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9 NOVEMBER 2012
3Q12
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
Resilience of Pay TV, Broadband and Voice revenues
“ZAP” continues to post very positive quarter on quarter growth, reaching Net Income breakeven ahead of schedule
Strong improvement of EBITDA-CAPEX driven by the stable performance of EBITDA and the decrease of CAPEX, as forecast
For the 2nd consecutive year, ZON ranked Best Quality of Service in TV and Broadband by ANACOM versus its largest competitor
The best performing Portuguese company at USA Contact Center World awards: 2 Gold and 2 Silver medals
Leading in innovation with the launch of “Timewarp”
3
3Q12 Highlights
ZON has the best 3P value proposition driven by
IRIS’ innovative, unique features with outstanding
customer feedback and leading broadband
speeds
IRIS – The most advanced features
Over 70 channels for up
to 2 hours
Free RESTART TV Free ZON ONLINE
Television on the PC,
iPad and iPhone
Personalized
Profiles, configure
premium channels,
videoclub and packages
whenever you like
Quick and easy to find
navigation
Advanced Search
Simultaneously record
entire series and
programmes
Advanced recording FREE APPS
Interactive TV APPS The largest and best
HD content offer (43
channels)
HD
Share your
preferences and
your friends’, using
the UI
VOD
The largest offer with
the most recent movies
Network PVR 7 days with
simplified record
management
Free TIMEWARP
5
6
IRIS – The Best 3P product in the market
Why choosing IRIS over any other 3P bundle?
1) Only award winning interface for its design and usability
2) Most advanced cloud-based TV solution with innovative and
unique TV features like Timewarp
3) Broadband with 100Mb/s – several times more than ADSL
4) Access to 500,000 hotspots free Wi-FI – by far the largest
network in Portugal
5) Largest number of HD channels in the market
6) Largest VOD library with over 10,000 titles
7) Unlimited calls including 50 countries
8) Watch content on Smartphone, Tablet and PC
6
IRIS – The Best TV Experience
7
8
IRIS – Timewarp is a unique feature
“Choice no
longer depends
on time of day
but on what I
want to watch”
“I only
watch
what I
want”
“I have more
freedom to
watch TV, no
time
restrictions”
“Timewarp is fantastic
and watching TV is cool
again
“The new
way to
record TV”
“I can watch
programmes
recommended
by friends and
colleagues,
after they
were shown
on TV”
“I don’t have to worry
about missing a
programme as I have 7
days to go back and
watch it”
What our customers are saying
8
9
IRIS – The Best TV Experience extended to all
devices
Live TV
Restart TV for 36 channels (PC)
Videoclub rental and viewing (PC)
Schedule recording to watch later on TV
Navigate full EPG
Intelligent search for content
ZON Online - Available on the PC, iPad and iPhone for all IRIS customers
9
10
Free Wi-Fi access to 500,000 hotspots in Portugal, 7 million worldwide
Free for ZON Broadband customers
On a monthly basis, 23% of Broadband customers used the service with an average of
2 sessions per day per user and 69% of hotspots generated traffic
Leading Innovation in Broadband and Voice The largest Wi-Fi network in Portugal
10
11
Unlimited fixed voice calls to 50 countries,
nights and weekends
ZON PHONE APP – Fixed calls from anywhere in
the world using your home phone number and
tariff plan, over a Wi-Fi network
Fixed phone voice messages can be accessed
away from home over a computer
Dual number acount allowing more than one
phone number per household
Leading Innovation in Broadband and Voice Putting Fixed Voice back on the map
11
3Q12
Operating Review
751.7 thousand Triple Play customers, up 9.1% yoy
193 thousand IRIS customers, 16% of cable customer base, 31.4k net adds in 3Q12 13
Good Triple Play take-up
High take-up of high-end IRIS bundles continues
Triple Play Customers and Penetration of Cable
Base [Thousands, %]
IRIS customers and Penetration of Cable Base [Thousands, %]
603.5688.8
751.7
51.9%
59.3%
62.4%
30%
50%
70%
90%
110%
130%
150%
00
100
200
300
400
500
600
700
800
3Q10 3Q11 3Q12
Net Adds
[Thousands]
28.346.2
65.0
97.0118.9
161.5
193.0
2.4%4.0%
5.6%8.2%
9.9%
13.3%16.0%
00%
05%
10%
15%
20%
25%
30%
00
50
100
150
200
250
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
28.3 17.9 18.8 32.1 21.9 42.6 31.4
766.2 thousand Broadband subs
63.6% penetration of customer base
57% offers greater than 20 Mbps
and 38% higher or equal to 30 Mbps
14
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]
960.2 thousand Fixed Voice subs
77.9% penetration of cable customer
base
666.4725.0
766.2
57.3%
62.4% 63.6%
30%
35%
40%
45%
50%
55%
60%
65%
70%
200
300
400
500
600
700
800
3Q10 3Q11 3Q12
732.3844.0
960.2
61.7%
70.7%
77.9%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
00
200
400
600
800
1,000
3Q10 3Q11 3Q12
Basic ARPU from core TV, BB and Voice
services decreased 3% yoy
Adjusting for the impact of entry level
offers, basic ARPU would have remained
nearly flat – a 0.9% decrease
Success of lower ARPU, entry level,
offers and continued pressure from
discretionary premium ARPU (-14.3%) led
to decline in Blended ARPU of 4.8%
≈ 50 thousand new entry-level customers
between 3Q11 and 3Q12, due to
analogue switch-off
15
ARPU under pressure from less premium channel
subscriptions
Basic, Premium and Blended ARPU [3Q11 = Base 1]
-4.8%
-3.0%
-14.3%
0.80
0.85
0.90
0.95
1.00
1.05
1.10
3Q11 4Q11 1Q12 2Q12 3Q12
Blended ARPU Basic ARPU Premium ARPU
Cinema Exhibition: 3Q12 performance improvement,
above the remainder of the market
Source: ZON, ICA
Cinema tickets sold and revenue per ticket [Thousands, Euros]
3Q12 Performance of Gross Revenues and Attendance
[%]
Average revenue per ticket: -3.9% in 3Q12
Cinema Exhibition gross revenues were up 2.9% in 3Q12, with the market as a whole
growing by 0.4% yoy
16
2.9%
0.5%0.4%
-3.2%
Gross Revenue Attendance
ZON Market
2,372 2,260
1,725 1,714
2,383
5.1
4.8 4.84.9
4.9
04
05
05
05
05
05
05
05
05
05
05
0
500
1000
1500
2000
2500
3000
3Q11 4Q11 1Q12 2Q12 3Q12
Source: ZON, ICA
17 17
ZON Audiovisuais:
Reinforcing leadership in Cinema Distribution
Cinema Gross Revenues by Distributor - Market Share 3Q12 [%]
ZON distributed 7 of the Top 10 movies
shown in cinemas in Portugal in 9M12
63.6% market share of cinema
distribution gross revenues in 3Q12
Sale of content rights to FTA channel
operators pressured by the cutbacks on
their programming grids
ZON63.6%
Columbia17.7%
Big Picture 2
14.1%
Others4.7%
18
ZAP – strong performance, above expectations
Very strong operational performance
EBITDA breakeven reached in 1Q12
Net Income breakeven reached in 3Q12, ahead of schedule
ZAP Customers
3Q11 4Q11 1Q12 2Q12 3Q12
19
ZAP’s success is based on (1): more advanced
technology, strong local presence...
ZAP has the most advanced set-top-boxes in the market: Zapper HD+DVR, Zapper
HD+ and Zapper SD
Strong local presence:
o Angolan company, with a local team of 260 people
o In Angola, 10 own stores, 200 door-to-door salespeople, 610 agents, call-centre
20
ZAP’s success is based on (2): ...more Portuguese
content, strong investment in marketing
ZAP offers more Portuguese-spoken content, for all pockets, and is supplied by the
major national and international content suppliers:
o ZAP Mini: 40 channels, 21 of which in Portuguese 15 USD / month
o ZAP Maxi: 86 channels, 42 of which in Portuguese 30 USD / month
o ZAP Premium: 117 channels, 61 of which in Portuguese 60 USD / month
Strong investment in marketing and communication, locally developed, turning ZAP
into one of the most recognized brands in the Angolan market
3Q12
Financial Performance
22 22
Solid revenue performance
Consolidated Operating Revenues [Millions of Euros]
Positive consolidated revenue performance yoy: +0.8%
African JV (30%) reaching revenues of 9.1 million euros in 3Q12
213.7 215.3
3Q11 3Q12
+0.8% +0.7%
639.2 643.9
9M11 9M12
23 23
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 3.2% yoy in 3Q12 and 1.8% in 9M12, in a
very challenging macroeconomic context
191.4 185.4
3Q11 3Q12
(3.2)%
578.6568.2
9M11 9M12
(1.8)%
24
ARPU Revenues Growth [3Q11 = Base 1]
24
Growth in underlying core ARPU revenues
ARPU Revenues split [%]
Basic ARPU revenue decrease of 1.5%
Premium revenues down 13% yoy putting pressure on total revenues
Premium revenues now represent 14% of ARPU revenues down from 16% in 3Q11
-3.3%
-1.5%
-13.0%
0.80
0.85
0.90
0.95
1.00
1.05
3Q11 4Q11 1Q12 2Q12 3Q12
Total Basic Premium
84% 86%
16% 14%
3Q11 3Q12
Basic Revenues Premium Revenues
25 25
Audiovisuals and Cinema revenues: performance
ahead of the market
Despite the difficult macroeconomic environment placing pressure on the number of
spectators, the more appealing films exhibited during 3Q12 enabled an improvement in
revenue trends
The Audiovisuals business was negatively affected by the reduction in sales to FTA
channel operators, who have been cutting back on their programming grids
Cinema Revenues [Millions of Euros]
Audiovisuals Revenues [Millions of Euros]
16.5 16.2
3Q11 3Q12
17.6
15.7
3Q11 3Q12
(2.1)% (10.7)%
52.3 50.4
9M11 9M12
(3.7)%
44.5
39.9
9M11 9M12
(10.5)%
26 26
Costs savings materializing
Excluding proportionate consolidation of Angolan JV, OPEX fell by 3.1% to 129.9 million
euros in 3Q12 and to 389.3 million euros in 9M12
Consolidated Operating Costs Excluding African Operation [Millions of Euros]
134.1129.9
3Q11 3Q12
(3.1)%
401.6 389.3
9M11 9M12
(3.1)%
27
15.3 14.3
3Q11 3Q12
27
Operating Costs excluding African Operation [Millions of Euros]
Cost savings materializing
W&S Direct Costs Commercial
Costs
Other Op.
Costs
(6.7)% 61.2 61.2
3Q11 3Q12
+0.0%
13.1 13.0
3Q11 3Q12
(0.8)% 44.541.4
3Q11 3Q12
(7.0)%
Operating Costs ex Africa
(millions of euros) 3Q12 Δ % Drivers
Other Operating Costs 41.4 (7.0%)
Excluding the costs from consolidation of the African JV, other operating costs fell by 7% 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
(6.7%)
Direct Costs 61.2 0.0%
The decline in W&S is explained mostly by a reduction in the average number of employees of 5.4%, which occurred mostly within the
cinema division on the back of the weaker operating environment as discussed earlier in this report, and of an ongoing process of
optimization of the number of employees per multiplex
Excluding the impact of the consolidation of the African Operation, Direct Costs would have remained flat, due to a combination of
higher Programming costs related to the UEFA Euro 2012, higher royalty fees paid for Cinema Distribution on the back of a stronger
3Q12 and lower telecom costs due to efforts to optimize the use of telecom infrastructure
Commercial Costs 13.0 (0.8%) Excluding the impact of the African Operation, commercial costs would have decreased by 0.8%
W&S 14.3
28 28
Improvement in core Pay TV, BB and Voice EBITDA
margin
Core Pay TV, Broadband and Voice margin grew by 1.5pp yoy to 39.9%
Group Margin remained relatively flat due to lower contribution from other domestic
businesses and consolidation of Angolan JV, whose contribution was already remarkable
Group EBITDA, EBITDA Margin [Millions of Euros, %]
Pay TV, Broadband and Voice EBITDA
and EBITDA Margin [Millions of Euros, %]
EBITDA Margin [%]
79.6 79.7
37.2% 37.0%
30%
31%
32%
33%
34%
35%
36%
37%
38%
39%
40%
30
40
50
60
70
80
90
3Q11 3Q12
+0.2%
73.6 74.0
38.4%
39.9%
30%
32%
34%
36%
38%
40%
42%
30
35
40
45
50
55
60
65
70
75
80
3Q11 3Q12
+0.6%
35.3%39.9%
34.3%37.0%
17.1%
11.2%
2.6%
23.5%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Pay TV, BB and Voice Group Aud + Cin International
29
Net Income [Millions of Euros]
Net Income Growth
9.19.6
3Q11 3Q12
+5.1%
(millions of euros) 3Q12 Δ % Drivers
In 3Q11 ZON had a negative contribution from the consolidation of the African Operation of 2.0 million euros, which does not appear in this
line anymore. For comparative purposes, the equivalent impact for 3Q12 was a positive contribution at the EBT level of 0.7 million euros,
with 3Q12 thus representing the first quarter of break even at the Net Income level for the African Operation
D&A somewhat lower at 52.6 million euros, compared with 55.5 million euros in 3Q11 although D&A is still relatively high due to the
significant accelerated CAPEX cycle of the 2008-2010 investment cycleD&A 52.6 (5.1)%
Income Taxes 5.8 46.8%
Income Taxes in 3Q12 were 5.8 million euros representing an effective P&L tax rate of 36.9%, above the general corporate tax rate of
29.5% due to a few one-off corrections in 3Q12. The accumulated tax rate for 9M12 is 34.7%, in line with expectations for the effective tax
rate for FY12
Net Financial Expenses 11.9 13.4%
Net Interest costs and other financial charges registered an increase of 41% led by a combination of higher average cost of debt and
financing charges as a result of refinancing secured
28.5 29.6
9M11 9M12
+3.9%
30
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 total revenues at 11.7% in 3Q12, and at 13.6% as percentage
of Pay TV, BB and Voice revenues, in line with the sector average for maintenance and still
including some growth related investment
19.915.9
10.3
6.6
1.4
2.7
3.4
35.1
25.2
3Q11 3Q12
Pay TV, BB and Voice Infr. Terminal Equipment
Other Baseline CAPEX Non-Recurrent CAPEX
(28.1)%
109.3
82.518.9%
14.5%
00%
05%
10%
15%
20%
25%
00
20
40
60
80
100
120
9M11 9M12
(24.5)%
31
Strong improvement in OCF
EBITDA - CAPEX [Millions of Euros]
Strong improvement in EBITDA-CAPEX led by solid EBITDA performance and the decline
in CAPEX, as forecast
44.5
33.1
50.1 51.154.5
3Q11 4Q11 1Q12 2Q12 3Q12
+22.6%
32 32
Solid Capital Structure,
2.1x Net Financial Debt / EBITDA
Change in Net Financial Debt [Millions of Euros]
Net Financial Debt of 650.5 million euros on 3Q12
Net Financial Debt / EBITDA of 2.1x
Average cost of financing of 4.87% in 9M12
2.01 years of average maturity
650.5
0.5
8.4
9.9
6.2
20.6
54.5
660.4
3Q12
Other Items
Income TaxesPaid
Net Interest Paid
Long TermContracts
Non-Cash Itemsand Working
Capital
EBITDA-CAPEX
2Q12
33
Good operational performance of the core Triple Play business with
strong take-up of higher value-added bundles, IRIS, despite
continued pressure in premium channel subscriptions;
Leading in innovation: the first operator in the World to launch the 7-
day recording functionality: Timewarp;
Strong growth in ZAP, generating revenues of 9.1 million euros (30%)
and an EBITDA margin of 23.5% in 3Q12;
EBITDA-CAPEX growing as forecast – focus on Cash Flow
improvement.
Wrap-up
Appendix Financial Highlights
Operational Highlights
35 35
Financial Highlights
(Millions of Euros) 3Q11 3Q12 ∆ y.o.y. 9M11 9M12 ∆ y.o.y.
Operating Revenues 213.7 215.3 0.8% 639.2 643.9 0.7%
Pay TV, Broadband and Voice 191.4 185.4 (3.2%) 578.6 568.2 (1.8%)
Audiovisuals 17.6 15.7 (10.7%) 52.3 50.4 (3.7%)
Cinema Exhibition 16.5 16.2 (2.1%) 44.5 39.9 (10.5%)
International - 9.1 n.a. - 22.8 n.a.
Other (11.9) (11.1) (7.0%) (36.3) (37.4) 3.2%
EBITDA 79.6 79.7 0.2% 237.6 238.2 0.3%
EBITDA Margin 37.2% 37.0% (0.2)pp 37.2% 37.0% (0.2)pp
Pay TV, Broadband and Voice 73.6 74.0 0.6% 220.1 223.6 1.6%
EBITDA Margin 38.4% 39.9% 1.5pp 38.0% 39.3% 1.3pp
Cinema and Audiovisuals 6.0 3.6 (40.4%) 17.5 11.8 (32.8%)
EBITDA Margin 17.6% 11.2% (6.4)pp 18.1% 13.0% (5.0)pp
International - 2.1 n.a. - 2.9 n.a.
EBITDA Margin n.a. 23.5% n.a. n.a. 12.6% n.a.
Income from Operations 24.1 27.1 12.4% 73.3 78.2 6.6%
Net Income 9.1 9.6 5.1% 28.5 29.6 3.9%
CAPEX 35.1 25.2 (28.1%) 109.3 82.5 (24.5%)
EBITDA minus CAPEX 44.5 54.5 22.6% 128.3 155.7 21.4%
Net Financial Debt 668.3 650.5 (2.7%) 668.3 650.5 (2.7%)
CAPEX as % of Revenues 16.4% 11.7% (4.7)pp 17.1% 12.8% (4.3)pp
Net Financial Debt / EBITDA [x] 2.1x 2.1x n.a. 2.1x 2.1x n.a.
36 36
Operational Highlights
Note: Figures refer to Portuguese Operations
37
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
