9 MAY 2013 1Q13 RESULTS PRESENTATION
9 MAY 2013
1Q13
RESULTS PRESENTATION
This presentation contains forward looking information, including statements which constitute forward looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and assumptions of our
management and on information available to management only as of the date such statements were made.
Forward-looking statements include
(a) information concerning strategy, possible or assumed future results of our operations, earnings, industry conditions, demand and pricing for
our products and other aspects of our business, possible or future payment of dividends and share buy back program; and
(b) statements that are preceded by, followed by or include the words “believes”, “expects”, “anticipates”, “intends”, “is confident”, “plans”,
“estimates”, “may”, “might”, “could”, “would”, and the negatives of such terms or similar expressions.
These statements are not guarantees of future performance and are subject to factors, risks and uncertainties that could cause the assumptions
and beliefs upon which the forwarding looking statements were based to substantially differ from the expectation predicted herein. These
factors, risks and uncertainties include, but are not limited to, changes in demand for the company’s services, technological changes, the effects
of competition, telecommunications sector conditions, changes in regulation and economic conditions. Further, certain forward looking
statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may
differ materially from the plans, strategy, objectives, expectations, estimates and intentions expressed or implied in such forward-looking
statements. Additionally, some of these statements refer to board proposals to be submitted to ZON - Multimédia – Serviços de
Telecomunicações e Multimédia, SGPS, S.A. (“Multimedia” or “ZON”) AGM and subject to (i) its approval by Multimedia’s shareholders, (ii) the
market conditions and (iii) the ZON’s financial and accounting position as revealed in the financial statements approved by Multimedia’s AGM.
Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new
information or future developments or to provide reasons why actual results may differ. You are cautioned not to place undue reliance on any
forward-looking statements.
ZON Multimedia is exempt from filing periodic reports with the United States Securities and Exchange Commission (“SEC”) pursuant to Rule
12g3-2(b) under the Securities Exchange Act of 1934, as amended. The SEC file number for PT Multimedia’s exemption is No. 82-5059. Under
this exemption, ZON Multimedia is required to post on its website English language translations, versions or summaries of certain information
that it has made or is required to make public in Portugal, has filed or is required to file with the regulated market Eurolist by Euronext Lisbon or
has distributed or is required to distribute to its security holders.
This presentation is not an offer to sell or a solicitation of an offer to buy any securities.
Disclaimer
Record Take up of IRIS, with net adds of 50 thousand in 1Q13, reaching
285 thousand subs
IRIS voted the best TV product of the year by consumers and
Timewarp the best new TV product in terms of marketing and
innovation
ZON voted the best TV, Broadband and Fixed Voice provider by ECSI
(European Customer Satisfaction Index)
Strengthened position in Business segment with major new corporate
accounts being signed up
Sequential growth in quarterly revenues of core Pay TV, BB and Voice
business, +0.9% over the previous quarter
Highest ever quarterly EBITDA and EBITDA-CAPEX
African JV posting very strong growth with revenues in 1Q13 up 56%
yoy
3
1Q13 Highlights
1Q13
Operating Review
50 thousand IRIS net-adds in 1Q13, the best quarter since launch. IRIS customers now
represent 36% of the Triple Play base
781.5 thousand Triple Play customers, up 9.2% yoy representing 64.6% of cable
customers 5
Record net-adds in IRIS, 65% Triple Play penetration
Triple Play Customers and Penetration of Cable
Base [Thousands, %]
IRIS customers and Penetration of Triple Play
Customer Base [Thousands, %]
Net Adds
[Thousands]
666.0715.7
781.5
57.6%
59.4%
64.6%
30%
50%
70%
90%
110%
130%
150%
00
100
200
300
400
500
600
700
800
1Q11 1Q12 1Q13
28.346.2
65.0
97.0118.9
161.5
193.0
234.8
284.4
4%7%
9%14%
17%
22%26%
30%
36%
-5%
5%
15%
25%
35%
45%
55%
-35
15
65
115
165
215
265
315
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
28.3 17.9 18.8 32.1 21.9 42.6 31.4 41.8 49.6 +7.5%
+9.2%
ECSI (European Customer
Satisfaction Index) : ZON #1 in
customer satisfaction in all 3
services – Pay TV, BB and Voice
Consumers voted IRIS the best
Triple Play service of the year
and Timewarp the best new TV
product in terms of innovation and
marketing
TV Connect Industry awards –
ZON Online voted the best TV on
the move service
6
An award winning interface and service – the best
Triple Play offer and most satisfied customers
Continuously innovating with the launch of the best
content and most relevant features
Launch of new smartphone APP that
automatically identifies available ZON@FON
hotspots with simplified login process
ZON customers can access, for free, over
500 thousand WiFi hotspots in Portugal and
7 million around the world
Launch of new channels, some of which
exclusive to ZON:
Globo (brazilian series and movies,
general entertainment) *
+TVI (national/TVI produced
content) *
Disney Junior
Canal Q (portuguese comedy)
7
* Exclusive
Growth in Corporate and SME
Technical offer and commercial team have been strengthened
Tendering for relevant contracts in Public and Corporate sectors
Differentiated, integrated services at very competitive costs
Leveraging capillarity and sophistication of ZON’s Next Generation Network
In 1Q13 an important contract to provide fixed communications to a large retail
bank in Portugal was won
8
Broadband net adds of 10 thousand,
bringing the total customer base to 800
thousand
66.2% penetration of cable base
63% subscribe offers greater than 20
Mbps and 45% higher or equal to 30 Mbps 9
Growing in Broadband and Fixed Voice
Broadband Subscribers [Thousands, % of Penetration of Cable Base]
Fixed Voice Subscribers [Thousands; % of Penetration of Cable Base]
Fixed Voice net adds of 9.4 thousand,
bringing the total customer base to 986
thousand
79.9% penetration of cable customer
base
704.7748.6
799.9
61.0% 62.1%66.2%
30%
35%
40%
45%
50%
55%
60%
65%
70%
200
300
400
500
600
700
800
1Q11 1Q12 1Q13
807.5921.4 985.8
68.2%
74.9%79.9%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
00
200
400
600
800
1,000
1Q11 1Q12 1Q13
Basic ARPU from core Pay TV, BB and
Voice services increased 1.3% yoy and
by 3.4% in comparison with the previous
quarter
Adjusting for the impact of entry level
offers, basic ARPU would have grown by
2.9% yoy
Premium channel subscriptions, primarily
sports, still weighing negatively on ARPU
Positive impact of price increase in 1Q13
10
Sequential improvement in ARPU
Basic, Premium and Blended ARPU [1Q12 = Base 1]
-0.4%
+1.3%
-10.6%
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1Q12 2Q12 3Q12 4Q12 1Q13
Blended ARPU Basic ARPU Premium ARPU
Cinema Exhibition: a tough market, ZON performing
better than sector in terms of revenues
Source: ZON, ICA
Cinema tickets sold and revenue per ticket [Thousands, Euros]
1Q13 Performance of Gross Revenues and Attendance
[%]
Ticket sales increased yoy by 3.5% although average revenue per ticket fell -4.1% in 1Q13
mainly due to lower mix of 3D movies and less bar sales
Cinema Exhibition gross revenues were down 0.7% in 1Q13, with the market as a whole
declining by 10.8% yoy 11
1,725 1,714
2,383
1,9921,784
4.8 4.9 4.9 4.7 4.6
03
04
04
05
05
06
06
07
07
0
500
1000
1500
2000
2500
3000
1Q12 2Q12 3Q12 4Q12 1Q13
Tickets Sold Avg. Revenue Per Ticket
-0.7%
3.5%
-10.8%
-8.9%
Gross Revenue Attendance
ZON Market
Source: ZON, ICA
12 12
ZON Audiovisuais:
Reinforcing leadership in Cinema Distribution
Cinema Gross Revenues by Distributor - Market Share 1Q13 [%]
Audiovisuals revenues remained stable
and ZON maintained leading position
ZON distributed 4 of the Top 10 movies
shown in cinemas in Portugal in 1Q13
55.8% market share of cinema
distribution gross revenues in 1Q13
ZON55.8%
Columbia12.4%
Big Picture 2
22.8%
Others9.0%
13
ZAP – Strong performance
ZAP continues to post a very positive performance in terms of customer growth
Ranks as one of the leading brands in Angola: #4
Increased distribution network:
Present in 10 of the largest Angolan provinces
Almost 1,000 distribution agents
200 door-to-door sales people
New channels launched: Bola TV, +TVI, ZAP Viva and Fight Network
1Q13
Financial Performance
15 15
Very encouraging revenue performance (1)
Consolidated Operating Revenues [Millions of Euros]
Marginally positive consolidated revenue performance yoy: +0.1% in 1Q13
Stable quarterly revenue trends with slight qoq decrease of 0.2% in 1Q13
+0.1%
214.2 214.3
1Q12 1Q13
(0.2)%
214.7 214.3
4Q12 1Q13
16
Pay TV, Broadband & Voice Revenues [Millions of Euros]
16
Very encouraging revenue performance (2)
Sequential quarterly growth of 0.9% in Pay TV, BB and Voice and a reduction in pace of
yoy decline to -1.8%
(1.8)%
191.9 188.4
1Q12 1Q13
+0.9%
186.8 188.4
4Q12 1Q13
17
ARPU Revenue Growth [1Q12 = Base 1]
17
Improvement in ARPU revenue trends
ARPU Revenue split [%]
Encouraging sequential improvement in basic flat-fee ARPU revenues, supported by price
increase in 1Q13, resilience of core subscriptions
Continued pressure from premium subscription revenues although pace of yoy decline
slowed in 1Q13 to -11.5% (compared with -13.8% in 4Q12)
-1.5%
+0.3%
-11.5%
0.80
0.85
0.90
0.95
1.00
1.05
1Q12 2Q12 3Q12 4Q12 1Q13
Total Basic Premium
85% 86%
15% 14%
1Q12 1Q13
Basic Revenues Premium Revenues
18 18
Audiovisuals and Cinema revenues remained stable yoy at 17.1 million and 11.8 million
euros respectively
The market environment remains very tough in this segment however ZON is posting
better performance than the market as a whole, thus reinforcing its market share
Cinema Revenues [Millions of Euros]
Audiovisuals Revenues [Millions of Euros]
17.1 17.1
1Q12 1Q13
+0.1%
11.8 11.8
1Q12 1Q13
+0.2%
Audiovisuals and Cinema revenues: performance
ahead of the market, despite challenging
environment
19 19
ZAP already making relevant contribution
Revenues from ZON’s African JV in Angola in Mozambique grew by 55.8% to 33.4 million
euros in 1Q13 (ZON’s 30% stake represented 10 million euros)
International Revenues (30% stake in ZAP) [Millions of Euros]
6.47.3
9.1 8.810.0
1Q12 2Q12 3Q12 4Q12 1Q13
+55.8%
20 20
Cost savings materializing
Group-wide efforts to contain and adjust the cost structure to the challenging environment
are delivering results
OPEX fell by 2.5% to 131.2 million euros in 1Q13 with important savings being achieved in
practically all relevant cost lines
Excluding consolidation of ZAP, consolidated operating costs would have fallen further by
3%
Consolidated Operating Costs [Millions of Euros]
134.5131.2
1Q12 1Q13
(2.5)%
21 21
Operating Costs [Millions of Euros]
Cost savings materializing
W&S Direct Costs Commercial
Costs
Other Op.
Costs
Operating Costs
(millions of euros) 1Q13 Δ % Drivers
Other Operating Costs 43.9 (3.8%)3.8% decrease thanks to continued cost discipline driving savings in areas such as support services, maintenance and repairs and other
SGA
Commercial Costs 14.3 (11.5%)Decrease of 11.5% explained by a continued decrease in the level of sales commissions and marketing costs led by cost saving
initiatives
W&S 13.3 (6.5%)
Direct Costs 59.6 2.0%
ZON is making efforts to accommodate normal staff attrition levels without hiring. In the cinema business in particular, the number of
employees per multiplex has been adjusted down, along with the implementation of other cost and efficiency measures.
Increase mainly due to a higher level of traffic and capacity related costs and some increased cost of programming due to the launch of
some new exclusive channels and higher operating activity yoy. However sequential quarterly trends reflect a decline of 6% in Direct
Operating costs as a result of the efforts in recent quarters to achieve savings in these areas.
14.3 13.3
1Q12 1Q13
(6.5)%
58.4 59.6
1Q12 1Q13
+2.0%
16.2 14.3
1Q12 1Q13
(11.5)% 45.7 43.9
1Q12 1Q13
(3.8)%
22 22
Best quarterly EBITDA ever
Core Pay TV, Broadband and Voice margin grew by 3pp yoy to 42.2%, the best ever
quarterly level and a reflection of the ability to contain costs and improve efficiency
Group Margin grew by 1.6pp despite dilution from the other lower margin domestic
businesses. Although dilutive, ZAP’s EBITDA margin of almost 30% was already
remarkable given that breakeven was achieved just one year ago
Group EBITDA, EBITDA Margin [Millions of Euros, %]
Pay TV, Broadband and Voice EBITDA
and EBITDA Margin [Millions of Euros, %]
EBITDA Margin [%]
79.783.1
37.2%
38.8%
30%
31%
32%
33%
34%
35%
36%
37%
38%
39%
40%
30
40
50
60
70
80
90
1Q12 1Q13
+4.4%
75.379.5
39.2%
42.2%
30%
32%
34%
36%
38%
40%
42%
44%
30
40
50
60
70
80
1Q12 1Q13
+5.6% 37.3%42.2%
37.1% 38.8%
21.5%
12.3%
2.6%
29.9%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Pay TV, BB and Voice Group Aud + Cin * International
* Adjusted for 2.9 million euros one-off provision
23
Net Income [Millions of Euros]
Strong Net Income Growth of 12.5% yoy
(millions of euros) 1Q13 Δ % Drivers
Yoy decline of 2.3% to 54.6 million euros however in line with the previous quarterD&A 54.6 (2.3)%
Income Taxes 4.3 (7.4%)Income Taxes amounted to 4.3 million euros, representing an effective P&L tax rate of 27% which is slightly less than the normal corporate
tax rate of close to 29% due to the fact that the Angolan operation does not generate corporate tax
Net Financial Expenses 12.3 46.9%
Net Financial Expenses higher in 1Q13 at 12.3 million euros compared with 8.3 million euros in 1Q12, although just 6.2% higher than in
4Q12. The yoy increase is a result of a progressively higher average cost of interest as some of ZON’s older and less expensive financing
lines matured and with the entrance of the new retail bonds issued in June 2012. This effect is partially compensated by the lower average
level of consolidated debt
10.3
11.6
1Q12 1Q13
+12.5%
24
CAPEX stable at between 13-15% of Pay TV,
Broadband and Voice revenues
Total CAPEX [Millions of Euros]
Total CAPEX, Total CAPEX / Pay TV, BB and Voice
Revenues [Millions of Euros, %]
CAPEX levels significantly down on previous years as forecast
As percentage of Pay TV, BB and Voice revenues, CAPEX was 13.6% in 1Q13, still
including some growth related investment as well as non-recurrent CAPEX due to the
upgrade to MPEG4 in the DTH business
19.212.2
9.1
9.6
1.3
1.9
29.625.7
2.0
1Q12 1Q13
Pay TV, BB and Voice Infr. Terminal Equipment
Other Baseline CAPEX Non-Recurrent CAPEX
29.625.7
15.4%13.6%
00%
05%
10%
15%
20%
25%
30%
00
05
10
15
20
25
30
1Q12 1Q13
(13.1)% (13.1)%
25
Strong improvement in FCF generation
EBITDA - CAPEX [Millions of Euros]
Strong improvement in EBITDA-CAPEX led by the continously resilient EBITDA
performance and the decline in CAPEX, as forecast
Free Cash Flow generation was 15.6 million euros. Adjusted for the one-off, upfront
payment of 20 million euros under the renewal of the Portuguese Football League contract
for 3 additional football seasons ending July 2016, FCF would have more than doubled
to 35.6 million euros
Free Cash Flow [Millions of Euros]
50.1 51.154.5
34.1
57.4
1Q12 2Q12 3Q12 4Q12 1Q13
+14.7%
16.3
33.6
9.9
46.7
15.6
35.6
20.0
1Q12 2Q12 3Q12 4Q12 1Q13
+118.8%
Portuguese
Football
League
Contract
renewal
upfront
payment
26 26
Solid Capital Structure, deleveraging to
1.9x Net Financial Debt / EBITDA
Change in Net Financial Debt [Millions of Euros]
589.7
1.6
1.5
10.2
24.9
4.0
57.4
605.0
1Q13
Other Items
Income Taxes Paid
Net Interest Paid
Long Term Contracts
Non-Cash Items andWorking Capital
EBITDA-CAPEX
2013
Net Financial Debt of 589.7 million euros at the end
of 1Q13
Net Financial Debt / EBITDA of 1.9x
Average cost of debt of 5.55% in 1Q13
1.7 years of average maturity
27 27
Wrap-up
Excellent financial and operating performance. Sequential improvement in core
3P revenues and very strong take-up of IRIS
Best ever quarter in terms of EBITDA and Operating FCF generation, led by
efforts to adjust the cost structure and improve operating efficiency
Continued strong pace of growth in African JV
Important milestones achieved in merger process with almost unanimous
approval by ZON’s Shareholder Meeting and waiver by CMVM of mandatory
tender offer. Pending non-opposition from the Competition Authority (AdC)
Appendix Financial Highlights
Operational Highlights
29 29
Financial Highlights
(Millions of Euros) 1Q12 1Q13 ∆ y.o.y.
Operating Revenues 214.2 214.3 0.1%
Pay TV, Broadband and Voice 191.9 188.4 (1.8%)
Audiovisuals 17.1 17.1 0.1%
Cinema Exhibition 11.8 11.8 0.2%
International 6.4 10.0 55.8%
Other (13.0) (13.0) 0.0%
EBITDA 79.7 83.1 4.4%
EBITDA Margin 37.2% 38.8% 1.6pp
Pay TV, Broadband and Voice 75.3 79.5 5.6%
EBITDA Margin 39.2% 42.2% 3.0pp
Cinema and Audiovisuals 4.2 0.7 (84.5%)
EBITDA Margin 14.6% 2.3% (12.3)pp
International 0.2 3.0 n.a.
EBITDA Margin 2.6% 29.9% 27.2pp
Income from Operations 23.7 28.5 20.1%
Net Income 10.3 11.6 12.5%
CAPEX 29.6 25.7 (13.1%)
EBITDA minus CAPEX 50.1 57.4 14.7%
Net Financial Debt 644.6 589.7 (8.5%)
CAPEX as % of Revenues 13.8% 12.0% (1.8)pp
Net Financial Debt / EBITDA [x] 2.1x 1.9x n.a.
30 30
Operational Highlights
Note: Figures refer to Portuguese Operations
31
José Pedro Pereira da Costa
CFO
Maria João Carrapato
Head of Investor Relations
ZON Multimedia
Rua Ator António Silva, 9
1600-404 Lisboa, Portugal
Tel.: +351 21 782 47 25
Fax: +351 21 782 47 35
Operational Highlights