Broadcast Stig Eide Sivertsen 1
Agenda 1. Overview 2. TV Distribution 3. Nordic TV Distribution growth opportunities 4. Transmission 5. Summary 2
Overview Delivered as promised Continued subscriber growth Streamlined organisation Reduced churn Piracy control Number 1 Nordic content provider Operating cash flow of 1 billion NOK in 3
Overview Leading positions throughout the value chain Content Transmission Distribution 4
Reaching customers across different access platforms Households: Monthly ARPU: DTH Subscribers with satellite dish 763 000 294 NOK Cable Cable TV subscribers 604 000 128 NOK SMATV Households in small antenna TV-networks 1 098 00 25 NOK DTH cards only Free to air channels only to DTH households 242 000 5
Overview Revenue distribution SMATV Other TV Distribution 70% Cable Satellite Transmission 24% DTH Terrestrial Gross revenue of 5.4 billion NOK 6
Financial Overview Top line growth and margin expansion Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) Operating Cash Flow (NOKm) 4 800 EBITDA CAPEX 3 607 1 217 965 2 614 805 13 % 14 % 25 % 350 507 384 252 123 2001 2001-455 2001 Excludes sales gains / losses Operating Cash Flow = EBITDA - CAPEX 7
Financial Overview Improved operations quarter by quarter Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) Operating Cash Flow (NOKm) EBITDA CAPEX 1 310 1 059 1 162 1 138 1 158 1 194 386 281 255 254 316 311 176 27 % 26 % 29 % 187 204 169 120 133 113 17 % 10 % 18 % 74 28 35 56-49 Q1 Q2 Q1 Q2 Q1 Q2 Excludes sales gains / losses Operating Cash Flow = EBITDA - CAPEX 8
Agenda 1. Overview 1. 2. TV Distribution 3. Nordic TV Distribution growth opportunities 4. Transmission 5. Summary 3. 4. 5. 9
TV Distribution Continuous growth and improved operations in DTH subscriber base increased 9% DTH pay TV market share increased from 61% to 63% DTH ARPU increased 9% Cable ARPU increased 13% DTH churn down from 19% to 16% Streamlined operations after Canal Digital integration 10
TV Distribution Market share increased quarter by quarter Nordic DTH Subscribers ( 000) Observations 506 465 500 569 614 459 456 646 763 701 713 708 726 664 453 451 442 424 439 413 Canal Digital s subscriber CAGR exceeds 20% primarily due to premium content Canal Digital s packaging strategy different from MTG/Viasat s 2001 2001 Q1 Q2 Q1 Q2 Viasat Premium Subscribers Canal Digital Premium Subscribers 11
TV Distribution DTH subscriber and ARPU growth DTH subscribers ( 000) and ARPU (NOK) Observations 700 600 701 763 800 700 Extended content offering contributed to subscriber and ARPU growth 500 400 412 569 600 500 400 ARPU expected to level out as new customer have lower priced subscriptions 300 200 239 251 270 294 300 200 100 100 0 2000 2001 DTH subscriber base Monthly DTH ARPU 0 12
TV Distribution DTH churn reduced to 16% DTH Churn Development Strategy 41 % 33 % Increased customer satisfaction Content and pricing Operational excellence 19 % 16 % Piracy control through Conax system 2000 2001 13
TV Distribution Cable subscriber and ARPU growth Cable subscribers ( 000) and ARPU (NOK) Observations 300 700 High speed internet and digital TV drives Cable TV revenue 250 554 571 604 600 Pricing and packaging 200 150 357 500 400 Organic subscriber growth 300 100 101 107 113 128 200 50 100 0 2000 2001 Cable subscriber base Monthly CATV ARPU 0 14
TV Distribution Streamlining increases profitability DTH CATV Avidi SMATV Vision Promotion of Canal Digital as joint TV brand Headcount down 30% after Canal Digital integration Economies of scale in content purchase Optimising pricing and product mix 15
Improved operations with Canal Digital 100% Economies of scale DTH + CATV (million subs) 1,3 1,4 0,6 Revenues (NOKm) / EBITDA % 2001 4 436 4 800 DTH ARPU Cable ARPU 3 973 ARPU growth 251 270 107 113 294 128 350 300 250 200 150 100 Profitable growth 25 % 50 2001 Staff reductions 1 156 Man-labour year 972 809 9 % -1 % 2001 Numbers include Canal Digital 100% June 30th Excludes sales gains / losses, proforma numbers 16
TV Distribution Stable growth and operational turnaround Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) Operating Cash Flow (NOKm) EBITDA CAPEX 1 037 779 857 872 917 948 171 146 177 235 6 % 3 % 10 % 21 % 18 % 23 % 45 43 26 105 85 17 188 17 166 20 58 2 68-79 Q1 Q2 Q1 Q2 Q1 Q2 Excludes sales gains / losses Operating Cash Flow = EBITDA - CAPEX 17
TV Distribution Potential for increased margins DTH Benchmarks Canal Digital BSkyB EBITDA-margin 18 % 18 % DTH subscribers 763 000 7 200 000 Subs growth - 9 % 10 % Monthly ARPU (NOK) 294 398 Churn 16 % 9 % Both Canal Digital and BSkyB have potential for increased margins after expansion phase Canal Digital is best practice on important cost parameters and rivals BSkyB on profitability BSkyB is best practice on ARPU and churn due to monopoly and economies of scale 18
Agenda 1. Overview 2. TV Distribution 1. 2. 3. Nordic TV Distribution growth opportunities 4. Transmission 5. Summary 4. 5. 19
TV Distribution 3 million households will convert to digital TV TV Households ('000) Norway Sweden Denmark Finland Total Cable 860 2 560 1 160 1 070 5 650 DTH (inkl. cards only) 570 780 470 130 1 950 Terrestrial Digital (DTT) 0 250 0 200 360 Terrestrial Analogue only 530 710 780 800 2 910 Nordic TV Market 1 960 4 300 2 410 2 200 10 870 Opportunity for TV Distribution Opportunity for Norkring Numbers are Broadcast estimates based on available information 20
DTH Fighting piracy increases the addressable market Canal Digital is not commercially hacked today, due to: intensive work on encryption technology frequently change of smart cards Piracy and MTG/Viasat are major competitors Estimated 300 000 pirate MTG/Viasat cards in the Nordic region Picture: Buena Vista International Norge 21
TV Distribution Content uniqueness will still drive revenue Canal Digitals leading Nordic position ensures access to the best content effects on recruitment and churn Opportunities to repack and extend the program packages increase margins Canal Plus in final rounds to retain Premier League 22
TV Distribution Sweden and Norway are our strongest markets Canal Digital s DTH subscribers as a % of total TV households Key Observations and Strategy 14% 2% Finland and Denmark are growth opportunities CRM operator role for DTT in Finland will strengthen our Finish position 8% 5% 23
Agenda 1. Overview 2. TV Distribution 3. Nordic TV Distribution growth opportunities 4. Transmission 5. Summary 1. 2. 3. 5. 24
Transmission Steady profitable development Satellite Broadcasting Revenues (NOKm) / EBITDA % New business compensates for analogue shut down Cost reductions to compensate revenue drop 958 37 % 782 44 % Norkring (terrestrial transmission) New radio contract from 2004 Potential for new revenues in new digital services Revenues (NOKm) / EBITDA % 506 501 44 % 42 % Excludes sales gains / losses 25
Transmission Satellite Broadcasting is the leading Nordic satellite operator Analogue to digital migration completed Intensified sales of new products and services in Intelsat 10-02 investment of 88 USDm will improve profitability from H2 2004 Evaluation of ownership strategy for Satellite Broadcasting 26
Transmission Digitization is an opportunity for increased revenues in terrestrial transmission New radio station and digital radio (DAB) have extended existing contract portfolio Digital transmission TV (DTT) gives expansion opportunities Norkring excels in Benchmark analysis 27
Transmission Steady profitable development Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) Operating Cash Flow (NOKm) EBITDA CAPEX 358 337 332 315 313 317 45 % 41 % 38 % 42 % 40 % 46 % 148 30 139 144 144 127 127 65 35 16 25 10 118 92 129 111 119 79 Q1 Q2 Q1 Q2 Q1 Q2 Excludes sales gains / losses Operating Cash Flow = EBITDA - CAPEX 28
Agenda 1. Overview 2. TV Distribution 3. Nordic TV Distribution growth opportunities 4. Transmission 5. Summary 29
Broadcast Summary Substantial growth within TV Distribution Improved operations in TV Distribution Stable profitability in Transmission Potential for further Nordic growth 30
Broadcast Outlook 2004 Expectations Revenue EBITDA Capex Continuing revenue growth Targeting an improved EBITDA margin from Capex (ex. Satellite and DTT) at level 31
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