T le Co C l o um u bu b s u acqu q i u res pe p pc p om

Transcription

1 Tele Columbus acquires pepcom 13 September 2015

2 Disclaimer This document has been prepared by Tele Columbus AG (the "Company") solely for informational purposes. This presentation may contain forward-looking statements. These statements are based on management's current expectations or beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Although we believe that such forward-looking statements are reasonable, we cannot assure you that any forward-looking statements will prove to be correct. Such forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on the forward-looking statements. This presentation may contain references to certain non-gaap financial measures, such as Normalised EBITDA and Capex, and operating measures, such as RGUs, ARPU, Homes connected and subscribers pro forma calculation. These supplemental financial and operating measures should not be viewed as alternatives to measures of Tele Columbus s financial condition, results of operations or cash flows as presented in accordance with IFRS in its financial statements. The non-gaap financial and operating measures used by Tele Columbus may differ from, and not be comparable to, similarly titled measures used by other companies. For further information please see in particular the financial statements. This presentation also contains financial information as well as references to certain non-gaap financial measures and business information which are related to pepcom. This information derives from pepcom s annual report, from press releases or has been provided by pepcom s management. Tele Columbus has not verified this information and therefore assumes no liability for and offers no guarantee of the accuracy of this information. The presentation does not constitute or form part of, and should not be construed as, and offered to sell or issue, or the solicitation of an offer to purchase, subscribe to or acquire, securities of the Company, or an inducement to enter into investment activity in the United States. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. None of the Company, the companies in the Company's group or any of their respective directors, offices, employees, agents or any other person shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of the presentation or its contents or otherwise arising in connection with the presentation. We disclaim any obligation to publicly update or revise any forward-looking statements or other information contained in this presentation. It is pointed out that the existing presentation may be incomplete or condensed, and it may not contain all material information concerning Tele Columbus AG or the Tele Columbus Group or pepcom. 2

3 Transaction rationale Reinforces TC s position as third largest German cable player and the key consolidation platform of the German cable market, on the back of the acquisition of primacom in July 2015 Expansion of geographic footprint with pepcom s established presence in economically attractive cities such as Munich, Nuremberg, Frankfurt am Main and Leipzig Well established pepcom B2B business adds a strategically important pillar and new customer base to the group for upside growth potential going forward Significant potential for growth in Internet & Telephony and Premium TV services Strong housing association relationship portfolio to augment current TC customer base Attractive opportunity for scale effects across the combined businesses of Tele Columbus, primacom and pepcom as well as sharing of best practices Substantial synergy opportunity due to similarities of the two businesses 3

4 Transaction highlights Transaction structure and consideration Significant synergy opportunity Tele Columbus has entered into an agreement to acquire 100% of the shares in pepcom, Germany s 4 th largest cable operator from Star Capital 100% cash offer valuing pepcom at an enterprise value of 608m on a cash and debt free basis Enterprise value represents a multiple of 9.5x pre-synergies and 7.9x post-synergies 1 based on pepcom s expected normalized EBITDA The equity value payable by TC after deduction of debt like items and the KMS 4 minority interest amounts to approximately 505m (pepcom has a controlling stake of 70% in the Bavarian TV and broadband cable company KMS 4 together with Vodafone Kabel Deutschland which owns the remaining 30%) Significant synergy opportunity is expected from the combination due to scale effects between the two businesses and sharing of best practices and expertise Annual run-rate cost synergies of 13m and capex synergies of 2m are expected to be fully realised within 24 months of closing 5 Conditions and timing Financing The closing of the acquisition of pepcom is subject to approval of the extraordinary shareholders meeting (EGM) of the proposed capital increase of up to 240m to be held on 14 September 2015 The timing of the closing is dependent on the registration of the capital increase. The closing is expected to occur by the end of 2015, at the latest by 30 April 2016 Combination of cash on balance sheet, additional senior financing under the existing SFA and an equity bridge loan The equity bridge financing and potentially a proportion of the debt financing shall be repaid by an equity rights issue based on the resolution to be adopted by the EGM on 14 September The rights issue to be conducted at the latest in May 2016 Post transaction and repayment of the equity bridge financing, the leverage is expected to stay at approximately 5.0x pro forma the acquisition of primacom in July 2015, but may be lower depending on the size of the equity rights issue and/or other equity and equity-like measures Leverage for the newly formed group Tele Columbus, primacom and pepcom is expected to return to the communicated medium-term range of x within months after closing 1) Including expected full run-rate cost synergies; 2) Based on information provided by pepcom management; 3) Excluding finance leases; 4) Kabelfernsehen München ServiCenter GmbH & Co; 5) Synergy estimates do not include potential upside from combining the three businesses 4

5 pepcom snapshot Company overview Key network statistics and KPIs (Dec 2014) pepcom is the 4 th largest cable operator in Germany offering cable TV, high-speed internet and telephony to over 580k unique subscribers out of c.810k homes connected Operations nationwide with a strong presence in the economically attractive cities such as Munich, Nuremberg, Leipzig and Frankfurt am Main Relationships with c.8,200 housing associations which are served under stable long-term contracts In 2014, pepcom generated total revenues of 126m and normalized EBITDA of 57m (45% margin) In 2012 pepcom acquired HL komm, a Leipzig-based provider of telecommunication services for business customers Residential customers Homes connected Connected to own L3 network Upgraded for 2-way communication on own network Basic cable RGUs Pay TV RGUs Internet RGUs Telephony RGUs c.64% of HCs c.58% of HCs c. 810k c.580k / c.72% of HCs c.20k / c.4% of basic cable c.80k / c.15% of IP ready c.60k / c.11% of IP ready The company has a controlling stake of 70% in the Bavarian TV and broadband cable company KMS 1 together with Vodafone Kabel Deutschland which owns the remaining 30% The company currently employs c. 370 people, with corporate headquarters in Unterfoehring near Munich Business customers 1,600+ business customers Blended ARPU: Customers include SMEs, large corporates, carriers and resellers Source: pepcom management information as of December 2014; 1) Kabelfernsehen München ServiCenter GmbH & Co; 2) Blended ARPU per month based on annual revenues divided by average of beginning of period and end of period cable subscribers divided by 12 months 5

6 Reinforcing Tele Columbus position as the third largest player in the German cable market Regional density 1 and unique subscribers Homes connected 8.3m 7.1m c.3.7m Note: Kabel Deutschland homes connected as per Q report, UM customer relationships as per Q report, Tele Columbus homes connected as per Q report, primacom homes connected as per Annual Report 2014, pepcom homes connected as per management information Side-by-side financials 334k Total unique subscribers: c.580k Homes connected: c.810k m, 2014A Tele Columbus primacom 1 pepcom 2 Revenues k 43k 33k 23k 85k Normalised / Adjusted EBITDA Bavaria Hesse Mecklenburg- Pomerania Brandenburg Saxony Other² % margin 46% 42% 45% Source: pepcom management information as of December 2014; 1) Regional density based on cable network; 2) Other includes North Rhine Westphalia, Baden-Wuerttemberg, Rhineland Palatinate, Schleswig-Holstein, Berlin, Saxony Anhalt, Lower Saxony, Thuringia 1) primacom 2014 results press release (financials pro-forma for 100% consolidation of DTK in FY2014A, does not include full runrate DTK synergies); 2) pepcom management information as of December

7 Overview of key network statistics side-by-side 1 Homes connected c.1.7m c.1.2m 2 c.0.8m c.3.7m Connected to own L3 network c.73% of HCs c.83% of HCs c.64% of HCs c.2.7m c.74% of HCs Upgraded for 2-way communication on own network c.57% of HCs c.57% of HCs c.58% of HCs c.2.1m c.57% of HCs Internet RGUs 213k c.130k c.80k c.420k c.19% of IP ready 0.92 Telephony RGUs 202k c.60k c.120k c.360k c.17% of IP ready 0.87 Significant upside from further Level 3 migrations and upselling of Internet, Telephony, Premium TV and - recently launched - mobile services 1) Source: Tele Columbus company information as of June 2015, primacom unless otherwise stated based on information provided by primacom management (as of December 2014); pepcom management information as of December 2014; 2) Source: primacom 2014 annual report 7

8 Tangible synergy opportunities identified Run rate p.a. 1 Key sources COGS Opex 13m Signal fees Internet & Telephony cost Personnel costs External services / suppliers Office premises Administration & other Capex 2m Procurement costs Combined capex investment program Integration costs Integration cost assumed to be 1x cost and capex synergies run-rate (split over first 24 months post closing) Revenue synergies Leverage TC online sale experience Market mobile into pepcom IP base Stimulate DTV Basic HD sales Carriage revenues B2B opportunity Source: Tele Columbus estimates; 1) Full run-rate expected to be achieved within 24 months of closing 8