Exhibit 99.2
Exhibit 99.2
November 11, 2004
Telewest Global, Inc. 3rd Quarter Results
Disclaimer
The following information contains or may be deemed to contain “forward-looking statements” (as defined in the U.S. Private Securities Litigation Reform Act of 1995).
These statements relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth (including penetration of developed markets and opportunities in emerging markets), product introductions and innovation, meeting customer expectations, planned operational changes (including product improvements), expected capital expenditures, future cash sources and requirements, liquidity, customer service improvements, cost savings and other benefits of acquisitions or joint ventures—potential and/or completed—that involve known and unknown risks, uncertainties and other factors that may cause our or our businesses’ actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of those terms or other comparable terminology.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Future results may vary from the results expressed in, or implied by, the following forward-looking statements, possibly to a material degree.
A discussion of some of the important factors that could cause the results to differ from those expressed in, or implied by, the following forward-looking statements can be found in the Risk Factors section of our Registration Statement on Form S-1 filed with the SEC on July 16, 2004 and available from on the Company’s website.
This presentation includes some non-GAAP financial measures as defined in Regulation G adopted by the SEC. These measures and full reconciliations to US GAAP measures can be found in Telewest Global, Inc.’s third quarter 2004 results press release and associated Form 8-K filed on November 11, 2004 available on Telewest’s website at www.telewest.co.uk.
2
Eric Tveter
Chief Operating Officer
3
Introduction
Consumer driven revenue growth, offset by pressure in Business Division.
Financial Highlights
Consumer revenue growth 5%
Adjusted EBITDA1 before SBCE2 of £125m, up 14%
Free cash flow3 of £101m year-to-date
Consumer Internet revenue growth 42%
Business data growth 7%
Content ad-sales growth 17%
Operational Highlights
17,000 customer net adds – best growth for over two years
70,000 broadband net adds in quarter, strong net adds in October
92,000 RGU net adds; 2.0 RGUs per customer
24.4% triple play penetration, up 10% pts on Q3-03
ARPU of £45.05 per month, up 3% on Q3-03
1 Adjusted EBITDA is operating income before depreciation, amortization and financial restructuring charges
2 SBCE is Stock Based Compensation Expense of £3 million
3 Free cash flow is adjusted EBITDA less cash capex, cash interest, tax, working capital and other
4
Neil Smith
Chief Financial Officer
5
Summary Income Statement
Consumer division operating momentum beginning to produce financial improvements, partly offset by challenges in Business division Global Inc Predecessor
Q3-04 Q2-04 Change
£m £m
Revenue 328 326 +£2m
Direct Costs (89) (92) -£3m
Contribution 239 234 +£5m
S,G&A* (before SBCE) (114) (112) +£2m
Adjusted EBITDA (before SBCE) 125 122 +£3m
SBCE (3) 0 +£3m
Adjusted EBITDA 122 122 -
Financial Restructuring expenses 0 (12) -£12m
Depreciation (103) (90) +£13m
Amortization (9) 0 +£9m
Operating Income 10 20 -£10m
Net Interest (43) (113) +£70m
Forex / Other 4 (33) +£37m
Net (Loss)/Income (29) (126) +£97m
* Before Financial Restructuring Expenses
Operating income affected by SBCE costs and impact of fresh start accounting increasing depreciation and amortization
6
Revenue and adjusted EBITDA
£m
Revenue Q2-04 326
Consumer 3
Business -
Content (1)
Revenue Q3-04 328
Adjusted EBITDA Q2-04 122
Trading Improvement 3
125
Fresh Start Accounting
Business Installs (1)
Market rent and programming costs 1
Stock Based Compensation Expense (3)
Adjusted EBITDA Q3-04 122
Growth driven by broadband and triple play
Business stabilising following divisional reorganisation
Small decline in “Other revenue” magnified by rounding
Result of focus on profitable growth in Consumer
Deferred Business install revenue removed
Adjustments to fair market value
New, non cash charge, for stock options granted
Consumer led growth from customer and broadband growth
7
Capital spending
Current capex £157m YTD
Scaleable infrastructure, £22m
Commercial (Business), £32m
Line extensions, £3m
Upgrade/ rebuild, £7m
Support, £27m
Content, £1m
Customer Premise Equipment, £65m
Future capex
2004 Capex c £225m
New product launches
VOD & PVR around £20m
Increased consumer & business install activity
Broadband growth related network capacity costs & speed upgrades
Consolidation of Customer Management Systems onto one platform in early 2006
2005 Capex £240—£270m
Growth in 2005 needed to deliver future new product revenue and cost savings from potential efficiency
8
Capital structure
Proposed refinancing expected to deliver significantly extended debt maturity and reduced cost of debt
Q3-04 £m
Bank debt 1,840
Leases & other 120
Gross Debt 1,960
Less cash (266)
Net Debt 1,694
Net Debt / Adjusted EBITDA (LQA) 3.5x
Underwritten commitments from 6 banks for a new £1.8bn credit facility
Reduces average weighted cost of debt
Maturity extended with 7, 8 & 9 year repayment profiles
£1bn hedges to cap LIBOR at 5.3-5.4%
Around £145m-£155m* net cash interest in 2005
* Includes the cost of hedging and lease commitments and interest received on loans to affiliate investments. Assumes successful completion by end of 2004 ie excludes facility fees
9
Free cash flow
£101m of free cash flow generated in 9 months to Sept-04
Q3-04 Q2-04 Q1-04
£m £m £m
Adjusted EBITDA 122 122 122
SBCE 3 - -
125 122 122
Capex (50) (61) (66)
Interest (net) (39) (29) (32)
Working capital & other 3 5 1
Free Cash Flow 39 37 25
Focus of the business is free cash flow generation through profitable subscriber growth and effective cost management
10
Fresh start accounting
PLC Balance Sheet 30-Jun-04 Restructuring Adjustments Fresh Start Adjustments Fresh Start Balance Sheet 30-Jun-04 Global Balance Sheet 30-Sep-04
£m £m £m £m £m
Total Assets 3,857 (178) 924 4,603 4,561
Total Liabilities/MI (6,545) 3,901 (10) (2,654) (2,638)
Shareholders Equity (2,688) 3,723 914 1,949 1,923
Restructuring adjustments
effect the debt for equity swap
repay £160m of bank debt
Fresh Start adjustments
uplift of property, plant and equipment and intangible assets
leads to increased ongoing depreciation & amortization costs
11
UKTV: a valuable asset
Total revenue, operating income* and cash (£m)
40 35 30 25 20 15 10 5 0 -5
33
9
6
37
5
-3
37
12
3
39
13
6
39
14
6
Q3’03
Q4’03
Q1’04 Q2’04 Q3’04
Revenue
Operating Income
Cash Received by Telewest
*UKTV has no depreciation or amortisation
50:50 JV with the BBC
UKTV not included in Telewest Adjusted EBITDA, in affiliate income
Telewest 50% of UKTV Adjusted EBITDA is £19m year-to-date
Telewest provided funding
Loan balance currently standing at £190m
Telewest receives interest and capital repayments
Dividends to BBC and Telewest expected in future
12
Tax shield
Telewest has a UK tax shield consisting of:
£1.6 billion of Net Operating Losses
£5.2 billion of Unused Capital Allowances
Both survived the financial restructuring*
Can be used to offset tax on future profits
UK Corporate tax rate is 30%
*Dependent upon the individual companies in which the losses reside not undergoing a major change in the nature or conduct of their trades for the 3 years following the restructuring
13
Eric Tveter
Chief Operating Officer
14
Going for growth
Service excellence
The bundle works
Value
Choice
Freedom
Simplicity
Free cash flow
Drive growth through delivering the bundle and service excellence
15
Customer growth
Net customer additions
‘000s
18 16 14 12 10 8 6 4 2 0
2
9
12
10
17
Q3’03 Q4’03 Q1’04 Q2’04 Q3’04
Customer penetration
38.0% 37.5% 37.0% 36.5% 36.0% 35.5% 35.0%
37.4% 37.2% 37.0% 36.8%
37.7%
Q3’03 Q4’03 Q1’04 Q2’04 Q3’04
70% growth in net adds during the quarter
Accelerated momentum in October
Customer penetration currently 38%. Targeting 45% within 5 years
Focus on customer quality—targeting 40% triple play penetration within 5 years
16
Bundling effectiveness
Acquisition mix
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
19% 21% 21% 22%
28%
61% 60% 61% 57%
53%
20% 19% 18% 21% 19%
Q3’03 Q4’03 Q1’04 Q2’04 Q3’04
Solus Combo Triple
Triple play penetration
25% 20% 15% 10% 5% 0%
22%
19% 17% 15%
24%
Q3’03 Q4’03 Q1’04 Q2’04 Q3’04
28% of acquisitions during Q3’04 were triple play
44% of web sales in Q3, where customers self-select, were triple play
Almost 10% year on year increase in triple play penetration
Continue to drive value from bundle proposition – competitive advantage
17
RGU growth
RGU Net Additions
49k
69k
77k
84k
92k
38
47
51
72
70
3
8
12
9
13
8
14
14
9
Q3’03 Q4’03 Q1’04 Q2’04 Q3’04
TV adds Restel adds Broadband adds
Household ARPU
£43.93
£44.42
£45.05
£44.98
£45.05
Q3’03 Q4’03 Q1’04 Q2’04 Q3’04
Household ARPU
Triple play driving growth in net RGU’s to 92,000 in Q3’04
2.0 RGUs per customer leading to growth in household ARPU
Continued growth momentum in broadband and accelerated growth in TV and telephony
18
Broadband driving growth
Broadband subscribers and ARPU
000’s
700 600 500 400 300 200 100 0
£22.52 £22.97 £22.57 £23.04
£22.27
607 465 538 367 415
£
35 30 25 20 15 10 5 0
Q3’03 Q4’03 Q1’04 Q2’04 Q3’04
Subscribers ARPU
Customers
14% broadband penetration
70k net adds in Q3 2004
42% of acquisitions are new to Telewest
71% triple play & 94% take at least one other service
Growth potential
19% broadband penetration
56% internet penetration
64% PC penetration
1.2m existing non broadband customers
Broadband is successfully attracting profitable new customers to Telewest with a high propensity to take bundled services
19
Broadband competition
Broadband market share in addressable area
Telewest, 71%
BT Retail, 9%
Wanadoo, 4%
AOL, 4%
Tiscal, 4%
Other, 8%
The market
Clear market leadership with 71% market share
Greater consumer propensity to buy uncapped products
DSL economics are challenging at lower price points
Consistently highest customer satisfaction of any major ISP
Our response
“Easy Switcher” offer launched Nov 1st
Speed increases
Our speed and cost advantage enable us to compete effectively in the increasingly competitive broadband market
20
Speed upgrade
Current Service New Service Applications Enabled
256K Email
STARTER £17.99 No Change Web browsing
Audio Downloads
750k 1Mb Online Gaming
ESSENTIAL £25.00 £25.00 Small Screen Video
1.5Mb 2Mb Full Screen Quality Video
SUPREME £35.00 £35.00 File Downloading
Video-conferencing
3Mb 4Mb Homeworking
SUPREME + 384k Upstream
£50.00 £50.00 Multimedia Collaboration
Automatic Upgrade for all Services
Speed Upgrade Rationale
Preserves Mix
Reduces downward migration
ARPU Growth
Incentive for higher tier migration
Preserves competitive options
Value enhancing
Broadband speed upgrades enhance customer value while protecting mix and providing opportunity for up-sell
21
Television
Total TV subscribers and ARPU
000’s
£20.93 £21.16 £21.18
£20.53 £20.72
1,259 1,272 1,286 1,288 1,297
1400 1200 1000 800 600 400 200 0
Q3’03 Q4’03 Q1’04 Q2’04 Q3’04
Digital Subs Total Subscribers ARPU
Customers
9k overall TV & 26k digital TV net adds in Q3
83% of base digital
94% of network digitally enabled
Growth opportunity
Package enhancement allows TV price increase
Low UK payTV penetration at only 42%
Launch VOD in H1’05 & PVR in H2’05
VOD and PVR will continue to drive TV penetration and ARPU growth
22
Consumer telephony
Total telephony subscribers & ARPU
000’s
£24.53 £24.13 £24.20
£23.70 1,635
1,592
1,600
1,612
1,621
£23.53
£
25 20 15 10 5 0
1640
1630
1620
1610
1600
1590
1580
1570
Q3’03 Q4’03 Q1’04 Q2’04 Q3’04
Subscribers ARPU
Customers
13k net adds during Q3’04
35% telephone penetration
81% of telephony subs take bundled services
34% of telephone subs take Talk
310k telephony only customers, providing cross-sell opportunity
Services
Launched Talk Mobile in Oct & Talk Weekends in Nov
Migration to “Talk” is improving overall contribution per telephony customer
23
Churn analysis
1.2% 1.3% 1.2% 1.1% 1.0% 1.1% 1.2% Monthly churn
32% 31% 43% 36% 39% 46% 46% Movers
25% 26% 25% 32% 27% 24% 21% Voluntary
43% 43% 32% 32% 34% 30% 33% Non-Pay
Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04
Voluntary churn has been falling due to better quality, value and customer care Strong increase in movers market this summer, trend now starting to reverse Continued strict adherence to strong credit policies
24
Operational improvements
Operational efficiencies—current and future
Process to focus on Business customer work-in-progress established
3 billing systems consolidated to 2 in Q3 2004, will have single system by early 2006
CPE costs continue to fall e.g. targeting £75 VOD enabled STB during 2005
Rationalising property portfolio; 10 exits in 2004
Renegotiating installation contractor rates; will save £2m per year Reducing fault rates, down 30% year on year resulting in fewer truck rolls
Wireless install reducing truck rolls
Deployed new BBI install process improving efficiency by 30 minutes per install saving £2m per year
Introduced automated attendant – Kate Cox
Mobile workforce management
25
Business Services
Addressing challenging business environment through:
More efficient service model separating Complex and Standard customers
Management change recently made
Defend voice through new products:
Special rate services
Carrier pre-select
Wholesale line rental
Focus on highly profitable new data product segments Public sector strength
Profitable Business Division which is generating free cash flow
26
Business revenue
Profitable Business Division which is generating free cash flow
£71m
£63m
£63m
£63m
4
12
16
39
2 9 17
35
Travel Carrier
Data
Voice
2
10
17
34
2
9
17
35
Q3-03 Q3-04 Q2-04 Q3-04
Data up 7% on Q3’03 and is key area of focus
Voice revenues down 12% on Q3 2003 but up 2% on Q2 2004
Carrier and Travel businesses were down 29% on Q3 2003, but declines have stabilised sequentially
Work-in-progress of £27m
27
Flextech
Flextech revenue (£m)
35 30 25 20 15 10 5 0
5 9 3 4 3
12 14 13 14 14
10 10 10 10 10
Q3’03 Q4’03 Q1’04 Q2’04 Q3’04
Subscription Advertising Other
Financial performance
Advertising revenue up 17%
YTD adjusted EBITDA doubled to £10m*
Ratings
19% share of basic viewing
4.6% share of net advertising revenue
LivingTV now 2nd most popular pay channel amongst our target audience
Selective investment in programming on flagship channel LivingTV is driving ratings, advertising revenue and profitability
* After intercompany elimination
28
Summary
Accelerated profitable consumer growth
Planned launch of digital services & speed upgrades in 2005 to provide continued momentum
Valuable content division outperforming
Continue to drive free cash flow
29
