Slide 1
ntl:
NTL Incorporated
Q1 2003 Results
May 14, 2003
<page>
Slide 2
Safe Harbor Statement Under the Private Securities
Litigation Reform Act of 1995
Certain statements contained herein constitute "forwardlooking statements"
as that term is defined under the Private Securities Litigation Reform Act
of 1995. When used herein, the words, "believe," "anticipate," "should,"
"intend," "plan," "will," "expects," "estimates," "projects," "positioned,"
"strategy," and similar expressions identify such forwardlooking
statements. Such forwardlooking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from those contemplated, projected, forecasted,
estimated or budgeted, whether expressed or implied, by such forwardlooking
statements. Such factors include, among others, the "Risk Factors" set
forth in Amendment No. 1 on Form 10-K/A to the Company's Annual Report on
Form 10-K for the year ended December 31, 2002, as such filings may be
amended from time to time, as well as: the impact of our organizational
restructuring and integration actions; our ability to maintain contracts
that are critical to our operations; potential adverse developments with
respect to our liquidity or results of operations; our ability to fund and
execute our business plan; our ability to attract, retain and compensate
key executives and associates; our ability to attract and retain customers;
general economic and business conditions; technological developments; our
ability to continue to design networks, install facilities, obtain and
maintain any required governmental licenses or approvals and finance
construction and development, all in a timely manner at reasonable costs
and on satisfactory terms and conditions; assumptions about customer
acceptance, churn rates, overall market penetration and competition from
providers of alternative services; the impact of new business opportunities
requiring significant up-front investment; and interest rate and currency
exchange rate fluctuations. We assume no obligation to update the
forward-looking statements contained herein to reflect actual results,
changes in assumptions or changes in factors affecting such statements.
<page>
Slide 3
Use of non-GAAP (Generally Accepted
Accounting Principles) terms
All US Securities and Exchange Commission Regulation G reconciliations are
available in our three months ended March 31, 2003 press release on our
website www.ntl.com/investors. To supplement our consolidated financial
statements presented on a GAAP basis, NTL uses certain non-GAAP measures (such
as EBITDA and Capital Expenditures) that we believe may be useful to enhance
investor's overall understanding of our past financial performance and also
our prospects for the future. The presentation of this additional information
is not meant to be considered in isolation or as a substitute for results
prepared in accordance with GAAP accepted in the United States.
<page>
Slide 4
ntl:
Barclay Knapp
Chief Executive Officer
<page>
Slide 5
Agenda
o Introduction and Q1 03 Summary
o Divisional Review
o Financial Review
o Questions and Answers
<page>
Slide 6
First Quarter Highlights
o Revenue of (pound)546.5 million and EBITDA of (pound)156.5 million,
Capital Expenditures of (pound)82.5 million and Operating Cash Flow
of (pound)74.0 million
o UK Revenue Generating Units now exceed 5 million
o NTL Home adds over 141,400 services (RGUs) and 27,100 net customers
o UK annualized churn down to 13.0%
o Exceptional income of(pound)4.2 billion ($6.8b) related to emergence
from Chapter 11
<page>
Slide 7
Financial Summary
Year over Year
((pound) millions) Q1 2003 Q1 2002* Q1 2002
------- ------- -------
Revenue
Home (pound)362 (pound)362
Business 75 83
Broadcast 64 64
Carrier 28 33
Ireland 18 14
--------- ----------
Total Revenues (pound)547 (pound)556 (pound)556
Underlying EBITDA (pound)157 (pound)143 (pound)154
EBITDA Margin 29% 26% 28%
Capital Expenditures (pound) 83 (pound) 92 (pound)103
Operating Cash Flow (pound) 74 (pound) 51 (pound) 51
* Q1 2002 restated to deduct Corporate Expenses in line with treatment in Q1
2003. Accounts for changes in assumptions relating to the allocation of
certain costs from capital to operating expense that occurred in Q4 02,
reducing Q1 02 EBITDA and Capital Expenditures by (pound)10.8m.
<page>
Slide 8
Financial Summary
Actual Q4-02 and Q1-03 vs January 10th 8-K
8-K
((pound)millions) Q1 2003 Q1 2003* Q4 2002
------- ------- -------
Revenue (pound)547 (pound)539 (pound)533
EBITDA 157 155 158**
Corporate Expenses (3) (3)
Underlying EBITDA (pound)157 (pound)152 (pound)155
Underlying Capital Expenditures (pound) 83 (pound)103 (pound)133***
* As reported in 8-K filed January 10, 2003.
** Underlying Q4 2002 EBITDA, as reported in Q4 and Year-End 2002 press
release.
*** Underlying Q4 2002 Capital Expenditure as described in the Q4 and
Year-End 2002 presentation.
<page>
Slide 9
New Management and Board
o Chairman - Jim Mooney, ex-Nextel
o CEO - Barclay Knapp
o COO - Simon Duffy, ex-Orange
o CFO - Scott Schubert, ex-WilTel
o Board of Directors
Jeffrey D. Benjamin, James E. Bolin, David Elstein,
William R. Huff, Barclay Knapp, Jim Mooney, George
R. Zoffinger, Brett Wyard, Ed Banks
<page>
Slide 10
[GRAPHICS OMITTED]
ntl:home
<page>
Slide 11
Q1 2003 Summary
o 141,400 net new services (RGUs) and 27,100 net new customers added
o Revenue growth continued
o Second successive quarterly increase in revenue
o 661k Broadband customers at March 2003, over 691k today
o Increase of 144k in the Q1-03
o Telephone customer growth restarted
o Margin improvement continues
o Product mix, cost reductions, efficiencies
<page>
Slide 12
Operating Results - Home
Year over Year
Adjusted
((pound)millions) Q1 2003 Q1 2002* Q1 2002
------- ----------------------
Revenue (pound)362 (pound)362 (pound)362
EBITDA (pound)153 (pound)138 (pound)142
EBITDA Margin % 42% 38% 39%
* Accounts for changes in assumptions relating to the allocation of
certain costs from capital to operating expense that occurred in Q4 02,
reducing Q1 02 EBITDA by (pound)4 million.
<page>
Slide 13
Home Customer Base
Q1 2003 vs Q4 2002
(in thousands) Q1 2003 Q4 2002 Change
------- ------- ------
Total Customers 2,713 2,686 27
Total RGUs 5,125 4,984 141
RGUs per customer 1.89 1.86
Telephone 2,427 2,412 15
Broadband 661 517 144
Television 2,038 2,055 (17)
of which Digital TV 1,255 1,229 26
<page>
Slide 14
<table>
<caption>
Customers and ARPU
Net customers and ARPU up...
Gross Adds Disconnects
(Quarterly, 000s) (Quarterly, 000s)
<s>
157
| | 154
| | 116 144 | |
| | 112 | | | | | |
| | | | 106 | | | | | | 127
| | | | | | | | | | | | | | 119
| | | | 84 | | | | | | | | | | | | 113
| | | | 54 49 | | | | | | | | | | | | | | | | 108
| | | | | | | | | | | | | | | | | | | | | | | | | | 89
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
- -------------------------------------------- ------------------------------------------------
Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03
Net Customer ARPU
Movement (Average of quarter(pound))
(Quarterly, 000s)
27
| |
13 | |
| | | |
| | | | 40.7
- -------------------------------------------- |
Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 40.0 |
| | | | | | | | | | | 39.6 | 40.0|
| | | | | | | | (2) | | | |
| | | | | | | | 38.8| | 39.1 | | |
| | | | | | (29) | | | | | 38.9| |
(37) | | | | | | | | | | |
| | | | | | | | | | |
| | (70) ------------------------------------------
(73) Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03
</table>
<page>
Slide 15
<table>
<caption>
Net RGUs Broadband
(Quarterly Change, 000s) (Quarterly Change, 000s)
<s> <c>
144.0
141 137.0 | |
113 | | | | | |
| | | | 105.2 | | | |
64 | | | | | | | | | |
| | | | | | 92.0 | | | | | |
| | | | | | | | | | | | | |
| | 34 | | | | 65.0 | | | | | | | |
| | | | | | | | 38.9 | | | | | | | | | |
| | | | | | | | 33.4 | | | | | | | | | | | |
- -------------------------------------------- | | | | | | | | | | | | | |
Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
|_| | | |_| --------------------------------------------
(52) |_| (56) Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03
(76)
Telco Television
(Quarterly Change, 000s) (Quarterly Change, 000s)
20
| | 15
| | | | 11
| | | | | |
- -------------------------------------------- --------------------------------------------
Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | (14) | | | | | | | | | | | |
(26) | | | | | | | | | | | | | | | | (18)
| | | | (28) | | | | | | | | | |
| | | | | | | | | | | | (32)
| | | | | | | | | | (44)
| | | | | | | | | |
(65) | | (65) | | | |
(71) | | | |
(76) | |
(77)
</table>
<page>
Slide 16
Churn & Low Bad Debt
21.3%
| |
19.5% | |
| | | | 17.9%
| | | | | | 17.1%
| | | | | | | | 16.4%
| | | | | | | | | | 15.9% 13.0%
| | | | 2.8%* | | | | | | | |
2.7%* | | | | | | | | | | | |
| | 2.2%* | | | | 1.7%* | | | |
| | | | | | 1.6%* | | 1.0%* | |
| | | | | | | | | | | | 1.1%*
- ------------------------------------------------
Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03
Key *Bad Debt Churn%
<page>
Slide 17
Customer Service Performance
Calls Answered, Average Speed of Answer, Accessibility Index, Calls per Customer
% Calls Answered
97%
| |
95% | |
| | | |
93% | | | |
| | | | | |
90% 90% | | | | | |
| | | | 89% 89% | | | | | |
| | | | | | | | | | | | | |
88% | | | | | | | | | | | | | |
| | | | 87% | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03
(continued)
Avg. Speed of Answer
151
144 | |
| | 141 | |
| | | | | |
| | | | | |
123 | | | | 123 | |
111 | | | | | | | | | |
| | | | | | | | | | | | 103
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | 64
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | 50
| | | | | | | | | | | | | | | | | |
Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03
(continued)
Accessibility Index
% Calls answered in 20 seconds or less
71%
| |
62% | |
| | | |
54% | | | |
48% | | | | | |
| | | | | | | |
| | 46% | | | | | |
41% 41% | | | | | | | | | |
39% 39% | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03
(continued)
Calls per Customer
0.74x
| |
| | 0.73x
| | | |
| | | |
0.70x 0.68x | | | |
| | | | | | | | 0.65x 0.65x
| | | | | | | | | | 0.64x | |
| | 0.63x | | | | | | | | | | | | 0.63x
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03
<page>
Slide 18
[GRAPHIC OMITTED]
ntl:business
<page>
Slide 19
Operating Results - Business
Year over Year
Adjusted
((pound)millions) Q1 2003 Q1 2002* Q1 2002
------- ------- -------
Revenue (pound)75 (pound)83 (pound)83
EBITDA (pound)21 (pound)18 (pound)20
EBITDA Margin % 28% 22% 24%
* Accounts for changes in assumptions relating to the allocation of certain
costs from capital to operating expense that occurred in Q4 02, reducing Q1 02
EBITDA by (pound)2m.
<page>
Slide 20
Q1 2003 Summary
o Restructure of Business segments complete
- VISP (Wholesale Internet) to Home
- Public Safety to Broadcast
- Mobile/Carrier to Carriers
o New NTL Business merger of Retail and Enterprise segments
- Focus on selling standard on-net voice and data products
- Regional organizational structure
o Strategic Focus on
- Churn reduction
- Cross sell and up-sell to profitable customers
- Driving cost out of business
<page>
Slide 21
Operating Results - Commentary
o Revenue
- Revenues stable despite reorganization of the business
- Focus on higher margin products/customers
o Gross Margin
- Gross margin improvement reflects new revenue strategy
o Operating Costs
- Recurring costs lower as the business drives out operational
inefficiencies
- Significant further efficiencies identified
<page>
Slide 22
ntl: Carriers
<page>
Slide 23
Operating Results - Carrier
Year Over Year
((pound)millions) Q1 2003 Q1 2002
Revenue
Carrier (pound)10 (pound)21
Mobile 18 12
-- --
Total Revenue (pound)28 (pound)33
EBITDA (pound)22 (pound)27
EBITDA Margin % 79% 82%
<page>
Slide 24
Carrier Division - Profile
(Previously reported under NTL: Business)
o Manage relationships with other Operators for Interconnect cost base
o Voice
o IP
o Leased lines
o Sales and Service relationships with Carriers and Mobile customers for
network based products and services
o Managed networks
o Bandwidth (DWDM/SDH)
o Voice minutes
o Co-location and maintenance
o Integrated with Networks Division
o Exploits network design, build and management capability
o Integrated within end to end processes
o Exploits networks assets
<page>
Slide 25
[GRAPHIC OMITTED]
ntl:broadcast
<page>
Slide 26
Broadcast Profile
o Long term cash-generative contracts
o Key assets: towers, teleports & technical facilities
o Strong customer relationships & customer service reputation
o Long track record of service in our major markets
o Financially self-contained: customer-driven capex, near vertically
integrated, free cash positive
[GRAPHIC REFLECTING COMPOSITION OF BROADCAST BUSINESS (WIRELESS 17%, PUBLIC
SAFETY 21% AND MEDIA 62%) AND BREAKDOWN OF MEDIA (TV & RADIO TRANSMISSION 73%
AND SATELLITE & MEDIA SERVICES 27%) OMITTED]
<page>
Slide 27
Operating Results - Broadcast
Year over Year
((pound)millions) Q1 2003 Q1 2002
------------------------
Revenue
Media (pound)39 (pound)41
Wireless 11 10
Public Safety 14 13
-- --
Total Revenue (pound)64 (pound)64
EBITDA (pound)29 (pound)28
EBITDA Margin % 45% 44%
<page>
Slide 28
o Media:
o Teletext transmission renewal ((pound)10m over 10 yrs)
o Digital radio network win in Yorkshire with MXR group ((pound)7.7m
over 12 years)
o Wireless:
o Average Sharers per tower rose from 2.71 to 2.97
o Public Safety:
o Metropolitan Police Integrated Communications Platform ((pound)25m
over seven yrs, subject to contract)
o Managing digital transition for Thames Valley Police consortium of 5
police forces ((pound)13m, up to 6 yrs)
<page>
Slide 29
ntl:
Financial Overview
<page>
Slide 30
Financial Summary
Quarter over Quarter
((pound)millions) Q1 2003 Q4 2002 Q1 2002*
------- ------- --------
Revenue
Home (pound)362 (pound)356 (pound)362
Business 75 75 83
Broadcast 64 63 64
Carrier 28 27 33
Ireland 18 15 14
Q4 2002 Accounting Adjustment - (3) -
-- -- --
Total Revenues (pound)547 (pound)533 (pound)556
Underlying EBITDA* (pound)157 (pound)155 (pound)143
EBITDA Margin 29% 29% 26%
Capital Expenditures (pound) 83 (pound)133 (pound) 92
Operating Cash Flow (pound) 74 (pound) 22 (pound) 51
* Q1 2002 and Q4 2002 EBITDA are restated to deduct Corporate Expenses in line
with treatment in Q1 2003. Q1 2002 figures account for changes in assumptions
relating to the allocation of certain costs from capital to operating expense
that occurred in Q4 02, reducing Q1 02 EBITDA and Capital Expenditures by
(pound)10.8m. Q4 2002 Underlying EBITDA and Capital Expenditures are as
reported in the Q4 2002 Year-End presentation and press release.
<page>
Slide 31
Luquidity
((pound) millions)
Q1 2003
-------
Cash per 8-K (pound)277
Q1 2003 Cash Improvements
- Operating efficiencies
- Working capital improvements + 26
- Lower capital spend -----
Actual Q1 2003 Ending Cash (pound)303
o Capital Expenditures improvement partly due to efficiencies and partly
due to timing
o Cash utilization across the company better than expected
<page>
Slide 32
NCTA Standard Reporting: Capex
o Customer Premise Equipment
o Commercial
o Scaleable Infrastructure
o Line Extensions
o Upgrade/Rebuild
o Support Capital
<page>
Slide 33
Q1 2003
-------
UK
Customer Premise Equipment (pound)37
Commercial 4
Scaleable Infrastructure 12
Line Extensions 0
Upgrade/Rebuild 3
Support Capital 16
---
Total 72
Non-NCTA category capex
Broadcast 3
Other 5
Ireland 3
---
Total Capital Expenditure (pound)83
<page>
Slide 34
Fresh Start Reporting
o SOP 90-7 requires NTL to adopt 'fresh start reporting' on emergence from
Chapter 11
o Professional valuation specialists performed the valuation exercise
o 'Reorganization value' (the Company's fair value) is the basis of NTL's
new opening balance sheet as of January 1, 2003
<page>
Slide 35
ntl: