FY19 Interim Results Presentation 27 February 2019
Res eset ettin ting g Voc ocus us – Clea Clear r mo mome ment ntum um on on st strate tegic gic tu turna narou ound nd ➢ 3 year turnaround - focus is long term value creation ➢ Growth potential is greater than we have challenged ourselves to realise THE ➢ Target to double revenue from Enterprise, Government and Wholesale in 5 years RESET ➢ Culture and technology must be critically differentiating enablers A ug ‘18 ➢ Cost management must be a core part of our DNA ✓ Board renewed ✓ Organisation restructured into 3 distinct business ✓ Leadership team rebuilt and remuneration aligned to 3 year turnaround and value creation PROGRESS ✓ Company values launched IN H1 FY19 ✓ Australia Singapore Cable launched ✓ Optus MVNO renegotiated (path to 5G and economics constructed for scale growth) ✓ Strengthening and extending secure network capability ✓ Commenced network consolidation 2
H1 FY1 H1 FY19 9 Res esults ults – Highs Highs an and d Lo Lows ws ✓ Accelerating new sales momentum in Vocus Networks-Services (EGW) 1 ✓ Coral Sea Cable project, a sub-sea cable connecting Solomon Islands and Papua New Guinea to Australia, is on track ✓ Significant cost out of Consumer business – redesign sales and service channel (Manila HIGHS operations) ✓ Cash conversion strong at 98% • Sustainable range of 90% - 95% (subject to normal movements either side) ✓ Improving debt profile post significant ASC capex investment Vocus Networks-Services (EGW) 1 revenue growth impacted by • Capacity planning and poor provisioning process LOWS • Higher than normal churn due to industry consolidation and legacy contracts Vocus Retail (Consumer and Business) 1 margin decline • Customer churn and legacy PSTN erosion in Business • NBN impact and energy SIOs in Consumer 1. Operating structure (see slide 5). 3
Resetting Vocus 4
Res eset etting ting Vocus ocus – Ope Operating ting st struc uctu ture e aligne aligned d to to thr three ee dist distinct inct bu busine siness sses es Leadership incentivised with Vocus Group LTI VOCU CUS NETWORK RKS VOCU CUS RE RETAI AIL VOCU CUS NEW W ZEALAN ALAND Networks & Retail Enterprise, Government, Wholesale Business & Consumer Product & Marketing Product SERVICES Product Sales Operations Sales & Channel Sales & Marketing & Marketing & Channel & Support Operations & Support Channels & Support INFRASTRUCTURE & OPERATIONS (IaaS) IT & Operating Operating Systems Networks IT & Operating Systems Systems Networks GRO ROUP SERVI RVICE CES 5
Res eset etting ting Vocus ocus – Fibr Fibre e infr infras astr truc uctu ture e is is ou our r co core as asse set t an and d op oppo portu tunity nity Australian inter-capital network – 16,400 km 1 1. • Australia’s second largest national inter -capital fibre network • Combined with ASC, provides single operator assured services between Asia and East Coast Australia Australia Singapore Cable (ASC) – 4,600 km 2. • New high capacity route to Asia (and onto Europe) replacing ageing and unreliable SeaMeWe3 system • Strong growth expected as internet traffic swings to the West North West Cable System (NWCS) – 2,100 km 3. • Connecting offshore oil & gas facilities in the Timor Sea, between Port Hedland and Darwin • No other sub sea cable in this region Australian metro network – 5,500 buildings on net 4. • Good coverage in major CBDs New Zealand inter-cap network – 4,200 km 5. • Uniquely positioned to maximise further Trans-Tasman opportunities across Enterprise market segment 1. Including RBBP fibre. 6
Res eset etting ting Vocus ocus – Prior Prioritising itising op oppo portu tunities nities to to f fur urth ther er st stren engt gthe hen n an and d dif differ eren entia tiate te co core fi e fibr bre e as asse sets ts The strength of the Vocus network is moving high volumes of data around Australia, to and from Asia and the USA 1. Extending the reach of our secure infrastructure (completion 2019) • Dedicated national secure network, secure NOC, secure provisioning team • Safeguarding against ever increasing cyber threats • Second only to Telstra in geographic reach and service breadth 2. Reviewing strategic fibre builds into new geographic markets • Metro & Regional 5G backhaul • Connecting ASC / NWCS through oil rich Timor Sea & North West Shelf, and mining focused Pilbara region • Connecting Southern Indonesia from NWCS 3. Broadening International assets and improving diversity • ASC enables strategic international swaps into Asia to build network reach and opportunity • Capacity on Indigo enables protected services from Perth to Singapore • Connecting ASC and NWCS would “complete the national loop” – secure and enhanced reliability of northern and west coast Australian communications network 7
Res eset etting ting Vocus ocus – Align Align ta targe get t mar market ets s with ne with netw twor ork k ca capa pabili bility ty. . Few ewer er. . Big Bigge ger. . Bolde Bolder Fibre infrastructure assets are critical to support a 5G enabled and cloud connected world Key verticals Differentiation / Leadership Financial services • Financial services – high reliability fibre optimised for trading, domestic and regional trade flows Enterprise Oil & Gas 1 • Oil & Gas, Mining – reliable network in geographically remote regions Mining Federal and State • Build Government grade secure networks and product Government • Security enabled cloud services Government 2 Defence and • Australian owned and operated Defence Industries • On net carriage from Sydney to Singapore – enable domestic and international carriers / OTTs OTTs to operate domestically, AsiaPac and US Wholesale Data Centres 3 • Breadth and diversity of inter-city reach 5G Networks • Regional 5G backhaul Target – double revenue in Vocus Networks - Services (EGW) by 2023 8
Res eset ettin ting g Voc ocus us – Res esha hapin ping g te techn hnolo ology y ca capa pability bility an and d ec econ onomics omics In 3 years, Technology must be a competitive differentiator and enabler of growth Financ Fina ncial ial Aspiration Aspir tion 20 2023 23 Now End CY2021 End CY2022 ➢ Double revenue in Vocus Networks by 2023 whilst delivering: 8 BSS 2 BSS BSS stacks stacks -- Consolidation 12 Billing 2 billing 1 systems systems ➢ Net OpEx reduction of c.$30m from Infrastructure & Operations 1 Network 6 networks -- 1 network consolidation ➢ Annual capex savings of c.$30m 2 Manual ➢ Investment funded within existing Automated provisioning Programmable provisioning process -- capex envelope network can takes weeks take minutes 3 and months Investor update on Network and System consolidation - mid May 2019 1. As defined Slide 5 9
Res eset etting ting Voc ocus us – Le Lega gacy y bu busine siness ss de decli lining ning bu but V t Voc ocus us Ret etail ail is is a a tu turna narou ound nd op oppo portu tunity nity CHALLENGES OPPORTUNITIES • Existing margin mix dominated by Fixed Broadband • Real brand equity: Commander, Dodo, iPrimus • Legacy fixed voice in Business • Significant customer base, in complementary segments • NBN is complex and economically unattractive • New Optus MVNO opportunity, including 5G • Inefficient existing legacy systems • New experienced leadership team • Valuable energy business • Significant cost out opportunity • Cash generative 10
Res eset etting ting Voc ocus us – Voc ocus us Ret etail ail – 3 3 yea ear r res eset et on on role, ole, market mar et op oppo portu tunity nity an and d ca capa pabili bility ty THE RESET FIXED WIRELESS • Focus on growing cash returns & MOBILE vs NBN • Operated independently from Vocus THE • Big mobile market share upside for ROLE Networks Commander, Dodo and iPrimus • 5G path for business applications • Small business • Mobile and 5G / fixed wireless • “Fit for purpose” wholesale pricing MARKET • NBN where viable OPPORTUNITY construct in mobile • Cross product bundles • Simpler, enabling lower operating cost • Commercial and strategic • Digital CAPABILITY partnership with Optus vs. price • Base management taker from government monopoly 11
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