management board report - viedoklis: gktriatel 54 0.00 26.41 11 493 620 609 izzi 53 -0.06 16.45 3...

Management Board Report

Supervisory Council Meeting #217th February 2014

Juris Gulbis

2

Table of Contents

• Commercial activities• Financial results

2 | Strictly confidential to the Supervisory Council of SIA Lattelecom2

3

The Top Business Events

• 347K TV connections

• 279K broadband connections

• Lattelecom - second most desired employer in 2013

• Events for corporate clients

• «Platinum Mouse» award


Commercial Activities

5

15th LIKTA 15th LIKTA 15th LIKTA 15th LIKTA Conference «Europe`s Digital Conference «Europe`s Digital Conference «Europe`s Digital Conference «Europe`s Digital market»market»market»market»• Lattelecom was general sponsor of the

Latvian Information and Communications Technology Association (LIKTA) annual conference on December 5th.

• Presentation on unified EU Digital market opportunities was delivered by CEO Juris Gulbis.

• LIKTA annual award «Platinum Mouse»was given to Lattelecom WiFi project.

• Publicity: 52 publications in internet, press radio and TV.

| Strictly confidential to the Supervisory Council of SIA Lattelecom

TOP Activities

6

Total Publicity Volume of Total Publicity Volume of Total Publicity Volume of Total Publicity Volume of LattelecomLattelecomLattelecomLattelecom and Competitors and Competitors and Competitors and Competitors


TOP Activities

CompanyNumber of

articles/storiesAverage reflection

type ratioPublicity effectiveness

indices (PEI, %) Communication

effectiveness indices (CEI) Audience reach

index (ARI)

Lattelecom 1021 0.15 28.01 12 086 12 339 827

LMT 1059 0.06 22.45 11 283 11 948 361

Tele2 305 0.10 23.07 9 788 2 985 337

Viasat 329 0.01 18.30 9 559 3 145 067

Bite Latvija 216 0.01 18.01 10 107 2 183 102

Baltcom 130 0.02 20.52 7 647 994 087

MTG 104 -0.02 21.69 8 575 891 798

Triatel 54 0.00 26.41 11 493 620 609

IZZI 53 -0.06 16.45 3 239 171 672

Total 3271 0.08 23.40 10 786 35 279 860

77

TV


Interactive TV ARPU December 2013 LVL 6.93 LVL 6.93 LVL 6.93 LVL 6.93

Terrestrial TV ARPU December 2013 LVL 4.01LVL 4.01LVL 4.01LVL 4.01

7

Actual on 31.01.2014

179

520

167

557

177

981

175

490

170

321

167

845

167

970

168

031

166

706

168

001

168

186

167

890

169

196

169

896

172

044

175

236

177

148

179

200

180

985

182

985

184

587

186

588

188

562

190

288

330 508350 320

0

100000

200000

300000

400000

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14

TV connections

DVB-T Interactive TV DVB-T forecast Interactive TV - forecast Budget

88

Broadband


Broadband ARPU December 2013 LVL 8.76LVL 8.76LVL 8.76LVL 8.76

8

279

226

280

916

282

234

284

435

285

578

285

584

285

835

286

821

287

003

287

444

287

899

289

773

276 089

293 135

200 000

220 000

240 000

260 000

280 000

300 000


Broadband connections

Actual Forecast Budget


99

GPON


*Included GPON and active optic users

9

GPON ARPU December 2013 LVL 7.77LVL 7.77LVL 7.77LVL 7.77


126

922

128

685

130

103

131

950

133

091

133

281

133

797

134

904

135

560

136

364

137

020

138

673

123 653

141 904

50 000

70 000

90 000

110 000

130 000

150 000


GPON connections


1010

Voice


Voice ARPU December 2013 LVL 5.68 LVL 5.68 LVL 5.68 LVL 5.68 (subscription and traffic)

10


405

620

401

666

398

244

393

998

390

399

387

375

384

030

380

877

377

575

374

203

370

977

368

167

404 727

361 739

340 000

350 000

360 000

370 000

380 000

390 000

400 000

410 000


Equivalent lines


Lattelecom via TeliaSonera Group

Not the Worst in the ClassEBITDA

| Strictly confidential to the Supervisory Council of SIA Lattelecom12


Not the Worst in the ClassEBITDA

14 | Strictly confidential to the Supervisory Council of SIA Lattelecom

Not the Worst in the ClassConnections Dynamics


Not the Worst in the ClassConnections Dynamics

Residential Segment

1717

Campaigns


Tablet PC in every home! (19.11.2013. – 23.12.2013.) Offer: Apply for a set of Internet +TV and receive Tablet PC as a gift!Results:

Terrestrial TV campaign (28.10.2013. – 08.01.2014.) Offer: Apply for Terrestrial TV subscription and get all content- based packages for 12 month for free + get a decoder and smart card for free.Results:

Terrestrial TV 40 374 (367%)

Internet 10 533 (155%)

Interactive TV 8 421 (165%)

1818

Campaigns


Lattelecom Internet television free for everyone!(14.11.2013. – 31.01.2014.)

Offer: Register at www.lattelecom.tv and watch more than 30 TV channels and more than 600 movies for free until January 31st.Results:

Unique Internet TV users 99 957 (100%)

Terrestrial TV pre-paid campaign on lattelecom.lv (16.12.2013. – 31.12.2013.)

Offer: Buy pre-paid code and receive movie package as a gift!Results:

Number of pre-paid codes sold 7 678 (107%)

Terrestrial TV pre-paid campaign on lattelecom.lv (13.01.2014. – 31.01.2014.) Offer: Big code for a small code price! Results:

Number of pre-paid codes sold 10 370 (123%)

Internet Access in Households

Data source: Gemius

Data source: GfK CR Baltic population monitor

n (Dec .10)=815, n (Dec.11) = 1053, n (Dec.12) = 1025, n (Dec.13) = 1001

*Internet total penetration data from Central Statistic bureau of Republic of Latvia

60%64% 69% 72%

59% 57%61% 59%

4%8% 9% 11%

1% 1% 2%0%

20%

40%

60%

80%

Dec-10 Dec-11 Dec-12 Dec-13

Internet penetrationInternet penetrationInternet penetrationInternet penetration

Penetration*

Fixed internet

Mobile internet

Internet troughsmartphone

4%

8%96%

92%

90%

91%

92%

93%

94%

95%

96%

97%

0%

2%

4%

6%

8%

10%

Nov

.12

Dec

.12

Jan.

13Fe

b.13

Mar

.13

Apr.1

3M

ai.1

3Ju

n. 1

3Ju

l. 13

Aug.

13Se

p.13

Oct

. 13

Nov

.13

Dec

.13

Jan.

14

Page views from mobile devices vs PCPage views from mobile devices vs PCPage views from mobile devices vs PCPage views from mobile devices vs PC

non-PC

PC

Internet penetration increasing :

total (+12pp), fixed line steady around

59%, mobile internet (+7pp).

Usage of mobile devices (penetration of

Smartphone ~34% and tablets ~10%)

internet usage in mobile devices also

increasing . 8% of total page views are

made from mobile devices.

For first time in November 2013 more

units of tables sold than laptops.


Internet Market Shares

Lattelecom share stable

Tele2 strengthens its position in mobile internet

market (12% cheaper internet data than LMT), LMT

market share decrease

46%

67% 66%60%

39%

23% 25% 29%

7%6%

4% 2%

8%

4%

5%9%

0%

20%

40%

60%

80%

Dec.10 Dec.11 Dec.12 Dec.13

Mobile internet market shareMobile internet market shareMobile internet market shareMobile internet market share

LMT Tele2 Bite Triatel

46%44% 43% 43%

7%

12%13%

14%13%

12%

15% 15%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Internet market share

Lattelecom

Mobile internet

Baltcom + Izzi

49% 50% 50% 50%

37% 36%33% 31%

14% 14%17%

18%

-10%

0%

10%

20%

30%

40%

50%

60%


Fixed internet market share

Lattelecom Others Baltcom + Izzi




Pay-TV Market Shares

Lattelecom market share incresed to 40%

Increase took place against all market participants, mostly

smaller ones.

Baltcom group (now with acquired IZZI) increase

relatively small.

Pay-TV penetration stable

Market reallocated already existing clients

between market participants.

83% 83% 85% 85%

0%

20%

40%

60%

80%

100%


PayPayPayPay----TV penetrationTV penetrationTV penetrationTV penetration

29% 31%33%

40%

9% 9%

8% 8%

28% 28%

33%

26%

34% 32%

25%

27%

0%5%

10%

15%20%25%30%

35%40%45%50%


PayPayPayPay----TV market shareTV market shareTV market shareTV market share

Lattelecom

Viasat

Others

Baltcom + Izzi




Fixed Voice Market Share

Fixed voice market penetration continue to

decrease, Lattelecom market share at ~87%

50%43%

39%

30%

0%

10%

20%

30%

40%

50%

60%


Fixed voice penetrationFixed voice penetrationFixed voice penetrationFixed voice penetration



90% 89% 89% 87%

3% 6% 7% 8%

4% 4%0%

20%

40%

60%

80%

100%


Fixed voice market shareFixed voice market shareFixed voice market shareFixed voice market share

Lattelecom

Baltcom

Others


Small and Medium Enterprises


• eData safety positioning campaign (13.01.-26.01.).

• WiFi support for first Latvia «Startup Weekend» on January17th.

• «The Wolf of Wall Street» movie premier for SME Gold clients at Forum Cinemas on February 6th.

TOP Activities

Fixed Voice Market ShareLattelecom - market share

decreasing. Stable by income.

Telegrupa – increased their share

by number of lines

Data source: Lattelecom SME Market Monitor

Factum: n (Jul.10) = 1036; n (May.11) = 1046; n (Feb.12) = 1311

Latvijas Fakti: n (Nov.12) = 1000; n (May.13) = 1006; n (Nov.13)=1002

92% 88%82% 82% 78% 75%

1% 2%

5% 6%

13%10%

3% 2%5%

6%8%

7%10%

7%8%

0%

5%

10%

15%

20%

25%

0%

20%

40%

60%

80%

100%

Jul-10 May-11 Feb-12 Nov-12 May-13 Nov-13

By number of linesBy number of linesBy number of linesBy number of lines

Lattelecom

CSC Telecom

Telegrupa

Others

96% 92% 88%81% 83% 82%

1%

5%3%

6%

4% 3%0%

3%2%

3%

6%6%

3%

0%

7%9%

8%

0%

5%

10%

15%

20%

25%

0%

20%

40%

60%

80%

100%


By By By By incomeincomeincomeincome

Lattelecom

CSC Telecom

Telegrupa Baltijā

Others


Internet Market ShareLattelecom market share slight

decrease within trend by number of

connected computer. Decrease in

market share by income.

Data source: Lattelecom SME Market Monitor

Factum: n (Jul.10) = 1036; n (May.11) = 1046; n (Feb.12) = 1311

Latvijas Fakti: n (Nov.12) = 1000; n (May.13) = 1006; n (Nov.13)=1002

* TOP 5 – Latnet, Telia, Baltcom, Balticom, Telegrupa

** Mobile– LMT, Tele2, Bite

58% 60%55%

58% 58% 56%

9%17% 19%

23%

13% 14%

5% 3% 6% 5%11% 8%

28%

20% 21%

14%

19% 21%

0%

10%

20%

30%

40%

50%

60%

70%


By number of connected computersBy number of connected computersBy number of connected computersBy number of connected computers

Lattelecom

TOP 5

Mobile

Others

64% 67%

57% 55%61%

56%

7%

13% 15%18%

10% 12%11%

7% 9%12%

13% 15%

19%

14%19%

15%16% 16%

-5%

5%

15%

25%

35%

45%

0%

20%

40%

60%

80%


By By By By incomeincomeincomeincome

Lattelecom

TOP 5

Mobile

Others


Corporate Segment


Two Christmas events for corporate customers took place:

• on 5th December - State and Municipalities,

• on 12th December for customers - Large Enterprises.

Events took place in Grand Palace Hotel, and in total more than 300clients participated.

TOP Activities

Client Project Total of deal, EUR Status

Actual:

State Revenue Service

Corporate network infrastructure modernization

and maintenance3,13M EUR for 5 years Agreement signed

Spechimprodukcija(Russia)

Data centre (DATTUM) service 368,5K EUR for 3 years Agreement signed

A/S MG Capital (ex AS Ge Money)

Data centre solution 150K EUR for 3 years Agreement signed

Largest Projects and Tenders


Client Project/tender Total of deal, EUR Status

Actual:

TDC (end customer Linde)

Baltic Net solution 220K EUR for 3 years Agreement signed

Beltelecom 10 G Internet connection 97K EUR for 1 year Agreement signed

BTA Insurance company Data solution 200K EUR for 3 years Negotiations



30

Client Project/tender Total of deal Status

Forthcoming:

State Agency for Properties of Defence

Maritime surveillance system, service and maintenance of emergency power

equipment

151K EUR for 3 years

Waiting for tender results

Maritime surveillance radar system and radar components, maintenance and

repair



Marine surveillance system, data network maintenance



Ministry of Agriculture of Latvia

Data networking and security services918K EUR for 3

yearsWaiting for tender

results



31

Client Project/tender Total of deal Reason

Lost tenders:

Rīgas Satiksme(submitted on 15th

January)Info phone service 398K EUR Higher price

The State Social Insurance Agency

(submitted on 24th January)

Software maintenance 1,8M EUR Higher price

Largest Lost Tenders


Technology Service Activities

34


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Cisco Hosted Collaboration System• High and Low Level Design Finished • Network Ready For Use plan Finished• Equipment physical installation Finished• Logical installation &configuration Finished• Network Ready For Use tests Finished• Go Live and Migration startGo Live and Migration startGo Live and Migration startGo Live and Migration start 05/0205/0205/0205/02


35


35

IMS / Stage 2• C4 implementation and verification is done• Lawful Intercept integration for Slave Site is completed by

Huawei/Verint, verification in progress• Upgrade to IMS Release 9.2 on Master Site is completed,

commercial licences loaded• IMS Capacity Expansion +30 000

• Total number of IMS clients today exceeds 80 000


36


36

MPLS core network upgrade• Site 1 (Maskavas187) Finished• Site 2 (Bāriņu 10) Finished• Site 3 (Brīvības 304) Finished• Site 4 (Jelgava) Migration in progress• Site 5 (Valmiera) Equipment integration • Site 6 (Dzirnavu 105) Equipment integration• Site 7 (Kleistu 5) Design in progress


management board report - viedoklis: gktriatel 54 0.00 26.41 11 493 620 609 izzi 53 -0.06 16.45 3...

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