Transcript 3Q2003 Results - True Corporation

3Q2003 Results
Content

3Q2003 highlights

Financial summary

Focuses going forward

Appendix
2
3Q2003 highlights
Financial Results

Consolidated Revenue and EBITDA growth of 10 and 15
percent year to date, including TA Orange

TA Orange achieved EBITDA break-even for the first time
in September

High EBITDA maintained through ongoing cost control while
cash flows grew strongly

Balance sheet improved further with refinancing of existing
Thai Bank Baht loans
3
3Q2003 highlights (cont’d)
Operating Results

Fixed line subscribers declined due to acceleration in
disconnection process while ARPU stabilized

First co-operation among all fixed line operators to launch
a reduced fixed line tariff promotion to lift competitiveness

PCT net additions turned positive for the first time
in more than a year

Strong growth in Internet and broadband business

Involvement in high-potential on-line game business
4
Revenue and EBITDA growth with contribution
from TA Orange
Including TA Orange
3Q03
3Q02
2Q03
%YoY
%QoQ
9M03
9M02
%YoY
Revenue
6,775
6,512
7,047
4.0%
-3.9%
20,616
18,733
10.1%
EBITDA
2,805
2,397
2,929
17.0%
-4.2%
8,466
7,380
14.7%
NIOGO*
(1,208)
(336)
(1,114)
-259.3%
-8.4%
(3,453)
(281)
-1,128.5%
CF from Operation
1,963
(822)
1,939
338.8%
1.2%
4,674
2,385
96.0%
FCF
(773)
(1,002)
(2,157)
22.9%
64.2%
(4,066)
(4,184)
2.8%
* NIOGO represents net income (loss) from ongoing operations including share of loss in associates but
excluding non-recurring items.
5
Revenue and EBITDA declined slightly,
excluding TA Orange
Excluding TA Orange
3Q03
3Q02
2Q03
%YoY
%QoQ
9M03
9M02
%YoY
Revenue
5,641
5,779
5,769
- 2.4%
-2.2%
16,946
17,359
-2.4%
EBITDA
2,932
2,959
3,052
- 0.9%
-3.9%
8,919
9,095
-1.9%
NIOGO*
(396)
(224)
(295)
- 76.9%
-34.3%
(1,118)
(403)
-177.2%
CF from Operation
1,993
788
2,269
153.0%
-12.2%
5,606
4,531
23.7%
FCF
1,148
376
1,324
204.9%
-13.3%
3,494
2,359
48.1%
* NIOGO represents net income (loss) from ongoing operations including share of loss in associates but
excluding non-recurring items.
6
Revenue and EBITDA (stand-alone basis)
Non-Consolidated
3Q03
3Q02
2Q03
%YoY
%QoQ
9M03
9M02
%YoY
Revenue
4,970
5,138
5,148
- 3.3%
-3.5%
15,034
15,298
-1.7%
EBITDA
2,490
2,445
2,514
1.8%
-1.0%
7,430
7,362
0.9%
NIOGO*
(79)
62
(69)
NM
-14.3%
(295)
290
NM
1,590
575
2,030
176.7%
-21.7%
4,824
3,960
21.8%
928
253
1,226
266.7%
-24.3%
3,087
2,123
45.4%
CF from Operation
FCF
* NIOGO represents income (loss) from ongoing operations excluding share of loss in associates and
non-recurring items.
7
High EBITDA margin maintained through ongoing
cost control
EBITDA Margin
54.5%
51.6%
53.0%
52.9%
51.2%
49.0%
52.0%
Excluding TA Orange
Standalone
47.1%
47.9%
46.6%
49.3%
47.6%
48.8%
50.1%
43.8%
Including TA Orange
41.6%
41.4%
40.2%
35.9%
1Q02
2Q02
36.8%
34.3%
3Q02
4Q02
1Q03
2Q03
3Q03
8
Balance sheet improved further with refinancing of
Thai bank Baht loan
• The next step in TA’s ongoing effort to strengthen the balance sheet.
• The benefits from new loan facility;
– A reduction of about Bt200 million a year in interest cost and improvement in debt
servicing capacity with 3-year extention in maturity of loans to 2011.
– A greater operational flexibility with less restricted terms
Debt Service Schedule - TA Stand-Alone
THB million
Before Refinance
12,000
10,000
8,363
8,000
8,855
7,480
6,575
4,269
6,000
2,441
5,391
5,109
4,189
4,000
2,664
2,000
1,784
0
3,142
3,089
2,985
2,932
5,000
4,031
880
2003
157
157
157
2004
2005
2006
Thai Bank
2,929
1,575
4,094
5,039
3,464
2,180
2007
2008
2009
2010
2011
Others
Bef ore Ref inancing
9
Fixed line subscribers declined due to TelecomAsia
accelerating the disconnection process for line reutilization
Net Additions
Revenue - Fixed Line Telephone
THB Million
3,344
111,344
3,508
3,411 3,424
3,349
3,574
3,422
73,255
51,545
37,532
177
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
1Q02
2Q02
Revenue & ARPU - Public Telephone
THB million
6,852
600
4Q02
1Q03
2Q03
3Q03
Line Disconnection
Baht
7,000
6,164
6,104
555
6,004
5,763
500
6,958
3Q02
-13,306 -25,573
64,381
521
6,000
5,507
465
471
59,437
472
53,475
51,598
440
5,000
399
45,664 46,081
6,664
44,083
35,444
400
4,000
46,811
300
3,000
200
28,937
2,000
1Q02
2Q02
3Q02
Revenue
4Q02
1Q03
2Q03
3Q03
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
10
ARPU
Disconnected by TOT
Disconnected by TA
Fixed line ARPU continued stabilizing trend
ARPU Trends - Fixed Line Telephone
750
700
Bt
633
572
Revenue from call to mobile per line
Baht
546
685
662
%
657
650
35.1%
615
35%
603
600
579
564
24.9%
545
535
25%
500
20%
450
15%
400
1Q01
2Q01
3Q01
4Q01
1Q02 2Q02
3Q02
4Q02
1Q03
28.5%
30%
557
554
550
2000
31.1%
597
2Q03
32.5% 33.2% 33.3%
21.3%
26.2%
22.8%
150
158
154
33.7%
196
187
179
184
176
183
141
150
100
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03
ARPU
% Fixed Line Call to Mobile
Components of ARPU (Baht/Line)
579
78
165
597
10 76
185
10
564
66
179
7
554
62
184
10
557
535
57
176
9
59
196
8
545
54
7
Others
183
DLD
Mobile
228
225
211
200
167
10%
3Q03
250
200
192
192
198
99
100
100
97
101
102
102
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
Local
Rental
11
PCT net additions turned positive for the first time
in more than a year
Revenue - PCT
Net additions - PCT
Subscribers
THB Million
800
779
779
80,000
744
652
563
600
60,000
545
496
40,000
400
757
761
726
610
36,676
20,000
542
530
6,803
463
200
1,880
0
1Q02
0
1Q02
2Q02
3Q02
4Q02
Service
1Q03
2Q03
3Q03
Sale
3Q02
4Q02
1Q03
-20,000
2Q03
3Q03
-8,972
-28,290 -27,785
-40,000
-37,793
ARPU Trend - PCT
Baht
2Q02
% retention success
500
12,000
382
400
377
344
80%
70%
10,000
342
60%
306
8,000
291
50%
265
300
6,000
40%
30%
4,000
200
20%
2,000
10%
0
100
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
0%
Feb
Request
Mar
Apr
Retain
May
Jun
Jul
Disconnect
Aug
Sep
12
%Success
Strong growth in Internet and broadband business
Data/Internet/Broadband Revenue
THB Million
623
598
620
667
696
Internet Revenue
THB Million
686
134
518
110
71
56
55
50
37
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
Internet Subscribers
Subscribers
1Q02
2Q02
3Q02
4Q02
Subscribers
4,864
453,043
365,219
185,369
2Q02
1,646
3Q02
3Q03
8,205
7,313
5,230
2,376
785
1Q02
6,141
3,708
248,122
164,231
2Q03
Broadband Subscribers (ADSL + Cable Modem)
529,530
344,618
1Q03
4Q02
1Q03
2Q03
3Q03
1,920
1,064
4,081
2,840
1,508
861
856
868
868
783
911
892
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
TA Cable Modem
TA Express
13
Involvement in high-potential on- line game business
Reasons to enter

Significant market opportunity
– Many segments left untouched

Drive broadband usage growth

Stepping stone toward digital
content leader
The Market

Ragnarok creates profound impact to the
online game market in Thailand
– The first successful commercial
launch of online game
– 50,000concurrent users
– Estimated active subscribers of over
700,000
– Drew international and regulatory
attention

Estimated market size of 1billion in 2004

Regulatory concerns
– imposed time limit for players aged
under 18 years
TelecomAsia’s Strength

An Experienced Service Provider

A marketing engine

Own key infrastructures
14
Financial Summary
15
3Q2003 Income statements (excluding TA Orange)
Normalized Income Statements
Consolidated
THB millions
Revenues
Cash Operating Expense
Revenue sharing
EBITDA
Depreciation and amortization
Operating profit
3Q03
5,641
2Q03
5,769
3Q02
5,779
(2,709) (2,717) (2,819)
(871)
2,932
(910)
3,052
(918)
2,959
(2,333) (2,258) (2,162)
YoY
%
9M03
-2.2%
-2.4%
16,946
17,359
-2.4%
-0.3%
-3.9%
(8,028)
(8,264)
-2.9%
-4.3%
-5.1%
(2,652)
(2,699)
-1.7%
-3.9%
-0.9%
8,919
9,095
-1.9%
3.3%
7.9%
(6,857)
(6,388)
7.3%
2,062
2,707
0.1%
(2,847)
(2,685)
6.0%
(117)
-4.1%
QoQ
%
9M02
YoY
%
599
794
797
(895)
(985)
(894)
(39)
(35)
(17)
12.8% 128.4%
(112)
(335)
(225)
(114)
-48.8% -193.8%
(898)
(61)
(70)
(110)
Net income from continuing operations
(396)
(295)
(224)
Non recurring items & others
(282)
277
(1,204)
NM
76.6%
95
(6,391)
NM
(308)
270
(1,327)
NM
76.8%
46
(274)
NM
Net profit (loss)
(678)
(18) (1,428) -3703.5%
52.5%
(1,023)
(6,794)
84.9%
EBITDA margin
52.0%
-93 bps +76 bps
52.6%
Interest expense û net
Tax
Income from continuing operations
Share of losses in associates
Gain ( loss ) on foreign exchange
52.9%
51.2%
-24.6% -24.9%
-9.1%
44.3%
(221)
-34.3% -76.9%
(1,118)
12.5%
-23.8%
(95) -846.4%
(309)
28.5%
(403) -177.2%
52.4% +24 bps
16
Revenue and EBITDA trend
Revenues
EBITDA
Excluding TA Orange
THB millions
THB millions
3,500
60%
54.5%
51.6%
6,100
51.2%
5,481
5,687
5,536
5,769
52.9%
52.0%
47.1%
5,641
5,779
53.0%
50%
3,000
40%
2,500
2,988
3,148
2,959
2,934
3,052
30%
2,932
2,678
20%
2,000
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
10%
1Q02
2Q02
3Q02
4Q02
EBITDA
1Q03
2Q03
3Q03
EBIDA Margin
Including TA Orange
THB millions
THB millions
7,050
6,629
6,512
3,500
7,047
6,794
6,775
60%
46.6%
3,000
5,592
50%
40.2% 41.6% 41.4%
35.9% 36.8%
40%
34.3%
30%
2,500
2,929
2,731
2,603
2,380
2,397
2,805
20%
2,418
2,000
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
10%
1Q02
2Q02
3Q02
EBITDA
4Q02
1Q03
2Q03
3Q03
EBITDA Margin
17
Operating Expense trend
Operating Expenses (including TA Orange)
Operating Expenses (excluding TA Orange)
THB million
THB million
50%
12,000
10,000
34.7%
37.4%
40.5% 40.8%
8,000
6,415
6,000
5,105
4,000
2,116
2,000
2,989
2,167
6,540
2,425
7,201
2,569
36.9% 36.0% 36.2%
6,713
2,650
6,906
2,788
6,807
2,837
40%
4,248
4,115
4,632
4,063
4,118
3,970
50%
10,000
8,000
35.8%
29.1%
6,000
20%
10%
0%
3Q02 4Q02 1Q03 2Q03
Depreciation
Cash Opex
Core Opex as A % of Rev.
3Q03
40%
29.7%
30.5%
30.5%
30%
4,584
2,091
5,219
5,087
4,981
2,135
2,162
2,210
2,952
2,819
3,009
4,867
4,975
5,042
2,266
2,258
2,333
2,601
2,717
2,709
20%
10%
2,000
2,493
2Q02
30.3%
31.8%
30%
4,000
0
1Q02
12,000
0
0%
1Q02
2Q02
3Q02 4Q02 1Q03 2Q03
Depreciation
Cash Opex
Core Opex as A % of Rev.
3Q03
18
Core wireline and data approached break-even point
Revenues
EBITDA & EBITDA Margin
THB millions
THB millions
5,245
4,914
5,138
5,022
4,915
5,148
4,970
4,000
3,000
49.0%
49.3%
47.9% 47.6%
48.8%
50.1%
50.0%
43.8%
40.0%
2,510
2,406
2,445
2,201
2,426
2,514
2,490
30.0%
2,000
20.0%
1,000
10.0%
0
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
0.0%
1Q02
2Q02
3Q02
EBITDA
4Q02
1Q03
2Q03
3Q03
Margin
NIOGO (Stand-Alone Basis)
THB millions
1Q02
2Q02
3Q02
86
142
62
Excl. share of gain (loss)
in subsidiaries and affiliates
& non recurring items (on
stand-alone basis)
4Q02
1Q03
-148
2Q03
3Q03
-69
-79
-348
19
Transformed balance sheet and cash flows
(excluding TA Orange)
Net Debt/EBITDA
EBITDA/Interest Coverage
10.0x
7.3x
6.5x
3.2x
3.3x
2002
3Q03
2.2x
5.2x
4.9x
1.7x
1.3x
1999
2000
2001
2002
3Q03
1999
2000
Cash Flow from Operations
THB millions
7,567
2001
Free Cash Flow
7,475
THB millions
6,000
6,000
4,682
4,464
4,000
4,000
3,229
5,606
2,000
4,659
1,353
1,534
2,000
1,810
3,494
75
0
0
1999
2000
2001
2002
9M03
1999
9M03 represents
annualized figures
2000
2001
2002
9M03
20
TA Orange contribution
Revenue
1,436
THB millions
1,310
1,301
491
1,176
154
176
1,147
1,134
1,092
1Q03
2Q03
3Q03
84
767
575
287
132
945
297
93
40
1Q02
480
278
2Q02
3Q02
Service
4Q02
Handset Sales
EBITDA
Net Profit *
THB millions
1Q02
THB millions
2Q02
3Q02
4Q02
-204
-375
1Q03
2Q03
-122
-154
3Q03
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
-98
-388
-547
-658
-657
-740
-728
-794
-742
-877
* Before amortization of negative goodwill
21
Focus Going Forward
22
Focus going forward
• Maximizing group synergies and market strengthening through re- branding will be top
priorities in 2004
Fixed line telephone
–
–
–
Reduce operating cost
Rapidly grow high-margin services to generate
new revenue streams
Customer retention and churn management
Home / Customer
Solution
Wireless
–
–
–
–
Focus on high-value customer and prepaid
Best network
Improve ARPU with value-added services
Execute PCT revitalization plan
Office / SME Solution
& Wireless Access
Data/Broadband/Internet
–
–
–
–
Build on No. 1 broadband position
Expand ADSL market
Increase involvement in on-line game market
Increase revenue contribution
Corporate Solution
& Data
23
3Q2003 Analysts Conference
November 12, 2003