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27 JULY 2012
2Q12
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
Stability of Core Triple Play revenues, showing
strong resilience
African JV “ZAP” posting very positive quarter on
quarter growth
Strong FCF improvement led by solid EBITDA
evolution and decline in CAPEX, as anticipated
#1 in Customer Satisfaction in TV services according
to the nationwide customer satisfaction survey 2011
3
2Q12 Highlights
731 thousand Triple Play customers, up 7.7% yoy
160 thousand IRIS customers, 13% of cable customer base, 42.5k net adds in 2Q12 4
Good Triple Play take-up
Acceleration in take-up of high-end IRIS bundles
Triple Play Customers and Penetration [Thousands, %]
571.9
678.5730.9
49.0%
58.6%
60.4%
30%
50%
70%
90%
110%
130%
150%
00
100
200
300
400
500
600
700
800
2Q10 2Q11 2Q12
IRIS net adds [Thousands]
28.3
17.9 18.8
32.1
21.9
42.5
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
5
Leadership in product innovation reinforced with
launch of new ZON IRIS version
New IRIS 2.1 version rolled out to customers
nationwide in July
Seamless Facebook integration
Upgrade to Restart service, now allows the start-over
of any show that finished within the last 2 hours
Other new features: Vertical EPG, Messages, Profiles,
Integrated Search, Related Content,… ...
6
Extension of TV Experience to companion devices
continues
iPhone & Android Remote Control
for ZON IRIS (launch in August)
ZONLINE iPhone
(launched in May)
751.5 thousand Broadband subs
62.1% penetration of customer base
55% offers greater than 20 Mbps
and 35% higher or equal to 30 Mbps
7
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]
947.0 thousand Fixed Voice subs
76.2% penetration of cable customer
base
650.1714.8
751.5
55.7%
61.7% 62.1%
30%
35%
40%
45%
50%
55%
60%
65%
70%
200
300
400
500
600
700
800
2Q10 2Q11 2Q12
692.0
826.8947.0
58.3%
69.6%
76.2%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
00
200
400
600
800
1,000
2Q10 2Q11 2Q12
Basic ARPU from core TV, BB and Voice
services decreased 1.0% yoy
Adjusting for the impact of entry level
offers, basic ARPU would have increased
by 0.9%.
Success of lower ARPU, entry level,
offers and continued pressure from
discretionary premium ARPU (-14.2%) led
to decline in Blended ARPU of 3.2%
8
Resilience of Basic ARPU
Basic, Premium and Blended ARPU [2Q11 = Base 1]
-3.2%
-1.0%
-14.2%
0.80
0.85
0.90
0.95
1.00
1.05
1.10
2Q11 3Q11 4Q11 1Q12 2Q12
Blended ARPU Basic ARPU Premium ARPU
Cinema Exhibition: Challenging market context,
ZON Lusomundo outperforming the market
Source: ZON, ICA – Gross Revenue Data adjusted for VAT rate change in cinema tickets.
Cinema tickets sold and revenue per ticket [Thousands, Euros]
2Q12 Performance of Gross Revenues and Attendance
[%]
Average revenue per ticket: -1.0% in 2Q12
Cinema Exhibition gross revenues were down 13.6% in 2Q12, with the market as a whole
falling by 15.9% yoy
9
2,0942,372 2,260
1,725 1,714
4.9 5.14.8 4.8 4.9
03
04
04
05
05
06
06
07
07
0
500
1000
1500
2000
2500
3000
2Q11 3Q11 4Q11 1Q12 2Q12
Tickets Sold Avg. Revenue Per Ticket
-13.6%
-18.1%-15.9%
-19.8%
Gross Revenue Attendance
ZON Market
Source: ZON, ICA
10 10
ZON Audiovisuais:
Reinforcing leadership in 2Q12
Cinema Distribution gross revenues market share 2Q12 [%]
ZON distributed 8 of the Top 10 movies
shown in cinemas in Portugal in 1H12
59.5% market share of cinema
distribution gross revenues in 2Q12
ZON59.5%
Columbia14.9%
Big Picture 2
16.0%
Others9.5%
11
Growing distribution network
13 own stores
Over 700 agents / points
of sale
Door-to-door sales force
of 200 people in Angola
ZAP – posting excellent results in Angola
ZAP Subscribers
Very strong operational
performance
EBITDA breakeven reached
in 1Q12
ZAP Stores
2Q11 3Q11 4Q11 1Q12 2Q12
2
1213
June
2010
June
2011
June
2012
Strong focus on
Portuguese Language
content
The most recognized
brand in the market
12
ZAP – gaining recognition and popularity in the
Angolan market
Rate of spontaneous advertising awareness,
all sectors [%]
Source: Marktest study April 2012.
ZAP’s campaigns are the 4th most recognized
in the Angolan market…
… and are the clear leaders in the Pay TV sector
Rate of spontaneous advertising awareness,
Pay TV sector [%]
31.3%
17.5%14.3%
11.1%
Mobile
brand
Beverages
brand
Mobile
Brand
93.2%
25.6%
2nd
Pay TV
brand
13 13
Solid revenue performance
Consolidated Operating Revenues [Millions of Euros]
Yoy change in Pay TV, BB and Voice Revenues [%]
Positive consolidated revenue performance yoy: +1.4%
Impact of proportionate consolidation of African JV in 2Q12 of 7.3 million euros
Clear improvement in the sequential evolution of Triple Play revenues
211.5 214.4
2Q11 2Q12
+1.4%
-3.0%-2.5%
-2.8%
-1.9%
-0.3%
-4%
-3%
-2%
-1%
0%
2Q11 3Q11 4Q11 1Q12 2Q12
14
ARPU Revenues Growth [2Q11 = Base 1]
14
Growth in underlying core ARPU revenues
ARPU Revenues split [%]
Basic ARPU revenue growth of 1.0%
Premium revenues down 12.5% yoy putting pressure on total revenues
Premium revenues now represent 15% of ARPU revenues down from 17% in 2Q11
0.80
0.85
0.90
0.95
1.00
1.05
2Q11 3Q11 4Q11 1Q12 2Q12
Total Basic Premium
-1.2%
+1.0%
-12.5%
83% 85%
17% 15%
2Q11 2Q12
Basic Revenues Premium Revenues
15 15
Solid Audiovisuals revenues performance;
Pressure on Cinema revenues
Cinema revenues affected by combination of:
• Macro pressure and consumer environment
• VAT increase (6% to 13%) on cinema tickets
Cinema Revenues [Millions of Euros]
Audiovisuals Revenues [Millions of Euros]
14.4
11.9
2Q11 2Q12
(17.2)%
17.7 17.6
2Q11 2Q12
(0.6)%
16 16
Costs savings materializing
Excluding proportionate consolidation of Angolan JV, OPEX fell by 2.1% to 130.2 million
euros
Consolidated Operating Costs Excluding
Angolan Operation [Millions of Euros]
132.9 130.2
2Q11 2Q12
(2.1)%
17 17
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) 2Q12 Δ % Drivers
Other Operating Costs 43.4 (4.8%)Excluding the impact of the consolidation of the African Operation, like for like Other Operating Costs would have decreased by 4.8%
thanks to important savings achieved in several General and Administrative areas, namely customer service, maintenance and repairs
Commercial Costs 14.0 15.2%Excluding the impact of the African Operation commercial costs would have increased by 15.2%, on the back of stronger commercial
activity for the entry level segment
W&S 14.5 0.7%
Direct Costs 58.3 (4.2%)
Excluding the effect of the proportionate consolidation of the African JV as from 1Q12, W&S like for like would have increased by just
0.7% in 2Q12
Excl. the impact of the consolidation of the African JV, like for like direct costs would have fallen by 4.2%, due to a reduction in
Programming Costs of 5.0%, due to the lower level of premium subscriptions, and to an increase in Broadband and Voice traffic
14.4 14.5
2Q11 2Q12
60.9 58.3
2Q11 2Q12
12.1 14.0
2Q11 2Q12
45.5 43.4
2Q11 2Q12
(4.8)%
+15.2%
(4.2)%
+0.7%
18 18
Improvement in core Triple Play EBITDA margin
Core Pay TV, Broadband and Voice margin grew by 0.5pp yoy to 39.0%
Group Margin remained relatively flat due to lower contribution from other domestic
businesses and consolidation of Angolan JV
Group EBITDA, EBITDA Margin [Millions of Euros, %]
Pay TV, Broadband and Voice EBITDA
and EBITDA Margin [Millions of Euros, %]
EBITDA Margin [%]
78.5 78.8
37.1% 36.8%
30%
31%
32%
33%
34%
35%
36%
37%
38%
39%
40%
30
40
50
60
70
80
90
2Q11 2Q12
+0.4%
73.7 74.5
38.5% 39.0%
30%
32%
34%
36%
38%
40%
42%
30
35
40
45
50
55
60
65
70
75
80
2Q11 2Q12
+1.1%
35.4%39.0%
34.3%36.8%
16.1%
12.9%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
Pay TV, BB and Voice Group Aud + Cin
19
Net Income [Millions of Euros]
Net Income Growth
9.29.7
2Q11 2Q12
+5.0%
(millions of euros) 2Q12 Δ % Drivers
Other Expenses (0.9) (7.3)%Other Expenses of 0.9 million euros, reflecting mainly curtailment charges incurred in related to the implementation of redundancy
programmes affecting 24 employees that will enable savings in W&S of 1 million euros on an annual basis
In 2Q11 ZON had a negative contribution from the consolidation of the Angolan Operation of 2.3 million euros, which does not appear in
this line anymore.
D&A somewhat lower at 51.5 million euros, compared with 53.3 million euros in 2Q11 although D&A is still relatively high due to the
significant accelerated CAPEX cycle of the 2008-2010 investment cycle
Effective P&L tax rate of 37%, well above the general corporate tax rate of 29.5%. In 2Q12, the tax line reflected a couple of one-off
effects, namely a correction in prior year tax incentive schemes accounted for and an impairment charge which is not deducted for tax
purposes
D&A (51.5) (3.3)%
Net Interest costs and other financial charges registered an increase of 13.9% led by a combination of higher average cost of debt and
financing charges as a result of refinancing secured
Income Taxes (5.8)
(10.7) 2.1%Net Financial Expenses
25.7%
20
Continued reduction of CAPEX to more normalized
levels as forecast
Total CAPEX [Millions of Euros]
Total CAPEX, Total CAPEX / Operating
Revenues [Millions of Euros, %]
CAPEX levels significantly down on previous years as forecast
CAPEX as percentage of total revenues at 12.9% in 2Q12, and at 14.5% as percentage
of Triple Play revenues, in line with the sector average for maintenance and still including
some growth related investment
19.5 17.3
12.1
7.7
2.2
2.7
1.7
35.5
27.7
2Q11 2Q12
Pay TV, BB and Voice Infr. Terminal Equipment
Other Baseline CAPEX Non-Recurrent CAPEX
(21.8)%
35.5
27.7
16.8%
12.9%
00%
05%
10%
15%
20%
25%
00
05
10
15
20
25
30
35
40
2Q11 2Q12
21
Strong improvement in OCF
Operating Cash Flow After Investment [Millions of Euros]
Strong improvement in OCF led by solid EBITDA performance, decline in CAPEX, and
lower Working Capital investment when compared with 2Q11
29.2 0.3
7.7
13.9 51.1
2Q11 ∆ EBITDA ∆ CAPEX ∆ Non-Cash Items and Working Capital
2Q12
+ 22.0 M €
22
Strong FCF generation cycle
Free Cash Flow [Millions of Euros]
(35.5)
(8.7)
3.4
(7.0)(2.0)
(15.1)
37.930.8
16.3
33.6
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
After the accelerated investment cycle between 2008 and 2010, ZON has entered a cycle
of strong Free Cash Flow generation, thanks to its good EBITDA performance and the
normalization of CAPEX levels
23 23
Solid Capital Structure,
2.1x Net Financial Debt / EBITDA
Change in Net Financial Debt [Millions of Euros]
660.4
0.6
49.8
2.4
8.8
5.4
0.0
51.1
644.6
2Q12
Other Items
Dividends Paid
Income TaxesPaid
Net Interest Paid
Long TermContracts
Non-Cash Itemsand Working
Capital
EBITDA-CAPEX
1Q12 Very successful retail bond issue:
200 million euros (158.8% oversubscribed)
Fixed rate of 6,85%
3 year maturity (2012/2015)
Net Financial Debt of 660.4 million euros on 2Q12
Net Financial Debt / EBITDA of 2.1x
Average cost of financing of 4.56% in 1H12
2.26 years of average maturity
24
Good operational performance of the core Triple Play business with
strong take-up of higher value-added bundles, IRIS
Despite slowdown of Premium subscriptions, optimization of cost
structure has enabled continued EBITDA growth
Excellent results of the African business, with EBITDA breakeven in
1Q12 and margin improvement in 2Q12
Strong FCF with good quarterly Cash Flow momentum
Wrap-up
Appendix Financial Highlights
Operational Highlights
26 26
Financial Highlights
(Millions of Euros) 2Q11 2Q12 ∆ y.o.y. 1H11 1H12 ∆ y.o.y.
Operating Revenues 211.5 214.4 1.4% 425.6 428.6 0.7%
Pay TV, Broadband and Voice 191.6 191.0 (0.3%) 387.2 382.8 (1.1%)
Audiovisuals 17.7 17.6 (0.6%) 34.7 34.7 (0.1%)
Cinema Exhibition 14.4 11.9 (17.2%) 28.0 23.7 (15.5%)
International - 7.3 n.a. - 13.7 n.a.
Other (12.2) (13.3) 8.8% (24.3) (26.3) 8.1%
EBITDA 78.5 78.8 0.4% 158.0 158.5 0.3%
EBITDA Margin 37.1% 36.8% (0.4)pp 37.1% 37.0% (0.2)pp
Pay TV, Broadband and Voice 73.7 74.5 1.1% 147.1 150.0 2.0%
EBITDA Margin 38.5% 39.0% 0.5pp 38.0% 39.2% 1.2pp
Cinema and Audiovisuals 4.8 3.8 (21.0%) 10.9 7.8 (29.1%)
EBITDA Margin 15.0% 12.9% (2.1)pp 17.4% 13.3% (4.2)pp
International - 0.6 n.a. - 0.7 n.a.
EBITDA Margin n.a. 7.8% n.a. n.a. 5.4% n.a.
Income from Operations 25.3 27.3 8.2% 49.2 51.0 3.7%
Net Income 9.2 9.7 5.0% 19.4 20.0 3.3%
CAPEX 35.5 27.7 (21.8%) 74.3 57.3 (22.8%)
EBITDA minus CAPEX 43.1 51.1 18.7% 83.8 101.2 20.8%
Net Financial Debt 706.8 660.4 (6.6%) 706.8 660.4 (6.6%)
CAPEX as % of Revenues 16.8% 12.9% (3.8)pp 17.4% 13.4% (4.1)pp
Net Financial Debt / EBITDA [x] 2.3x 2.1x n.a. 2.3x 2.1x n.a.
27 27
Operational Highlights
28
José Pedro Pereira da Costa
CFO
Maria João Carrapato
Head of Investor Relations
ZON Multimedia
Avenida 5 de Outubro, 208
1069-203 Lisboa, Portugal
Tel.: +351 21 782 47 25
Fax: +351 21 782 47 35
Operational Highlights