M2 Telecommunications Group Ltd

2013 Investor Day 12 November 2013

Presentation Content • Welcome • Consumer Segment Overview • Business Segment Overview • Update & Outlook

Investor Day 2013, Slide 2

Agenda Time

Item

Speaker

10.30

Welcome

Geoff Horth, CEO

10.40

Consumer Segment Overview

Boris Rozenvasser, Consumer Director

11.10

Business Segment Overview

Scott Carter, Business Director

11.40

Update and Outlook

Geoff Horth, CEO

12.10

Panel Q&A

Geoff Horth, Darryl Inns, Boris Rozenvasser, Scott Carter

12.40

Lunch with the Executive Team

1.00

Sydney Exchange Tour (optional)

Investor Day 2013, Slide 3

Consumer Boris Rozenvasser, Consumer Director

Products & Positioning One Call to connect all essential services

Affordable monthly automatic payment plans

Leading challenger brand in telco with wide market appeal

Cheap price with high perceived value offerings

Family-orientated Mid/lower tier socio-economic sector

Flexible payment options

Quality offering for the more discerning user

Established & Aspirational Mid/higher tier socioeconomic sector

Connect & Save with Dodo Low-cost telecommunications & utilities provider

Providing Australian households with high-value telecommunications services since 1996

NBN Fixed Voice

Data

Mobile

Fibre

Energy

Insurance

Fixed Voice

Data

Mobile

Fibre

Investor Day 2013, Slide 5

Go-to-market Strategy

Online Affiliates | Search Engine Marketing | Display | Comparators

Offline Radio | TV | Outdoor | Sponsorship | Direct Mail

Internal Cross-sell | Upsell

SERVICES GROWTH

Investor Day 2013, Slide 6

Sales & Marketing

$20M+

5%

95%

Total spend

Branding

Direct Response

800

2,000

1,200

Sales & Marketing Team

Sales Calls/day

Online Leads/day

Investor Day 2013, Slide 7

Above the Line: Radio • Partnering with Key Radio Stations – leaders in our demographic • Maintaining Dodo activity and commenced iPrimus in October 2013

Matt & Jo

Breakfast with John & Ross

Fifi & Jules

• iPrimus • #1 FM Breakfast show in Melbourne (all people)

• iPrimus and Dodo Power & Gas • #1 Breakfast show in Melbourne (55+)

• iPrimus • #1 National drive show (all people)

Hot Brekky • Dodo Power & Gas • #1 FM Breakfast show in Melbourne (24-54)

Investor Day 2013, Slide 8

Above the Line: TV • Partners covering all main free-to-air channels nationwide • Maintaining Dodo activity with key TV partners • Commenced iPrimus TV in October 2013

Investor Day 2013, Slide 9

iPrimus TVC

http://www.youtube.com/user/iPrimusAU Investor Day 2013, Slide 10

iPrimus achieves 148% growth in new sales iPrimus New Service Gross Sales M2 Acquisition of iPrimus

Jun‐12

Jul‐12

M2 Acquisition of Dodo

Aug‐12

Sep‐12

Oct‐12

Nov‐12

Dec‐12

Jan‐13

Feb‐13

Mar‐13

Apr‐13

May‐13

Jun‐13

Re-priced iPrimus to be in line with premium positioning

Jul‐13

Aug‐13

Sep‐13

Above The Line commenced

Oct‐13

148% increase in monthly gross sales between Jun 2012 and Oct 2013 Investor Day 2013, Slide 11

Dodo continues strong sales performance

[Removed: Dodo video http://www.youtube.com/user/DodoAUS]

Investor Day 2013, Slide 12

Dodo NBN Leveraged M2 infrastructure to launch NBN with no incremental investment

Investor Day 2013, Slide 13

Dodo NBN Low entry-level price point including Pay As You Go Fibre Home Phone

Investor Day 2013, Slide 14

Dodo NBN Highly competitive unlimited data plan

Investor Day 2013, Slide 15

Dodo Connect Stores Retail distribution strategy aligned to low cost-to-acquire advantage

Dodo Connect Stores 7 existing stores in Victoria with another 13 to be opened before Christmas Bendigo Craigieburn

Epping Plaza

Plenty Valley

Broadmeadows Woodgrove Watergardens

Greensborough Airport West Northland

Doncaster

Knox City

Werribee Plaza Chadstone

Southland Dandenong Plaza

Parkmore

Fountain Gate

Geelong

Bayside Plaza

Business Scott Carter, Business Director

Business Brands

Business Communication Specialists

End-to-end Business Solutions

Trusted partner with 30 years experience

NBN-ready Specialists

Low-Cost SoHo/Micro Business Provider

Recognised IP Voice (VoIP) Specialist

Competitive broadband + IP voice bundles

Investor Day 2013, Slide 19

SMB Sales Channels

Investor Day 2013, Slide 20

SMB Sales Channels

Investor Day 2013, Slide 21

Product Opportunity VOICE

IP & Hosted Voice

MOBILE

4G

DATA

NBN

COMPUTING

Cloud storage & applications

Investor Day 2013, Slide 22

Marketing Producing more inbound leads

Improving lead conversion

Increasing bundled sales

 Taking advantage of brand recognition for Commander using tactical Above The Line offers

ABOVE

• • •

TV Advertising Radio Advertising Outdoor Billboard

BELOW

• • •

Direct Mail Outbound Telemarketing Dealer Appointments

 Multi-channel approach driving improved results of Below The Line initiatives Investor Day 2013, Slide 23

Tactical Above-The-Line Campaign TV Advertising + Radio Advertising + Outdoor Billboards

Investor Day 2013, Slide 24

Tactical Above-The-Line Campaign

http://www.commander.com/why-commander Investor Day 2013, Slide 25

Online Presence High Lead Conversion

• •

Low Cost per Acquisition

Scalable Initiative

Investing in online strategy to build online traffic from organic and paid traffic sources > 50% of marketing budget in online lead generation

Commander site traffic

Investor Day 2013, Slide 26

Acquisition & Cross Sell Campaign Acquisition Campaign

Bonus Credit Offer

Bonus Gift Offer

Cross Sell Campaign

Sign Up Bonus 4G Mobile

Business Builder

Investor Day 2013, Slide 27

Driving DSL & Improving Fixed Plan Mix

Increasing Customer Bundles

Improving Fixed Margins

Investor Day 2013, Slide 28

Update and Outlook Geoff Horth, CEO

FY14 Priorities

GROW Sales & marketing focus to take share of market

SIMPLIFY Technology drives sustained cost to serve advantage

TEAM NURTURE Increase share of wallet, extend tenure, seamlessly transition to NBN Investor Day 2013, Slide 30

Brand Family Disruptive, mass-market utility services provider

Investor Day 2013, Slide 31

Grow

Primus and Dodo acquisitions provide capability, scale and brand relevance

Leverage complementary capabilities (in sales, technology, product and marketing) to accelerate growth

Build on distribution advantage to maximise market reach

Maximise opportunity presented by NBN, leverage our expertise and pedigree with margin paradigm

Investor Day 2013, Slide 32

Nurture Active customer lifecycle management program Comprehensive Business Account Management Program Consumer segment exceeding 2 products per customer

CUSTOMER Strong trends in customer service 50% improvement in Commander first call resolution Dodo customer support satisfaction rating is 4.5/5

Customer

Predictable delivery Auto configure modems now standard across all brands Quality assurance and welcome calls reduce early life churn by 20%

Investor Day 2013, Slide 33

Simplify Completed Phase 1 of IP voice switch upgrade, which in time will allow us to decommission 220 racks of DMS switch Rebrand all business segment customers (excluding Engin) under Commander brand Focus development on 3 core billing systems, continue consolidation of non-core systems

16 offices consolidated into 7

Investor Day 2013, Slide 34

Outlook • Q1 results finalised and on track to achieve FY14 guidance

• Targeting mid single-digit growth in subscribers in Consumer segment • Dodo kiosks increasing physical presence • Additional products and services available to increase product penetration

• • • •

Targeting low single-digit growth in subscribers in Business segment Augment Business segment distribution channels Stronger data sales improving product mix Hosted voice and Cloud productisation for mass-market Investor Day 2013, Slide 35

FY14 Guidance On track to meet guidance following Q1 completion $M

% Change

FY13(a)

FY14 Guidance

Revenue

681.0

970 - 1030

Up 47%

EBITDA

108.1

150 - 170

Up 48%

NPAT

43.8

60 - 70

Up 48%

NPAT (underlying1)

58.4

85 - 95

Up 54%

EPS (cents per share2)

27.4

34 - 39

Up 33%

EPS (cents per share, underlying1,2)

36.3

48 - 53

Up 39%

2.9%

2%

Down 31%

Capex (as % of revenue)

(from midpoint)

(1) Underlying NPAT and EPS figures each include an add-back of a non-cash cost of $14.6 million for FY13 and $26 million for FY14 for amortisation associated with customer contracts acquired in the relevant period (in accordance with Australian Accounting Standards) (2) Calculated using the volume weighted average number of shares

Investor Day 2013, Slide 36

Disclaimer Certain statements made in this presentation are forward-looking statements. These forward-looking statements are not historical facts but rather are based on M2’s current expectations, estimates and projections about the industry in which M2 operates, and its beliefs and assumptions. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks,” "estimates,“ “guidance” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the control of M2, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forwardlooking statements. M2 cautions shareholders and prospective shareholders not to place undue reliance on these forwardlooking statements, which reflect the view of M2 only as of the date of this presentation. The forwardlooking statements made in this presentation relate only to events as of the date on which the statements are made. M2 will not undertake any obligation to release publicly any revisions or updates to these forwardlooking statements to reflect events, circumstances or unanticipated events occurring after the date of this presentation except as required by law or by any appropriate regulatory authority.

Investor Day 2013, Slide 37