M2 Telecommunications Group Ltd 2013 Investor...

M2 Telecommunications Group Ltd2013 Investor Day12 November 2013

Presentation Content

• Welcome• Consumer Segment Overview• Business Segment Overview• Update & Outlook

Investor Day 2013, Slide 2

Agenda

Time Item Speaker

10.30 Welcome Geoff Horth, CEO

10.40 Consumer Segment Overview Boris Rozenvasser, Consumer Director

11.10 Business Segment Overview Scott Carter, Business Director

11.40 Update and Outlook Geoff Horth, CEO

12.10 Panel Q&A Geoff Horth, Darryl Inns, Boris Rozenvasser, Scott Carter

12.40 Lunch with the Executive Team

1.00 Sydney Exchange Tour (optional)


Consumer Boris Rozenvasser, Consumer Director

Products & Positioning

Leading challenger brand in telco with wide market appeal

Quality offering for the more discerning

user

Established & Aspirational Mid/higher tier socio-

economic sector

Flexible payment options

Family-orientatedMid/lower tier socio-economic

sector

Cheap price with high perceived value offerings

One Call to connect all essential services

Affordable monthly automatic payment

plans

Connect & Save with DodoLow-cost telecommunications & utilities provider

Providing Australian households with high-value telecommunications services since 1996

NBN

Fixed Voice Data Mobile Fibre Energy Insurance Fixed Voice Data Mobile Fibre


Go-to-market Strategy

OnlineAffiliates | Search Engine Marketing | Display | Comparators

OfflineRadio | TV | Outdoor | Sponsorship | Direct Mail

InternalCross-sell | Upsell

SERVICES GROWTH


Sales & Marketing

$20M+Total spend

5%Branding

95%Direct Response

800Sales & Marketing Team

2,000Sales Calls/day

1,200Online Leads/day


Above the Line: Radio

• Partnering with Key Radio Stations – leaders in our demographic• Maintaining Dodo activity and commenced iPrimus in October 2013

Matt & Jo• iPrimus• #1 FM Breakfast show in Melbourne

(all people)

Breakfast with John & Ross• iPrimus and Dodo Power & Gas• #1 Breakfast show in Melbourne

(55+)

Fifi & Jules• iPrimus• #1 National drive show

(all people)

Hot Brekky• Dodo Power & Gas• #1 FM Breakfast show in Melbourne

(24-54) Investor Day 2013, Slide 8

Above the Line: TV

• Partners covering all main free-to-air channels nationwide• Maintaining Dodo activity with key TV partners• Commenced iPrimus TV in October 2013


iPrimus TVC


http://www.youtube.com/user/iPrimusAU

Jun‐12 Jul‐12 Aug‐12 Sep‐12 Oct‐12 Nov‐12 Dec‐12 Jan‐13 Feb‐13 Mar‐13 Apr‐13 May‐13 Jun‐13 Jul‐13 Aug‐13 Sep‐13 Oct‐13

iPrimus New Service Gross Sales

iPrimus achieves 148% growth in new sales

M2 Acquisition of Dodo

Above The Line commenced

Re-priced iPrimus to be in line with premium positioning

M2 Acquisition of iPrimus

148% increase in monthly gross sales between Jun 2012 and Oct 2013


Dodo continues strong sales performance


[Removed: Dodo videohttp://www.youtube.com/user/DodoAUS]

Dodo NBNLeveraged M2 infrastructure to launch NBN with no incremental investment


Dodo NBNLow entry-level price point including Pay As You Go Fibre Home Phone


Dodo NBNHighly competitive unlimited data plan


Dodo Connect StoresRetail distribution strategy aligned to low cost-to-acquire advantage

Dodo Connect Stores

Bayside Plaza

Parkmore

Southland

Chadstone

Dandenong Plaza

Fountain Gate

Knox City

Doncaster

Northland

Greensborough

Plenty Valley

Airport West

Epping Plaza

Craigieburn

Broadmeadows

WatergardensWoodgrove

Werribee Plaza

Geelong

7 existing stores in Victoria with another 13 to be opened before Christmas

Bendigo

BusinessScott Carter, Business Director

Business Brands

End-to-end Business Solutions

NBN-readySpecialists

Trusted partner with 30 years experience

RecognisedIP Voice (VoIP)

Specialist

Competitive broadband + IP voice bundles

Business Communication Specialists Low-Cost SoHo/Micro Business Provider


SMB Sales Channels


SMB Sales Channels


Product Opportunity

COMPUTING

MOBILE

DATA

VOICE

Cloud storage & applications

4G

NBN

IP & HostedVoice


Marketing

Producing more inbound

leads

Improving lead conversion

Increasing bundled sales

Taking advantage of brand recognition for Commander using tactical Above The Line offers

Multi-channel approach driving improved results of Below The Line initiatives

• TV Advertising• Radio Advertising• Outdoor Billboard

• Direct Mail• Outbound Telemarketing• Dealer Appointments

ABOVE

BELOW


Tactical Above-The-Line Campaign

TV Advertising + Radio Advertising + Outdoor Billboards


Tactical Above-The-Line Campaign

Investor Day 2013, Slide 25http://www.commander.com/why-commander

Online Presence

High Lead Conversion

Low Cost per Acquisition

Scalable Initiative

• Investing in online strategy to build online traffic from organic and paid traffic sources

• > 50% of marketing budget in online lead generation

Commander site traffic


Acquisition & Cross Sell Campaign

Bonus Credit Offer

BonusGift Offer

Sign Up Bonus 4G

Mobile

Acquisition Campaign

Cross Sell Campaign

Business Builder


Driving DSL & Improving Fixed Plan Mix

Improving Fixed Margins

Increasing Customer Bundles


Update and OutlookGeoff Horth, CEO

GROWSales & marketing

focus to take share of market

SIMPLIFYTechnology

drives sustained cost to serve advantage

NURTUREIncrease share of

wallet, extend tenure, seamlessly transition to NBN

TEAM

FY14 Priorities


Brand Family


Disruptive, mass-market utility services provider

Grow

Primus and Dodo acquisitions provide capability, scale and brand relevance

Leverage complementary capabilities (in sales, technology, product and marketing) to accelerate growth

Build on distribution advantage to maximise market reach

Maximise opportunity presented by NBN, leverage our expertise and pedigree with margin paradigm


Active customer lifecycle management

programComprehensive Business

Account Management Program

Consumer segment exceeding 2 products per

customer

Predictable deliveryAuto configure modems now standard across all

brandsQuality assurance and welcome calls reduce early life churn by 20%

Strong trends in customer service50% improvement in Commander first call

resolutionDodo customer support

satisfaction rating is 4.5/5

Customer

Nurture

CUSTOMER


Completed Phase 1 of IP voice switch upgrade, which in time will allow us to decommission 220 racks of DMS switch

Rebrand all business segment customers (excluding Engin) under Commander brand

Focus development on 3 core billing systems, continue consolidation of non-core systems

16 offices consolidated into 7

Simplify


• Q1 results finalised and on track to achieve FY14 guidance

• Targeting mid single-digit growth in subscribers in Consumer segment• Dodo kiosks increasing physical presence• Additional products and services available to increase product

penetration

• Targeting low single-digit growth in subscribers in Business segment• Augment Business segment distribution channels• Stronger data sales improving product mix• Hosted voice and Cloud productisation for mass-market

Outlook


$M FY13(a) FY14 Guidance % Change(from midpoint)

Revenue 681.0 970 - 1030 Up 47%

EBITDA 108.1 150 - 170 Up 48%

NPAT 43.8 60 - 70 Up 48%

NPAT (underlying1) 58.4 85 - 95 Up 54%

EPS (cents per share2) 27.4 34 - 39 Up 33%

EPS (cents per share, underlying1,2) 36.3 48 - 53 Up 39%

Capex (as % of revenue) 2.9% 2% Down 31%

FY14 Guidance

(1) Underlying NPAT and EPS figures each include an add-back of a non-cash cost of $14.6 million for FY13 and $26 million for FY14 for amortisation associated with customer contracts acquired in the relevant period (in accordance with Australian Accounting Standards) (2) Calculated using the volume weighted average number of shares

On track to meet guidance following Q1 completion


Certain statements made in this presentation are forward-looking statements. These forward-lookingstatements are not historical facts but rather are based on M2’s current expectations, estimates andprojections about the industry in which M2 operates, and its beliefs and assumptions.

Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks,” "estimates,“ “guidance”and similar expressions are intended to identify forward-looking statements.

These statements are not guarantees of future performance and are subject to known and unknownrisks, uncertainties and other factors, some of which are beyond the control of M2, are difficult to predictand could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.

M2 cautions shareholders and prospective shareholders not to place undue reliance on these forward-looking statements, which reflect the view of M2 only as of the date of this presentation. The forward-looking statements made in this presentation relate only to events as of the date on which thestatements are made.

M2 will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date ofthis presentation except as required by law or by any appropriate regulatory authority.

Disclaimer


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M2 Telecommunications Group Ltd 2013 Investor...

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