Corporate Presentation
Oct 15, 2020 Disclaimer
This presentation (“Presentation”) has been prepared by Forthnet S.A. (the Company”) for informational purposes only.
The information in this Presentation includes forward-looking statements, which are based on current expectations and projections about future events. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur. Many of these risks and uncertainties relate to factors that are beyond the Company’s ability to control or estimate precisely. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as the date of this Presentation. The Company does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials.
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Forthnet S.A. is a public company with shares listed on the Athens Stock Exchange since 2000. This Presentation should be read with, and in light of, all of the information made publicly available by the Company (including the Company's interim and annual financial statements) in the English language through its ordinary course communications on the Athens Stock Exchange, and all such information is expressly incorporated by reference in this Presentation.
(2/31) Agenda
1. General Information & Financial Highlights
2. Key Developments & Milestones
3. Shareholder Structure, Bank Debt & adjusted EBITDA
4. Appendix
a) Financials & KPIs
b) Business Overview
c) Infrastructure
(3/31) Our History
Forthnet: the market pioneer that brought Internet and Pay TV in Greece
Key Milestones
Enhanced bundling; Nova Energy launch
2020
2018
United Group makes strategic investment in Forthnet
(4/31) Company Overview
. Leading innovation for 20 years: Forthnet introduced internet and pay-tv to Greece
. With over 873K subscriptions, it is the second largest provider of bundled home entertainment and communication services in the country
. Under the brand name NOVA, one of the most recognized in Greece, Forthnet offers a wide range of fixed telephony, broadband and Pay-TV services to:
. 650,000 unique customers
. 40,000 corporate customers and SMEs
. The Government through the SIZEFXIS I network
. Operators such as VOD, Wind, Cyta etc. through wholesale agreements in Greece and Cyprus
. It owns the exclusive Pay-TV rights for:
. The most popular sports content
. The best movies and entertainment
Company data as H1 2020
(5/31) Company Market Shares
PAY-TV MARKET BROADBAND MARKET MOBILE MARKET
13%
37% 31% 48% 47% 51% 24%
11% 15% 22%
Forthnet (Retail & Wholesale) Others Forthnet Vodafone Vodafone Wind Cosmote Cosmote Wind Cosmote Forthnet has a strong franchise Due to its premium content, in the retail and business BB / Forthnet commands more than telephony market A market ripe for MVNO 40% value share in the Pay-TV launches market Greece has become a 4-player market
Sources: Companies’ financial results Estimated market data as 2019YE
(6/31) Company Strengths & Opportunities
. Forthnet has a leading position in the Greek 3Play market with a very strong, relevant to the local audience, Sports & Film TV product offering combined with a high quality telecom offering
. The company is run by a very experienced management team and has proven its resilience under the most adverse conditions
. The company has already created new revenue streams with the Novasports channels wholesale product for MNOs and the Universal Service provision contract
. There are significant prospects for leveraging the company’s strengths and increasing profitability through service offering enhancement (MVNO, OTT, SIZEFXISII project etc.)
. Reduction of DTH transmission cost could significantly enhance EBITDA
. A release from the present cash constraints would enable the company to improve significantly its performance and market position
Company data as 2019ΥΕ
(7/31) Company Key Facts & Figures
REVENUES (€ million) EBITDA (€ million) 144,4 17,9 18,1 18,0 133,5 125,2
H1 2018 H1 2019 H1 2020 H1 2018 H1 2019 H1 2020
. Forthnet offers Pay-TV services through DTH & OTT platforms and Telco services through a fiber backbone network plus ULL
. Its 6,100km fiber optic network spans the whole country, covering 94% of its customers
. Forthnet’s distribution network consists of ~95 fully franchised shops across Greece, an e-shop, dedicated call centers, plus independent resellers
. Since 2017 the company is the fixed telephony Universal Service Operator (USO) in the country
Company data as H1 2020
(8/31) H1 2020 Results at a glance
• Group H1 2020 EBITDA reaches €18.0 million, stable compared to the prior year’s respective period, despite the -6.2% reduction of revenues
• EBITDA margin at 14.4%, increasing by +0.8% compared to H1 2019
• Total net loss for the period at €14.6 million compared to €15.3 million in H1 2019
• Revenues at €125.2M declining by €8.3 million (-6.2%) mainly as a result of the negative impact of COVID-19 on business and retail pay-tv, and advertising
• Costs decline by €8.2 million (-7.1%) reflecting extensive cost reduction efforts in all categories, decline in variable costs
• The company’s working capital constraints, affect its capacity to compete on equal basis with other market players
• Forthnet is preparing for the launch of mobile services
(9/31) H1 2020 P&L vs. Prior Year (€million)
(In millions of €) 2020 2019 Δ Revenues 125,2 133,5 -6,2% Total Retail 86,5 91,6 -5,5% Total Business 21,4 24,1 -11,1% Advertising 4,7 5,0 -6,5% PayTV Wholesale 7,4 6,8 8,3% Other 4,2 5,0 -15,3% Other Income 1,0 1,0 -4,6%
Telecommunications costs -38,3 -38,2 0,3% Royalties and licenses -29,2 -32,8 -10,8% Cost of sales of inventory and -0,8 -1,0 -22,5% consumables Advertising and promotion costs -2,3 -1,3 76,1% Payroll and related costs -16,2 -17,1 -5,6% Sundry expenses -20,0 -24,6 -18,6% minus Subsidies -0,5 -0,5 -0,7%
EBITDA 18,0 18,1 -0,5% Depreciation and amortisation -26,3 -27,7 -5,0% plus Subsidies 0,5 0,5 -0,7% EBIT -7,8 -9,1 -14,1% Net financial expenses -7,3 -6,9 5,6% EBT -15,1 -16,0 -5,6% Taxes 0,6 0,8 -26,2% Net Result -14,6 -15,3 -4,6%
(10/31) OPEX Historical Evolution
-22.9%
. OPEX savings of €31,5mn since H1 2016 . More than 32,6% of the decline comes from content cost reduction
(11/31) Agenda
1. General Information & Financial Highlights
2. Key Developments & Milestones
3. Shareholder Structure, Bank Debt & adjusted EBITDA
4. Appendix
a) Financials & KPIs
b) Business Overview
c) Infrastructure
(12/31) Latest Business Developments o The company is broadcasting the majority of the Greek Super League Championship by concluding bilateral agreements with football clubs o The company agreed the extension of the Euroleague contract until 2023 o Following the wholesale agreement with Vodafone, the Company is progressing full speed with the Mobile project, working on its technical and commercial aspects, and plans to launch services during 2020 o The company signed the framework agreement of “SIZEFXIS II“ and following the tender process administered by the State, has bid successfully for significant parts of the project in the Attica and Thessalonica areas. Final steps of the tender are in progress.
(13/31) Agenda
1. General Information & Financial Highlights
2. Key Developments & Milestones
3. Shareholder Structure, Bank Debt & adjusted EBITDA
4. Appendix
a) Financials & KPIs
b) Business Overview
c) Infrastructure
(14/31) Capitalization & Shareholder structure
• Forthnet in 2008 borrowed from a consortium of Greek banks funds to SHAREHOLDINGS POST LATEST % finance the acquisition of Pay TV assets. Current related debt stands at CONVERSION (13.10.2020) €255.0mn plus accrued interest. UNITED GROUP 33,20% • In October 2016 Forthnet issued a €70.1mn convertible bond, WIND 14,06% subscribed by its creditor banks (Piraeus, NBG, Alpha and Attica). The PIRAEUS BANK 10,09% banks have partially converted this bond and now have a cumulative GO PLC 9,63% 36.2% shareholding of the company. MASSAR INVEST. 9,63% NATIONAL BANK OF GREECE 8,11% • In November 2017 the banks initiated a process of receiving offers by ALPHA BANK 5,67% potential investors regarding their debt & equity exposures to the VODAFONE 2,77% company. ATTIKIS BANK 0,31% REST SHAREHOLDERS 6,52% • In May 29, 2020 the banks signed an agreement related to the sale of 100,00% their exposures with United Group (UG). In Sep 8, 2020, the loans of Forthnet and part of its convertible were transferred to United Group(UG).
• On Sep 9, 2020 UG has requested the conversion of 85,7mn convertible bonds into ordinary Forthnet shares. The related conversion process was concluded on October 13, 2020.
• Post the above conversion Forthnet’s shareholder structure currently stands as presented in the table on the right:
(15/31) Bank Debt Breakdown
Forthnet Convertible Bond Total Forthnet Bond Loans at €255.0mn (without (Issued Oct 11, 2016) accrued interest) • Total issue: 233.8 million bonds of €0.30 • Forthnet (Issued 2007 & 2011): €78.4mn nominal value (€70.1mn) paying 1% interest • Forthnet Media* (Issued 2008 & 2011): €176.5mn maturing in Oct 2025, that can be converted quarterly to equal number of Forthnet • The totality of Forthnet’s Bond Loans plus shares, leading potentially to a total 68% accrued interest have been transferred by the stake in the company Banks to United Group Group on Sep 8, 2020 • Banks have already converted 62.4 million bonds leading to a cumulative 36.2% shareholding * Forthnet Media is the Pay TV subsidiary of Forthnet • Following the Banks’ conversion, the Convertible decreased to €51.3mn • A portion of the convertible has been transferred by banks to United Group on Sep 8, 2020 • On Oct 13, 85.7 million bonds held by United Group were converted to shares and the outstanding Convertible decreased to €25.6mn
(16/31) Agenda
1. General Information & Financial Highlights
2. Key Developments & Milestones
3. Shareholder Structure, Bank Debt & adjusted EBITDA
4. Appendix
a) Financials & KPIs
b) Business Overview
c) Infrastructure
(17/31) Financials I Historical Evolution
Historical Financials (€mm) 2016 2017 2018 2019 2020 LTM Total Revenues 324,7 297,1 285,2 262,8 254,5 % Growth (7,8%) (8,5%) (4,0%) (7,9%) (3,2%) EBITDA 54,8 40,2 42,3 37,1 37,0 Adjustments1 ------Adj. EBITDA 54,8 40,2 42,3 37,1 37,0 % Margin 16,9% 13,5% 14,8% 14,1% 14,5% CapEx 27,8 30,6 23,9 24,4 25,5 Adj. EBITDA - CapEx 27,0 9,6 18,4 12,7 11,5 Memo Items: Interest Expense 16,7 13,2 12,1 11,4 10,9 Cash Taxes 0,1 1,4 (0,8) (0,1) (0,0) Capital Structure Total Cash, incl. restricted 13,9 9,6 7,0 6,9 9,5 Bank Debt 254,9 255,0 255,0 255,0 255,0 Credit Statistics Total Debt / Adj. EBITDA 4,6x 6,3x 6,0x 6,9x 6,9x Adj. EBITDA / Interest Expense 3,3x 3,0x 3,5x 3,3x 3,4x (Adj. EBITDA - CapEx) / Interest Expense 1,6x 0,7x 1,5x 1,1x 1,1x
(18/31) Financials I Historical Costs and Key Performance Indicators
Historical Costs & KPI’s
(€mm) 2016 2017 2018 2019 2020 LTM Total Revenues 325 297 285 263 254 Adj. EBITDA 55 40 42 37 37 % Margin 17% 14% 15% 14% 15% Key Expense Metrics Telecommunication costs 90 83 79 77 77 % Growth (6%) (8%) (5%) (2%) 0% % Total Revenues 28% 28% 28% 29% 30% Total broadband subscribers ('000) 582 562 550 551 550 % Growth (9%) (3%) (2%) 0% (0%) Telco costs / broadband subscription (€) 155 147 143 139 140 % Growth 4% (5%) (3%) (2%) 0% Royalties and licenses 78 77 70 65 62 % Growth (15%) (0%) (10%) (7%) (5%) % Total Revenues 24% 26% 24% 25% 24% Total Pay TV subscribers ('000) 439 417 377 342 323 % Growth (11%) (5%) (9%) (9%) (5%) Royalties costs / Pay TV subscription (€) 177 185 185 191 191 % Growth (5%) 5% (0%) 3% 0% Payroll and related costs 36 36 34 32 31 % Growth 0% 0% (5%) (7%) (3%) % Total Revenues 11% 12% 12% 12% 12% Unique customers ('000) 720 689 669 661 650 % Growth (9%) (4%) (3%) (1%) (2%) Personnel costs / unique customer (€) 50 52 51 48 47 % Growth 10% 5% (2%) (6%) (2%) Total other costs 66 61 61 52 48 % Growth (15%) (8%) (1%) (14%) (7%) % Total Revenues 20% 21% 21% 20% 19%
(19/31) Financials I Revenue and Subscriptions Evolution
Historical Revenues & Subscribers
(€mm) 2016 2017 2018 2019 2020 LTM Total Telco Revenue 167 153 143 137 136 % Growth (7%) (8%) (6%) (4%) (1%) Total Pay TV Revenue 135 119 113 101 94 % Growth (12%) (12%) (5%) (11%) (30%) Other 23 26 29 25 24 Total Revenues 325 297 285 263 254 % Growth (8%) (9%) (4%) (8%) (3%) Adj. EBITDA 55 40 42 37 37 % Growth 9% (27%) 5% (12%) (0%)
3Play bundled subscribers ('000) 302 290 259 232 223 Standalone broadband subscribers ('000) 280 272 291 319 327 Standalone Pay TV subscribers ('000) 138 127 118 110 101 Unique customers ('000) 720 689 669 661 650 % Growth (9%) (4%) (3%) (1%) (2%) Revenue / customer (€) 451 431 427 398 391 % Growth 1% (4%) (1%) (7%) (13%) Adj. EBITDA / customer (€) 76 58 63 56 57 % Growth 19% (23%) 9% (11%) 1%
Unique customers ('000) 723 692 669 661 650 3Play bundled customers ('000) 302 290 259 232 223
Total subscriptions ('000) 1.024 982 927 893 873 % Growth (10%) (4%) (6%) (4%) (2%) Revenue / subscription (€) 317 303 308 294 291 % Growth 3% (5%) 2% (4%) (1%) Adj. EBITDA / subscription (€) 54 41 46 42 42 % Growth 21% (23%) 11% (9%) 2%
(20/31) Business overview I Strategic priorities & Actions
o Agreement with top Greek Football teams Capture the best exclusive o Euroleague Basketball Championship premium content, relevant o Acquisition of the popular Italian Serie A Championship to the Greek audience o Renewal of rights agreements with the major Hollywood studios
Optimize the cost structure o Continuous renegotiations with suppliers & general OPEX reduction and enhance Cash Flow
Provide high quality services o Unique Nova 3Play retail and SME offering & turnkey solutions for corporates to households, SMEs & o “Nova Energy” enhancing multi-play proposition corporate customers, and other operators o Nova branded premium channels through Wholesale partnerships
o Enhance OTT platform (Nova GO / Nova On demand / Novaflix) o Drive towards the future Extend multi-play offering with MVNO o Expand services to Government through SIZEFXIS II project o Reduce annual DTH transmission cost through new agreement with the provider
(21/31) Business overview I Market dynamics & opportunities
Pay TV HH penetration MVNOs market share in selected 19% countries in Europe 58% 13% -32pp 10% 9% 9% 7% 6% 26% 0,3%
Europe average* Greece * Penetrations below EU average Source: Digital TV *Western Europe Forecasts – Digital TV Research Source: EC, Europe's Digital Progress Report 2016 • Significant growth prospects in Pay-TV, either . Market and regulatory environment ripe for the standalone or as part of multi-play offering introduction of favourable MVNO regime
• Nova’s enhanced Pay-TV bouquet, with optimized . Opportunity to launch a convergent 4-Play value for money following the new sports content offering targeting Forthnet’s customer base, agreements, leads the market significantly reducing churn and enhancing revenues • Very low FTTH density in Greece supports DTH model * Following CYTA’s absorption by VOD, currently there is no • New content distribution model & significant potential MVNO in Greece Company growth levers savings in DTH transmission costs to improve profitability
Macro improvement to positively affect the 3-Play and Pay-TV market
(22/31) Business overview I Market dynamics & key technologies
70% NGA as % of Broadband (>30Mbps) 60% . Only 23% of broadband lines in Greece 50% -39pp relate to NGA networks, despite the launch 40% 30% of VDSL since 2012 20% 10% 0%
Greece NGA average EU NGA average Source: Digital Agenda scoreboard – as 2019 H1
Pay TV evolution per technology . >79% of Greek Pay-TV market operates 1200 under the DTH model 1000 800 . The geography of the country, the structure 600 its networks and regulatory issues point 400 out that within the next few years, IPTV 200 cannot practically replace DTH 0 . OTE, the country’s incumbent operator and largest investor by far in fiber networks, DTH subs IPTV subs has based its Pay TV on a DTH model Source: NRA, Companies’ financial results
(23/31) Business overview I Content: The most popular exclusive live sports
Exclusive agreements with the leading Greek clubs Greek Football OSFP, PAOK, AEK, ARIS, ASTERAS TRIPOLIS, AEL, ATROMITOS, A’ Division OFI, PANAITOLIKOS, GIANNENA, VOLOS, APOLLON, LAMIA
o Euroleague, the top European basketball organization, with the participation Top of the two leading Greek teams OLYMPIAKOS, PANATHINAIKOS Basketball events o Eurocup, the 2nd most prominent European professional basketball club competition with the participation of PROMITHEAS PATRAS
o Italian League (Serie A) Top o French League (Ligue1) European o Dutch League (Eredivisie) football o English Football League Championship
o German Cup (DFP Pokal), English League Cup (Carabao Cup) Other o Spanish Super Cup, French Super Cup football & o Wimbledon, ATP CUP Sports Events o USA Major League Soccer o FIVB Nations League o Handball World Championships 2021 o Major Golf tournaments
(24/31) Business overview I Content: The best movies and entertainment
Premium Movies and Series Top thematic channels Novalifε FOX, Foxlife Output deals with major Hollywood studios Series / Entertainment E! Entertainment My Zen TV Insight TV Food Network HD
Novasports 24 HD Eurosport Sports Action 24 Eurosport 2 Eurosport HD
Awarded movies of the year, Discovery National Geographic HD specials, tributes Animal Planet Docs National Geographic WILD HD Viasat History Discovery HD Showcase Travel Channel HD
Boomerang HD Disney Channel Kids Disney XD Nickelodeon Top Pay TV drama series & Box Sets Nova Mad Greekζ VH1 simulcast /very close with US premier! Music NR1 HD MTV Live HD, MTV Hits
Vivid Red HD Hustler HD Adult Dorcel Redlight HD
Plus major Greek commercial channels & hundreds International Free to air stations
(25/31) Business overview I Multi-platform offering
nova On Demand Live TV and On demand titles Top movies, series, docs and kids programs at any mobile device through STB
Nova GO penetration Nova On Demand penetration
43% 45% 41% 38% 42% 40% 34% 38% 30% 37% 34% 35% 24% 32% 33% 14% 10% 11%
1% 2%
H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 H2 19 H1 20 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 H2 19 H1 20
In 3Play eligible active base In Pay TV standalone eligible active base
. 124K registered users . 110K Connected STBs
Upgraded STBs with connected functionalities improve customer experience, build customer loyalty and provide OTT capability Company data as Η1 2020
(26/31) Business overview I Customer mix improving
Strong position Increased NGA Expansion in multi-play subs contribution in wholesale
17%
34% 29%
50%
71% 16% 83%
Standalone Broadband NGA Broadband subs Direct Pay-TV subs Standalone Pay-TV Non NGA Broadband subs Wholesale Pay-TV subs 3Play
34% of Nova HHs 17% of Fixed 29% of 456K Pay TV choose Nova 3Play broadband subs select subs comes through Pay NGA services TV wholesale Company data as H1 2020
(27/31) Business overview I Nova : A strong brand
TOP OF MIND Awareness in Pay TV (%)
60 42 43 41 40 42 43 44 Nova Competitor 1 20 Competitor 2 Competitor 3
0 3 3 2 6/19 12/19 6/20
Source : Internal Market Track Research by FOCUS BARI, Wave June 2020
o Nova image in the Greek Pay TV market is associated with Experience and the Best TV content
o Current Nova TV customers highly appreciate the alternative ways of viewership that Nova offers like Nova Go and Nova On Demand
(28/31) Business overview I Commitment in Business segment
Continuous growth Full service portfolio
100 22% 25% 21% 19% Millions 80 16% 20% 60 15%
40 10%
20 5%
0 0% 2016 2017 2018 2019 Business Revenue* as % of Total Revenue
* Advertising revenue not included
Trusted by the country’s largest companies
Banking Insurance Retail Industrial Shipping Hotels Public sector
Company data as 2019YE
(29/31) Infrastructure I Telecommunications Infrastructure
Telecom network, International Connectivity and DC technologies
• 6.127 km fibre optic MAN, and WAN • 71 Gbps national connectivity
infrastructure • Fully geo-redundant IMS (IP Multimedia
• 476 physical and remote collocations to OTE’s Subsystem) collects and terminates voice local exchanges service
• 78% LLU coverage of total active local loops • IPv4/IPv6 & MPLS are the main protocols being used across the whole network • 100% population coverage through SAT BB • Data Center hosting services (>100 racks) • 250 Gbps international connectivity • 382 Gbps CDN in Athens & Thessaloniki
(30/31) Thank You
Contact us: Dimitris Tzelepis, CFO [email protected]
(31/31)