-term (5 yr): rev CAGR 3-5%, EBITDA CAGR 7-10%, FCF CAGR 15-20%, margin (of service rev) 34-36%. Sources of growth: contract (flat growth), no-contract (the 'un-carrier'; 80-90%), geographic expansion of MetroPCS brand (10-20%).
  • Considers IPO for EE, strategic alternatives for Scout group, more network sharing deals.
  • IT savings EUR 1bn per annum by 2015; One DT Europe program (centralizing shared tasks) to leverage economies of scale in Europe.
Assuming inclusion of MetroPCS from 1/1/2013:
                  2012      2013      2014   2015   2016

SERV. REV USA            20.8-21.0

EBITDA    GROUP     18      18.4        up
          USA              5.8-6.0

MARGIN    GROUP                                40
          USA               27-29

EPS                                          0.80

DPS               0.70      0.50      0.50

CAPEX GERMANY                3.4       4.1    4.3    4.5
      USA                 $4.7-4.8    $3.0   $3.1
      GROUP        8.3       9.8              9.5

FCF                  6         5                6