Optus SingTel Investor Day 1 October 2003
Chris Anderson Chief Executive Officer Optus
Optus: only scale player challenging incumbent � Wireless and wireline networks around Australia Darwin Darwin B1 Satellite B1 Satellite B3 Satellite B3 Satellite A3 Satellite A3 Satellite C1 Satellite C1 Satellite Cairns Cairns Jasuraus Jasuraus Brisbane Brisbane PacRim PacRim SMW 3 SMW 3 West West Sydney Sydney Perth Perth Southern Southern Cross Cross Canberra Canberra Adelaide Adelaide Tasman Tasman 2 2 Southern Southern Mobile Digital (GSM) Coverage Inter Office Fibre Melbourne Melbourne Cross Cross International Fibre Optic Cable Broadband Local Network Hobart Hobart
Australian telecomms market: scale and returns � Australia supports 2-3 major players in most industries Australian telecoms Profitability correlates to operators: revenue scale revenue and network scale 20 Operating revenue (A$bn) EBITDA margins • Incumbent: approximately 50% 5.5 • Optus: approaching 30% target 1.6 1.5 • Other operators have lower margins 0.2 0.1 Telstra Hutchison Optus Vodafone AAPT PowerTel Based on last reported FY results (Telstra & AAPT - y/e Jun 30; Optus & Vodafone - y/e Mar 31; Hutchison & PowerTel - y/e Dec).
Established track record of top line growth � Largest contributor to SingTel Group revenues Optus revenue growth: Q1 FY04: strong contributions outstripping the industry from each retail division Mobile: 17% Optus service revenues 17% Growth Optus Business: 13% total revenues* Industry 5% Consumer: 21% total revenues Optus JP Morgan Q1 FY04* estimate Q1 FY04 * Excluding C1 defence contract
Financial discipline: cost control � Margin improvement drives bottom line turnaround Operational EBITDA margin* NPAT turnaround: A$122m increases to 28% 80* Operational EBITDA margin 28% Net profit after tax (A$m) 22% (42) Q1 Q1 Q1 Q1 FY03 FY04* FY04 FY03 * Excluding C1 defence contract
Financial discipline: capital management � Capex and cashflow turnaround Capex: revenue ratio continues Free cash flow* up 172% to to track within mid-high teens A$185m… 29% 185 Free cash flow* (A$m) 16% FY02* FY03 Q1 FY03 Q1 FY04 * FY02 revenues restated on basis consistent with FY03
Strategic discipline: clear strategic focus � Strict investment criteria successfully executed Investment criteria Example Segments with a strong � Maximise yield Mobile presence Aim to maintain Consumer � Segments with current cash positive regulatory barriers presence Achieve scale and DSL � New markets return on investment within 3-4 years Pay TV If businesses do not content � Exit business meet investment criteria
Optus divisions
Three retail divisions: different stages of maturity � Mix of yield and potential for growth Our businesses: Q1 FY04 Our businesses: Q1 FY04 revenue contribution* Operational EBITDA margins Operational EBITDA margin CMM Optus overall 24% 38% margin target: 30% Mobile Wholesale 54% 23% 6% Business 17% 10% Mobile Business Consumer & Wholesale* *Excludes C1 Defence contract
Optus Business: Q1 FY04 results � Successful launch of C1 satellite contributes A$217m revenue Underlying corporate revenues up 13%* Optus Business revenue (A$m) Corporate voice revenues 7% C1 217 Defence contract 7% Corporate data revenues 252 Underlying 222 corporate revenues Combined Business & 23% Wholesale EBITDA margin* Q1 FY03 Q1 FY04 * Excludes C1 Defence contract
Challenger approach underpins our strategy � Customers value quality in many areas of service Icon account successes: financial services Icon account successes: government State governments NSW, WA, NT Other icon account successes
Outlook
Optus: strong & sustainable turnaround � “Best Asian Competitive Carrier” - Telecom Asia 2003 Strong turnaround delivered: Positive outlook Q1 FY04 results Top line: FY04 Double strong growth Revenues* 17% revenue digit track record growth Operational Bottom line: Net profit A$80m 30% EBITDA now profitable after tax* Margin target Cashflow: Free cash FY04 free >A$650m positive Group A$185m flow** cash flow** contributor * Excluding C1 defence contract ** Operating cash less cash capex
Optus SingTel Investor Day 1 October 2003
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