A brighter place for everyone
An Introduc on to TalkTalk Business
February 2013
Chief Execu ve
2 Growing TalkTalk Business is an important element of our medium term 2% revenue and 25% EBITDA margin targets £425m revenue business today, of which £315m Corporate and £110m basic business phone and broadband Similar opportunity to grow revenue, simplify opera ons and expand margin as in our Consumer business Similar opportunity to leverage the cost and technology advantage of our network
3 Managing Director, TalkTalk Business
4 £425m, scale business The only B2B operator apart from BT, VMEd and C&W with significant network presence 140,000 SoHo/SME customers 1,400 mid-market and corporate customers 750 Partners ranging from resellers to systems integrators Key contributor to Group revenue and profits
5 Enterprise: Direct 2k+ e’ees Partner Channel Channel Mid Market: 250 – 2,000 e’ees
SME: 10 – 250 e’ees
SOHO: < 10 e’ees
CONSUMERS
6
Voice Data Carrier
Voice Over Ethernet IPVPN Networks Voice Interconnect Enterprise (VOE) Ethernet / EFM Wholesale Transit
ISDN30 IPVPN Networks Mid Market Hosted Contact Centre Ethernet / EFM Hosted PBX Ethernet over Fibre (EoF)
ISDN30 / ISDN2 EFM / EoF Hosted Contact Centre SME Fibre Hosted PBX
Fibre Phone SOHO DSL (MPF / SMPF)
7
Local & na onal calls Contact Centre for SOHO and Small Mul ple line services for SME and Mid Market specific services SME
Call Bundles with Broadband Hosted PBX/UC Premise based NEW Next Gen Contact Voice over phone systems ISDN / SIP Manager Ethernet
8
Asymmetric, asynchronous, High speed Symmetric, synchronous, Contended, business SLAs, asymmetrical non-contended, business-grade SLAs, high speeds <2Mbps upstream
MPF & SMPF Broadband Fibre EoF EFM 10 MB 100 MB Gig < £20 p.m. From From From From £25 p.m. £100 p.m. £350 p.m. £1,000 p.m.
9 By Channel* By Product* Carrier 14% Partner 50% Data 37%
Direct Voice 50% 49%
* 9m to 31st December 2012
10 Typical Competitors Customers Typical Partners
Integrators Carriers Virgin Media BT Enterprise Cable & Wireless
e.g. Daisy Mid Market
ISPs e.g. XLN, O2, Chess, SME Resellers
e.g. ZEN, NewCall, SOHO
11 Reach Product Innovation 95% coverage On-Net SIP & ISDN30 More Ethernet exchanges (30% cheaper than BT) than BT Wholesale FTTC – only scale alternative to BT Wholesale
Service Quality Value For Money 6 Hour Fix on Fibre £10 business broadband Public sector certified Competitive ethernet Carrier / Enterprise grade pricing service model
12 Large Direct customer base with up and cross sell poten al
Vibrant Partner channel that scales quickly for revenue build
Legacy voice revenues in decline but momentum growing in a strong set of high margin data products
Opportunity to simplify opera ons ahead of driving scale
13 Significant opportuni es through Partner channel and Direct Data Only 10% of SME customers take our data products Con nued expansion of Ethernet products
Core revenue and new market growth Carrier Con nued expansion of interna onal trading New opportuni es in data
Voice Established declining trend in legacy voice Growing selec vely through next genera on ISDN and SIP proposi ons
14 Strong growth in high Making TalkTalk Simpler margin products
Broadband & Fibre vs Voice Improving customer Simpler systems Ethernet family service and processes New Next Gen Voice
Growth in new segments e.g. Business and Inves ng in online Enterprise grade integrators and public sector service model Ra onalising legacy products and systems Consolidate service teams in Warrington Fewer, be er systems and Irlam
Closing Stoke Mandeville
15 16 Network scale and design allows: › Product innova on › Compe ve pricing › Flexibility
A simplified and effec ve opera ng model: › Lower costs to serve as scale grows
The value player in the B2B market
17 Largest UK Opera ng Value for money Unbundled B2B Fibre Efficiencies quad play Network
2% REVENUE CAGR Base Growth Base Growth Data and Fibre demand from 20% of UK from lower Plus Mix Carrier grows with TV not online churn Base growth for TV Mobile + TV, Offnet decline content ARPU Legacy Voice
25% EBITDA MARGIN
Growth in fully Making TalkTalk Lower SAC from Growing Data Lower costs to unbundled mix Simpler: lower churn services serve £30m-£50m Higher margin Declining lower Plus margin legacy Voice Investment in TV Content gross Lower gross network margin % margin %
SAC to build TV and mobile
18 A brighter place for everyone
February 2013