Corporate Presentation
2019YE 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.
Neither the Company, its affiliates nor their respective directors, officers, employees or agents (the “Group”) gives any representation or warranty, express or implied, as to (i) the achievement or reasonableness of future projections, management targets, estimates, prospects, returns, business data or property described in this Presentation, if any or (ii) the accuracy or completeness of any information contained in this Presentation, any other written information or oral information provided in connection therewith or any data that any of them generates. Furthermore, and without prejudice to liability for fraud, no member of the Group accepts or will accept any liability, responsibility or obligation (whether in contract, tort or otherwise) in relation to these matters. Any prospective investor should make its own investigation on the Group and all information provided.
This Presentation: (i) does not constitute an offer, invitation or solicitation by any member of the Group to subscribe for or purchase or sell any securities or assets in the United States or in any other jurisdiction, nor any form of commitment or recommendation by any member of the Group; (ii) will not, and nor will any other oral or written information made available to a prospective investor, other than a definitive and binding agreement, form the basis of any contractual or other agreement and (iii) does not contain all the information that a prospective investor may wish to have in connection with entering into any transaction. Neither this Presentation nor the information contained herein shall form the basis of any contract or commitment.
The provision of this Presentation: (i) does not place any member of the Group under any obligation to provide any further information in relation to any transaction or to update this Presentation or any additional information or to correct any inaccuracies in any such information which may become apparent and (ii) does not place any member of the Group under any obligation to consider or accept any offer, irrespective of whether such offer is the only offer or one of a number of offers representing the highest price. Without prejudice to liability for fraud, each member of the Group disclaims any liability which may be based on this Presentation or any other written or oral information provided in connection therewith and any errors therein and/or omissions therefrom.
The distribution of this Presentation in certain jurisdictions may be restricted by law and, accordingly, recipients of this Presentation represent that they are able to receive this Presentation without contravention of any unfulfilled registration requirements or other legal restrictions in the jurisdiction in which they reside or conduct business.
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
Enhanced bundling; Nova Energy launch
2018 Key Milestones Key
(4/31) Company Overview
. Leading innovation for 20 years: Forthnet introduced internet and pay-tv to Greece
. With over 893K 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:
. 661,000 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 2019ΥΕ
(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 in the retail and business BB / content, Forthnet commands telephony market A market ripe for MVNO more than 40% value share in launches the Pay-TV 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
*2018 Adjusted for Forth-CRS Revenues and EBITDA in 2018
. 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 2019YE
(8/31) FY 2019 Results at a glance
• EBITDA reaches 37,1M with margin at 14,1%
• Revenues at 262,8M impacted by 3Play revenue decline and CRS sale, partially offset by LLU, advertising and wholesale revenue growth
• Costs decline by 16,4M following extensive cost reduction efforts in all categories
• The company’s working capital constraints, affects the company’s capacity to compete on equal basis with other market players
• Forthnet is preparing for the launch of mobile services
(9/31) FY 2019 P&L vs. Prior Year (€million)
(In millions of €) 2019 2018 Δ • 2019 EBITDA decreasing by Revenues 262,8 285,2 -7,9% 12,4% reaching € 37.1m Total Retail 179,2 196,7 -8,9% Total Business 47,5 49,8 -4,5% Advertising 9,9 9,3 5,8% • Cost savings across the PayTV Wholesale 13,5 11,9 13,7% board Other 9,9 13,8 -28,8% Other income 2,8 3,6 -23,0% • Retail revenues pressure on
Telecommunications costs -76,8 -78,6 -2,2% 3play and paytv partly offset Royalties and licenses -65,3 -69,8 -6,5% by broadband market Cost of sales of inventory and consumables -1,8 -1,8 -3,9% gains, advertising & Advertising and promotion costs -4,4 -5,1 -14,1% Payroll and related costs -31,5 -33,8 -6,8% wholesale revenue growth. Sundry expenses -45,0 -52,8 -14,7% minus Subsidies -0,9 -0,9 -2,6%
EBITDA (incl. IFRS 16 effect) 37,1 42,3 -12,4% Depreciation and amortisation -54,7 -61,5 -11,1% plus Subsidies 0,9 0,9 -2,6% EBIT -16,7 -18,2 -8,4% Net financial expenses -14,6 -16,0 -9,1% EBT -31,2 -34,2 -8,7% Taxes 2,7 4,8 -43,6% Net Result -28,5 -29,4 -3,0%
(10/31) OPEX Historical Evolution
-26.1%
. OPEX savings of €78,5mn since FY 2015 . More than 33% 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 kept on broadcasting the majority of the most commercially attractive matches of the Greek Super League Championship by concluding bilateral agreements with leading football clubs o The company agreed extension of the Euroleague contract until 2023 o Following recent regulatory decision and the 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 is proceeding to the next stages of the process
(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 FORTHNET SHAREHOLDERS % Greek banks funds to finance the acquisition of WIND 21.05 Pay TV assets. Current related debt stands at PIRAEUS BANK 15.11 €255.0mn. GO PLC 14.42 MASSAR INVESTMENTS 14.42 • In October 2016 Forthnet issued a €70.1mn NATIONAL BANK 12.14 convertible bond, subscribed by its creditor ALPHA BANK 8.48 banks (Piraeus, NBG, Alpha and Attica). The VODAFONE 4.15 banks have partially converted this bond and ATTICA BANK 0.46 now have a cumulative 36.2% shareholding of REST SHAREHOLDERS 9.77 the company. 100.00
• In November 2017 the banks initiated a process of receiving offers by potential investors regarding their debt & equity exposures to the company.
• In April 2020 Forthnet was informed by banks that they have entered exclusive negotiations with United Group/BC Partners.
(15/31) Bank Debt Breakdown
Forthnet Convertible Bond Total Forthnet Bond Loans at €255.0mn (Issued Oct 11, 2016) • Forthnet (Issued 2007 & 2011): €78.4mn • Total issue: 233.8 million bonds of €0.30 • Forthnet Media* (Issued 2008 & 2011): €176.5mn nominal value (€70.1mn) paying 1% interest • * Forthnet Media is the Pay TV subsidiary of Forthnet maturing in Oct 2025, that can be converted quarterly to equal number of Forthnet shares, leading potentially to a total 68% stake in the company • Banks have already converted 62.4 million bonds leading to a cumulative 36.2% shareholding
(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) 2015 2016 2017 2018 2019 Total Revenues 352,0 324,7 297,1 285,2 262,8 % Growth (7,0%) (7,8%) (8,5%) (4,0%) (7,9%) EBITDA 48,2 54,8 40,2 42,3 37,1 Adjustments1 2,3 ------Adj. EBITDA 50,5 54,8 40,2 42,3 37,1 % Margin 14,3% 16,9% 13,5% 14,8% 14,1% CapEx 35,6 27,8 30,6 23,9 24,4 Adj. EBITDA - CapEx 14,9 27,0 9,6 18,4 12,7 Memo Items: Interest Expense 19,3 16,7 13,2 12,1 11,4 Cash Taxes 0,3 0,1 1,4 0,8 0,1 Capital Structure Total Cash, incl. restricted 9,8 13,9 9,6 7,0 6,9 Bank Debt 324,8 254,9 255,0 255,0 255,0 Credit Statistics Total Debt / Adj. EBITDA 6,4x 4,6x 6,3x 6,0x 6,9x Adj. EBITDA / Interest Expense 2,6x 3,3x 3,0x 3,5x 3,3x (Adj. EBITDA - CapEx) / Interest Expense 0,8x 1,6x 0,7x 1,5x 1,1x
(18/31) Financials I Historical Costs and Key Performance Indicators
Historical Costs & KPI’s
(€mm) 2015 2016 2017 2018 2019 Total Revenues 352 325 297 285 263 Adj. EBITDA 50 55 40 42 37 % Margin 14% 17% 14% 15% 14% Key Expense Metrics Telecommunication costs 96 90 83 79 77 % Growth (2%) (6%) (8%) (5%) (2%) % Total Revenues 27% 28% 28% 28% 29% Total broadband subscribers ('000) 641 582 562 550 551 % Growth (5%) (9%) (3%) (2%) 0% Telco costs / broadband subscription (€) 149 155 147 143 139 % Growth 3% 4% (5%) (3%) (2%) Royalties and licenses 92 78 77 70 65 % Growth (4%) (15%) (0%) (10%) (7%) % Total Revenues 26% 24% 26% 24% 25% Total Pay TV subscribers ('000) 495 439 417 377 342 % Growth (2%) (11%) (5%) (9%) (9%) Royalties costs / Pay TV subscription (€) 185 177 185 185 191 % Growth (2%) (5%) 5% (0%) 3% Payroll and related costs 36 36 36 34 32 % Growth (11%) 0% 0% (5%) (7%) % Total Revenues 10% 11% 12% 12% 12% Unique customers ('000) 789 720 689 669 661 % Growth (3%) (9%) (4%) (3%) (1%) Personnel costs / unique customer (€) 45 50 52 51 48 % Growth (8%) 10% 5% (2%) (6%) Total other costs 78 66 61 61 52 % Growth (8%) (15%) (8%) (1%) (14%) % Total Revenues 22% 20% 21% 21% 20%
(19/31) Financials I Revenue and Subscriptions Evolution
Historical Revenues & Subscribers
(€mm) 2015 2016 2017 2018 2019 Total Telco Revenue 178 167 153 143 137 % Growth (8%) (7%) (8%) (6%) (4%) Total Pay TV Revenue 154 135 119 113 101 % Growth (3%) (12%) (12%) (5%) (11%) Other 20 23 26 29 25 Total Revenues 352 325 297 285 263 % Growth (7%) (8%) (9%) (4%) (8%) Adj. EBITDA 50 55 40 42 37 % Growth (16%) 9% (27%) 5% (12%)
3Play bundled subscribers ('000) 346 302 290 259 232 Standalone broadband subscribers ('000) 294 280 272 291 319 Standalone Pay TV subscribers ('000) 148 138 127 118 110 Unique customers ('000) 789 720 689 669 661 % Growth (3%) (9%) (4%) (3%) (1%) Revenue / customer (€) 446 451 431 427 398 % Growth (4%) 1% (4%) (1%) (7%) Adj. EBITDA / customer (€) 64 76 58 63 56 % Growth (13%) 19% (23%) 9% (11%)
Unique customers ('000) 793 723 692 669 661 3Play bundled customers ('000) 346 302 290 259 232
Total subscriptions ('000) 1.139 1.024 982 927 893 % Growth (3%) (10%) (4%) (6%) (4%) Revenue / subscription (€) 309 317 303 308 294 % Growth (4%) 3% (5%) 2% (4%) Adj. EBITDA / subscription (€) 44 54 41 46 42 % Growth (13%) 21% (23%) 11% (9%)
(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
o Greek Football agreements reduced football cost, significantly improves Optimize the cost structure cost to value proposition and enhance Cash Flow o Continuous renegotiations with suppliers & general OPEX reduction o The company is generating cash on an operating level
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 by approx. 60% through new agreement
(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 agreements, leads the market base, 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
0,7 NGA as % of Broadband (>30Mbps) 0,6 . Only 23% of broadband lines in Greece 0,5 relate to NGA networks, despite the launch 0,4 -39pp 0,3 of VDSL since 2012 0,2 0,1 0
GreeceEU NGA NGA Average average EUGreece NGA averageNGA Average Source: Digital Agenda scoreboard – as 2019 H1
Pay TV evolution per technology . >79% of Greek Pay-TV market operates 1200 1000 under the DTH model 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 DTH subs IPTV subs networks, has based its Pay TV on a DTH Source: NRA, Companies’ financial results model
(23/31) Business overview I Content: The most popular exclusive live sports
Exclusive agreements with the leading Greek clubs Greek Football OSFP, PAO, AEK, ARIS, ASTERAS A’ Division TRIPOLIS, AEL, OFI, PANIONIOS, VOLOS
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)
Other o French Cup, French League Cup, French SuperCup, Russian Cup, Turkish football & Cup Sports o Wimbledon, ATP CUP Events o English League Cup (Carabao Cup) o Major Golf tournaments, extreme & other sports
(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% 41% 38% 40% 34% 38% 30% 37% 34% 35% 24% 32% 33%
10%
H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 H2 19 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 H2 19
. 127K registered users . 99K Connected STBs
Upgraded STBs with connected functionalities improve customer experience, build customer loyalty and provide OTT capability Company data as 2019YE
(26/31) Business overview I Customer mix improving
Strong position in multi-play Expansion in wholesale
25% 35% 48%
75% 16%
Standalone Broadband Direct Pay-TV subs Standalone Pay-TV Wholesale Pay-TV subs 3Play
35% of Nova HHs choose Nova 3Play 25% of 457K Pay TV subs comes through Pay TV wholesale in Greece and Cyprus Company data as 2019ΥΕ
(27/31) Business overview I NOVA : A very strong brand
Top of mind awareness in Pay TV (%) Strong digital presence
53 53 52 50 50 1.5 743 546 millions thousands thousands 37 37 38 34 34 avg. monthly unique users apps installs followers
2 2 2 2 3 DEC 16 JUN 17 DEC 17 JUN 18 DEC 18
Nova Competitor 1 Competitor 2 Competitor 3
Source : Internal market track research by Focus Bari*, wave 12/2018 * CATI interviews among a representative sample of the total Greek population (800 people). Respondent profile: 18-64 years, decision makers / co-decision makers
o Nova is the leading Greek Pay-TV brand standing for “unique entertainment experience”
o Key Nova sub-brands, Nova 3Play, Nova GO, Nova On Demand enjoy very high image and public awareness Company data as 2018YE
(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) • 233 Gbps international connectivity. • 368 Gbps CDN in Athens & Thessaloniki
(30/31) Thank You
Contact us: Dimitris Tzelepis, CFO [email protected]
(31/31)