31
22 JANUARY 2013 4Q12 RESULTS PRESENTATION
22 JANUARY 2013
4Q12
RESULTS PRESENTATION
This presentation contains forward looking information, including statements which constitute forward looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and assumptions of our
management and on information available to management only as of the date such statements were made.
Forward-looking statements include
(a) information concerning strategy, possible or assumed future results of our operations, earnings, industry conditions, demand and pricing for
our products and other aspects of our business, possible or future payment of dividends and share buy back program; and
(b) statements that are preceded by, followed by or include the words “believes”, “expects”, “anticipates”, “intends”, “is confident”, “plans”,
“estimates”, “may”, “might”, “could”, “would”, and the negatives of such terms or similar expressions.
These statements are not guarantees of future performance and are subject to factors, risks and uncertainties that could cause the assumptions
and beliefs upon which the forwarding looking statements were based to substantially differ from the expectation predicted herein. These
factors, risks and uncertainties include, but are not limited to, changes in demand for the company’s services, technological changes, the effects
of competition, telecommunications sector conditions, changes in regulation and economic conditions. Further, certain forward looking
statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may
differ materially from the plans, strategy, objectives, expectations, estimates and intentions expressed or implied in such forward-looking
statements. Additionally, some of these statements refer to board proposals to be submitted to ZON - Multimédia – Serviços de
Telecomunicações e Multimédia, SGPS, S.A. (“Multimedia” or “ZON”) AGM and subject to (i) its approval by Multimedia’s shareholders, (ii) the
market conditions and (iii) the ZON’s financial and accounting position as revealed in the financial statements approved by Multimedia’s AGM.
Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new
information or future developments or to provide reasons why actual results may differ. You are cautioned not to place undue reliance on any
forward-looking statements.
ZON Multimedia is exempt from filing periodic reports with the United States Securities and Exchange Commission (“SEC”) pursuant to Rule
12g3-2(b) under the Securities Exchange Act of 1934, as amended. The SEC file number for PT Multimedia’s exemption is No. 82-5059. Under
this exemption, ZON Multimedia is required to post on its website English language translations, versions or summaries of certain information
that it has made or is required to make public in Portugal, has filed or is required to file with the regulated market Eurolist by Euronext Lisbon or
has distributed or is required to distribute to its security holders.
This presentation is not an offer to sell or a solicitation of an offer to buy any securities.
Disclaimer
FCF generation above expectations, 46.7 million euros in
4Q12 and 106.5 million euros in FY12
Resilience in revenues and profitability in the core
business in Portugal with a strong focus on
Innovation and cost and CAPEX discipline
ZAP continues to boast very strong operational and
financial performance quarter after quarter, above all
expectations
3
4Q12 Highlights
4Q12
Operating Review
Around 235 thousand IRIS customers, 30% of the Triple Play customer base, 41.8k net adds
in 4Q12
772.6 thousand Triple Play customers, up 9.0% yoy 5
Continued strong take-up of IRIS bundles
Growth in 3P customer base
Triple Play Customers and Penetration of Cable
Base [Thousands, %]
IRIS customers and Penetration of Cable Base [Thousands, %]
Net Adds
[Thousands]
642.3708.7
772.6
55.2%
60.1%
63.9%
30%
50%
70%
90%
110%
130%
150%
00
100
200
300
400
500
600
700
800
4Q10 4Q11 4Q12
28.346.2
65.0
97.0118.9
161.5
193.0
234.8
4%7%
9%
14%17%
22%
26%
30%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
-45
05
55
105
155
205
255
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12
28.3 17.9 18.8 32.1 21.9 42.6 31.4 41.8
+10.3%
+9.0%
6
“IRIS” voted Triple Play product of the year in 2013
ZON IRIS was voted Product of the Year
in the category of Triple Play Services, by
Portuguese consumers
Grand Prize of Marketing and Innovation
with the Timewarp service
High customer satisfaction:
89% of customers used the service
during the first month after launch,
94% in the first four months
In a scale of “1” (lowest) and “10”
(highest), customers rate the
relevance of the service as “9” and
“8” in terms of satisfaction
Most customers would recommend
the service to friends and family
7
IRIS – The best 3P offer, continuously innovating
with the launch of new content and the most
relevant features for users
Launch of the ZON Cinemas widget
that enables customers to watch
trailers of movies being shown,
browse the timetables and purchase
the ticket for their chosen screen
and seat. It also enables the clients
to share their favourite trailers or
movies on Facebook
Launch of a new exclusive channel
– Globo – with a strong focus on
brasilian series and movies, and of
+TVI, a new, exclusive to ZON,
Portuguese channel with a strong
focus on entertainment content
Broadband net adds of 23.8
thousand, bringing the total customer
base to 790 thousand
65.3% penetration of customer base
59% offers greater than 20 Mbps
and 40% higher or equal to 30 Mbps 8
Robust net additions in Broadband and Fixed Voice
Broadband Subscribers [Thousands, % of Penetration of Cable Base]
Fixed Voice Subscribers [Thousands; % of Penetration of Cable Base]
Fixed Voice net adds of 16.2
thousand, bringing the total customer
base to 976.4 thousand
79% penetration of cable customer
base
690.2739.2
790.0
59.3%62.7%
65.3%
30%
35%
40%
45%
50%
55%
60%
65%
70%
200
300
400
500
600
700
800
4Q10 4Q11 4Q12
777.6883.9
976.4
65.3%
73.2%
79.0%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
00
200
400
600
800
1,000
4Q10 4Q11 4Q12
Basic ARPU from core TV, BB and Voice
services decreased 2.3% yoy
Adjusting for the impact of entry level
offers, basic ARPU would have remained
nearly flat – a 0.3% decrease
Success of lower ARPU, entry level,
offers and continued pressure from
discretionary premium ARPU (-14.7%) led
to decline in Blended ARPU of 4.3%
9
ARPU still under pressure from less premium
channel subscriptions and by entry-level bundles
Basic, Premium and Blended ARPU [4Q11 = Base 1]
-4.3%
-2.3%
-14.7%
0.80
0.85
0.90
0.95
1.00
1.05
1.10
4Q11 1Q12 2Q12 3Q12 4Q12
Blended ARPU Basic ARPU Premium ARPU
Cinema Exhibition: 4Q12 performance above the
remainder of the market
Source: ZON, ICA
Cinema tickets sold and revenue per ticket [Thousands, Euros]
4Q12 Performance of Gross Revenues and Attendance
[%]
Average revenue per ticket: -0.6% in 4Q12
Cinema Exhibition gross revenues were down 6.8% in 4Q12, with the market as a whole
declining by 7.1% yoy
10
2,260
1,725 1,714
2,383
1,992
4.8 4.84.9 4.9
4.7
04
04
05
05
05
05
05
06
0
500
1000
1500
2000
2500
3000
4Q11 1Q12 2Q12 3Q12 4Q12
-6.8%
-11.9%
-7.1%
-12.7%
Gross Revenue Attendance
ZON Market
Source: ZON, ICA
11 11
ZON Audiovisuais:
Reinforcing leadership in Cinema Distribution
Cinema Gross Revenues by Distributor - Market Share 2012 [%]
ZON distributed 7 of the Top 10 movies
shown in cinemas in Portugal in 2012
61.8% market share of cinema
distribution gross revenues in 2012
Homevideo sales and the sale of content
rights to FTA channel operators
pressured, by the cutbacks on their
programming grids
ZON61.8%
Columbia16.0%
Big Picture 2
13.6%
Others8.6%
12
ZAP – strong performance, above expectations
Very strong operational performance, with net adds accelerating in 4Q12
FY12 revenues of 105.4 million euros (100%) in the second full year of operations
EBITDA breakeven in 1Q12 and reaching and EBITDA of 14.2 million euros (100%) in
2012. Net Income breakeven reached in 3Q12, ahead of schedule
ZAP Customers
4Q11 1Q12 2Q12 3Q12 4Q12
4Q12
Financial Performance
14 14
Solid revenue performance
Consolidated Operating Revenues [Millions of Euros]
Stable consolidated revenue performance yoy: (0.4)% in 4Q12 and +0.4% in FY12
Proportional consolidation of ZAP with a positive impact on Consolidated Operating
Revenues of 8.8 million euros in 4Q12 and 31.6 million euros in FY12
215.6 214.7
4Q11 4Q12
(0.4)%
854.8 858.6
2011 2012
+0.4%
15 15
Pay TV, BB and Voice revenues continue to show
good resilience in face of the difficult macro context
Pay TV, Broadband and Voice Revenues [Millions of Euros]
Pay TV, Broadband and Voice Revenues down 3.6% yoy in 4Q12 and 2.3% in 2012, in a
very challenging macroeconomic context
193.8 186.8
4Q11 4Q12
(3.6)%
772.4 755.0
2011 2012
(2.3)%
16
ARPU Revenues Growth [4Q11 = Base 1]
16
ARPU revenues under pressure from decline in
Premium revenues
ARPU Revenues split [%]
Basic ARPU revenue decrease of 1.4% with flat Cable revenues, reflecting greater stability
in the 2P and 3P customer base and the competitive superiority of ZON’s network and
services
Premium revenues down 13.8% yoy putting pressure on total revenues
84% 86%
16% 14%
4Q11 4Q12
Basic Revenues Premium Revenues
-3.3%
-1.4%
-13.8%
0.80
0.85
0.90
0.95
1.00
1.05
4Q11 1Q12 2Q12 3Q12 4Q12
Total Basic Premium
17 17
Audiovisuals and Cinema revenues: performance
ahead of the market
Challenging macroeconomic environment continues to weigh on the number of cinema
spectators, with revenues down 11.8% in 4Q12 and 10.8% in FY12
The Audiovisuals business was negatively affected by the reduction in homevideo sales
and sales to FTA channel operators, who have been cutting back on their programming
grids
Cinema Revenues [Millions of Euros]
Audiovisuals Revenues [Millions of Euros]
(11.8)% (3.3)%
14.713.0
4Q11 4Q12
59.2
52.8
2011 2012
(10.8)%
20.1 19.6
4Q11 4Q12
(2.4)%
72.4 70.0
2011 2012
18 18
Costs savings materializing
Excluding proportionate consolidation of Angolan JV, OPEX fell by 6% to 133.5 million euros
in 4Q12 and by 3.8% to 522.8 million euros in FY12
Consolidated Operating Costs Excluding African Operation [Millions of Euros]
142.0
133.5
4Q11 4Q12
(6.0)%
543.6 522.8
2011 2012
(3.8)%
19 19
Operating Costs excluding African Operation [Millions of Euros]
Cost savings materializing
W&S Direct Costs Commercial
Costs
Other Op.
Costs
Operating Costs ex Africa
(millions of euros) 2012 Δ % Drivers
Other Operating Costs 172.3 (3.4%)
Excluding the costs from consolidation of the African JV, other operating costs fell by 3.4% yoy. Some relevant savings were achieved
in core areas of the domestic business such as support services, as a result of the implementation of a number of efficiency
improvement measures at the contact center level, maintenance and repairs and other SGA. The impact of the move to the new
Corporate Headquarters in 4Q12 is also beginning to be felt
239.4 (1.8%)
Excluding the effect of the proportional consolidation of the African JV from 1Q12, W&S would have declined by 3.5% in FY12, mostly
due to a 3.9% reduction in the average number of employees, mostly in the Cinema Exhibition division
Excluding the impact of the consolidation of the African Operation, Direct Costs decreased by 1.8% due to a combination of on the back
of lower telecom costs due to efforts to optimize the use of telecom infrastructure and of lower programming costs
Commercial Costs 53.9 (13.2%)Excluding the impact of the African Operation, commercial costs would have decreased by 13.2%, as a result of lower commission and
marketing costs
W&S 57.2 (3.5%)
Direct Costs
59.3 57.2
2011 2012
(3.5)%
243.9 239.4
2011 2012
(1.8)%
62.1 53.9
2011 2012
(13.2)% 178.3 172.3
2011 2012
(3.4)%
20 20
Strong improvement in core Pay TV, BB and Voice
EBITDA margin. Good contribution from ZAP
Core Pay TV, Broadband and Voice margin grew by 2.2pp yoy to 37.1%
Group Margin remained grew by 0.6pp despite lower contribution from other domestic
businesses and consolidation of Angolan JV, whose contribution, however, was already
remarkable
Group EBITDA, EBITDA Margin [Millions of Euros, %]
Pay TV, Broadband and Voice EBITDA
and EBITDA Margin [Millions of Euros, %]
EBITDA Margin [%]
73.6 74.7
34.1%34.8%
30%
31%
32%
33%
34%
35%
36%
37%
38%
39%
40%
30
35
40
45
50
55
60
65
70
75
80
4Q11 4Q12
+1.4%
67.7 69.3
35.0%
37.1%
30%
32%
34%
36%
38%
40%
42%
30
35
40
45
50
55
60
65
70
75
4Q11 4Q12
+2.3% 35.3%
37.1%
34.3% 34.8%
17.1%
12.2%2.6%
15.6%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12
Pay TV, BB and Voice Group Aud + Cin International
21
Net Income [Millions of Euros]
Net Income Growth
(millions of euros) FY12 Δ % Drivers
In 2011 ZON had a negative contribution from the consolidation of the African Operation of 10.2 million euros, which does not appear in this
line anymore. For comparative purposes, the equivalent impact for 2012 was a negative contribution at the EBT level of 1.3 million euros
D&A somewhat lower at 214.6 million euros compared 2011. D&A is still relatively high due to the significant accelerated CAPEX cycle of
the 2008-2010 investment cycleD&A (214.6) (1.4)%
Income Taxes (18.0) 21.6% The effective tax rate for 2012 was 32.8%, a little higher than the corporate tax rate of 29.5%, due to a few one-off effects during the year
Net Financial Expenses (42.4) (1.4%)
Net Interest costs and other financial charges registered an increase of 27% when compared to 2011, led by a combination of higher
average cost of debt and financing charges as a result of refinancing secured
5.7
6.4
4Q11 4Q12
34.236.0
2011 2012
+5.3% +12.7%
22
Continued reduction of CAPEX to more normalized
levels as forecast
Total CAPEX [Millions of Euros]
Total CAPEX, Total CAPEX / Pay TV, BB and Voice
Revenues [Millions of Euros, %]
CAPEX levels significantly down on previous years as forecast
CAPEX as percentage of Pay TV, BB and Voice revenues at 16.3% in FY12, in line with
the sector average for maintenance and still including some growth related investment
149.9
123.1
19.4%
16.3%
00%
05%
10%
15%
20%
25%
-15
05
25
45
65
85
105
125
145
165
2011 2012
(17.9)%
23.3 25.9
13.0 9.5
2.8 5.21.3
40.5 40.6
4Q11 4Q12
Pay TV, BB and Voice Infr. Terminal Equipment
Other Baseline CAPEX Non-Recurrent CAPEX
+0.1%
23
Strong improvement in FCF generation
EBITDA - CAPEX [Millions of Euros]
Strong improvement in EBITDA-CAPEX led by the continously resilient EBITDA
performance and the decline in CAPEX, as forecast
Free Cash Flow before dividends generation above expectations, with 106.5 million
euros in FY12 and 46.7 million euros in 4Q12
33.1
50.1 51.154.5
34.1
4Q11 1Q12 2Q12 3Q12 4Q12
+3.0%
30.8
16.3
33.6
9.9
46.7
4Q11 1Q12 2Q12 3Q12 4Q12
+51.4%
Free Cash Flow [Millions of Euros]
24 24
Solid Capital Structure,
1.9x Net Financial Debt / EBITDA
Change in Net Financial Debt [Millions of Euros]
605.0
0.5
17.0
35.8
30.8
49.8
1.1
189.8
660.9
23.4
637.5
2012
Other Items
Income Taxes Paid
Net Interest Paid
Long Term Contracts
Dividends
Non-Cash Items andWorking Capital
EBITDA-CAPEX
2011 Incl. InternationalBusiness
International BusinessConsolidation
2011
Net Financial Debt of 605 million euros at the end
of 2012 coming from 661 million euros at the end of
2011
Net Financial Debt / EBITDA of 1.9x
Average cost of debt of 4.96% in 2012
1.98 years of average maturity
25
The Board of Directors will propose to the General
Assembly the payment of a 12 euro cent dividend per
share:
• Payout ratio of around 100%
Shareholder remuneration
26
Sport TV – renegotiation of Portuguese Football League contract:
• Extension for another 3 years, until the end of season 2015-2016
• Remuneration model of these broadcasting rights bearing a greater connection to
the level of revenues generated by Sport TV
Renegotiation of long term transponders contract:
• Lease of 5 instead of 8 transponders
• Significant savings in yearly cash payments from 2014
Long Term Contracts
Appendix Financial Highlights
Operational Highlights
28 28
Financial Highlights
(Millions of Euros) 4Q11 4Q12 ∆ y.o.y. 2011 2012 ∆ y.o.y.
Operating Revenues 215.6 214.7 (0.4%) 854.8 858.6 0.4%
Pay TV, Broadband and Voice 193.8 186.8 (3.6%) 772.4 755.0 (2.3%)
Audiovisuals 20.1 19.6 (2.4%) 72.4 70.0 (3.3%)
Cinema Exhibition 14.7 13.0 (11.8%) 59.2 52.8 (10.8%)
International - 8.8 n.a. - 31.6 n.a.
Other (12.9) (13.4) 4.0% (49.2) (50.8) 3.4%
EBITDA 73.6 74.7 1.4% 311.2 312.9 0.5%
EBITDA Margin 34.1% 34.8% 0.6pp 36.4% 36.4% 0.0pp
Pay TV, Broadband and Voice 67.7 69.3 2.3% 287.8 292.8 1.7%
EBITDA Margin 35.0% 37.1% 2.2pp 37.3% 38.8% 1.5pp
Cinema and Audiovisuals 5.9 4.0 (32.0%) 23.4 15.9 (32.1%)
EBITDA Margin 16.9% 12.2% (4.6)pp 17.7% 12.9% (4.8)pp
International n.a. 1.4 n.a. n.a. 4.3 n.a.
EBITDA Margin n.a. 15.6% n.a. n.a. 13.5% n.a.
Income from Operations 20.3 20.2 (0.7%) 93.6 98.3 5.0%
Net Income 5.7 6.4 12.7% 34.2 36.0 5.3%
CAPEX 40.5 40.6 0.1% 149.9 123.1 (17.9%)
EBITDA minus CAPEX 33.1 34.1 3.0% 161.4 189.8 17.6%
Net Financial Debt 637.5 605.0 (5.1%) 637.5 605.0 (5.1%)
CAPEX as % of Revenues 18.8% 18.9% 0.1pp 17.5% 14.3% (3.2)pp
Net Financial Debt / EBITDA [x] 2.0x 1.9x n.a. 2.0x 1.9x n.a.
29 29
Operational Highlights
Note: Figures refer to Portuguese Operations
30
José Pedro Pereira da Costa
CFO
Maria João Carrapato
Head of Investor Relations
ZON Multimedia
Rua Ator António Silva, 9
1600-404 Lisboa, Portugal
Tel.: +351 21 782 47 25
Fax: +351 21 782 47 35
Operational Highlights
