Transcript Agenda

August 19, 2002
First Half 2002
Investor Presentation
First half 2002 highlights
 Strong 2Q 2002 results
–
–
Revenue growth 20%
EBITDA growth 26.5%
 EBITDA margin above 50% and rising
 Consolidated net income before non-recurring items approaching break even
 Highest billable subscribers in competitive markets
–
3.5 million plus owned customers, largest in Thailand
 Transforming balance sheet
–
THB bond offering and recapitalization imminent
 TA Orange progressing rapidly
2
Agenda
 TA operational highlights
 Financial highlights
 Balance sheet management: Refinancing/recapitalization
 TA Orange
3
TA has achieved robust subscriber growth in highly
competitive market conditions
1H02 subscriber growth





1.9 million billable fixed lines
– 16% growth from Jun-01
– Highest ever net additions in 1H02
670k billable PCT lines
– 48% growth from Jun-01
Billable fixed lines – net additions
Thousands
190
139
61
63
1H00
2H00
78
6,000 new payphones added in 2Q02
Rapid growth in customers for other
businesses in 1H
– DDN bandwidth multiplied threefold in
1H02 to 7,416 kbps
– Internet subscribers increased 19%
to 185k (prepaid+postpaid)
– UBC subscribers increased 15,202
(4%) to 421,791
TA Orange had 642k subscribers (Jul-02)
1H01
2H01
1H02
PCT net additions
Thousands
174
119
81
60
1H00
2H00
1H01
43
2H01
1H02
4
TA now has the largest base of billed customers, the
highest cross-selling opportunities
Billable customers – June 2002
Thousands
3,483
422
UBC
405
Cellular
55
Data/Internet
670
PCT
1,932
Fixed
TA
Source: Companies. TT&T data for 2002 if for May 2002
5
Fixed line and PCT ARPU are stabilizing

Fixed line revenue trend (excl. installation
and international call revenues) over last 4
quarters (as percent of fixed line revenue)
– Subscription fee stable at 16%-17%
– DLD revenue has fallen from 14% to
13% (18% in 1Q01)
– Revenue from calls to mobile has
increased from 25% to 31%
– Revenue from local call has fallen from
43% to 38%
Fixed line monthly ARPU (revenue per line)
THB
657
615
603
579
2Q01
3Q01
4Q01
1Q02
597
2Q02
PCT monthly ARPU (revenue per line)

PCT revenue trend (excl. installation and
international call revenues) over last 4
quarters
– Subscription fee has fallen from 43% to
35%
– DLD revenue stable at 3%-4%
– Revenue from calls to mobile has
increased from 23% to 32%
– Revenue from local call has remained
stable at 30%
THB
458
2Q01
443
3Q01
410
4Q01
382
377
1Q02
2Q02
PCT monthly ARPU applies only to TA subscribers
6
Significant increase in revenue from calls to mobile
has been key driving force for stabilizing ARPU

Fixed line call to mobile per line grew 25%
Y-o-Y and 12% Q-o-Q in 2Q02
Fixed line call to mobile per line per month
THB
187
141
1Q01

PCT call to mobile per line grew 32% Y-o-Y
and 11%Q-o-Q in 2Q02
150
154
159
2Q01
3Q01
4Q01
167
1Q02
2Q02
PCT call to mobile per line per month
THB
121
109
91
92
1Q01
2Q01
102
104
3Q01
4Q01
1Q02
2Q02
PCT monthly ARPU applies only to TA subscribers
7
Other businesses are growing strongly
Payphone revenue
23% G
THB millions
DDN revenue
182% G
THB millions
560
839
681
199
1H01
1H02
Internet revenue
1H01
57% G
THB millions
PCT service revenue
1H01
16% G
THB millions
105
67
1H02
1,517
1,311
1H02
1H01
1H02
8
Agenda
 TA operational highlights
 Financial highlights
 Balance sheet management: Refinancing/recapitalization
 TA Orange
9
1H02 income statement summary
Excluding BITCO
THB millions
1H02
1H01
% chg.
Revenues
11,578
10,070
15
Cash operating expense
(5,457)
(5,020)
9
6,120
5,050
21
(4,226)
(3,870)
9
1,895
1,181
60
(1,797)
(2,577)
(30)
(100)
(34)
(193)
(2)
(1,431)
100
Share of losses in associates
(199)
(534)
63
Net income from continuing operation
(201)
(1,965)
90
(5,162)
(696)
(641)
(3)
12
(124)
(5,366)
(2,649)
(103)
EBITDA
Depreciation and amortization
Operating profit
Interest expense – net
Tax
Income from continuing operations
Non recurring items
Minority interests
Net profit (loss)
* Normalized figures
10
1H02 revenues have increased significantly




Revenue back to the high growth trend
Half yearly consolidated revenue
THB millions
Revenue growth over 1H01
– With BITCO
– Without BITCO
With BITCO
21%
15%
Revenue growth without product sales over
1H01
– With BITCO
19%
– Without BITCO
17%
W/o BITCO
12.2
11.6
10.3
10.6
10.0
9.0
Key components of revenue growth
– Basic fixed line
4%
– Payphone
23%
– PCT service
16%
– Data (DDN)
182%
1H00
2H00
1H01
2H01
1H02
11
Strong growth in EBITDA and EBITDA margin

Consolidated EBITDA growth over 1H01
– With BITCO
-2%
– Without BITCO
21%
Half yearly consolidated EBITDA
THB billions
4.8
With BITCO
W/o BITCO
4.7
6.1
5.2
5.1
5.0
4.0


Consolidated EBITDA without product sales
over 1H01
– With BITCO
1%
– Without BITCO
17%
Key components of strong EBITDA growth
– Strong revenue growth
– EBITDA margin > 50% and rising
1H00
2H00
1H01
With BITCO
53%
W/o BITCO
50%
53%
50%
38%
EBITDA Margin over 1H01
– With product sales
– Without product sales
1H02
Half yearly consolidated EBITDA margin
46%

2H01
41%
+270bp
+ 40bp
1H00
2H00
1H01
2H01
1H02
12
Consolidated net income before non-recurring items
approaching break even
Normalized net income (loss) from ongoing operations - excl. BITCO
THB millions
(52)
(149)
(415)
(693)
(916)
(1,031)
(1,222) (1,242)
(1,241)
(1,166)
(1,222)
(1,411)
(1,746) (1,735)
1Q99
2Q99
3Q99 4Q99
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01 3Q01
4Q01
1Q02 2Q02
* Including UBC but excluding all non-recurring items (FX, other income/loss, gain on sale of investment, gain from debt restructuring,
out-of-period accounting adjustments)
13
Operating cash flows have grown rapidly
Consolidated operating cash flows
THB billions
With BITCO
3.7
W/o BITCO
3.2
2.5
2.0
1.9
1.4
1H00
1.8
2H00
1H01
2H01
1H02
Operating cash flows are after interest and tax payments, but before debt repayments and new debt draw downs, if any
14
Balance sheet movements have been small
Summary balance sheet - Excluding BITCO
June 30, 2002
Dec 31, 2001
Cash and equivalents
6.3
5.6
Other current assets
9.0
9.0
57.1
59.9
9.7
10.6
82.1
85.1
1.3
1.7
70.6
73.6
Other non-current liabilities (ex-debt)
5.1
3.8
Shareholders’ equity
5.1
6.0
82.1
85.1
THB billions
Fixed assets
Other non-current assets
Total assets
Current liabilities (ex-debt)
Debt
Total liabilities and shareholders’ equity
15
Results - actual vs. target ( excl BITCO)
2002 % G
2002 % G
(target) (revised target)
1H02(A)
1H01(A)
% G(A)
Revenue (MB)
11,578
10,070
15
7-10
12-15
EBITDA (MB)
6,120
5,050
21
10-14
17-21
CAPEX (MB)
1,761
1,345
31
+/-10
Headcount (persons)
5,449
5,510
(1)
2
16
Agenda
 TA operational highlights
 Financial highlights
 Balance sheet management: Refinancing/recapitalization
 TA Orange
17
The THB debenture is to be issued to refinance all US
Dollar denominated loans
Debt reduction plan
 Debenture to be issued in October 2002 to retire all secured U.S. dollar
denominated loans of US$531 million
 U.S. dollar exposure will be eliminated
 Debt repayment burden will be reduced in 2005 onwards
 Extend the repayment for part of the debt by approximately another 2.5 years
 Blended interest rate post debenture issuance will be approximately 6.9%
18
Recapitalization plan has been proposed; key details
of the plan
Debt reduction plan
 Up to THB6.2 billion
 Rights offering
–
–
1 new share issued for 6 existing shares, total 539 million shares
Priced at THB6.5 per share, THB3.5 billion total proceeds
 Remaining amount to be raised through bookbuilt private placement
 CP has indicated commitment to take up unsubscribed rights and invest up to
THB3 billion
 Creditor and shareholder approvals required
 To be completed in October 2002
19
Goals of the recapitalization
 Raise equity to
–
–
Strengthen balance sheet
• Reduce debt on favorable terms
Invest in TA Orange
20
Debt level will be significantly reduced post
recapitalization plan
Debt reduction plan
 Use approximately THB3.1 billion from the recapitalization and proceeds from the
sale of some non-core assets
 Debt reduction will be effected at TA, Telecom Holdings and PCT company totaling
THB15 billion (20% of outstanding debt as of Dec 31, 2001)
– THB4 billion prepayment and scheduled repayment
– THB6 billion debt discounts
– Aggregated debt reduction of THB5 billion at TA and TH level
 D/EBITDA will decrease from 7.6x (2001) to 4.5x to 5x in 2002
 Gains from discount will be largely offset against 1997 tax-loss carry-forwards
(expiring in 2002)
 Subject to creditor consents
21
Investment in TA Orange – details
 TA Orange plans THB6 billion capital increase @THB10 per share
–
Present capital is THB15 billion
 TA proposes to take-up 51%
 TA shareholding in TA Orange will increase from 41% to 44%, CP shareholding will
fall from 10% to 7%
22
Agenda
 TA operational highlights
 Financial highlights
 Balance sheet management: refinancing/recapitalization
 TA Orange
23
TA Orange has been launched successfully
 503,000 subscribers end June 2002
–
–
–
Fastest ever GSM network to 0.5 million subscribers.
80% postpaid, 20% prepaid.
50% of sales through controlled channels.
 High quality network
–
–
–
100% network coverage BMA, 60% national coverage (62/76 provinces)
EFR implemented
On target for 90% population coverage by year-end.
 Enthusiastic reception for the Orange brand.
–
–
Brand awareness 89%, 2 months after launch
Award-winning advertising campaigns
 Real product innovation
–
–
–
–
–
Thai SMS
Per second billing
“Just Talk” everyday bonus
Full choice number selection
MMS successfully demonstrated
24
TA Orange vision
 The Thai mobile market will continue to expand, driven by increased competition,
improving network coverage and quality, and innovative products:
–
–
Mobile penetration rates will exceed 50% by 2005.
The Thai mobile market will reach 30 million subscribers in 2005.
25
TA Orange strategy
 Attracting and retaining the highest value customers
•
•
•
•
•
Best quality network
Best customer service
Innovative products
Best value
Targeted offers.
 Leveraging the Orange brand & brand values
•
•
•
Distinctive positioning and communications.
Award-winning execution.
Unique team culture.
 Maintain competitive cost structures
•
•
Exploit cost synergies with CP and TA
Exploit cost synergies with Orange SA
26
TA Orange is the only operator to add postpaid
subscribers in Q2’02
 TA Orange added 287k postpaid
Subscriber development
Thousands
subscribers in Q2
Postpaid
Prepaid
 TA Orange Q2 market share of net
503
338
52
286
April
421
98
64
405
adds in Bangkok estimated at
21%
357
May
June
27
ARPU is improving as initial subscriber base matures
Monthly ARPU
Orange
THB
800
750
700
650
595
600
550
500
450
400
21-Apr
28-Apr
05-May
12-May
19-May
26-May
02-Jun
09-Jun
16-Jun
23-Jun
30-Jun
Blended ARPU for 4 weeks ending 31st July is 625 Baht.
28
Orange has retained its postpaid customers
Postpaid churn – Q2 (monthly)
EoP
July
250,000
218, 553
200,000
Orange
Ambassador
TA offer
150,000
100,000
1.9%
1.7%
100, 983
50,000
0
Ambassador
TA
29
Acquisition costs in rapid decline
 SAC’s rapidly declining
SAC
 SAC’s down 72% since April
120
100
 IMEI unlock should continue to
100
92
encourage churn from
competitors
80
60
 50% of sales through controlled
40
34
channels
20
0
April
May
June
30
Investment
 additional 12 billion Baht to cover peak funding requirements
–
–
majority to cover network CAPEX 2003-2004
support operating cash flow until breakeven
31
milestones
 EBITDA +ve (month on month)
-
Q3 2003
 monthly revenue at breakeven
-
1.2bn Baht
 average subscribers at breakeven
-
1.9m
32
Ideally positioned
“to become the leading wirefreeTM operator in the Thai market”
–
–
–
–
–
best network
best customer service
internationally proven brand & brand values
proven innovation skills
complementary partner strengths
33
“the futures bright, the future’s Orange”
34
QQ && A
A
35
“Safe Harbor” statement
This presentation contains statement about expected future events and financial
results that are forward-looking and subject to risks and uncertainties. For those
statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995
Discussion of factors that may affect future results is contained in our recent filings
with
the
Securities
and
Exchange
C o m m i s s i o n.
36
August 19, 2002
First Half 2002
Investor Presentation