axiata presentation 18thagm
TRANSCRIPT
18TH ANNUAL GENERAL MEETINGPresentation to Shareholders22 June 2010
AGENDA
22
Axiata Overview
2009 Performance
1Q 2010 Performance
Addressing MSWG Questions
AGM 2010 3
Legend:
Note: Subscribers as of 1Q 2010
Axiata at a GlanceOne of the largest and fastest growing telcos in Emerging Asia Mobile Telecom
Subsdiaries
Associates
10 Countries, 130 million customers
Iran
Pakistan
India
Bangladesh
Sri Lanka
Thailand
Cambodia
Malaysia
Singapore
Indonesia
AGENDA
44
Axiata Overview
2009 Performance
1Q 2010 Performance
Addressing MSWG Questions
AGM 2010 5
All round strong financial results and growth in 2009
Key Highlights of 2009 performance
(‘07 to ‘09)Revenue RM13.1 bn 31%
EBITDA RM5.2 bn 25%
Subscribers 120 mn 202%
Successful Completion of Phase 1 :
Strategies at Axiata and OpCos were executed well, showing tangible results
OpCo engagement model significantly improved
Top management across the group significantly enhanced with strong diversity
Stronger fundamentals (management, processes, strategy) for sustainability
AGM 2010 6
2009 Performance Summary : Group
OPERATING REVENUE (RM mn)
+15%
39%
EBITDA Margin
ADJUSTED PATAMI (RM mn)EBITDA (RM mn)
+18% +44%
All round strong financial results and growth
Strong results, particularly at Celcom, XL and Robi
Strong 2009 results – an all round performance across all major OpCos
38%
Subscribers (mn)
+34%
AGM 2010 7
Strengthened capital structure with further deleveraging of balance sheet with lower Net Debt / EBITDA at 2.0x
Net Debt / EBITDA (x)
3.8x
2.0x
FY 2008 FY 2009
Group turned Free Cash Flow positive
RM 2.1 bn
4.6x
2.4x
Gross Debt/EBITDA
*Free Cash Flow : EBITDA less Capex
265%
2009 Performance Summary : GroupImproved Leverage and Free Cash Flow
Cash On Hand : RM2.0 bn
AGM 2010 8
Strong performance at Celcom, XL and Robi through execution of strategies. Dialog showed signs of continued quarterly improvement
6% 13% 11%6% 2% 19%Celcom
7% 1% 4%*33%* >100%* 45%*Dialog
12% 14% 21%18%XL 3% >100%
Q o Q Performance Y o Y PerformanceRevenue EBITDA PATAMI Revenue EBITDA PATAMI
9% 15%19% 33%* -3%Group 18% 44%*
Note: QoQ denotes 4Q09 vs 3Q09 . YoY denotes FY 2009 vs FY2008.
* Norrmalised
24% 36% 58%>100% >100%Robi >100%
2009 Performance Summary
AGM 2010 9
Perfectly consistent upward trends at Group, Celcom and XL2009 Performance Summary
2,4182,867 3,164 3,381 3,694
4Q 08 1Q 09 2Q 09 3Q 09 4Q 09
7671,045 1,244 1,309
1,559
4Q 08 1Q 09 2Q 09 3Q 09 4Q 09
REVENUE
EBITDA
Axiata Group (RM million)
Axiata Group (RM million)
39.3%31.7% 36.4% 38.7% 42.2%
+36%+19% +5%+19%
+19% +10% +7% +9%
1,471 1,4761,544
1,6061,699
4Q 08 1Q 09 2Q 09 3Q 09 4Q09
Celcom* (RM million)
Celcom (RM million)
664 664 682 716 759
4Q 08 1Q 09 2Q 09 3Q 09 4Q 09
44.2%45.0%45.1% 44.6% 44.7%
*2008 - Fibercomm excluded due to demerger (for comparison purpose)
+0.3%+5%+4%
+6%
+0% +3% +5% +6%
2,978 2,926 3,3283,592
4,033
4Q 08 1Q 09 2Q 09 3Q 09 4Q09
XL (IDR billion)
XL (IDR billion)
1,021 1,113 1,454 1,672 1,965
4Q 08 1Q 09 2Q 09 3Q 09 4Q 09
34% 44% 49%38% 47%
-2% +14%+8%+12%
+9%+31%+15% +18%
AGM 2010 10
Encouraging trends at Dialog and Robi2009 Performance Summary
REVENUE
EBITDA
Dialog (SLR million)
Dialog (SLR million)
8,797 8,475 8,780 8,9459,574
4Q 08 1Q 09 2Q 09 3Q 09 4Q 09
392
1,1361,778 2,252
2,686
4Q 08 1Q 09 2Q 09 3Q 09 4Q 095% 13% 20% 25% 28%
-4% +4%+2% +7%
>+100%+56% +27% +19%
9621,399
2,140
829
2,322
4Q 08 1Q 09 2Q 09 3Q 09 4Q 09
Robi (BDT million)
Robi (BDT million)
3,947 4,392 4,580 4,8986,052
4Q 08 1Q 09 2Q 09 3Q 09 4Q 09
24% 47% 38%32% 17%
+11%+4%+7% +24%
+45%+53%
-61% >+100%
AGM 2010 11
2009 Performance Summary : Subsidiaries
Despite high industry penetration, Revenue grew 13%, >2x industry average
Strong EBITDA growth of 11%, >5x industry average
15 consecutive quarters of revenue growth
Exceeded industry average in almost all key measurements
( Malaysia)
Celcom’s excellent execution of segment marketing and broadband focus delivered strong performance
5,6066,324
FY 08 FY 09
Revenue (RM mn)
2,541 2,822
FY 08 FY 09
EBITDA (RM mn) & Margins (%) PATAMI (RM mn)
19%+13% +11%
1,2941,540
FY 08 FY 09
45.2% 44.6%
AGM 2010 12
2009 Performance Summary : Subsidiaries
Strong Revenue growth of 14% (vs. industry average of 9%)
Significant EBITDA growth of 21%, ~2x industry average
PAT turned profitable
Subscribers grew 21% to 31.4 million
Outperformed all competitors in almost all key measurements
( Indonesia)
XL’s (Indonesia) execution on yield focus strategy showed strong performance in all financial metrics
12,156
13,880
FY 08 FY 09
Revenue (IDR bn)
5,1326,205
FY 08 FY 09
EBITDA (IDR bn) & Margins (%) PATAMI (IDR bn)
>+100%+14% +21%
-15
1,709
FY 08 FY 09
42% 45%
AGM 2010 13
Normalised EBITDA (adjusted for non-recurring charges) improved by 4%
4 consecutive quarters of strong EBITDA improvements
2009 Performance Summary : Subsidiaries
( Sri Lanka)
Dialog ( Sri Lanka ) faced some challenges, but turnaround plans showing encouraging results
36,278 35,774
FY 08 FY 09
Revenue (SLR mn)
7,887 7,853
FY 08 FY 09
EBITDA (SLR mn) & Margins (%) PATAMI (SLR mn)-1%
-12,208
-2,879FY 08 FY 09
22% 22%
-0.4% (Normalised: +4%) >-100% (Normalised: -45%)
AGM 2010 14
Spectacular Revenue growth of 36%
Significant Profit growth improvement – EBITDA increased 58%, PAT turned profitable with growth of more than 100%
Highest quarterly Revenue achieved with growth recorded for 5 consecutive quarters
2009 Performance Summary : SubsidiariesRobi ( Bangladesh ) showed successful turnaround in 2009, with significant growth in revenue and profitability
( Bangladesh)
14,61719,922
FY 08 FY 09
Revenue (BDT mn)
4,235
6,691
FY 08 FY 09
-1,178
857
FY 08 FY 09
EBITDA (BDT mn) & Margins (%) PATAMI (BDT mn)
>+100%+36% +58%
29% 34%
AGM 2010 15
209 Performance : AssociatesIdea had a strong performance despite challenging industry. M1 showed table performance
HIGHLIGHTSCOMPANY YEAR ON YEAR PERFORMANCE OVERVIEW
Strong 2009 results amidst challenging sector conditions
Revenue Subs EBITDA48% PAT20%23% 8%
Revenue Subs EBITDA PAT8%2% 2%Launch of new mobile services, NGNBN and iPhone to provide exciting new opportunities
0.1%
Note : Idea based on their financial calendar ending March 2010
AGENDA
1616
Axiata Overview
2009 Performance
1Q 2010 Performance
Addressing MSWG Questions
AGM 2010 17
1,636
1,678
4Q09 1Q10
3,7563,813
4Q09 1Q10
1Q 2010 Performance Summary : Group ( Quarter on Quarter)
2% 3% 8%
The momentum continues...
44% 44%
551594
4Q09 1Q10
OPERATING REVENUE (RM mn) ADJUSTED PATAMI (RM mn)EBITDA (RM mn) Subscribers (mn)
8%
120.0 129.7
4Q09 1Q10
AGM 2010 18
Strong Q o Q performance at Celcom and XL with profit turnaround in Dialog. Short term pressure at Robi in pursuit of growth.
0.2% 15% 16%2% 7% 24%Celcom
3% 42% 92%9%XL 18% >100%
Q o Q Performance Y o Y PerformanceRevenue EBITDA PATAMI Revenue EBITDA PATAMI
2% 31%3% 65% -3%Group 52% >100%
Note: QoQ denotes 4Q09 vs 1Q10 . YoY denotes 1Q09 vs. 1Q10
2% >100%18% >100%Dialog 16% >100%
Normalised for International Gateway (IGW) Revenue recognised from 4Q09 with finalisation of agreements at year end1
35% 11% >100%Robi 5% 33% 91%1
1Q 2010 Performance Summary
AGM 2010 19
1Q 2010 Performance : Affiliates ( Quarter on Quarter )Idea had a solid all round performance while M1’s revenue and profitability was up
HIGHLIGHTSCOMPANY QUARTER on QUARTER PERFORMANCE OVERVIEW
Strong 4Q finish amidst challenging sector conditions
Revenue Subs EBITDA11% PAT13%
Higher service revenue, handset sales and data revenue. Handset costs impacted EBITDA
6%
2% Revenue Subs EBITDA PAT15% 6%
57%
3%
AGM 2010 20
Axiata Share Price has outperformed KLCI in 2010 and is the best performing stock in the KLCI (Top 30) for the year to date
80%
90%
100%
110%
120%
130%
140%
AXIATA KLCI
Period : 1 Jan 2010 – 21 June 2010
Axiata
KLCI
29%
5%
AGENDA
2121
Axiata Overview
2009 Performance
1Q 2010 Performance
Addressing MSWG Questions
AGM 2010 22
• Group EBITDA margin of 39.3% is a consolidated number derived from companies operating in different countries and not comparable to other Malaysian operators.
• In Malaysia, Celcom in 2009, outperformed the competitors with an EBITDA growth of 11% and margin improvements by 0.4 pp while other 2 major competitors showed decline in EBITDA and margins
• Similarly, XL led the Indonesian competitors in 2009 with improved margins while other 2 major competitors had margin decline
• Improvements shown were the result of the initiatives of Cost Management Programme and variety of market programmes to improve revenue contribution from its subscribers’ base.
QUESTIONS ASKED BY MSWG
1. We note the EBITDA margin for the Group was 39.3%, helped by Celcom and XL which were at 44.6% and 44.7% respectively. However, it was below the market leader. What would be the Group’s overall medium to long term ways to improve EBITDA margin, amidst the competitive environment?
Response :
-22-
Operations and Financial Performance
AGM 2010 23
a) The subsidiary referred to is Celcom where these projects were completed after receiving necessary approvals from the relevant authorities that resulted in the write-back of impairment loss provision in the year. The impairment loss provision was made in the prior years based on the appropriate accounting policies and prudent accounting practice.
b) The impairment loss was contributed mainly by Dialog’s impairment of old and replaced network assets resulting from the completion of its mobile network modernisation project during the year. The impairment in Dialog contributed approximately 77% of total net impairment losses of the Group.
The breakdown of impairment losses of RM83.6 million are as follows:-
Dialog network modernization RM64.8 millionXL Capital Work-in-progress impairment RM11.9 millionOthers (net of Celcom reversal of impairment loss RM5.2 million) RM6.9 million
QUESTIONS ASKED BY MSWG
3. It was reported that the Group incurred net impairment losses of RM83.6 million (2008: RM12.8 million), primarily for PPE due to the write down of certain telecommunication network assets in which the assets were written down to its recoverable values, net of reversal of impairment losses of RM5.2 million (2008: RM16.0 million) in relation to capital work-in-progress made on a subsidiary’s long outstanding projects which were now completed.
a) Which is the subsidiary involved and why was this project long outstanding?b) Given the long outstanding work-in-progress, was the impairment loss due to costs over-runs?
Response :
-23-
Operations and Financial Performance
AGM 2010 24
a) Group CAPEX guidance for 2010 is RM3.6 billion
b) Axiata have been, and will continue to deploy and operate state of the art wireless networks using the GSM family of technologies. The technology roadmap began with GSM, moving on to HSPA, HSPA+ and LTE. LTE trials have been conducted by M1 with very positive results. The Group will pursue LTE as and when spectrum is made available.
QUESTIONS ASKED BY MSWG
8. In 2009, Celcom’s total capex was around RM770 million and major domestic Celcos would range between RM700 million to RM1.24 billion.
a) What would be the Group’s OpCos guided capex in 2010?b) What is the Group’s plan(s) on the 4G LTE (Fourth Generation Long Term Evolution) technology?
Response :
-24-
Balance Sheet and Strategies
AGM 2010 25
• The Board led by the Board Nomination Committee has recently completed this process and resolved on the right size and the criteria of candidates that the Board is looking at. The process for identification of candidates is currently ongoing and this includes engaging the services of third party recruitment specialist and/or consultant to assist the Board.
• The process is targeted to be completed by 3Q’2010. In the meantime, with the present Members, the Board is sufficiently equipped to manage its role as the required expertise is still present and all legal requirements are met.
QUESTIONS ASKED BY MSWG
9. It was reported that the Board was planning a holistic review of the Board’s composition and balance in 2010, taking into account the various feedback and current and future needs of the Group, including diversity in terms of skill- sets, ethnicity, gender and nationality which would be necessary for a regional group like Axiata. Could the Board further enlighten the shareholders on how soon this would occur taking into cognizant of the two less Board members as compared to last year?
Response :
-25-
Corporate Governance Matters