Transcript JD Pres

Moving Forward
Discussion with Analysts
Bangkok
16th November 2000
Third Quarter 2000 Results
Outline
• 2000YTD Achievements
and 2001 Expectations
Supachai Chearavanont
• Operating Performance
Vichaow Rakpongpairoj
• Financial & Strategic Update
John Doherty
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16th November 2000
2000YTD Achievements
Highlights
• Strong financial and operating performance
• Investing in high-growth services “Data” and VAS
• Positioning for future with CRM system
• Passed TOT market share in BMA in 1Q2000
• Successful PCT launch, wireless positioning
• Moved to IAS improving transparency / comparability
• Reinventing internet business with
.com
• Completed debt restructuring for TA and subsidiaries
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16th November 2000
2000 YTD Achievements
Strong Financial Performance
Revenue 2000YTD vs. 1999YTD (M)
37% Growth
10,429
1999YTD
Revenue 3Q2000 vs 3Q1999 (M)
51% Growth
14,312
3,479
2000YTD
3Q1999
EBITDA 2000YTD vs. 1999YTD (M)
1999YTD
3Q2000
EBITDA 3Q2000 vs 3Q1999 (M)
27% Growth
5,659
5,265
25% Growth
1,917
7,158
2000YTD
3Q1999
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2,393
3Q2000
16th November 2000
2000 YTD Achievements
Strong Customer Growth
Wireline Customers (000s)
10% Growth
PCT Customers
247% Growth
1,494
364,000
1,356
105,000
1999YTD
2000YTD
1999YTD
Data Network (Circuits)
79% Growth
2000YTD
Internet Customers
226% Growth
3,515
65,000
1,968
20,000
1999YTD
2000YTD
1999YTD
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2000YTD
16th November 2000
2001 Expectations
Strategic Positioning 2001 & Beyond
Thai Telecoms Market Revenue
Baht million
350,000
Solutions
300,000
Contents
250,000
Data/Internet
Wholesale
200,000
International
150,000
Mobile
100,000
UMS
50,000
VAS
Fixed local & LD
0
2000
2001
2002
2003
2004
2005
Source: PwC analysis
We estimate that TA will need to capture 20% market share of the total telecoms market
revenue in 2005.
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16th November 2000
2001 Expectations
Strategic Positioning 2001 & Beyond
Focus on High Growth Areas:
• Bangkok Metropolitan Area (“BMA”)
• Broadband backbone and corporate solutions
• Wireless
 Data, initially with PCT @ 32Kb/s point-to-point
• Internet / Applications / Content
Market
Liberalization
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16th November 2000
2001 Expectations
Strategic Priority Checklist
• Strengthen financial position
• Sustain revenue growth at 20% and EBITDA growth at 25%
• Strategic integration & competency enhancement
• Market/Customer-driven / Business-focused
• Products & services bundling and innovation
• Customer care leadership
• Trusted & strong brand
• IT applications
• Enhance customer-focused & rewarding innovation culture
• Manage through liberalization process that satisfies most stakeholders
• Pursue & aggregate internet access, e-application, and content
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16th November 2000
Operating Highlights
Operating Performance
Overview
• Targeted marketing, promotional, and branding activities
• Segmentation, cherry-pick, and MSP
• Emphasized on high-bandwidth, high margin data services
• First-class customer services & billing -- “4th phase”
• Preventive network outage reduction program
• Engaged PwC to conduct strategic review & integration
• Movement towards pay-for-performance
• Narrowband
to broadband ADSL
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16th November 2000
Operating Performance
Customer / Revenue Base (thru September 2000)
2000
Growth
%
Change
92,500
7%
3,515
887
34%
20,000
65,000
364,000
348,000
3,235
48,000
171,692
23,402
19%
282%
89%
7%
September 2000

Total Billed Lines
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
Consumer
Business

Data Circuits

Payphones
Internet Customers
Wireless (PCT)
CATV Customers*



1,494,000
1.09 million
0.40 million
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16th November 2000
Operating Performance
Wireline Sales Activity – “Core” Growth
2000 Monthly Avg. = 16,900
1999 Monthly Avg. = 14,200
1998 Monthly Avg. = 7,800
60,000
19% Increase
153,000
+30%
82% Increase
58,000
53,000 54,000
118,000
+59%
50,000
42,000
74,000
40,000
30,000
26,000 25,000
23,000
42,000
41,000
34,000
20,000
20,000
10,000
3Q
2Q
00
20
1Q
4Q
3Q
2Q
99
4Q
3Q
2Q
19
1Q
1Q
19
98
0
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16th November 2000
Operating Performance
Wireline Net Additions – “Core” Growth
2000 Monthly Avg. = 11,145
1999 Monthly Avg. = 8,246
1998 Monthly Avg. = 3,765
45,000
35% Increase
100,306
119% Increase
40,000
38,517
36,939 37,627
62,015
35,000
+30%
+59%
30,000
24,408
25,000
10,237
20,000
24,162
22,262
15,345
15,000
7,615
10,000
4,821
4,402
5,000
0
3Q
2Q
20
00
1Q
4Q
3Q
2Q
19
99
1Q
4Q
2Q
19
98
1Q
3Q
-1,780
-5,000
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16th November 2000
Operating Performance
Wireline - Cumulative Lines Billed
• TA’s cumulative lines billed were 1,494 million in 3Q-2000
• As of March, TA’s market share surpassed TOT’s in BMA
2,000
Customers (000)
1,531
1,528
1,500
1,503
1,293
1,460
1,294
1,401 1,437
1,494 1,469
1998
1999
Sep.2000
E
1,010
1,000
683
500
0
1995
1996
1997
TelecomAsia
Sources: TelecomASIA and Telephone Organization of Thailand
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TOT
16th November 2000
Operating Performance
Wireline – Average Revenue Per Line
Baht / Customer / Month
800
700
ARPU up 16.2% since 1Q1999
660
644
649
643
616
669
662
600


703
605


672
694
6.2% growth y-o-y
1.3% growth q-o-q
ARPU dropped in 1998 due
to the economic crisis
Low point in 1Q-1999
500
Remark: Month-end data
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16th November 2000
Operating Performance
Wireline - % Call Completion Rate (Originating)
% Call Completion Rate
65

60
55.3
Major factors for uncompleted calls
 Unanswered call
17.56%
 Subscriber busy
15.71%
 Network-related
56.3
57.3
57.3
56.6
56.7
58.9
59.5
60.4
56.5
55
Call completion up over 390 basis points
50
Remark: Month-end data
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16th November 2000
Operating Performance
• 220% growth y-o-y
• 17% growth q-o-q
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
1,550
1,330
1,206
Significant growth in data
740
3Q
2Q
00
20
1Q
4Q
485
3Q
2Q
99
19
1Q
4Q
3Q
395 359 357 393
282
2Q
98
175
19
1Q
Thousand Kbps
Digital Data Network – Cumulative Bandwidth
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16th November 2000
Operating Performance
Thousand Customers
PCT - Customers
• 1999/98 growth over 80%
• YTD customers increased 90% over Dec ‘99
• 2000EOY Target > 400,000 customers
400
350
300
250
200
150
100
50
0
D
192
184
e
9
9
c-
226
202
255
247
216
219
255
219
312
274
255
219
229
330
75
59
70
253
260
289
0
0
0
0
0
0
0
0
0
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0
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0
0
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J
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S
F
A
A
M
M
TelecomAsia
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TOT
16th November 2000
Operating Performance
Public Phone
Generating annual revenue of ~ Bt1 billion with solid margins
300
6,000
250
5,000
200
4,000
150
3,000
100
2,000
50
1,000
3Q
2Q
00
20
1Q
4Q
3Q
2Q
99
19
1Q
4Q
3Q
19
1Q
2Q
0
98
0
Baht / Month
Total Revenue
Million Baht
Total Revenue
RPL
* Month-end data
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16th November 2000
Operating Performance
Efficiency Measures
1996
Staff
Lines / Staff
Revenue / Staff / Year (mn)
(Post Revenue Sharing )
1997
1998
1999
3,795 4,144
3,649
3,499
3,581
3,773
3,877
399
3.2
401
3.4*
401
3.4*
385
3.4*
229
1.9
356
2.5
TelecomASIA
C&W HKT
Bell Atlantic
Telecom New Zealand
British Telecom
TOT
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389
2.8
Lines Per Staff
385
337
333
278
271
112
1Q-00 2Q-00
3Q-00
* Annualized figures
16th November 2000
Financial and Strategic Update
Financial and Strategic Update
What We Told You Over A Year Ago
• Grow revenues by 20% to 25%, EBITDA by 25% to 30%
• Diversify mix / increase focus on corporate market
• Committed to wireless revenue growth
• Increase market share and customer share (ARPU)
• Leverage existing investment, Improve ROIC
• Building a sustainable platform for growth, Expenses
• Reduce F/X exposure, Improve financial integrity overall
• Strategic focus on corporate, broadband & data
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16th November 2000
Financial and Strategic Update
Financial Summary - YoY Growth (Consolidated)
%
Change
9M2000
%
9M1999 Change
Bt million
3M2000
3M1999
Revenue
5,265
3,479
51
14,312
10,429
37
EBITDA
2,393
1,917
25
7,158
5,659
26
EBITDA Margin
45%
55%
50%
54%
Net Interest
(1,376)
(1,389)
(1)
(4,190)
(4,329)
(3)
F/X Gain/(Loss)
(3,460)
(5,900)
(41)
(5,038)
(5,716)
(12)
Net Profit / (Loss)
(4,619)
(7,557)
(39)
(4,814)
(9,599)
(50)
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16th November 2000
Financial and Strategic Update
Revenue Diversification (Consolidated Total Revenue)
1998
VAS &
Other
1999
9M 2000
Wireless
10% BB, Data
& Internet
11%
Voice
VAS &
Other
BB, Data
9%
& Internet
9%
Voice
16%
Voice
68%
76%
80%
Wireless
6%
1999/1998
Growth
10.4%
2000/1999E
Growth
Over 30%
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9%
VAS &
Other
7%
BB, Data
& Internet
Baht 14.3 Billion
16th November 2000
Financial and Strategic Update
Revenue Diversification (Consolidated Total Revenue)
9M 2000
Wireless
16%
Wireline
Voice
68%
VAS &
9% Other
7%
BB, Data
& Internet
9M2000 9M1999 %Change
Wireline-Voice
9,661
8,372
Wireless (PCT)
2,284
1
BB, Internet
728
725
-
Data
244
139
76
VAS
1,201
768
56
194
424
-
Other
15
2,283
Baht 14.3 Billion
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16th November 2000
Financial and Strategic Update
Consumer / Business Revenue Mix (Wireline Voice & Data)
1998
1999
Business
Consumer
54%
46%
3Q2000
Business
Consumer
47%
53%
Business
51%
Consumer
49%
Business market contribution is growing consistently
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16th November 2000
Financial and Strategic Update
ROIC / ARPU – Wireline + PCT
• ARPU up 37% since 1Q1999
• Minimal investment
• ROIC improvement of 464%
830
800
680
649
605
662
3Q
2Q
19
99

694
703
7% growth y-o-y
3% growth q-o-q
1Q
1Q
19
98
500

1Q

ARPU dropped in 1998 due
to the economic crisis
Low point in 1Q-1999
4Q

3Q
600
669 672
3Q
616
763
2Q
643
20
00
700
702
4Q
660
644
2Q
Baht / Customer / Month
900
Remark: Month-end data
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16th November 2000
Financial and Strategic Update
Operating Expenses - YoY Growth (Consolidated)
9M99
9M00
Diff
% Change
9,500
12,875
3,375
36
Less Revenue Sharing
1,513
2,133
620
41
Less Depreciation
4,487
5,580
1,093
24
Less Cost of Sales
123
891
768
624
3,377
4,271
894
26
715
969
254
36
Network Expenses
1,414
1,709
451
21
Remaining Operating Expenses
1,248
1,593
345
28
As Reported
“Core” Operating Expenses
Personnel Expenses
Cost Control Remains a Priority
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16th November 2000
Financial and Strategic Update
EBITDA / EBITDA Margin
9M99
9M00
Diff
Revenue
10,429
14,312
3,883
37
EBITDA
5,659
7,158
1,499
26
54.3
50.0
(430bp)
EBITDA Margin (%)
% Change
-
EBITDA Margin Pressure (Approximate Basis Points)
Cost of Sales (PCT handsets)
1000bp
Revenue Share (16.3% to 17.2%)
100bp
“Core” OpEx (growth at 20% vs. 26%)
150bp
- Personnel Expenses (Flat)
170bp
- Network Expenses (Flat)
200bp
Growth with disciplined expense control
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16th November 2000
Financial and Strategic Update
Financial Plan
Improve Financial Flexibility
Fund Growth Initiatives
Enhance Credit Profile
Minimize F/X, Rate Exposure
Concession Conversion
Reduce Cost of Capital
• Wholesale
• Retail
• Consumer
• Corporate
• SME
41%
90%
65%
100%
Wireless
Business
Asia Multimedia
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16th November 2000
Financial and Strategic Update
Balance Sheet Improving
EBITDA/Interest Coverage
1.16
1.36
1.48
1.39
1.71
1.72
1.0
0.5
3Q
2Q
00
20
1Q
1Q
19
4Q
0.0
99
• Over Bt 3 billion in cash reserves
1.5
1.34
3Q
• Interest coverage improves to 1.72x
2.0
2Q
EBITDA Growth results in:
EBITDA / Interest Coverage
Million Baht
• Improving Debt/EBITDA, still high
Debt/EBITDA
Million Baht
11.01
10.3
2Q
20
00
7.59
7.98
1Q
4Q
3Q
7.78
1Q
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10.75
3Q
10.75
19
99
• Work-In-Progress
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2Q
EBITDA / Interest Coverage
• Local debt market opportunity
16th November 2000
Financial and Strategic Update
Consolidated Debt Profile - Financial Considerations
US$
Yen
Baht
801
841
X Million
45.8 Billion
24.3 Billion
US$
Baht
(250–500 Million)
Libor+100 to 175bp
Add 10 – 20 Billion
100+ bp reduction
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16th November 2000
Financial and Strategic Update
Monetization - 1.5 M FLAG Shares
Pledges 1.5 M. FLAG share
September 2000
CSFBI
KIN
Total proceeds = Over $17 million
1.5m shares * $11.55 (avg. price
Net Proceeds = 81.6 % of (Avg. Trade Price) x (# of Shares), interest plus fees
October 2003
KIN
Yes
Deliver Cash
Settlement
Exercise Cash
Settlement
CSFBI
No
Deliver 1.5
Million FLAG
If KIN exercise cash settlement
Pledge Release
Telecom Holdings(K.I.N.) retains right to 100% of 120% appreciation and 16.67% thereafter
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16th November 2000
Financial and Strategic Update - Internet
Internet Value Chain for TA – “Bricks & Clicks”
The Internet will be a crucial revenue driver for TelecomAsia
ISP – Revenue Sources
25,000 new customers in 6 weeks
Access Fees
Advertising
E - Commerce
ISP Path
Internet Customers
TA – Revenue Sources
Telco Path
• Consumers • ISPs
• Corporates • Ad Buyers
• SMEs
• Etc.
Wholesale / Transport
Hosting / ASP
10,000 new customers in 6 weeks
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Access – BB / NB
16th November 2000
Financial and Strategic Update - Internet
Objectives
• Make the Internet more available to Thai Business and
Consumer markets – change the model
• Grow the market – Added over 25,000 customers in 6 weeks
• Create immediate access and transport revenue for TA
• Use as a platform to leverage broader Internet / Web
opportunities
 Commerce
 Advertising
 Hosting
• Develop our customer relationships further
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16th November 2000
Financial and Strategic Update - Data / Internet
Broadband Access
Access CPE
Access
control
device
Access & Backbone
Transport
UBC / TA / AM
physical infrastructure
Broadband Service
Provision
• xDSL
• Cable
modem
• Wireless
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Content
Aggregation
Portals:
“walled garden”
for TV & mobile,
open Portal for
PCs
Content creation
BEC World
Grammy
International
Media of medias
16th November 2000
Financial and Strategic Update – Data / Internet
Broadband Access
NWN03
•
DSL will cover 40% of Corporate & 20% of
consumer footprint by 2000YE
•
Monthly Pricing
 Corporate 5,000 - 15,000 Baht
 Consumer
500 - 1,000 Baht
•
80% of addressable market by 1H2001
•
Vendors are:
 NorTel
 Nokia
 ECI
•
Cable Modems available by 1Q2000
NWN
TYB
RST
PTT
BAN
BBT
DNM
PKK
DNM43+15
SIK
CWT
LKS
NWW07+06
NTB
NWW
TSG
BGN
SNN
BGC05+06
BGS
LTP108+09
LTP1
BGT
NGK
MSK
KGC12+13
SRR PTW
TNB
LTY
PSN
SKW
SRW
KGC14
HAM
PNC
BKE
KGC
ASD
CSW
NGK12+13
LTP2
PYT
ITM
BGT16+14+15 SMS
PYT11+12
PMT
NGC
BGC
RIT
CYP
ONT
KTI
TKC
PWT
LKG
PKG
DKN
STD
BNA24+23
BNA17
RBN
BPL06
PSP14+13+17+19
BPL
PPG
PSP22
EKC
ADSL 100RCUs (35,35,15,15)
SIEMENS Switching 1 June 00
SIE
Other vendor
SPK
BPL04 BBB05
BBB01+02
BBO
 Over
2 million homes passed in Bangkok
BGU
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16th November 2000
Financial and Strategic Update – Corporate Data
Corporate Market
Broadband Data
End-to-End
Services
•
•
•
•
•
•
Data Services
•
•
•
E-Solutions
•
Improve data transport capabilities with ATM / IP overlay – I Pass Services
Build / acquire / JV for national presence
Offer full suite of telecom services
Build / acquire nationwide network
VOIP services an opportunity
Invest in new technology / skill sets
Need to secure space for servers and relevant equipment
Exploring partnering opportunities
Offer customized solutions
 Network integration
 Web / Applications (ASP) hosting
 B2B e-commerce facilitators
Evaluating global partners
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16th November 2000
Financial and Strategic Update – Corporate Data
Corporate Market
• “Core” revenue growth from:
 Increased usage
 Second line penetration
 Data transport services
Data Center
Internet
ASP
Web Hosting
• Data Centers – TA well suited:
Server
 24-hour security
Co-Location
 Air conditioning
 Maintenance and restoration
 Uninterrupted power
 Disaster protection and fire proofing
 Broadband backbone connections
 Data and Internet site performance monitoring
• Internet hotels profitable at 35%
Core
Business Value
Growth = 30%+
Enhancements
Around Core
• TA in strong competitive position
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16th November 2000
Moving Forward
Discussion with Analysts
Bangkok
16th November 2000