Cable and Wireless plc Regional Presentation 24th January 2003: Cable and Wireless plc Regional Presentation 24th January 2003
Cable and Wireless Regional Introduction: Cable and Wireless Regional Introduction David Prince
Group Finance Director
Cable and Wireless plc
Forward Looking Statements: Forward Looking Statements "The presentation contains forward-looking statements that involve inherent risks and uncertainties. We have identified certain important factors that may cause actual results to differ materially from those contained in such forward looking statements. See those which appear, or are referred to, in the cautionary statements section on page 3 of the company's Form 20F 2002".
Cable and Wireless Regional Introduction: Cable and Wireless Regional Introduction Robert Lerwill
Chief Executive Officer
Cable and Wireless Regional
Objectives: Objectives Provide information on C&W Regional
Review ongoing effects of market liberalisation on C&W Regional
Outline key opportunities & risks
Demonstrate synergies between C&W Regional’s businesses
C&W Regional - Key Strengths & Competencies : C&W Regional - Key Strengths & Competencies
“Deliver revenue growth & positive cashflow from businesses transforming to competition”
C&W Regional Team Members Present Today: C&W Regional Team Members Present Today Robert Lerwill* Chief Executive Officer
James Cheesewright* Chief Operating Officer
Keith Edmunds* Finance Director
David Stewart* Legal & Regulatory Affairs
Roger Mortimer* Business Development
Susan Fox* HR Director
Tom Phillips* Government Relations
Chris Tyler Chief Financial Officer, West Indies
Gary Barrow President, C&W Jamaica
Jose-Miguel Garcia CEO, C&W Panama
Thomas Perez-Ducy Executive VP, West Indies
Jacqueline Holding Regional Director, Atlantic & Indian Ocean *London based
Speakers
C&W Regional - Agenda for Today: Time Subject Presenter 8.30 - 8.45 Introduction David Prince/Robert Lerwill 8:45 - 9.15 C&W Regional Overview James Cheesewright 9.15 - 9:50 Liberalisation & Regulation David Stewart 9:50 - 10.05 Q&A 10.05 - 10.25 10.45 - 11.05 Coffee Break 11.05 - 11.25 Mobile - C&W Caribbean 11:25 - 11:45 Jamaica Gary Barrow 11.45 - 12.00 Q&A Thomas Perez-Ducy 12.20 - 12.45 Financial overview & wrap up James Cheesewight/
Robert Lerwill
12.45 - 13.00 Q&A 13.00 Buffet Lunch 12.00 - 12.20 Atlantic, Pacific & Indian Ocean
& Middle East Jacqueline Holding C&W Regional - Agenda for Today 10.25 - 10.45 Panama Jose Miguel Garcia Macau James Cheesewright
Cable and Wireless plc Regional Presentation 24th January 2003: Cable and Wireless plc Regional Presentation 24th January 2003
Cable & Wireless Regional Overview: Cable & Wireless Regional Overview James Cheesewright
Chief Operating Officer
Cable & Wireless Regional
C&W Regional - An Overview: C&W Regional - An Overview What is C&W Regional?
Geographies
Management
Products & Services
Key opportunities & challenges
Track record of growth
Strong cashflows
Market liberalisation
Regulatory expertise
Future revenue growth, margin maintenance
Synergies
C&W Regional : Atlantic, Pacific & Indian Ocean & Middle East
Revenue: £164m
EBITDA: £76m Others
Revenue: n/a
EBITDA: n/a C&W Regional *2001/02 FY continuing businesses, reported at actual exchange rates C&W Regional
Revenue: £1,459m*
EBITDA: £627m* Panama
Revenue: £296m
EBITDA: £134m Jamaica
Revenue: £366m
EBITDA: £145m Caribbean
Revenue: £488m
EBITDA: £214m Macau
Revenue: £145m
EBITDA: £58m No one business contributes more than 15% of PBT
C&W Regional - Principal Businesses: C&W Regional - Principal Businesses Business Unit
Jamaica
C&W Jamaica
Caribbean
C&W Anguilla
C&W Antigua
C&W Barbados
C&W Bermuda
C&W BVI
C&W Cayman Islands
C&W Dominica
C&W Grenada
C&W Montserrat
C&W St Kitts & Nevis
C&W St Lucia
C&W St Vincent
C&W Turks & Caicos
TSTT
(Trindad & Tobago)
Panama
C&W Panama Business Unit
Macau
CTM (Macau)
RB (Hong Kong) - Asia Cities
RB (Singapore) - Asia Cities
Atlantic Indian Ocean & Bahrain
TeleYemen (Yemen)
C&W Diego Garcia
Dhiraagu (Maldives)
C&W Seychelles
C&W Falklands
C&W Ascension
C&W St Helena
Batelco (Bahrain)
Sakhalin Telecom
Sakhalin Telecom Mobile
Others
C&W Guernsey
Mobile One (Singapore)
FinTel (Fiji)
Solomon Telekom (Solomon Is.)
Telecom Vanuatu
RTC (Bulgaria)
OAO Sakhalinsvayaz C&W %
51
100
100
51
100
45
100
100
100
100
20
60
61
100
6
49
42
33
49
6 C&W %
82
Branch
Branch
81
100
Branch
100
80
70
Branch
65
Branch
Branch
Branch
49
49 Trade investments
Associates
Subsidiary
C&W Regional - Management Structure: Finance Regulatory
Affairs HR Network
Operations Marketing E-
Commerce Purchasing Fraud &
Revenue
Assurance Jamaica Caribbean Support
Services C&W Regional - Management Structure CEO
C&W Regional Business
Development COO C&W
West Indies C&W
Panama Macau C&W
Guernsey
Atlantic, Pacific
& Indian Ocean
& Middle East
C&W Regional - Products & Services: C&W Regional - Products & Services Most entities are full service providers Source: H1 2002/03 at actual rates
C&W Regional - Growth Drivers: C&W Regional - Growth Drivers Revenue Mix Trends Source: Financial accounts at actual rates & C&W Regional estimates
C&W Regional - Track Record of Growth: Source: Financial accounts
Continuing businesses, at actual exchange rates
*EBITDA less cash Capex £m
FY
2000/01 £m
FY
2001/02
£m
H1
2002/03 Revenues 1,357 1,459 723 Growth rates (%) constant currency 6 6 EBITDA 580 627 298 Growth rates (%) constant currency 5 2 Capex 317 291 130 C&W Regional - Track Record of Growth 8 12 Cashflow* 263 336 168
C&W Regional - In Context : C&W Regional - In Context Significant continuing contributor to Regional’s economies
Major private sector employer
Dividend streams to Governments
Royalties to Governments
Significant corporate tax payer
Public shareholdings
C&W Regional - Market Liberalisation: All key markets competitive within 3 years
Competition stimulates market, especially mobile
International prices driven down by competition
Fragmented competition, mostly local entrepreneurs
Competitors target IDD, mobile & data
Rebalancing favours incumbents Expected Trends Most key markets opening to competition in line with plan or later than expected
Mobile market has grown beyond expectations
International prices have fallen as expected
Fragmented competition - mostly local entrepreneurs
Developing as anticipated
Agreed principles being translated into actual price adjustments Update C&W Regional - Market Liberalisation Impact of competition is broadly in line with expectations
C&W Regional - Market Liberalisation: C&W Regional - Market Liberalisation In 2002/03 over 50% of C&W Regional revenues will come from competitive markets Source: C&W management estimates
C&W Regional - Regulatory Expertise: C&W Regional - Regulatory Expertise Specialist regulatory affairs team within C&W Regional:
Working closely with business units & governments to introduce framework for fair, sustainable competition
Help ensure that agreed frameworks are implemented
Share best practice/experience around C&W Regional
Liberalisation not a zero sum game
Many benefits to C&W Regional from liberalisation - our competitors becoming our customers through interconnection payments
C&W Regional - Revenue Growth Drivers: Retaining existing customers is key
Focusing on new revenue streams
Example Initiatives Bundled offerings (IDD, Mobile & Internet) Launch of GSM/GPRS Mobile handset pricing, CPP (calling party pays) ADSL (Broadband) Launch of GSM/GPRS VOIP services Latin Cities Panama ADSL (Broadband)
Launch of GPRS Asia Cities Macau Broadband wholesale Internet kiosks Full ownership of the customer & the local loop are two of C&W Regional’s key competitive advantages Jamaica/
Caribbean C&W Regional - Revenue Growth Drivers Bermuda data centre -
offshore commerce/disaster recovery
C&W Regional - Revenue Growth Drivers - contd: C&W Regional - Revenue Growth Drivers - contd Customer
service Efficient installation/fault resolution
Effective resolution of bill & payment queries
Call centre performance
On-line customer service Executive sponsorship programme
Detailed customer satisfaction surveys conducted twice yearly
Increased contact through Account Managers Reductions in international rates
Reductions in leased line charges
Move to per second billing - Caribbean mobile Price &
Price
perception Customer
relationships
C&W Regional - Margin Management: C&W Regional - Margin Management C&W Regional continues to manage operating costs to maintain EBITDA margins as competition & liberalisation impact gross margins
Manage the cost of sales
Reduce outpayments - least-cost routing & IP
Reduce commission on prepaid mobile - electronic PINs
Manage operating costs
Continuing headcount reduction
Property rationalisation & disposal
E-enabling business processes - ERP
Lower Opex through “Regionalisation” of costs
3 pan-Caribbean GSM switches
3 pan-Caribbean call centres
Pan-Regional Fraud Management System
Pan-Caribbean ISP
Negotiating lower supplier licence fees & maintenance costs
C&W Regional - Margin Management: C&W Regional - Margin Management Headcount reduction Source: C&W Regional Management accounting information & estimates
C&W Regional - Synergies: C&W Regional - Synergies Management:- shared experience & expertise
Int’l appointments - CEO Spain to CEO Panama
Marketing - Caribbean expertise in Guernsey ADSL roll-out
HR Director to Panama supporting redundancy programme
Regulatory - UK supported Jamaica in negotiating liberalisation agreement
Operational
Centralised purchasing
Standardised systems & processes
- Customer Care & Billing System in 16 countries (AMDOCS)
- GSM/GPRS in Jamaica/Caribbean (Nortel)
Shared facilities - Contact centres, GSM infrastructure
Network/Traffic Management - Asia Cities, Frame-relay around Caribbean
Technology - ADSL rollout C&W Regional adds significant value to small incumbents
C&W Regional - Business Development: C&W Regional - Business Development Investment criteria:
Small scale
Earnings enhancing
Short payback
Synergies with C&W Regional/C&W Group
Acceptable regulatory & liberalisation framework
C&W Regional - Business Development: C&W Regional - Business Development Achievements Traffic Management – synergies with C&W Global
Headcount reduced by 6%
Contribute management – CEO, Business development, Mobile, Regulatory
Launch new products & services – ADSL launched Oct 2002 Guernsey Telecom Acquisition
Acquired for £22.5m in May 2002
Net assets acquired £48m inc. £15m cash
Financial service bias complementary to existing portfolio
BVI, Cayman Islands, Bermuda
Annualised turnover £38m
Re-branded as C&W Guernsey in Sept 2002 Source: C&W Group plc reported and Regional Management accounting information
C&W Regional - Business Development: C&W Regional - Business Development Completed
Guernsey Telecom - May 2002
Asia Cities - Q4 2001/02
In progress
French Caribbean, Latin Cities
Other potential opportunities arising from liberalisation
Jersey, Netherlands Antilles & others Selected opportunities
C&W Regional - Summary Perspective: C&W Regional - Summary Perspective Track record of growth
Generation of strong cashflows
Market liberalisation managed in line with expectations
Regulatory expertise assists in securing fair, sustainable competitive environments
Focus on future revenue & margin maintenance
Synergies add value to C&W Regional as a whole
Cable and Wireless plc Regional Presentation 24th January 2003: Cable and Wireless plc Regional Presentation 24th January 2003
Cable & Wireless Regional Liberalisation & Regulation: Cable & Wireless Regional Liberalisation & Regulation David Stewart Director, Legal & Regulatory Cable & Wireless Regional
C&W Regional - Agenda: C&W Regional - Agenda The decision to embrace liberalisation
Planning for competition
Update on liberalisation programme
Managing regulatory risk post-liberalisation
Case study: Jamaica
Regulatory issues for the future
C&W Regional - Drivers of Liberalisation : C&W Regional - Drivers of Liberalisation Exclusive licences
Government “partnerships”
Reliance on international settlements
Unbalanced tariffs, bearing no relationship to costs Governments favouring liberalisation
Pressure from international community
Bypass through new technology
Collapse of Accounting Rate System
Benefits to C&W of liberalisation Background Drivers of Change Decision to seek end to monopolies in return for fair competition
C&W Regional - Planning for Competition : C&W Regional - Planning for Competition Managed transition to competition
Resolution of key regulatory issues (tariff rebalancing, price caps, bypass)
Typical transition timetable
Phase 1, competition in mobile, internet, data, international resale, CPE
Phase 2, competition in domestic facilities
Phase 3, competition in international facilities Internal planning
Wholesale services & opportunities
Business transformation Negotiate with Government Agreed liberalisation model must enhance shareholder value
Phasing allows adjustment to full competition
C&W Regional - Competitive Landscape: C&W Anguilla
C&W Antigua
C&W Barbados
C&W Bermuda
C&W BVI
C&W Cayman Islands
C&W Dominica
C&W Grenada
C&W St Kitts & Nevis
C&W St Lucia
C&W St Vincent
TSTT (Trinidad & Tobago)
C&W Turks and Caicos
C&W Jamaica
C&W Panama
Batelco (Bahrain)
C&W Diego Garcia
DHIRAAGU (Maldives)
C&W Seychelles
TeleYemen
Fintel (Fiji)
Solomon Islands Telecom
Telecom Vanuatu
CTM (Macau)
MobileOne (Singapore)
RB Hong Kong
RTC (Bulgaria)
Sakhalin Telecom (Russia)
C&W Guernsey
C&W Regional - Competitive Landscape Now Within
12 months Within
3 years More than
3 years Competition in Ascension Islands, Falkland Islands, St Helena & Montserrat not anticipated
Source: C&W estimates. In some cases, these issues are under negotiation & may change Country/Service International Domestic Mobile Internet
C&W Regional - Status of Negotiations: Extent of liberalisation Liberalisation
complete Legacy licence
or unclear Liberalisation
process
defined &
in progress C&W Antigua*
C&W BVI
C&W Diego Garcia
Fintel (Fiji)
Solomon Is. Telecom
Telecom Vanuatu
C&W Regional - Status of Negotiations * Market competitive in mobile Liberalisation
under
negotiation/
discussion C&W Anguilla
C&W Cayman Islands
C&W Turks and Caicos
Dhiraagu (Maldives)
TeleYemen*
C&W Barbados
C&W Jamaica
Batelco (Bahrain)
C&W Guernsey
C&W Bermuda
C&W Dominica
C&W St Kitts & Nevis
C&W St Lucia
C&W St Vincent
C&W Seychelles
C&W Panama
C&W Regional - Competition in Key Markets: Liberalisation proceeding as agreed in 1997
Full liberalisation on 1 January 2003
Access deficit, interconnection, USO funding C&W Regional - Competition in Key Markets Liberalisation proceeding as agreed in 1999
Full liberalisation on 1 March 2003
Re-balancing proceeding under price cap arrangement
Access deficit, USO funding, indirect access Panama Jamaica Macau Liberalisation proceeding as agreed in 2000
Competition in mobile networks from 2001 but retained exclusivity in fixed line services
Retention of significant mobile market share
Rebalancing
C&W Regional - Managing Regulation : Competitors seek access to incumbent network at (lowest cost) regulated rates
Regulator needs to balance interests of incumbent & new entrant
Disputes are common Challenge Promoting use of cost based models as a basis for interconnect charges
Working with regulator to promote international standards
Participating in dispute resolution proceedings & managing litigation Management C&W Regional - Managing Regulation Interconnection
C&W Regional - Managing Regulation : C&W Regional - Managing Regulation Price caps & rebalancing Price cap arrangements widely accepted
Rebalancing key part of price cap
Setting of cap involves modelling complex set of issues
Social impact of rebalancing Pro-actively lobbying for
implementation
Driving agenda through
regulatory proceedings to
ensure that structure of
price cap delivers
rebalancing
Model business outcomes
under different price caps
Low user packages &
other socially desirable
schemes Challenge Management
C&W Regional - Case Study Price Caps & Rebalancing in Jamaica: C&W Regional - Case Study Price Caps & Rebalancing in Jamaica Commitment to rebalance is part of 1999 agreement with Government
Price cap allows line rental to increase every year by RPI + 10%
Service Description Nov-00 Nov-01 Nov-02 Business
Lines Rental ($)* 15.5 16.1 18.1 Residential
Lines Rental ($)* 6.6 6.7 7.8 Peak IDD call to USA ($c)* 63.2 56.3 37.0 * $ = USD
Slide42: C&W Regional -
Regulatory Issues for the Future Rebalancing & ADCs
Interconnection
Price Caps
Mobile termination
LRIC interconnection
Universal service
Number portability (fix. & mob.)
Carrier selection/preselection
Infrastructure sharing
Local Loop unbundling
Broadband USO
Cyber crime
Peering Today 2004 2005 2007
C&W Regional - Summary: C&W Regional - Summary Most C&W Regional markets are already competitive or within a phased transition to competition
C&W Regional has leveraged the advantages of participating in liberalisation across many markets
C&W Regional has been able to preserve and enhance shareholder value through the liberalisation process
Cable and Wireless plc Regional Presentation 24th January 2003: Cable and Wireless plc Regional Presentation 24th January 2003
Cable & Wireless Panama: Cable & Wireless Panama José Miguel García
CEO Cable & Wireless Panama
C&W Panama - Agenda : C&W Panama - Agenda Overview of Republic of Panama
C&W Panama
Financial Overview
Challenges & Opportunities
Key Initiatives
C&W Panama - Republic of Panama: C&W Panama - Republic of Panama Brazil Paraguay Uruguay Argentina Chile Bolivia Peru Colombia Mexico Cuba Guiana Dominican
Republic Haiti Ecuador Panama Costa Rica Jamaica Surinam Guyana Venezuela Nicaragua Honduras Guatemala El Salvador Belize
C&W Panama - Republic of Panama: C&W Panama - Republic of Panama PANAMA COLOMBIA COSTA
RICA Panama City * All $ are USD unless otherwise stated Colon
C&W Panama - Overview: C&W Panama - Overview 2,759* Employees 5.7 % GDP of Republic of Panama Gross Revenue Cable and Wireless plc - 49%
Government - 49%
Employees - 2% Ownership
(Board & Management control) Fixed line
Mobile
Data
IP
Yellow Pages Full service offering
BellSouth since June 1996
Second licence granted to
C&W in 1998 Mobile operators Since 1997 in voice services Incumbent operator * at Sept 2002
C&W Panama - Financial Overview: C&W Panama - Financial Overview Contribution to Regional Revenue – FY 01/02 Contribution to Regional EBITDA – FY 01/02 Source: C&W plc reported on a continuing basis Revenue
Growth % - constant currency EBITDA
EBITDA margin %
£m
FY
2001/02
296
(5)
134
45 £m
FY
2000/01
302
8
130
43
C&W Panama - Current Market Share: C&W Panama - Current Market Share Voice Market (Fixed Lines)
270,000 Residential telephone lines
102,000 Corporate & SME telephone
lines
13,000 Public telephones
Internet Market
6,300 ADSL customers
37,500 Dial Up customers
Mobile Market
550,000 Prepaid subscribers
64,000 Postpaid subscribers Source: C&W Panama (Nov 2002)
C&W Panama - Telecoms Market Trends: C&W Panama - Telecoms Market Trends Source: C&W Panama estimates Number of Subscribers (1,000s) 0 100 200 300 400 500 600 700 800 2002 2003 2004 Mobile Subscribers Fixed Lines Internet Solutions
C&W Panama - Liberalisation & Competition: C&W Panama - Liberalisation & Competition Mobile market is a duopoly
Duopoly will exist between C&W Panama & BellSouth until 2007
Voice Market liberalised since 2 January 2003
Today competition mainly confined to international & national long distance services
New entrants have limited geographic coverage
New entrants have limited capital resources
C&W Panama - Revenue Mix: C&W Panama - Revenue Mix Source: 2000/01 & 2001/02 C&W Panama Management accounts
C&W Panama - Challenges & Opportunities: C&W Panama - Challenges & Opportunities Difficult economic environment has impacted trading results but PBT has grown strongly
Opportunities to increase mobile penetration
Organic growth in fixed line market (2% / 3%)
Strong relationship with Regulator & Government
Government owns 49% of C&W Panama
Fixed lines competition focus primarily on international & long distance traffic
No further entrants in mobile market until 2007
Tightly manage capex - benefit from C&W Regional procurement
Increase customer focus / customer satisfaction
Fixed line: ADSL, IP Services (Voice & Data), Intelligent Services
Mobile: GSM / GPRS launch Oct 2002, Prepaid Offerings
Call Centre, Data Centre, Integrated Service offerings, Tailored Solutions, “Latin Cities” Economic
Market Trends Liberalisation Competition Operational
Efficiency Product
Developments Customer
Services
C&W Panama - Efficiency Improvements: C&W Panama - Efficiency Improvements Revenue per employee has improved 45% in the last 2 years
Operating expenses (excl. staff costs) have been managed down to 14% of revenues
Staff costs have been driven down from 17% to 14% of revenues with further improvements yet to flow through
Continuing management focus on costs and sweating existing assets
Cash flow (EBITDA-Capex) has improved 110% over the last two years Source: C&W Panama
C&W Panama - Efficiency Improvements - Headcount: C&W Panama - Efficiency Improvements - Headcount Source: C&W Panama
C&W Panama - Key Initiatives : C&W Panama - Key Initiatives Mobile (Pre & Postpaid) - GSM/GPRS launched Oct 2002
Internet solutions ADSL broadband launched Aug 2002
Customer retention programmes - Premier Plan & Tele prepaid
“Voice of the Customer”
Tightly manage capex, leveraging C&W Regional spend
Further reductions in underlying cost base
C&W Panama - Next Challenges: C&W Panama - Next Challenges Latin Cities Call Centre IP VPN QoS CARACAS QUITO LIMA RIO DE JANEIRO SANTIAGO BUENOS AIRES SAO PAULO PANAMA SAN JOSE BOGOTA Metro & Colon IP Core Data Centre
Cable and Wireless plc Regional Presentation 24th January 2003: Cable and Wireless plc Regional Presentation 24th January 2003
Macau: Macau James Cheesewright Chief Operating Officer
Cable & Wireless Regional
Macau - Agenda: Macau - Agenda Overview
Financial overview
Liberalisation & competition
Opportunities & challenges
Key initiatives for 2003/04
Macau - Location: CHINA GUANGDONG Hong Kong Guangzhou Shenzhen Foshan Zhongshan Zhuhai Macau - Location
Macau - Territory Overview: Macau - Territory Overview Economy
Population
GDP per capita
GDP growth - Special Administrative Region of China
- Largely autonomous under the “One Country - Two Systems” formula
- Urban economy, tourism strong
440,300 growing at 1%
per annum
$14,900
5.0% per annum Source: CIA - The World Factbook
Macau - Overview: 960 Employees* 51% owned by C&W Regional
28% Portugal Telecom
20% CITIC (Chinese Investment Co.)
1% Macau Government Ownership Exclusive provider of fixed lines until 2011
176,700 lines
Number one mobile provider - 73% market share
210,000 subscribers
Competitive since March 2001 Mobile Fixed Line Service offering Macau - Overview Well over 50% of revenue is earned from Mobile, Data & IP services * at Sept 2002
Macau - Financial Overview: Macau - Financial Overview Contribution to C&W Regional's revenue FY01/02 Revenue
Growth % - constant currency EBITDA
EBITDA margin %
£m
FY
2001/02
145
7
58
40 £m
FY
2000/01
130
(3)
53
41
Contribution to C&W Regional's EBITDA FY01/02 Financial performance has shown consistently strong growth Source: Cable and Wireless plc reported (at actual rates)
Macau - Liberalisation & Competition : Macau - Liberalisation & Competition Fixed Mobile ISP Other Date liberalised Exclusive
until 2011 Mar-01 Jan-01 - Licences* - 3 12 - Key competitors Smartone Hutchinson No major
competitors - * (inc. CTM) N/A
Macau - Opportunities & Challenges: Macau - Opportunities & Challenges Economic/Market Trends
Competition in Mobile/Internet
Product Development
Customer Service
Operational Efficiency
Well positioned to benefit from recovering economy
Proposed China, Hong Kong, Macau bridge
Opportunities arising from the “Las Vegas of the Far East”
High retention of market share in mobile & internet
Asian Cities
MMS, GPRS
Voice of the Customer
Retail outlets
Reduced headcount, increased productivity & e-enabled processes
Macau - Market Trends: Macau - Market Trends Fixed line Minimal fixed line growth
CTM 100% market share Mobile customer growth 30% 2002/03
CTM 73% market share
Mobile penetration currently 64% Data & IP Mobile Growth of 45% 2002/03
CTM 98% market share Source: C&W Regional estimates
Macau - Mobile Market Development: Macau - Mobile Market Development CTM customer numbers have grown by over 40% in the last 2 years
After 18 months of competition, CTM market share remains 73%
Over 65% of CTM’s customers are postpaid
ARPU is key commercial focus - premium business is being successfully protected & grown
Macau - Mobile Market Development - contd: A printed ad promoting the super rate on “Intra-Network” calls Macau - Mobile Market Development - contd
Macau - Growth Drivers: Macau - Growth Drivers Mobile data services through SMS, MMS & GPRS
Internet kiosks
Virtual second line for fixed residential users & new value added services
Provide 3rd party Call Centres
IP-VPN services for Hong Kong & Singapore
“Las Vegas of the Far East”
Retail outlets
Macau - Growth Drivers: Macau - Growth Drivers TeleOne retail outlet
Macau - Efficiency Improvements: Figures are presented in constant currency. Macau - Efficiency Improvements Revenue per employee has improved 30% over the last 2 years
Operating expenses have been managed down to 24% of revenues - even with the launch of Asia Cities in 2002/03
Continuing management focus on cost
Macau - Asia Cities: Macau - Asia Cities Tapping synergies between C&W Regional & C&W Global
Profitable use of capacity in C&W Global’s international network – gateway to China
C&W Regional’s relationship – Asia/China
Targeted proposition
Data & IP only
Business customers only
Corporate voice provided through Macau
Incremental capex only, no network build
Low cost entry to Hong Kong & Singapore markets
Profitable within four months of launch
Macau - Key Initiatives: Macau - Key Initiatives Mobile
Network quality enhancement
Other value added mobile services
Market segmentation to protect ARPU & increase customers
Fixed Line
Rebalancing local tariffs & rebundling local services
Repricing on IPLC to retain international competitiveness
Virtual second line for Residential users
Leverage Global infrastructure & Asia Cities
Data & Internet
Expand customer base
Broadband capacity enhancement
Provide Call Centre service to customers
Cable and Wireless plc Regional Presentation 24th January 2003: Cable and Wireless plc Regional Presentation 24th January 2003
Cable & Wireless Jamaica : Cable & Wireless Jamaica Gary Barrow
President, Cable & Wireless Jamaica
C&W Jamaica - Agenda: C&W Jamaica - Agenda Overview
Economic & Regulatory Environment
Financial Highlights
Challenges and Opportunities
Efficiency Management
Mobile
Key Initiatives
C&W Jamaica - Overview: C&W Jamaica - Overview Ownership
structure
Services
Customers
Employees* Listed on Jamaica Stock Exchange
82% - C&W plc
18% - Freefloat Voice (fixed & mobile)
Internet
Data solutions 2,470 435,000 fixed lines*
550,000 mobile subscribers* * at Sept 2002
* at Dec 2002
C&W Jamaica - Economic Environment: C&W Jamaica - Economic Environment Population 2.6m - low growth GDP growth 2001 1.7%
2002 (est.) 1-2% GDP per capita $2,500* Currency Jamaica Dollar * All $ are USD unless otherwise stated
C&W Jamaica - Regulatory Environment: C&W Jamaica - Regulatory Environment Negotiated agreement culminating with Sept 1999 Heads of Agreement between C&W & Government of Jamaica
Major aspects of agreement:
New Telecommunications Act 2000
Three phases of liberalisation over three years - full competition by March 2003
Regulatory Challenges addressed:
Rebalancing
Bypass
Price Cap
Interconnect rates determination
C&W Jamaica - Licences Issued : C&W Jamaica - Licences Issued Type of Licence
No. of
Licences
Issued*
Data Service Provider (DSP) 13 International Voice Service Provider (IVSP) 27 Domestic Voice Service Provider (DVSP) 11 Internet Service Provider (ISP) 44 Domestic Mobile Carrier 3 * Including C&W Jamaica
C&W Jamaica - Financial Highlights: C&W Jamaica - Financial Highlights Jamaica’s contribution to C&W Regional’s
revenue - FY 2001/02 Source: C&W plc financial accounts
C&W Jamaica - Financial Highlights : C&W Jamaica - Financial Highlights Source: C&W Group financial accounts FY FY 2000/01 2001/02 £m £m Revenue 317 366 Growth % - constant currency 14 EBITDA 148 145 47 40 EBITDA Margin % Strong revenue growth fuelled by expansion of mobile markets, interconnect fees from competitors & tariff re-balancing 12
C&W Jamaica - Revenue Mix: C&W Jamaica - Revenue Mix Strong revenue growth accompanied by a change in mix Source: C&W Jamaica
C&W Jamaica - Opportunities & Challenges: C&W Jamaica - Opportunities & Challenges International trend of lower Settlement Rates
Liberalisation of Domestic & International markets
Expanding Telecom market
Fixed to Mobile substitution Diversification into new profitable revenue streams
Investment in GSM/GPRS network with more services and features
Maximising value of existing products & services
Increased profitability through cost reduction
Improved customer services
C&W Jamaica - Efficiency Management: C&W Jamaica - Efficiency Management Continued drive for efficiency through
head count reduction Source: C&W Jamaica
C&W Jamaica - Efficiency Management: C&W Jamaica - Efficiency Management Employee Satisfaction Index Source: CFI Survey Listening to the Employee
C&W Jamaica - Efficiency Management: C&W Jamaica - Efficiency Management Continued Management of Operating Costs
CPE divestment
Van fleet rationalisation
Tightly controlled procurement & exploit synergies with Regional procurement
Property rationalisation & disposal
Front office system & billing (Customer Care & Billing System) - due Q1 2003/04
Introducing Enterprise Resources Planning (ERP)
C&W Jamaica - Mobile Market: C&W Jamaica - Mobile Market Market Performance
More mobile phones than fixed lines-matching the experience of many developing countries
Mobile Penetration of 45% against 13% eighteen months ago
Mobile market expected to grow to over 1.5 million customers
Fixed line penetration static at 17% 1 Dec 2002 - Market data
2 C&W Dec 2002
3 Estimated 1 3 2
C&W Jamaica - Growth Drivers: C&W Jamaica - Growth Drivers Handset design/availability
Additional roaming opportunities
Additional data capabilities
SMS
Mobile Internet
Multimedia Messaging
E-Banking
E-Pay & M-Commerce
Infor-tainment services
Vehicle Tracking Services
New GSM/GPRS Services
C&W Jamaica - Key Initiatives: C&W Jamaica - Key Initiatives Optimise current product & service offering
Market segmentation
Revenue diversification
Product bundles
Value added services
Cable and Wireless plc Regional Presentation 24th January 2003: Cable and Wireless plc Regional Presentation 24th January 2003
Cable & Wireless Caribbean Mobile Services : Cable & Wireless Caribbean Mobile Services Thomas Perez-Ducy
Executive Vice President, Mobile
Cable & Wireless West Indies
C&W Caribbean Mobile Service - Agenda: C&W Caribbean Mobile Service - Agenda Operating environment
Market liberalisation
Market characteristics
Growth drivers
GSM/GPRS update
Efficiency management
Short/medium term focus
C&W Caribbean Mobile Service - Caribbean Region: Grenada St Vincent
& the
Grenadines Barbados St. Lucia Montserrat Dominica Antigua C&W Caribbean Mobile Service - Caribbean Region Cayman St. Kitts Anguilla Turks & Caicos
C&W Caribbean Mobile Service - Economic Overview: C&W Caribbean Mobile Service - Economic Overview Economy
Population
GDP per capita*
GDP growth Variable throughout region
Includes Tourism, Mining, Financial services, Agriculture & Light manufacturing
902,000
Range from 13,000 to 267,000
Average: $9,000
Range: $2,400 (Montserrat) - $30,000 (Cayman)
1-2% over past 2-3 years Source: CIA – The World FactBook
* All $ are USD unless otherwise stated
C&W Caribbean Mobile Service - Market Liberalisation: C&W Caribbean Mobile Service - Market Liberalisation Competitive today: Jamaica & Antigua
Licences granted but operations not yet commenced: St. Lucia, St. Vincent, Grenada, & St. Kitts
Competition likely in other markets (except Montserrat) in the short/medium term
Likely competitors: Digicel, Centennial, APUA, & AT&T Wireless Liberalisation is not a “Zero sum” game –
competition will stimulate the mobile market as a whole
C&W Caribbean Mobile Service - Mobile Revenue by Country: C&W Caribbean Mobile Service - Mobile Revenue by Country Source: C&W Caribbean
C&W Caribbean Mobile Service - Market Data : C&W Caribbean Mobile Service - Market Data Source: CIA – The World Factbook & C&W Regional Management Accounts & assumptions. Country Population
(000) GDP/ Capita Mobile Penetration Subscriber
Numbers (000s) Anguilla 13 8,600 23 3 Antigua 71 10,000 39 11 Barbados 267 14,500 25 66 Cayman 39 30,000 59 23 Dominica 76 3,700 14 11 Grenada 101 4,750 8 8 Montserrat 5 2,400 20 1 St. Kitts 40 4,400 23 9 St. Lucia 154 8,700 17 26 St. Vincent 112 2,900 11 12 Turks 24 7,300 46 11 Total/Avg 902 9,000 26 181 Continued scope for increasing mobile penetration % ($)
C&W Caribbean Mobile Service - Market Size: Source: CIA – The World Factbook & C&W estimates C&W Caribbean Mobile Service - Market Size Bubbles = population Montserrat St. Lucia St.Vincent Grenada Dominica St.Kitts Barbados Antigua Anguilla Cayman 0% 10% 20% 30% 40% 50% 60% 70% GDP per capita (US$) Mobile Penetration % Turks & Caicos
C&W Caribbean Mobile Service - Revenue Growth: C&W Caribbean Mobile Service - Revenue Growth Source: C&W Jamaica
Gross turnover in H1 2002/03 was £33m
C&W Caribbean Mobile Service –Growth Drivers: C&W Caribbean Mobile Service –Growth Drivers Marketing, Product Development
Calling party pays introduced (except Barbados)
Per Second Billing phased in over next 4-6 months
Roaming revenue opportunities (available with TDMA today)
Short Messaging Service (SMS) introduced Sept 2001
Bundled product & marketing initiatives introduced from Q2 2002/03
Sales & Customer Service
Expansion of 3rd party distribution network
New Customer Care & Billing System (CCBS) deployed by Q1 2003/04
Single bill for multiple products
Launch GSM/GPRS in all Caribbean markets (from Q1 2003/04)
C&W Caribbean Mobile Service - GSM/GPRS Update: C&W Caribbean Mobile Service - GSM/GPRS Update Capex = £150m – over next 2 years (inc. Jamaica)
Radio/Transmission £108m
Switching £ 37m
Provisioning/Billing/Distribution £ 5m
C&W Regional procurement has secured beneficial supplier terms – Nortel
Technology strategy consistent with market developments in US TDMA operators (AT&T Wireless & Cingular)
C&W Caribbean Mobile Service – GSM/GPRS Update: C&W Caribbean Mobile Service – GSM/GPRS Update Launch : Barbados & Cayman launch date Q1 2003/04; all other markets shortly thereafter
Network coverage : GSM is the most cost effective means to improve coverage in medium to long term
Customer migration : segmented approach – migrate premium customers to GSM, run TDMA network indefinitely
Competitive offering : ability to offer a broad range of services & handsets
Mobile services : add additional data & internet based services to mobile product portfolio, GPRS available at GSM launch
C&W Caribbean Mobile Service - Efficiency Management : C&W Caribbean Mobile Service - Efficiency Management Tight control over operating costs
Customer acquisition costs - electronic PINS for pre pay customers, lower commission rates on handset sales
Operations & maintenance - reduce through seamless network coverage using switch & platform hubs
Product development - rationalised & deployed on pan-Caribbean basis
C&W Caribbean Mobile Service - Key Initiatives: C&W Caribbean Mobile Service - Key Initiatives Network coverage
Network quality
Maximise penetration ahead of introduction of competition
Customer loyalty programmes
Flexible product offerings & services
Prioritise targeted advertising & promotion campaigns
Focus on needs of high value customer base
Capitalise on strengths & benefits of a full service portfolio
Cable and Wireless plc Regional Presentation 24th January 2003: Cable and Wireless plc Regional Presentation 24th January 2003
Atlantic, Indian & Pacific Ocean, Middle East: Atlantic, Indian & Pacific Ocean, Middle East Jacqueline Holding
Regional Director, Atlantic & Indian Ocean
Atlantic, Pacific & Indian Ocean, Middle East: Atlantic, Pacific & Indian Ocean, Middle East
Atlantic, Pacific & Indian Ocean, Middle East - Financial Overview: * Management accounting information Atlantic, Pacific & Indian Ocean, Middle East - Financial Overview Contribution to Regional Revenues FY01/02 Contribution to Regional PBT FY01/02*
Atlantic, Pacific & Indian Ocean, Middle East - Economic Overview: * Source: The World Bank Group, based on 2001 estimates
All $ are USD unless otherwise stated Atlantic, Pacific & Indian Ocean, Middle East - Economic Overview GDP/Capita
($)* GDP
($)* Population Yemen 517 9.3bn 18.0m Bahrain 11,127 7.9bn 0.7m Maldives 2,214 0.6bn 0.2m Seychelles 7,125 0.6bn 0.1m Inflation 11.9% -1.2% 8.6% 6.1%
Atlantic, Pacific & Indian Ocean, Middle East - Company Overview: Atlantic, Pacific & Indian Ocean, Middle East - Company Overview Company Ownership Accounting
treatment Service
portfolio Fixed
lines Mobile
subscribers Employees TeleYemen 51% Subsidiary International
ISP mobile - 26,667 453 Batelco 20% Associate Full service 174,568 366,944 2,200 Dhiraagu 45% Subsidiary Full service 27,433 41,905 536 C&W
Seychelles 100% Subsidiary Full service 20,751 23,614 308
Atlantic, Pacific & Indian Ocean, Middle East - Market Structure : Atlantic, Pacific & Indian Ocean, Middle East - Market Structure Degrees of Regulation Regulated
Multi-Operator
Environment Regulated Liberalising Duopoly Monopoly Monopoly C&W
Diego Garcia Fintel C&W
Seychelles Sakhalin
Telecom C&W
Falklands Batelco
Dhiraagu C&W
Ascension C&W
St Helena
Telecom Vanuatu
Solomon Islands
Telecom
Atlantic, Pacific & Indian Ocean, Middle East - Overview of TeleYemen: Atlantic, Pacific & Indian Ocean, Middle East - Overview of TeleYemen Challenges
Licence and Shareholder Agreements terminate Dec 2003
Challenges to international exclusivity
Unregulated environment Opportunities
Licence terms currently under negotiation
Restructuring business to refocus on wholesale international
Business working with Govt to develop regulatory framework Status: Subsidiary
Shareholding: C&W 51%, Government of Yemen 49%
Revenues: FY 01/02 £69.6m*
Services: International voice and data, analogue mobile, ISP * Source: C&W Regional management accounts
Atlantic, Pacific & Indian Ocean, Middle East - Overview of Batelco, Bahrain: Atlantic, Pacific & Indian Ocean, Middle East - Overview of Batelco, Bahrain Challenges
Monopoly to end 2003, phased liberalisation of market
Mature market Opportunities
Working with regulatory body & Ministry to achieve sustainable competitive regime
Investing outside of Bahrain in JVs Status: Associate
Shareholding: C&W 20%, Government of Bahrain 58%, Others 22%
PBT: FY 01/02 £21m* (C&W share)
Services: Fixed & mobile full service operator, ISP * Source: FY 2001/02 reported
Atlantic, Pacific & Indian Ocean, Middle East - Overview of Dhiraagu, Maldives: Atlantic, Pacific & Indian Ocean, Middle East - Overview of Dhiraagu, Maldives Status: Subsidiary
Shareholding: C&W 45%, Government of Maldives 55%
Revenues: FY 01/02 £38.3m*
Services: Fixed line & GSM mobile full service operator, & ISP Challenges
National policy of liberalisation being introduced
Product cross-subsidy
Customer perception of value-for-money Opportunities
Assist Govt to build regulatory environment
Prepare company for competition
Re-align tariffs
Voice of the Customers * Source: C&W Regional management accounts
Atlantic, Pacific & Indian Ocean, Middle East - Overview of C&W Seychelles: Atlantic, Pacific & Indian Ocean, Middle East - Overview of C&W Seychelles Status: Subsidiary
Shareholding: C&W 100%
Revenues: FY 01/02 £27.1m*
Services: Fixed line & GSM mobile full service operator, not an ISP Challenges
Cash remittances blocked in country
Competitive since 1998
Limited regulation Opportunities
Hedging through property portfolio; barter
Reorganise company, improved customer perception, maintain market share 65% mobile; 97% fixed
Maintain customer focus * Source: C&W Regional management accounts
Atlantic, Pacific & Indian Ocean, Middle East: Atlantic, Pacific & Indian Ocean, Middle East
Cable and Wireless plc Regional Presentation 24th January 2003: Cable and Wireless plc Regional Presentation 24th January 2003
Cable &Wireless Regional Financial Overview & Wrap Up: Cable &Wireless Regional Financial Overview & Wrap Up Robert Lerwill & James Cheesewright
Cable & Wireless Regional
C&W Regional - Financial Overview: C&W Regional - Financial Overview Accounting for the business units
Financial performance
Financial management
Access to cashflows
Managing currency exposure
Cash & debt
Financial planning process
Guidance
C&W Regional – Accounting for the Business Units: C&W Regional – Accounting for the Business Units 100% owned branches
& subsidiaries Subsidiaries with minority stakes Associates Source: H1 2002/03 C&W management accounts 100% Revenue
100% EBITDA C&W Regional’s share of profits 17% PBT 83% PBT C&W Regional proportionate
share of PBT is 72%
C&W Regional - Financial Performance Overview: C&W Regional - Financial Performance Overview Source: As reported at actual rates - continuing businesses only
* EBITDA less cash Capex £m
2001
£m
2002
Growth % Constant
Currency £m
H1 2002/3
Growth % Revenue 1,357 1,459 6 723 6 Gross Margin 1,107 1,135 4 543 3 Gross Margin % 82 78 75 EBITDA 580 627 5 298 2 EBITDA Margin % 43 43 41 Constant
Currency Capex 317 291 130 Cashflow* 263 336 168
C&W Regional - Financial Performance: C&W Regional - Financial Performance £m
FY
2000/01
£m
FY
2001/02 £m
H1
2002/03
Revenue 1,357 1,459 723 EBITDA* 580 627 298 Depreciation/Amortisation (164) (182) (83) Operating profit 416 445 215 Interest & other income
(expense) (14) (7) (3) Share of profit of associates 62 77 41 Profit before tax &
exceptional items 464 515 253 Effective tax rate as part
of C&W Group Profit & Loss * Before exceptional items 22% 22% 21%
C&W Regional - Financial Management: C&W Regional - Financial Management Access to Cashflows
Dividends - £155m
Management fees
Branding fees
Timing & flexibility of Cashflows
Branch accounting
Intergroup balances FY 2001/02 cash remitted to C&W plc = £190m Source: C&W Management accounts
C&W Regional - Financial Management of Currency Exposure: C&W Regional - Financial Management of Currency Exposure Revenue by currency H1 2002/3 Currency exposure in C&W Regional principally relates to US Dollars 14% 40% 10% 36% $ $-pegged $-linked Other Source: H1 2002/03 C&W Management accounts
C&W Regional - Financial Management: C&W Regional - Financial Management Net cash/(external debt) £m
30 Sept 2002 Short Term
Deposits &
Cash External
Debt Net Cash/
(External Debt) Jamaica 24 (76) (52) Panama 18 (129) (111) Macau 36 - 36 Other Caribbean 82 (16) 66 AIO & Other 97 (11) 86 Total Regional 257 (232) 25 Source: H1 2002/03 reported
C&W Regional - Guidance: C&W Regional - Guidance 2002/03
Guidance for the full year remains unchanged:
Deliver 0-5% revenue growth*
EBITDA margin over 40%
Contain Capex at c.£300m * At constant currency
C&W Regional - Summary Perspective: C&W Regional - Summary Perspective Track record of sustainable growth
Market liberalisation being managed in line with expectations through regulatory expertise
Over 50% of revenues today are derived from open markets
Business focus on revenue growth & margin maintenance
Synergies add value to C&W Regional as a whole
Generation of strong cashflows
C&W Regional - A Record of Growth: £m C&W Regional - A Record of Growth
C&W Regional - Market Liberalisation: C&W Regional - Market Liberalisation In 2002/03 over 50% of C&W Regional revenues will come from competitive markets Source: C&W management estimates 0% 20% 40% 60% 80% 100% 2000/01 2001/02 2002/03 2003/04 2004/05 Competitive Non-competitive
Cable and Wireless plc Regional Presentation 24th January 2003: Cable and Wireless plc Regional Presentation 24th January 2003
Cable and Wireless plc Regional Presentation 24th January 2003: Cable and Wireless plc Regional Presentation 24th January 2003