1. business overview · (“presentation”) in good faith, however, no warranty or representation,...
TRANSCRIPT
Etisalat Group
Q1 2015 Results Presentation
19th April 2015, Abu Dhabi
Emirates Telecommunications Corporation and its subsidiaries (“Etisalat” or the “Company”) have prepared this presentation (“Presentation”) in good faith, however, no warranty or representation, express or implied is made as to the adequacy, correctness, completeness or accuracy of any numbers, statements, opinions or estimates, or other information contained in this Presentation.
The information contained in this Presentation is an overview, and should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary.
Where this Presentation contains summaries of documents, those summaries should not be relied upon and the actual documentation must be referred to for its full effect.
This Presentation includes certain “forward-looking statements”. Such forward looking statements are not guarantees of future performance and involve risks of uncertainties. Actual results may differ materially from these forward looking statements.
2
Disclaimer
1. Business Overview
6
Q1 2015 Highlights
Strategic Progress
Performance
Completed sale of assets
to Maroc Telecom
Sustained strong performance in
domestic market
Acquired 4G License in Morocco
Enhanced positioning
in ICT
Strategic partnership to develop 5G
Subscribers (1)
173 million+19 yoy
Revenue
Double digit growth yoy
EBITDADouble digit growth yoy
Adj. EPS
AED 0.25+8% yoy
Capex
AED 1.3 billion10% of revenue
(1) Subscriber numbers calculated as aggregate number of GSM, CDMA, fixed, fixed broadband and WLL lines generating revenue during the last 90 days.
2. Financial Overview
Etisalat Group
6
Q1’14 Q4’14 (2) Q1’15 (2) QoQGrowth
YoYGrowth
Subs (m) (1) 145 169 173 +2% +19%
Revenue (AED m) 9,899 13,044 12,906 -1% +30%
EBITDA (AED m) 4,939 5,583 6,569 +18% +33%
EBITDA Margin 50% 43% 51% +8pp +1pp
Net Profit 2,024 2,141 2,177 +2% +8%
Net Profit Margin 20% 16% 17% 0pp -4pp
Basic EPS (AED) 0.26 0.27 0.28 +2% +8%
Adj. EPS (AED) 0.23 0.25 0.25 +2% +8%
Subscriber growth Y/Y mainly attributed to the consolidation of Maroc Telecom and strong growth in Nigeria
Strong Revenue growth Y/Y driven by the growth in the domestic operations and consolidation of Maroc Telecom
EBITDA level improvement Y/Y mainly due to higher revenue growth trend, consolidation of Maroc Telecom and cost optimization initiatives
Net profit growth Y/Y attributed to higher EBITDA level, forex gain and lower royalty charges that was partially offset by higher depreciation and amortization expenses, higher finance costs and lower share of results of associates (3).
(1) Subscriber numbers calculated as aggregate number of GSM, CDMA, fixed, fixed broadband and WLL lines generating revenue during the last 90 days.(2) Q1’15 and Q4’14 Financial results excludes results of one of our subsidiary reclassified for held up for sale.(3) Share of results of associates excluded results of a major associate that has not declared its results for the period ending March 2015 before Etisalat’s disclosure date.
Highlights
Domestic vs. Int’l
9,899
12,906717
2,921
76 86 470
Q1'14 UAE MT Egypt Pakistan Others Q1'15
Group Revenue
7Note:(1) Q1’15 and Q4’14 Financial results excludes results of one of our subsidiary reclassified for held up for sale.
(2) “Others” consist of domestic non-telecom operations and other international operations.
Consolidated revenue in Q1’15 increased Y/Y by 30% attributed to strong performance of the UAE and consolidation of Maroc Telecom
Revenue from international consolidated operations significantly increased Y/Y by 69%, resulting in a 44% contribution to Group revenues, an improvement of 10 points as compared to Q1’14
― Positive contribution from consolidation of Maroc Telecom
― Egypt revenue impacted by currency devaluation
― Pakistan revenue impacted by competitive pressures
Highlights
Revenue (AED m) and YoY growth (%) Sources of Revenue growth – Q1’15 vs Q1’14 (AED m)
Revenue by Cluster (Q1’15)
International
9,899
13,044 12,906
3%
33% 30%
Q1'14 Q4'14 Q1'15Revenue YoY growth %
Int'l44%UAE
56%
Others0%
Egypt19%
Pakistan19%MT
Group52%
Others10%
(2)(1)(1)
(1)
Group EBITDA
8
Consolidated EBITDA increased 33% to AED 6.6 bn
EBITDA margin improvement due to consolidation of Maroc and improved revenue trends in the domestic market
EBITDA of consolidated international operations increased 118% Y/Y, resulting in a 36% contribution to Group EBITDA, an improvement of 14 points compared to Q1’14
― Consolidation of Maroc Telecom boosted EBITDA
― Egypt impacted by currency depreciation and higher network and operating costs
― Pakistan impacted by lower revenue due to decline in international incoming traffic
4,9395,583
6,569
50%43%
51%
Q1'14 Q4'14 Q1'15
EBITDA EBITDA Margin
Highlights
EBITDA (AED m) & EBITDA Margin Sources of EBITDA growth – Q1’15 vs Q1’14 (AED m)
EBITDA by Cluster (Q1’15)
Domestic vs. Int’l International
4,939
6,569
345
1,547
(64) (86) (111 )
Q1'14 UAE MT Egypt Pakistan Others Q1'15
Int'l36%
UAE62%
Others2%
(1) (1) (1)(2)
Note:(1) Q1’15 and Q4’14 Financial results excludes results of one of our subsidiary reclassified for held up for sale.
(2) “Others” consist of domestic non-telecom operations and other international operations.
Egypt16%
Pakistan15%
MT Group65%
Others4%
Group CAPEX
9
910
2,749
1,269
9%
21%
10%
Q1'14 Q4'14 Q1'15
CAPEX CAPEX/Revenue
CAPEX (AED m) & CAPEX/Revenue Ratio (%)
HighlightsCAPEX by Cluster (Q1’15)
Domestic vs. Int’l International
Sources of CAPEX growth – Q1’15 vs Q1’14 (AED m)
910
1,269162
31352
(54) (113)
Q1'14 UAE MT Egypt Pakistan Others Q1'15
Int'l49%
UAE49%
Others2%
Egypt27%
Pakistan21%
MT Group51%
Others1%
Capex increased Y/Y by 39% resulting in Capex/Revenue ratio
of 10%.
Capital spending in the UAE increased by 35% representing a
9% capex/revenue ratio. Capex spend aimed upgrade network
to address increased data demand and higher speed.
Capital expenditure in international operations increased Y/Y
by 36% and contributed 49% of consolidated capex driven by
consolidation of Maroc Telecom
Net cash position (AED m) 3M ‘14 3M ‘15
Operating 4,354 4,264
Investing (501) (1,184)
Financing (479) (25)
Net change in cash 3,375 3,054
Effect of FX rate changes (1) 556
Ending cash balance 18,823 22,162
Group Balance Sheet & Cash Flows
10
Balance Sheet (AED m) Q4’14 Q1’15
Cash & Cash Equivalent 18,543 22,148
Total Assets 129,585 128,345
Total Debt (1) 22,229 20,857
Net Cash / (Debt) (3,686) 1,291
Total Equity 60,927 58,141
Debt (1) by Source Q1’15 (AED m)
Borrowings (1) by Operation Q1’15 (AED m)
12,951
7,212
370 324
Bonds BankBorrowings
VendorFinancing
Others
(1) Debt balance as of 31 December 2014 excludes borrowing from discontinued operations
13,611
2,636 2,111 1,481
722 295
Group MT Egypt Pakistan Afghanistan Sri Lanka
11
Key Markets Financial Performance
UAE: Steady growth supported by strong performance across most business segments
12
Q1’14 Q4’14 Q1’15QoQ
GrowthYoY
Growth
Subs(1) (m) 10.9 11.0 11.4 +3% +4%
Revenue (AED m) 6,503 6,978 7,221 +3% +11%
EBITDA (AED m) 3,715 3,531 4,060 +15% +9%
EBITDA Margin 57% 51% 56% +6pp -1pp
Net Profit 1,651 2,239 1,807 -19% +9%
Net Profit Margin 25% 32% 25% -7pp 0pp
CAPEX 460 908 622 -31% +35%
CAPEX/Revenue 7% 13% 9% -5pp +2pp
Strong growth in subscriber with Y/Y double digit growth in the mobile post-paid and eLife segments
Maintained revenue growth momentum for 9 consecutive quarters
Improvement in EBITDA level due to higher revenue trend
Slight drop in EBITDA margin Y/Y due to higher cost of sales
Higher net profit Y/Y attributed to higher EBITDA level that was reduced by higher depreciation and royalty
Capital spending increased Y/Y to support network in addressing increased data demand
(1) Subscriber numbers calculated as aggregate number of GSM, fixed, fixed broadband and eLife lines generating revenue during the last 90 days.
Highlights
1.38 1.51 1.61
7.54 7.53 7.77
115 115 114
Q1'14 Q4'14 Q1'15
Postpaid Prepaid Blended ARPU
UAE: Subscriber growth in mobile and eLife segments
13
1.03 0.97 0.96
127137
132
Q1'14 Q4'14 Q1'15
Fixed ARPL
(1) Mobile ARPU (“Average Revenue Per User”) calculated as total mobile voice, data and roaming revenues divided by the average mobile subscribers.(2) ARPL (“Average Revenue Per Line”) calculated as fixed line revenues divided by the average fixed subscribers.(3) Fixed broadband subscriber numbers calculated as total of residential DSL (Al-Shamil), corporate DSL (Business One) and E-Life subscribers.(4) eLife subscribers includes one, double & triple-Play on fibre.
Mobile Subs (m) & ARPU(1) (AED)
Fixed Broadband(3) Subs (m)
Fixed Subs (m) & ARPL(2) (AED)
eLife Subs (m) (4)
0.700.78 0.80
374 380 383
Q1'14 Q4'14 Q1'15
E-Life (2P & 3P) ARPL
0.93 0.98 1.01
479 496 495
Q1'14 Q4'14 Q1'15
Fixed BB ARPL
Morocco64%
Int'l38%
Other-3%
Existing Subsidiaries
72%
New Subsidia
ries28%
Maroc Telecom: Expansion of International footprintMorocco, Benin, Burkina Faso, CAR, CDI, Gabon, Mali, Mauritania and Togo
14
Subscribers (m) Revenue (AED m) (1) / EBITDA Margin Highlights
Completed acquisition of Atlantique
Telecom’s six operations effective Jan 26th,
2015
Growth in subscriber base is driven by
international existing subsidiaries and new
acquired operations
Revenue growth in local currency mainly
driven by international subsidiaries and
newly acquired operations
― Like for like, revenue declined by
0.7% in local currency
Decline in EBITDA margin Y/Y is mainly due
to lower margin in Morocco and lower
margin of the newly acquired operations
Awarded 4G license in Morocco
39.2 40.2
51.6
Q1'14 Q4'14 Q1'15
3,241 2,907 2,921
55%53% 53%
Q1'14 Q4'14 Q1'15
Revenue EBITDA %
Domestic vs. Int’l
Revenue Breakdown Q1’15
Int’l
(1) Revenue figures in AED for Q4’14 & Q1’15 are not comparable to Q1’14 due to differences in accounting policies.
116
337
168
10%
26%
16%
Q1'14 Q4'14 Q1'15
CAPEX CAPEX/Revenue
Egypt: Competitive dynamics and FX impacting revenues
15
Total Subscribers (1) (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
1,146
1,293
1,070
39%
31%36%
Q1'14 Q4'14 Q1'15
Revenue EBITDA %
Subscriber growth slow down in-line with the market trend
Revenue growth Y/Y impacted by currency depreciation
EBITDA margin Y/Y declined due to higher network expenses, staff costs and other general expenses
Increased in capital spending Y/Y to support network expansion and data growth
Highlights
100 95 95
23% 23% 23%
Q1'14 Q4'14 Q1'15
Subscribers Market Share
(1) Subscribers and market share data as per statistic published by the Ministry of Information and Technology
27.6
26.3 25.8
Q1'14 Q4'14 Q1'15
1,180 1,101 1,094
37%
3%
32%
Q1'14 Q4'14 Q1'15
Revenue EBITDA %
189
438
135
16%
40%
12%
Q1'14 Q4'14 Q1'15
CAPEX CAPEX/Revenue
Pakistan: Challenging environment and strong competition impacting performance
16
Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
Subscriber growth negatively impacted by regulatory mandated measures
Revenue growth Y/Y adversely impacted by falling international incoming traffic and intense price among mobile operators
EBITDA margin declined Y/Y due to lower revenue and and higher interconnection costs and marketing expenses
Capital spending reduced Y/Y resulting in Capex/ revenue ratio of 12%
Highlights
29%
18.7
21.1
22.2
Q1'14 Q4'14 Q1'15
1,009 1,114
1,040
11%16% 16%
Q1'14 Q4'14 Q1'15
Revenue EBITDA %
437
462
140
43% 42%
14%
Q1'14 Q4'14 Q1'15
CAPEX CAPEX/Revenue
Nigeria: Strong performance masked by currency devaluation
17
Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
Solid customer uptake fuelled growth momentum in subscriber
Revenue growth Y/Y and Q/Q muted by currency devaluation
― Strong revenue growth Y/Y of 20% in local currency supported by higher subscriber base and new products
EBITDA margin progressing Y/Y due to higher revenue
Capex spending decline due to timing
Highlights
3M 2015 Actual Against Guidance:
18
Revenue Growth %
EBITDA Margin%
CAPEX / Revenue Ratio
8% - 10%
47% - 48%
17% - 18%
30%
51%
10%
Financial Objective Guidance 2015 Actual 3M 2015
