Lasanoz Finance Lasanoz Finance Successful Mobile Telephony Advisory Work September 2009
Outline
Executive Summary 3Executive Summary 3Winning Telecommunication Licenses for Netia 5Securing Equity Financing for P4 / Play 10Securing Vendor Financing for P4 / Play 14Securing Vendor Financing for P4 / Play 14
2 Lasanoz FinanceMandates Executed for Netia / Play
Executive SummaryEXTENSIVE EXPERIENCE IN THE POLISH TELCO FIELD
Executing Repeat Value Creating MandatesLasanoz Finance has assisted P4 (Play) and its founding shareholders, Novator and Netia, to create value through the execution of a number of mandates in succession:
• Winning Poland’s 4th 3G mobile telephony license (2004/5)
Executing Repeat Value-Creating Mandates
• Winning the 3,6GHz – 3,8GHz WiMax license for Netia (2005)
• Securing Novator as the key strategic partner to Netia, the founding strategic shareholder of Play, with a EUR 200m investment (2005)
• Obtaining a EUR 150m 10 year senior loan facility from China Development Bank and a• Obtaining a EUR 150m 10-year senior loan facility from China Development Bank and a EUR 20m 6-year facility from Comverse (Israel) to help finance Play’s development (2006)
• Advising Play in the non-cash acquisition of Germanos, Poland’s leading chain of mobile phone stores, to furnish the operator with a retail distribution network (2007)
• Obtaining a EUR 490m 10-year senior loan facility from China Development Bank for network expansion and to fully finance Play’s business plan
Financial advisory Vendor Financing Buy-side advisoryEUR 660 000 000 Confidential4th Mobile License
4 Lasanoz FinanceMandates Executed for Netia / Play
EXCLUSIVE FINANCIAL ADVISOR TO NETIA S.A. ON 4TH POLISH UMTS LICENSEWinning Telecommunication Licenses for Netia
In 2004/2005, Lasanoz Finance was retained by Netia S.A. as external advisor on its bid for Poland’s 4th mobile licenseLF’s scope of work included the following:• Project management of the mobile bid including coordinating a 20 strong internal team• Project management of the mobile bid, including coordinating a 20-strong internal team
including Netia’s entire management board• Gathering market information and developing key elements of the business plan• Building the roaming and non-roaming business case• Co-leading discussions with potential equity partners, incl. playing a key role in discussion
with strategic partners as well as financial investors• Leading vendor financing discussions with banks and vendors• Structuring the bidbook and providing advice on bidding amountsStructuring the bidbook and providing advice on bidding amounts
As a result, P4 acquired its UMTS license on very attractive comparative terms138
103
Average Cost of 3G licenses in selected countriesEUR per capita
5043
35 30 2615 15 10 1010,0
6 Lasanoz FinanceMandates Executed for Netia / Play
10 104 3 2
10,0
UKGerm
any
Kosovo Ita
ly
Serbia
Egypt
Denmark
Greece
Austria
France
Portuga
lNorw
ayBulga
ria (2
G)Bulga
ria (3
G)Polan
d P4Polan
d othe
r
DETAILED UMTS TENDER RESULTSWinning Telecommunication Licenses for Netia
Netia Mobile won the UMTS tender with highest overall score and second-highest merit score
20
3025.8
150
UMTS Tender - Merit Points
Hutchinson bid an insufficient amount (~EUR 25m) to win the tender, coming second 60
40
20
34.1
31.1
1520.1
51
35.3
18.1
47
15.27.426.1
50
100
ERA and PLUS operators were disqualified
0000 00000Maximum NM Hutch Idea Era Plus
Financial Credibility Technical Business Plan Telecom Experience
IDEA (since rebranded to ORANGE) came third in terms of merit score but bid only a nominal 400
500
Overall UMTS Scores
amount
150
300
100.3
248.7
130.2
175.2
95.70.04
00 000
100
200
300
7 Lasanoz FinanceMandates Executed for Netia / Play
00 000Maximum NM Hutch Idea Era Plus
Merit Points Price w/b Competitiveness
PRICE COMPARISON WITH OTHER UMTS CEE LICENSESWinning Telecommunication Licenses for Netia
Netia Mobile paid one of the lowest UMTS license fees per covered population in Europe, allowing it to focus its financial firepower on network and services
Illustrative Benchmarking of UMTS Frequencies Price Per Covered Pop
17.1
141618
.
6.85.2
6.568
1012
EUR
/ co
v. p
op
2.2
024
E
ERA/PLUS/IDEA(PL) 2001
Oskar (CZ) 2005 Tele2 (CRO) 2005 Vodafone ((HUN)2004
Netia Mobile (PL)2005
8 Lasanoz FinanceMandates Executed for Netia / Play
(PL) 2001 2004 2005
EXCLUSIVE FINANCIAL ADVISOR TO NETIA S.A. ON WIMAX LICENSEWinning Telecommunication Licenses for Netia
In 2005, Lasanoz Finance was retained by Netia S.A. as external advisor on its bid for a 3.6 – 3.8 GHz WiMax license
LF’s scope of work included the following:LF s scope of work included the following:• Project management of the tender offer bid, including
coordinating a 10-strong internal team• Gathering market information and developing key elements of
the business plan• Building the business case• Structuring the bidbook and providing advice on bidding amounts
As a result, Netia acquired both WiMax licenses for a totalconsideration of approx. PLN 20m
9 Lasanoz FinanceMandates Executed for Netia / Play
GAINING NOVATOR AS A STRATEGIC SHAREHOLDER FOR P4Securing Equity Financing for P4 / Play
Having founded Netia Mobile in 2004, and conscious of its limited financial resources, Netia S.A. sought a financial partner for its 2004/5 bid for Poland’s fourth 3G/UMTS licenseLasanoz Finance led discussions on behalf of Netia with regard to finding a strategicLasanoz Finance led discussions on behalf of Netia with regard to finding a strategic and/or financial partner for the mobile business.In April 2005, London-based and Icelandic-funded private equity fund Novator agreed to invest EUR 200m in the Polish 4th mobile operator Play and became the key strategic partner to Netia, Play’s founding shareholder, in this ventureLF’s scope of work included the following:• Identifying suitable partners for Netia• Pitching the partnership idea to select partiesPitching the partnership idea to select parties• Co-leading discussions with potential equity partners, as well as financial investors• Assisting Netia to negotiate the terms of the JV
Novator has been a strong and supportive shareholder of Play since 2005, and continues to be a near-50% shareholder in the business as of 2009In the period from 200[6] to 2009, Novator also became a significant shareholder of Netia S.A., facilitating the re-orientation of Netia S.A. from a business-focused voice service provider to a consumer-focused broadband-cum-voice supplier
11 Lasanoz FinanceMandates Executed for Netia / Play
provider to a consumer focused broadband cum voice supplier
Having secured its license in 2005, completed its senior management team, and secured
FACILITATING THE ENTRY OF GERMANOS AS A STRATEGIC SHAREHOLDER FOR P4Securing Equity Financing for P4 / Play
Having secured its license in 2005, completed its senior management team, and secured EUR 170m of vendor financing for its initial network in 2006 by early 2007 PLAY was getting ready to launch in the market In order to gain the necessary mass market distribution capability and know-how, PLAY’s shareholders (Novator and Netia) negotiated a non-cash contribution of Germanos’ Polish chains of mobile distribution outlets into P4, in return for a 22% stake, thereby proving Play with the necesary distribution capability for an aggressive market entry in March 2007As adviser to P4’s management, Lasanoz Finance facilitate the analysis and completion of the transaction, alongside P4’s shareholders and its other advisersLF’s scope of work included the following:• A l i f t t d t ti l i t ti i t Pl• Analysis of target and potential integration into Play• Identifying and removing dealbreakers resulting from Germanos’ existing distribution
business relationships with other mobile network operators (ERA, Orange)• Developing key elements of the post-merger business plan• Leading discussions with China Development Bank to secure
appropriate waiversAs a result, Play gained some 300 retail outlets, which werere-branded in record time in Q1 2007 just prior to the
12 Lasanoz FinanceMandates Executed for Netia / Play
j pcommercial launch
PLAY’S EVOLVING SHAREHOLDERS STRUCTURESecuring Equity Financing for P4 / Play
Since its foundation in 2004, P4 / Play has had three leading shareholdersLasanoz Finance has been privileged in working with and for all three shareholders, as well as P4’s management, to facilitate the growth and evolution of PLAY as the leading challenger in the Polish mobile marketchallenger in the Polish mobile market
2004 - 2008
23,4%22,0% 25,0%30%
70%
100%54,6%
75,0%
49,7%
50,3%
2004
• Netia Mobile (furtherrenamed to P4) isfounded by Netia SA
2005
• Netia Mobile gainsNovator as its strategicpartner who contributesEUR 200m in equity
2007
• Germanos (throughTollerton subsidiary) becomes a P4 shareholder (22% stake)
2008
• Netia divest its P4 stakeselling 20.4% of P4’s shares to Novator and the remaining 3% to
2008
• P4’s capital is increasedby EUR 160m inconnection with theGSM 900MHz licenseEUR 200m in equity
• LF was Netia’s advisorin the strategic investorsearch process
shareholder (22% stake) in exchange for contributing its mobile distribution outlet chain
• LF was P4’s advisor inthis transaction process
the remaining 3% to Tollerton
GSM 900MHz licensetender
• Tollerton subscribed to 100% of the capital increase and controls 50.3% of P4’s capital
13 Lasanoz FinanceMandates Executed for Netia / Play
Legend: Netia’s stakeNovator’s stakeTollerton’s stake
SECURING INITIAL EUR 170M IN FINANCINGSecuring Vendor Financing for P4 / Play
Negotiation of stand-by vendor financing declarations from ZTE and HUAWEI (Q1 2005)Our work involved pitching debt requests to > 20 commercial banks, ECAs and IFIs (Q3 and Q4 2005)Negotiating Vendor Financing from Huawei/CDB and Comverse (Q4/2005 – Q3/2006)LF’s scope of work included the following:
• Preparing all debt pitches, business plan presentations, term sheet structures
• Co-ordination with P4, Netia and Novator• Leading vendor financing discussions with banks
and vendors• Solving roadblocks in co-operation with P4, Netia,
Novator and Allen & OveryLF acted as sole financial advisor P4 secured very attractive long-term financing:
• EUR 150m 10-year non-recourse financing from China Development Bank
• EUR 20m 6-year non-recourse financing from Comverse Ltd.
This announcement appeared as a statement of record only (November 2006)
15 Lasanoz FinanceMandates Executed for Netia / Play
This announcement appeared as a statement of record only (November 2006).
SECURING A FURTHER EUR 490M FROM CDBSecuring Vendor Financing for P4 / Play
In June 2008 nearly 20 months after the originalIn June 2008, nearly 20 months after the original China Development Bank financing, P4 secured a further EUR 490m in vendor financing from CDB, thus increasing CDB’s facilities to a total of EUR 640mLasanoz Finance was the exclusive financial advisor asa o a ce as t e e c us e a c a ad soto Play and its ShareholdersOur work involved pitching debt requests to > 30 commercial banks, ECAs and IFIs (Q2 and Q3 2007)Managing the competitive negotiation process g g p g pbetween vendors (Huawei, Ericsson, Nokia/Siemens) and financial institutions (Q3 and Q4 2007)Negotiating Vendor Financing from Huawei/CDB (Q3/2007 – Q2/2008)LF’s scope of work included the following:
• Preparing all debt pitches, business plan presentations, term sheet structures
• Leading vendor financing discussions with banks and vendorsand vendors
• Solving roadblocks in co-operation with P4, Netia, Novator, Tollerton and Allen & Overy
• Negotiating the final financing documentationP4 secured very attractive long-term financing – a t t l f EUR 640 fi i f CDB
16 Lasanoz FinanceMandates Executed for Netia / Play
total of EUR 640m non-recourse financing from CDB maturing in Q4 2016 This announcement appeared as a statement of record only (June 2008).