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New Frontiers

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Irina Gofman, CEO MTG Russia & CIS &

Irina Gofman, CEO MTG Russia & CIS &
Ulrik Bengtsson, CEO Pay-TV Emerging Markets. Capital Markets Day 2010.

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New Frontiers New Frontiers Presentation Transcript

  • 2010 Capital Markets Day Irina Gofman, CEO MTG Russia & CIS Ulrik Bengtsson, CEO Pay-TV Emerging Markets New Frontiers Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 1
  • Non-stop Development Year 2003 2004 2005 2006 2007 2008 2009 2010 Countries 7 11 15 22 23 24 25 25 Channels 2 3 5 6 7 8 10 12 DTH platforms Baltic Ukraine Russia Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 2
  • Strong Financial Performance Total Pay TV Revenue, EBIT and margin 1100 30% • All times high sales in 2009, close to 900 million 25% 900 SEK 20% • Growing EBIT margins at 700 mln SEK 15% 20% 500 10% • Hard prove for the 5% successful business 300 model based on 0% 100 incremental growth and -5% scale -100 Y 04 Y 05 Y 06 Y 07 Y 08 Y 09 -10% Revenue EBIT EBIT Margin Source: MTG company data Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 3
  • Our markets are still far from saturation • Roomy growth potential across most of • Low Digital TV penetration gives another the markets dimension for multi-channel Pay TV development Pay TV Penetration vs Pay TV HH Digital TV HH as % of total TV HH 10,000 100% 8,000 80% 68% 6,000 54% 59% 60% 46% 46% 4,000 42% 29% 32% 29% 40% 23% 25% 2,000 17% 4% 20% 0 Russia Ukraine B&H Czech Bulgaria Serbia Croatia Macedonia Hungary Poland Romania Slovakia Slovenia 0% Hungary Romania Bulgaria Poland Ukraine Russia Germany UK France Terres trial S atellite C able IP TV Pay TV HH % Pay TV penetration Source: Screen Digest, RTL, MTG company data Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 4
  • Pay TV in East is structurally different from West Eastern Europe Western Europe • Larger Geographical • Smaller Geographical Footprint, multi- Footprint, multi-channel Structure channel free viewing pay viewing environment environment • Build volume first and fast • Growth in Pay TV & • Stable Pay TV & Platforms Digital-TV Penetration Digital-TV Penetration • Adjust business models from Scandi experience • Small variety of • Premium-, basic-, packaging larger & smaller • Pre-paid business Packages • Free viewing packages packages model for DTH businesses • MiniPay as a stand alone business in High price sensitivity • ARPU stable with high • some CEE countries Sometimes price in the base consumer Pricing • hardware vs content spending on Pay TV Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 5
  • Pay TV East – Rules of Engagement • Expanding Existing Viasat Brands into the Channel Geographical new territories Business is the Expansion MTG Trojan Horse to the DTH • Creating localized content brands: TV1000 East, Russian Kino Localization • Bundling and packaging to maximize Revenue revenues and promote Viasat Brand to Maximization end customers • Serving B2B and B2C segments (DTH) Diversifying and introducing advertising in the selected revenue markets streams Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 6
  • Channel Business in Eastern Europe Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 7
  • Pay TV Channel Business at a Glance • ~ 44 million subscriptions sold in 2009, • Revenues at all time high in 2009 but higher potential is still ahead • Channel business is the major EBIT driver for Pay TV East so far Channels Subscriptions (mln) and ARPU Revenue, EBIT 140 1.0 500,000 40% 0.9 30% 120 0.8 400,000 20% Addressable market 100 0.7 10% 300,000 0.6 80 0% 0.5 60 200,000 -10% 0.4 -20% 40 0.3 100,000 -30% 0.2 20 0.1 -40% 0 0 0.0 Y 04 Y 05 Y 06 Y 07 Y 08 Y 09 -50% 04 05 06 07 08 09 -100,000 -60% Subs (m illions ) ARPU (SEK) Revenue (TSEK) EBIT (TSEK) EBIT magin (%) Source: MTG company data Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 8
  • Presence across all major Eastern European Countries Attractive incremental margins due to the multi territory footprint • Russia, Romania and Bulgaria are • Poland is the ARPU leader, but the the highest volume drivers majority of the revenues are still coming from Russia Subscriptions Revenue 1% 5% Russia 2% 6% Russia 3% Poland Poland 3% Bulgaria 3% Bulgaria Serbia 3% Serbia 5% Romania Romania Ukraine 4% Ukraine Hungary Hungary 6% Czech Rep Czech Rep Slovakia 5% Slovakia Slovenia Slovenia Other Other 5% 9% 52% 6% 47% 4% 6% 5% 7% 13% Source: MTG company data Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 9
  • Russian Example: Consolidation and New Platforms Growth • Cable has still the highest penetration • Pay-TV was the fastest growing segment in • First consolidation stage is over, now focus is on the 2009 despite the telecom market stagnation network modernization • Mkt growth will be driven by penetration and • Satellite TV entered the boom phase through mostly free operators’ ARPU increase viewing (Tricolor TV) Cable 40 % HH Penetration Russian Consumer Spend (USD billion) 30 Pay cable 20 DTH 10 IPTV 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 Mobile Dig Dispay Fix line Broadband Pay TV Wild East Boom New Reality Source: IKS Consulting 2009, Json&Partners, April 2010, MTG company data Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 10
  • Russian Example: MTG on Top March Nov. May Oct. Nov. Sept. Summer 2003 2003 2004 2005 2006 2008 2010 Out- Top performing Top Russian Pay TV Channels Channels Market Group • TV1000 East and TV1000 • Viasat is the leading • Russian Pay TV revenue CAGR Russian Kino are the most Channel Group in Russia in 2004-09 was 31% (US$) watched Pay TV movie channels penetration and revenues in Russia according to TNS • Viasat Pay TV Revenue CAGR Gallup • High EBIT margin 2004-09 was 76% (US$) Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 11
  • DTH Business in Eastern Europe Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 12
  • DTH Introduction DTH has been very profitable for us in Scandinavia and given us leverage to move into the virtual operator business. We anticipate the same journey in our Emerging Markets STAR High market share in fast-growing market QUESTION Low market share in fast-growing market MARK DTH Baltic DTH Baltic High 2008 2004 DTH Scandi DTH Scandi 1997 1992 Market growth rate DTH Ukraine Virtual IP 2008 DTH Russia 2010 2010 CASH COW High market share in mature market DOG Low market share In mature market DTH Scandi Low 2008 High Relative market share Low Model shows MTG’s DTH development from 1992 untill today. Dotted arrows indicate direction of MTG’s development in the coming years. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 13
  • DTH at a glance Steady subscriber growth accelerated on back of Raduga acquisition. EBIT growth despite investments in Ukraine. Subscribers Revenue and EBIT (000' SEK) 350 550000 46500 300 450000 36500 250 Subscribers (000') 350000 200 26500 Revenue 250000 EBIT 150 16500 150000 100 6500 50000 50 -50000 -3500 0 Y 04 Y 05 Y 06 Y 07 Y 08 Y 09 Y 10 Y 04 Y 05 Y 06 Y 07 Y 08 Y 09 -150000 -13500 Premium DTH subscribers Basic DTH subscribers Revenue EBIT 2010 subscribers are Q1 values Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 14
  • DTH Baltic Viasat has gained significant market share in the last year. We are the largest pay TV platform in both Lithuania and Latvia. In Estonia we are part of the IPTV growth due to our Elion agreement. Market share total Baltic development in non cabled universe Average market share in non-cable universe 100% 100% 7% 18% 12% 80% 4% 80% 19% Viasat 60% 60% 12% IPTV DTT (pay) 40% 77% 40% DTT (free) 48% Terrestrial (analogue) 20% 20% 0% Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 0% Est Lat Lit Analogue Terrestrial DTT IPTV Viasat Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 15
  • DTH Baltic - positioning During the last 2-3 years Viasat has developed into a true premium player with the launch of Viasat Sport Baltic, Viasat Golf, Viasat Hockey, TV1000 premium and TV1000 action. Baltic Gold package around 45 channels Monthly fee: 305 EEK (24 USD) Entrance fee: 505 EEK (40 USD) Price leadership – higher TV ARPU than any competitor Content leadership – controlling the regions only premium sport and movie channels 13 own produced channels Premium position with HD and PVR products in the markets Full box subsidy. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 16
  • DTH Baltic – subscriber base After continuous growth since 2004 we faced a decline in the recession 2009, primarily due to bad payments. However, the situation has now stabilized and we are back to growth Total Subscriber Base Total ARPU (EEK) 250,000 3500 200,000 3000 150,000 2500 100,000 2000 50,000 1500 0 1000 2005 2006 2007 2008 2009 2010 Y 06 Y 07 Y 08 Y 09 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 17
  • DTH Ukraine – market development and markets shares DTH market has historically consisted of 2 million FTA satellite installations. However, this base is declining and are providing one of the best sources of growth for Viasat. Market shares in DTH segment Average market share Pay DTH (non terrestrial or cable) 100% 4% 2% 8% 42% 99% 45% 98% 97% 96% NTV + other 95% Tricolor Poverhnost' TV 94% Viasat Q2'2009 Q3'2009 Q4'2009 Q1'2010 Awareness and intention to Free satellite TV NTV + other 80% 4.0% connect Tricolor Poverhnost' TV Viasat 60% 3.0% Viasat have acquired a significant share of Ukraine’s 40% 2.0% Pay TV market and are already larger than NTV+ that 20% 1.0% have been on the market for 10 years 0% 0.0% Also Viasat brand awareness are already exceeding Viasat NTV+ Poverhnost' Aided TV that of NTV+ Spontaneous Source GFK and internal analysis Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 18
  • DTH Ukraine – positioning Strong offering but market still not ready for full fledged premium positioning. Ukraine Prestige Package around 70 channels Monthly fee: 168 UAH (21 USD) Entrance fee: 599 UAH (75 USD) Positioned with low entry barrier for customer but relatively high monthly fee Only supplier in the market offering customer service Partial box subsidy model 7 own produced channels First premium sport channel launched in September in cooperation with TRK Ukraine DTH exclusive movie and sport content MPEG 4 gives us beneficial cost structure Still not full fledged Premium position Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 19
  • DTH Ukraine – subscriber base Our customer base have grown steadily even throughout the Ukrainian crisis. Total Subscriber Base 50000 Total ARPU (UAH) 45000 1,400 40000 1,300 35000 30000 1,200 25000 1,100 20000 1,000 15000 10000 900 5000 800 0 Y 09 Y 10 J 08 M 08 M 08 J 08 S 08 N 08 J 09 M 09 M 09 J 09 S 09 N 09 J 10 M 10 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 20
  • DTH Russia – market potential Russia represents a large untapped DTH market which should be growing when disposable incomes increase. Total HH 54 mln Mostly Cable Mostly Non cable City HH 37 mln Cities High Rise Apt 24 mln Blocks Cities Low Rise apt 13 mln blocks Small settlements 17 mln Recreational (dachas), 10 mln second homes Addressable 24 mln 40 mln Current Pay TV 12 mln 5 mln To capture * 8-10 mln 10 mln *Adjusted to disposable income, adoption rate, ARPU increase of the current networks and current competition in DTH Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 21
  • DTH Russia – positioning Raduga is positioned neatly right in-between the existing two big players. This caters to a lower ARPU segment than NTV+ and our Ukrainian platform, but also a higher volume segment Raduga TV Package around 55 channels Monthly fee: 300 RUB (9,7 USD) Entrance fee: 5900 RUB (190 USD) Prepaid model Card sales model with no proprietary boxes No box subsidy Positioned with high entry barrier for customer but low monthly fee Positioned right in-between high end NTV+ and extremely low end Tricolor 8 own produced channels Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 22
  • DTH Russia – Subscriber base This positioning is providing a significant growth potential and since feb. 2009 base has grown to over 85 000 subscribers Total Subscriber Base 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 feb mar apr may jun jul aug sep oct nov dec jan feb mar apr 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2010 2010 2010 2010 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 23
  • Synergies between our minipay and DTH businesses There are proven synergies between our channel minipay business and our DTH platforms, our Scandinavian experiences has given us the blueprint on how to use them Description Relevance 1 Given the economy of scale in our own channels Structurally lower our platforms can access this content at a very low content cost price, this is particularly true for the expensive premium content 2 Lower marketing costs due to cross promotion access at our FTA and pay TV channels. Highest Cross promotion relevance where we have FTA channels 3 We have good understanding of the market we enter with DTH because we have had local Market knowledge presence for years. 4 The more channels we have in a market the more leverage we create which is a value that can be used Market Leverage to strengthen the platform either by giving it exclusive content or by entering virtual operator agreements Modern Times Group MTG AB Very relevant Nasdaq OMX Stockholm : MTGA, MTGB 24 Not relevant
  • Summary Russia still represent our single greatest growth potential Mini pay Growth will come primarily through volume growth Main driver in volume growth will be through selective new channel launches Baltic countries are still expected to provide growth for Viasat We have two additional new platforms both of which represents a great future potential DTH A multi-platform strategy focused on 3rd party networks (large digitised cable and IPTV operations) still represents a more or less untapped market for Viasat in our Emerging Markets. Ensure success in our Russian and Ukrainian DTH business Next Look for selective opportunities to extend current DTH businesses into new territories We are currently evaluating the opportunity for both mini pay and DTH in Africa Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 25
  • 2010 Capital Markets Day Irina Gofman, CEO MTG Russia & CIS Ulrik Bengtsson, CEO Pay-TV Emerging Markets New Frontiers Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 26