NASDAQ NM / TASE - symbol: IGLD Eli Holtzman, CEO Doron Turgeman, CFO Q2 2006 Internet Gold Internet Gold Leading Israeli communications Leading Israeli communications and Interactive media Group and Interactive media Group
Dec 29, 2015
NASDAQ NM / TASE - symbol: IGLD
Eli Holtzman, CEODoron Turgeman, CFOQ2 2006
Internet GoldInternet GoldLeading Israeli communications Leading Israeli communications
and Interactive media Groupand Interactive media Group
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Forward-Looking Statement
The statements contained herein that are not purely historical are forward-looking
statements. These forward-looking statements, and
especially those regarding the 012 merger, involve risks and uncertainties and actual
results could differ materially from the results discussed in these statements.
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Committed to growth…2007 - crossing the 1B NIS revenue line
2006– Build-out of International
VoIP Telephony services
– Expansion of InternetAdvertising
– Expansion of BusinessServices
– 012 acquisition to be completed and operations to be consolidated - Q4/06
2007– 1st full year of the merged
operation
– Continued growth expected in all lines of business (under both ‘smile’ and ‘012’ brands)
Primary drivers:
in NIS millions
1,250
405
180 220 298
0
200
400
600
800
1000
1200
1400
2003 2004 2005 2006 2007Goal
Organic CAGR = +20%
M&A CAGR = +47%
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Israel’s telecommunications market
Cellular, 11.9
Channel TV, 3.1
ILD, 1.6
Fixed line & data, 5.3
Internet, 1.3
Source: Israeli MoC
2005 – NIS 23.2 B
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2006/07: riding the expansion of our marketsto the next level of revenues and profits
Access Services
Major market share in a stable market
Stronger emphasis on biz sector
VoIP/VOB/TDM Telephony
Two strong brands to drive growth in market share
Start commercial penetration of domestic VoB
Online Advertising
We expect our advertising revenues will grow as media budgets continue to shift to the Internet
Efficient merger
1 + 1 = 3…
Significant savings on opex / capex
Efficient management of the two brands
Conservative estimation of 50-60M NIS/yr savings
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1 + 1 = 3 !!
Perfect synergy between the two companies
Global data networksRoaming servicesCall centersFixed domestic telephonyPre/post paid cardsTDM platform
Value Added ServicesBiz servicesHi level integrationHi level data protectionDealer networke-Media and e-
Commerce
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Rationale for the 012 acquisition &
merger
Revenues 159.7 335 494.7 1,150
EBIT 13.6 40 53.6 175-185***
EBITDA 27.5 70 97.5 270-280***
Employees 789 1,290 2079 Synergy
Total*
H1/2006
* Based on IGLD estimate –NIS in millions
*** Communications’ EBIT / EBITDA goals for 2007 exclude one time expenses relating to the merger. These goals assumes full synergy of merger to be achieved Q2/07
2007**
** company’s goals for the 1st full year of merged communications operations
SC
L
* communications activities only
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Leveraging state of the art telephony infrastructure
To drive further growth
Most sophisticated VoIP platform World class TDM platform Auxiliary platforms (anti-fraud / billing / CRM etc.)
ILD –growth driver for the communications industryInternational voice traffic from Israel - up 10.3% in 2005 vs. 2004
- up 12% in H1/06 vs. H1/05(Source – Israeli MoC)
+ = cash generators !!
ILD, 1.6
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State-of-the-art telephony infrastructure
Solid investment in class 5 fixed telephony No further significant investments required Auxiliary platforms (anti-fraud / billing / CRM etc.)
Fixed telephony Total fixed telephony market in Israel - NIS 5.3B in 2005
012 currently have only ~ 13k subscribers’ lines Our goal ~ 5% market share of this significant segment within 3-4
years Future marketing to rely on existing customer base of ~ 800 k
subscribers
072 / 075 - additional potential growth driver
Fixed line &
data, 5.3
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2006/2007: Growth of Online Advertising
continues
“Marketers are shifting more of their advertising budgets online… As consumers spend a larger percentage of their media time online, it is natural for the flow of advertising dollars to follow.” David Silverman, Partner, PricewaterhouseCoopers LLP
“Almost half of all marketers plan to increase online ad spending by decreasing spending in other channels…”Forrester Research
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67
10
12
0
2
4
6
8
10
12
14
16
18
2002 2003 2004 2005 2006*
Source: PWC IAB Internet Advertising Report, Sept. ‘05
US Internet Advertising CAGR = +22%
Source: Market surveys & IGLD estimates
Israel Internet Advertising CAGR = +40%
& company's estimates
50
36
2212
65
0
10
20
30
40
50
60
70
2002 2003 2004 2005 2006
*
* Q3/06 - Media market affected by current war conditions
in US$ billions
in US$ millions
estimated
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Israeli Online Advertising is ripe for growth
Israel’s broadband penetration is among the highest in the world
~70% of Israeli households have Internet access ~ 95% are connected via broadband!
>40% of users are online >10 hours per week. 2.7M users per day!
Israel’s online advertising budgets are low compared to “eyeball” exposure –ad spending always follows rating
Internet Advertising in Israel is currently > 6-7% of overall media spending (~ $900M in 05’) - growing fast
SEARCH - additional growth potential: US search revenues - 40% of total e-Adv. much higher than in Israeli market
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Smile.Media – diversification
msn-Israel
50.1% SML
49.9% MS Corp.
Hebrew language portal Messenger, Hotmail Israel & MSN Search Israel
start 100% General portal & Search engine
nirshamim 100% Academic portal
zahav.ru 100% Russian language portal
V-games 100% Games content portal
seret 51% Cinema portal
yahala 51% Arab-language portal
TheMoney 50.1% Lead-generation financial
portal
tipo 50% Children’s portal
netex Search engine & directory
goop Exclusive marketing rights Youth portal
GPG e-Advertising network
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Israel’s e-Commerce market will follow the growth
pattern of online advertising, and IGLD is positioned to
benefit
P1000 100%
One of Israel’s top 4 e-Commerce sites
Outlet for >100 of Israel’s largest consumer product suppliers
Growing revenues, positive EBIT Low-risk commission model with
fulfillment directly from suppliers
msn shops 50.1%
e-Commerce ventures between MSN-Israel and retailers
dbook 50% Israel’s “Amazon”
getprice 51% Israel’s #2 price comparison site
Paid content
marketing rights
Online magazines, newsletters, recruitment & jobs search and other content services
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13.3 16.5 17.5
59.4 67.878.4 79.7
13.9
73.381.1
94.9 97.2
Q3 05 Q4 05 Q1 06 Q2 06
Smile.media Smile.communications
Revenues
2.64.0 3.5
2.8 4.5
5.7
2.9
7.9
11.49.7
7.15.7
03 05 Q4 05 Q1 06 Q2 06
Smile.media Smile.communications
NIS in millions
EBIT
Quarterly Growth
NIS in millions
Two pure-play subsidiaries
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43 52 72146 176 246
333
1,150
34 100
1,250
180 220298
405
2003 2004 2005 2006* 2007**
Smile.media Smile.communications
Revenues
7 10 1422 18 1932
180
222
202
24 25 29 46
2003 2004 2005 2006* 2007**
Smile.media Smile.communications
NIS in millionsEBIT
Two pure-play subsidiaries
Annual Growth* company’s goals
** Ebitda goal for 2007 ~ 300 / estimate for finance exp. ~ 45
IGLD’s estimate for 2006/07, excludes one time expenses relating to the merger
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Balance sheet overview
* Including cash and cash equivalents of NIS 257.5 million attributable to the 012 acquisition.
Current assets* 353
Total assets 500
Current liabilities 92.2
Working capital 260.8
Total shareholders’ equity 170.9
in NIS millions
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ComparablesInteresting market opportunity…
as of August 11, 2006 Q1 / Q2 2006
Company Internet Gold Sify Pacific Thestreet.com Sina.ComTicker IGLD Sify PCNTF TSCM SINAShare price $5.17 $7.43 $9.03 $9.64 $22.08
CommunicationsRevenues (M$) 17.9 26.5 27.9Operating Income (M$) 1.8 2.4 1.5Market cap (M$) N/A N/A 122.1 N/A N/Aprice to revenues multiple N/ A N/ A 1.1 N/ A N/ Aprice to EBIT multiple N/ A N/ A 20.7 N/ A N/ A
MediaRevenues (M$) 4.0 2.2 12.4 53.7Operating Income (M$) 0.8 0.1 2.8 7.6Market cap (M$) N/A N/A N/A 261.0 1,181.9price to revenues multiple N/ A N/ A N/ A 5.3 5.5price to EBIT multiple N/ A N/ A N/ A 23.7 38.7
TotalRevenues (M$) 21.9 28.7 27.9 12.4 53.7Operating Income (M$) 2.6 2.5 1.5 2.8 7.6Market cap (M$) 95.3 315.0 122.1 261.0 1,181.9price to revenues multiple 1.1 2.7 1.1 5.3 5.5price to EBIT multiple 9.3 31.5 20.7 23.7 38.7
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Goal: to become Israel’s Leading Full
Suite Alternative Service Provider
Technology Value added services
VoB & business integration
VoWi-Fi / Wi-MAX
IP seamless mobility
IPTV
e-Commerce & paid content
International Long Distance (ILD) & Internet Access
Portals & e-Advertising
20091997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20081996
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Strong Shareholders / Dedicated Management
Public ~ 31%
Eurocom Communications ~ 69% Focused, communications-oriented controlling parent group Leading Israeli private communications group representing
exclusively Nokia, Panasonic, GE and more Also holds equity in radio stations, DBS TV service provider,
satellite communications, cellular and more
Closely-knit, results-oriented management team Most all level of management grows from within Experienced upper level management
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Investment highlights
Leading Communications Group
Today: controls 1/3 of its markets with a continuously growing market share
Tomorrow: entering new markets
Positioned to lead rapidly growing media markets
Owns over 18 portals & e-Commerce sites
High rate of market growth
Working from strong cash generating platform
All activities in both companies are major cash generators
Merger anticipated to save ~ NIS 50-60M in exp/inv
No difficulty in servicing loan (fin. exp. ~15% of Ebitda)
Proven management & ownership
Both company's management teams, working together with Eurocom (as controlling shareholder), have proven capable of carrying out aggressive growth / leadership strategies
Thank you!