Presentation by Andreas Schleicher Tackling the School Absenteeism Crisis 30 ...
New Frontiers
1. 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
2. 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
3. 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
4. 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
5. 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
6. 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
7. Channel Business in Eastern Europe
Modern Times Group MTG AB
Nasdaq OMX Stockholm : MTGA, MTGB 7
8. 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
9. 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
10. 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
11. 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
12. DTH Business in Eastern Europe
Modern Times Group MTG AB
Nasdaq OMX Stockholm : MTGA, MTGB 12
13. 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
14. 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
15. 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
16. 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
17. 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
18. 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
19. 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
20. 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
21. 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
22. 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
23. 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
24. 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
25. 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
26. 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