Dialog Axiata PLC Sri Lanka's Premier Connectivity Provider
Q3 2016 Results
10th November 2016
an axiata company
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Dialog Group Performance
Dialog Axiata Company Performance
Subsidiary Performance
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Q3 Group Revenue at Rs.21.7Bn, Grew by 3% QoQ and 19% YTD Q3 2016 featured the suspension of VAT & NBT, lowering consumption taxes, which had a positive impact on Revenue growth
Q3 Group EBITDA Improvement Driven by Significant Growth in Revenue and Cost Savings Q3 Group EBITDA at Rs7.7Bn, growth of 9% QoQ and 20% YTD; The Group EBITDA Margin reached 35.5% in Q3 2016
Group PAT Improvement Underpinned by Strong EBITDA and Significantly Lower Unrealised Forex Losses Q3 PAT at Rs2.8Bn, grew by 24% QoQ and 71% YTD
Dialog Group Further Strengthened its Leadership in Sri Lanka’s Broadband Sector during the Quarter YTD Capex of Rs12.7Bn directed mainly towards investments in High-Speed Broadband infrastructure focused at further strengthening the Group's leadership in Sri Lanka's Broadband sector; Capex Intensity of 20%
Subsidiaries Continue to Consolidate Performance DBN Records solid EBITDA growth of 34% YTD on the back of growth in fixed LTE Revenue DTV reported Revenue growth of 7% YTD albeit medium term net loss of Rs346mn due to cost expansion arising from aggressive customer acquisition
Aggressive Subscriber Growth Mobile subscriber base of 11.3Mn – up by 10% YoY TV subscriber base of over 791k with over 43k net adds during the quarter
Dialog Group Performance Highlights Dialog Posts Strong 3rd Quarter
The Sri Lankan Parliament Approved the Re-implementation of VAT & NBT on 26th of October; VAT & NBT Introduced with effect from 1st of November Lifting of the suspension of VAT & NBT would constrain customer consumption, hence Revenue growth achievable to be challenged in the immediate after-math of the introduction of VAT & NBT
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Group Financial Summary
Rs Mn Q3 16 QoQ YTD 16 YTD
Revenue 21,748 3% 63,970 19%
EBITDA 7,714 9% 21,790 20%
PAT 2,833 24% 7,791 71%
EBITDA Margin 35.5% 2.0pp 34.1% 0.3pp
PAT Margin 13.0% 2.2pp 12.2% 3.7pp
ROIC 16.4% 1.3pp 16.6% 2.6pp
All key Performance Indicators improved both QoQ and YTD basis with ROIC improving by 2.6 percentage points YTD
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Group Revenue Continued its Growth Trajectory, Recording a Growth of 3% QoQ and 19% YTD
18,816 20,039 21,157 21,065 21,748
63,970
53,891
Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 YTD 16 YTD 15
Group Revenue (Rs Mn)
3%
+16% +19%
Q3 2016 featured the suspension of VAT & NBT which had a positive impact on Revenue with growth registered across most business segments
Mobile Voice Revenue grew by 3% QoQ and 10% YTD; Mobile Data Revenue grew 17% QoQ and 54% YTD driven by increased smartphone penetration and 4G usage
Fixed Revenue grew by 7% QoQ and 32% YTD on the back of strong fixed LTE subscriber growth supported by wider LTE coverage and aggressive acquisition drive
Growth in Television Revenue driven by subscription Revenue which grew by 17% YTD; QoQ Revenue impacted by change in accounting treatment for Prepaid CPE sales, wherein CPE sales Revenue is deducted from the cost of CPE to arrive at the amount of subsidy, which is then amortised over the period of subscriber contract
International Revenue continued to be impacted by reduction in termination volumes due to OTT services with the growth in Smartphone penetration and higher retail rates to call Sri Lanka with the increase in termination rates w.e.f. 1st January 2016
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Cost as a % of Revenue Q3 15 Q2 16 Q3 16 YTD 16 YTD 15
Total Group Cost 66.4% 66.5% 64.5% 65.9% 66.2%
Direct Expenses 29.0% 27.7% 26.1% 27.9% 28.9%
Sales & Marketing 13.3% 13.8% 14.7% 14.1% 12.9%
Network Cost* 13.3% 11.9% 12.8% 12.3% 13.8%
Staff Cost 7.8% 7.5% 8.1% 7.8% 8.0%
Bad debt 1.0% 2.5% 0.2% 1.2% 1.0%
Overheads 2.0% 3.1% 2.6% 2.6% 1.6%
6,314 5,613 7,019 7,057 7,714
21,790
18,211
679 620 2,670 2,287 2,833
7,791
4,568
-
5,00 0
10,0 00
15,0 00
20,0 00
Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 YTD 16 YTD 15
EBITDA (Rs Mn)
PAT (Rs Mn)
Group EBITDA and PAT (Rs Mn)
EBITDA Margin % 33.6% 28.0% 33.2% 33.5% 35.5% 34.1% 33.8%
PAT Margin % 3.6% 3.1% 12.6% 10.9% 13.0% 12.2% 8.5%
+9%
+20% +22%
Q3 Profitability Improvement Underpinned by Growth in Revenue, Positive Cost Performance and Lower Forex Losses
*Network cost includes Frequency Cost earlier classified under Overheads
Group EBITDA grew by 9% QoQ underpinned by strong Revenue growth and savings in International Bandwidth Cost accruing from the quantum change in cost structure pursuant to the commissioning of the BBG Cable
YTD Group EBITDA improvement driven by growth in Revenue
Group PAT improved by 24% QoQ and 71% YTD in tandem with strong EBITDA performance and lower unrealised forex losses
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Remittances to Government of Sri Lanka (GoSL)
GoSL Payments Composition
41.7% 58.3%
Direct Taxes, Fees & Levies
Consumption Taxes collected onbehalf of GoSL
36.3% 63.7%
In Rs Mn YTD 2016 YTD 2015 Change %
Direct Taxes, Fees & Levies 8,605 7,806 10.2%
Consumption Taxes collected on behalf of GoSL 15,106 10,937 38.1%
Telco Levy 10,012 8,587 16.6%
VAT 2,163 77 +100%
Total 23,711 18,743 26.5%
Telco Levy accounts for 45.8% of Total Tax
Telco Levy accounts for 42.2% of Total Tax
Dialog Group remitted a total of Rs23.7Bn to GoSL during the nine months ended 30th September 2016. Total remittances included direct taxes and levies as well as consumption taxes collected on behalf of the GoSL
YTD 2016 YTD 2015
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Focused Capex Investments to Further Strengthen the Group’s Leadership in Sri Lanka’s Broadband Sector
*Capex excluding CPE (Customer Premises Equipment) investments, capex for spectrum acquisition and license renewal
3,683
10,618
2,942 4,148
5,651
12,742
8,959
20%
53%
14% 20% 26% 20% 17%
0%
20%
40%
60%
80%
100 %
120 %
140 %
160 %
180 %
200 %
-
2,00 0
4,00 0
6,00 0
8,00 0
10,0 00
12,0 00
Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 YTD 16 YTD 15
CAPEX CAPEX Intensity
Capex (Rs Mn) / Capex Intensity (%)
+36%
+42% +53%
YTD Capex of Rs12.7Bn directed mainly towards investments in High-Speed Broadband infrastructure consisting of capacity upgrades and LTE focused coverage expansion; Capex Intensity of 20% Aggressive investments in fiber rollout has enabled the extension of Fiber Backbone to reach over 3,600km to support fiberisation of sites and improve Last Mile Connectivity; Total Capex investment during the year amounted to over Rs650mn (YTD Sep 2016)
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Structurally Strong Balance Sheet with Net Debt to EBITDA Maintained Below 1.0x
(Rs Mn)
30 Sep 16 30 Jun 16 31 Mar 16
Gross Debt 31,916 31,850 31,540
Net Debt 26,845 28,197 21,799
Gross Debt / Equity (x) 0.61 0.64 0.63
Gross Debt/ EBITDA (x) 1.10 1.13 1.12
Net Debt/ EBITDA (x) 0.92 1.00 0.78
Underpinned by relatively low gearing (Net Debt/EBITDA ratio of 0.9x), Dialog’s structurally robust balance sheet demonstrates the Group’s financial strength
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Dialog Group Performance
Dialog Axiata Company Performance
Subsidiary Performance
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Dialog Axiata PLC (Company) Strong Revenue Growth of 4% QoQ and 17% YTD
QoQ Revenue growth of 4% underpinned by growth in Data and Voice whilst strong YTD Revenue improvement of 17% was driven by Data, Voice and VAS Revenues QoQ and YTD EBITDA improved by 13% and 21% respectively driven by growth in Revenue and positive Cost performance PAT grew significantly QoQ and YTD backed by strong performance in EBITDA and reduction in unrealised forex losses
16,089 17,007 17,972 17,667 18,305
53,944
45,936
5,581 4,804 6,283 5,898 6,669
18,850 15,540
1,050 921 3,028 2,322
3,037
8,387 4,826
-
10,0 00
20,0 00
30,0 00
40,0 00
50,0 00
60,0 00
Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 YTD 16 YTD 15
Revenue (Rs Mn)
EBITDA (Rs Mn)
PAT (Rs Mn)
EBITDA Margin % 34.7% 28.2% 35.0% 33.4% 36.4% 34.9% 33.8%
PAT Margin % 6.5% 5.4% 16.8% 13.1% 16.6% 15.5% 10.5%
+4%
+14% +17%
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Mobile Subscriber Growth Continues; up 3% QoQ and 10% YoY
9,177 9,731 9,424 9,770 10,103
1,135 1,141 1,166 1,187* 1,209
Q3 15 Q4 15 Q1 16 Q2 16 Q3 160
2,0 00
4,0 00
6,0 00
8,0 00
10, 000
12, 000
Postpaid Subs Prepaid Subs
No of Mobile Subscribers’000 Blended ARPU (Rs) & MOU
372 378 393 392* 406
148 140 140 132 133
7.4%
1.5% 4.3%
-0.5%
3.8%
Q3 15 Q4 15 Q1 16 Q2 16 Q3 16
Blended ARPUs Blended MOUs ARPU Growth
10,590 10,872 10,312
Total subs growth +3% qoq; +10% yoy
Postpaid subs growth +2% qoq; +7% yoy
Prepaid subs growth +3% qoq; +10% yoy
10,957* 11,313
*Restated
ARPU Increase Led by Growth in Data Revenue while MOUs Grew Marginally
Growth in Prepaid Segment Underpins the QoQ and YoY Subscriber Growth
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Dialog Group Performance
Dialog Axiata Company Performance
Subsidiary Performance
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Dialog Television Continues to Consolidate Revenue Growth with Revenue Increasing by 7% YTD
416 428 435 434 428
184 222 266 314 363
Q3 15 Q4 15 Q1 16 Q2 16 Q3 16Post paid Pre Paid
No of Television Subscribers’000
Total subs growth +6% qoq; +32% yoy
Postpaid subs growth -1% qoq; +3% yoy
Prepaid subs growth +16% qoq; +97% yoy
701 650 600
YTD Revenue improvement underpinned by strong subscriber growth while QoQ Revenue impacted due to change in prepaid CPE accounting treatment Cost expansion arising from aggressive customer acquisition alongside service and product expansion activities resulted in a medium term contraction of EBITDA on a YTD basis Contraction of EBITDA translated to an equivalent negative impact on PAT leading to a net loss of Rs346Mn for YTD 2016
748 791
1,463 1,516 1,577 1,563 1,437
4,577 4,264
70 23 31 183 96 310
586
(243) (184) (182) (46) (118)
(346) (130) (4 00)
100
600
1,10 0
1,60 0
2,10 0
2,60 0
3,10 0
3,60 0
(2 00)
800
1,80 0
2,80 0
3,80 0
4,80 0
Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 YTD 16 YTD 15
Revenue (Rs Mn)
EBITDA (Rs Mn)
PAT (Rs Mn)
EBITDA Margin % 4.8% 1.5% 2.0% 11.7% 6.7% 6.8% 13.7%
PAT Margin % -16.6% -12.1% -11.5% -2.9% -8.2% -7.6% -3.0%
-8%
+7% -2%
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Dialog Broadband Network EBITDA Improved Significantly YTD on the back of Strong Uptake in LTE Services
Strong growth in Fixed LTE Revenue driving QoQ and YTD Revenue improvement YTD EBITDA improvement driven by growth in Revenue YTD PAT registered a net loss of Rs62Mn underpinned by increase in depreciation accruing from aggressive expansion of Fixed 4G LTE and Fibre Infrastructure
1,815 1,969 2,095 2,260 2,406
6,761
5,339
655 814 750 1,032 980
2,763
2,057
(101) (80) (119) 79
(22) (62) (53)
(2 00)
800
1,80 0
2,80 0
3,80 0
4,80 0
5,80 0
(2 00)
800
1,80 0
2,80 0
3,80 0
4,80 0
5,80 0
6,80 0
Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 YTD 16 YTD 15
Revenue (Rs Mn)
EBITDA (Rs Mn)
PAT (Rs Mn)
+6%
+27% +33%
EBITDA Margin % 36.1% 41.4% 35.8% 45.7% 40.8% 40.9% 38.5%
PAT Margin % -5.6% -4.1% -5.7% 3.5% -0.9% -0.9% -1.0%
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Thank You