investor presentation august 2015-+investor+presentation+-+augu… · mfs and vas bangladesh:...

Investor Presentation August 2015

Investor Presentation © Global Telecom Holding S.A.E. 2015

This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of anoffer to buy shares in Global Telecom Holding (the "Company"). Further, it does not constitute a recommendationby the Company or any other party to sell or buy shares in the Company or any other securities.

This presentation includes statements that are, or may be deemed to be, "forward-looking statements". Theseforward-looking statements can be identified by the use of forward-looking terminology, including the terms"believes", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would","could" or "should" or, in each case, their negative or other variations or comparable terminology. All statementsother than statements of historical facts included in this presentation, including, without limitation, those regardingthe Company's prospects, Algeria transformation program and capital expenditure and growth strategies areforward-looking statements. By their nature, such forward-looking statements involve known and unknown risks,uncertainties and other factors which may cause the actual results, financial condition, performance, liquidity,dividend policy or achievements of the Company, or industry results, to be materially different from any futureresults, performance or achievements expressed or implied by such forward-looking statements.

Such forward-looking statements are based on numerous assumptions regarding the Company's present and futurebusiness strategies and the environment in which the Company will operate in the future. Important factors thatcould cause the Company's actual results, performance or achievements to differ materially from those in theforward-looking statements include, among others, the prices of the Company's products and services, the actionsof competitors, the availability of credit, governmental regulation of the telecommunications industry in countries inwhich the Company operates, the effects of political uncertainty and economic conditions in the relevant areas inthe world, the impact of foreign currency rates, taxation and unforeseen litigation. Forward-looking statementsshould, therefore, be construed in light of such factors and undue reliance should not be placed on forward-lookingstatements.

These forward-looking statements speak only as of the date of this presentation. The Company expressly disclaimsany obligation or undertaking (except as required by applicable law or regulatory obligation including under therules of the Egyptian Exchange and the UK Listing Rules and the Disclosure and Transparency Rules of the FinancialConduct Authority), to release publicly any updates or revisions to any forward-looking statement, whether as aresult of new information, future events or otherwise.

2

Disclaimer


GTH serves a population of approximately 415 million

1. Figures from CIA Factbook 2014

Geographical Presence1

3

ALGERIA Population: 38.8 millionGDP Growth: 4%GDP/Capita PPP: USD14,300Pop. Under 15 years: 28%

ZIMBABWEPopulation: 13.8 millionGDP Growth: 3.1%GDP/Capita PPP: USD2,000Pop. Under 15 years: 38%

PAKISTANPopulation: 196.2 millionGDP Growth: 4.1%GDP/Capita PPP: USD4,700Pop. Under 15 years: 33%

BANGLADESHPopulation: 166.3 millionGDP Growth: 6.2%GDP/Capita PPP: USD3,400Pop. Under 15 years: 32%


Algeria: Algeria: Djezzy remains a profitable market leader with significant mobile data potential and lowpenetration of broadband technologies

Pakistan: Mobilink leads the market and has great potential for revenue growth through mobile data, MFS and VAS

Bangladesh:Bangladesh:Banglalink is a leading operator with strong focus on increasing value share in a rapidly large and growing market with relatively low penetration level

Market Position

4


60

298

398

Bangladesh Pakistan Algeria

53%

75%

85%

Pakistan Bangladesh Algeria

7%

43%44%

Algeria Bangladesh Pakistan

Mobile Data Penetration2 (%) Data Usage (MB / User)Mobile Penetration1 (%)

Western Europe

Avg: 133%

Western Europe

Avg: 66%

Significant upside in terms of mobile penetration & data usage

Notes

1. Mobile penetration is for the market, based on sim cards number. Sources: Analysys Mason Research, Pakistan Telecommunications Authority, Bangladesh Telecommunications Authority (2014)

2. Based on Company estimates 2Q’15, where mobile data penetration = data users (number of SIM cards with data subscribed tariff plans) / mobile customers

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Attractive markets

1. CIA Factbook 20142. Market share as provided by the regulator as of 2014

Algeria Pakistan Bangladesh

Population1: 38.8 million

GDP/capita1: USD 14,300

Penetration: 85%

Market shares2

49%

27%

23% Djezzy

Mobilis

Ooredoo



Penetration: 53%

28%

26%18%

19%

9%Mobilink

Telenor

Ufone

Zong

Warid



Penetration2: 75%

Market shares2

26%

42%

21%

11% Banglalink

Grameenphone

Robi

Other (3)

Market shares2

6


7

2Q15 Financial highlights

Service revenue(USD million)

719

Mobile customers(million)

83

EBITDA(USD million)

EBITDA margin1

(%)

326 44.3

- 2% organic2 YoY

- 16% reported YoY- 3 million YoY

+ 1% organic2 YoY

- 15% reported YoY

- 0.2 p.p. reported YoY

• Revenue organic decline due to:► Gap in 3G rollout and increased

competition in Algeria► Negative impact from simplified

charging of VAS and SIM re-verification activities in Pakistan

► Partially offset by strong growth in Bangladesh

• EBITDA organic increase of 1% due to:► Cost efficiency initiatives► Positive one-off in utilities costs in

Pakistan

• Continued strong EBITDA margin of 44.3%

• Mobile data growth 130% YoY in 2Q15

• Mobile customers decreased mainly due to impact of regulation in Pakistan, requiring operators to block unverified SIMs; excluding this mobile customers increased by 2.4 million YoY

• Reported results continue to be impacted by adverse FOREX movements

1 EBITDA margin is EBITDA divided by total revenue; EBITDA and EBITDA margin are non-GAAP financial measures 2 Revenue and EBITDA organic growth are non-GAAP financial measures that exclude the effect of foreign currency translation and certain items such as liquidations and disposals


Launch of 3G services driving customer growth

36.7 36.0 35.9 33.5 34.5 34.4 33.729.8 32.0

16.8 17.0 17.6 17.4 17.1 17.6 17.7 17.1 17.1

2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

28.526.7

25.726.0

26.324.2

25.524.0 24.9

37.1 37.4 37.6 38.2 38.8 38.7 38.5 38.233.4

2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

10.110.0 10.0 10.2

10.9 11.0 11.3 11.3 11.6

27.128.1

28.829.4 29.8

30.230.8

31.8 32.0

2Q13 3Q13 4Q14 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

• As part of the transformation program, the 2Q14 customer base was revised down to 17.1 million in order to ensure compliance with the three month active definition.

• Clear leader in NPS

• SIM verification to continue to have negative impact on Mobilink’scustomer base¹. However, the company has managed to verifiy87% of customers and to secure 99% of revenue.

• Mobile customer base grew 8% YoYto 31.8 million

• Supported by 3G services, attractive tariff plans and other service offerings

In LC billions, if not stated otherwise

Bangladesh

Revenue and Customers

Algeria


Pakistan


1. Excluding the SIM re-verification impact of 5.6 million, the customer base in 2Q15 would have increased 1% YoY8


Bangladesh

EBITDA & EBITDA Margin

Launch of 3G services driving customer growth-Cont’d

Algeria


Pakistan


22.0 21.021.0

19.018.8 18.1 16.8 15.7

17.260.1%

57.2% 58.3% 57.6%54.5%

52.5%49.8%

52.3% 53.4%

2Q13 3Q13 4Q14 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

12.3 11.5

9.610.0

10.28.5 10.1

10.410.8

43.0% 43.1%

37.2%39.5% 38.9%

34.9%

41.5% 41.5% 41.3%

2Q13 3Q13 4Q14 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

3.73.6 3.4 4.0

4.24.4

4.6 4.6 4.9

37.2% 36.3%33.7%

37.4% 38.2%39.7% 40.8%40.6% 41.9%

2Q13 3Q13 4Q14 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

• EBITDA decreased 8% YoY, due to revenue decline and was partially offset by savings in structural OPEX.

• EBITDA¹ increased by 6% YoY

• Underlying EBITDA margin² of 40.2%, benefiting from power cost savings

• EBITDA increased 18% YoY, driven by the growth in revenue, and OPEX control initiatives in particular optimization of maintenance and utility costs.

In LC billions, if not stated otherwise

1 In 1Q15 underlying EBITDA and EBITDA margin, excl SIM-verification (PKR 0.7 bn) costs were PKR 10.4 bn and 41.5% respectively2 Underlying EBITDA margin adjusted for SIM verification costs of PKR 0.6 bn and positive one-off in utility costs of PKR 0.9 bn9


Algeria: transformation underway• Transformation program

started with organizational restructuring, new CEO on board

• Clear leader in NPS

• EBITDA margin still strong at 53%

• Continued investments in 3G network roll out and modernization of 2G sites

• 50% QoQ mobile data revenue growth and increased six-fold YoY

• Results expected to remain under pressure in 2015. Transformation will take another 9-15 months

18.815.7 17.2

54.3% 52.7% 53.4%

2Q14 1Q15 2Q15

34.329.8 32.0

2Q14 1Q15 2Q15

12.8

4.5

37%

14%

2Q14 2Q15

-7% YoY

-65% YoY

17.1 17.1

2Q14 2Q15

–8% YoY

DZD BILLION, UNLESS STATED OTHERWISE

Service revenue

EBITDA andEBITDA margin

Capex and Capex/revenue

Mobile customers1(million)

0% YoY

1 As part of transformation program the 2Q14 customer base was revised down to 17.1 million in order to ensure compliance with the three month active definition

10


Pakistan: Operational improvements

• Successfully completed SIMre-verification resulted in market share gains:

► 87% customers verified

► 99% of revenue secured

• Mobilink gained both customer and revenue market shares QoQ

• 75% YoY mobile data revenue growth

• MFS revenue doubled YoY

• Underlying EBITDA margin3 of 40.2%, benefiting from power cost savings

• First operator to launch 3G in 200 cities

10.2 9.710.8

38.9% 38.5%41.3%

2Q14 1Q15 2Q15

25.2 24.0 24.9

2Q14 1Q15 2Q15

9.9

8.138%

31%

2Q14 2Q15

PKR BILLION, UNLESS STATED OTHERWISE

–1% YoY

-19% YoY

38.8

33.4

2Q14 2Q15

+6% YoY

Service revenue

EBITDA andEBITDA margin2


Mobile customers (million)

5.6

-14% YoY+1% YoY

underlying1

1 Excluding the SIM re-verification impact of 5.6 million, the customer base in 2Q15 would have increased 1% YoY 2 In 1Q15 underlying EBITDA and EBITDA margin, excl SIM-verification (PKR 0.7 bn) costs were PKR 10.4 bn and 41.5% respectively3 Underlying EBITDA margin adjusted for SIM verification costs of PKR 0.6 bn and positive one-off in utility costs of PKR 0.9 bn

11


Bangladesh: Continued double digit growth

• Continued revenue market share gains

• Strong YoY revenue growth despite aggressive competitive environment

• Solid EBITDA margin of 41.9% due to revenue growth and OPEX control

• 86% YoY mobile data revenue growth, driven by significant increase in usage

• Continued investments in high-speed data networks

4.24.6

4.9

38.2% 40.6% 41.9%

2Q14 1Q15 2Q15

10.8 11.3 11.6

2Q14 1Q15 2Q15

3.3

2.5

30%21%

2Q14 2Q15

BDT BILLION, UNLESS STATED OTHERWISE

+7% YoY

-25% YoY

29.832.0

2Q14 2Q15

+8% YoY

+18% YoY

Service revenue

EBITDA andEBITDA margin


Mobile customers (million)

12

Appendix


14

2Q15 Income Statement

USD million 2Q15 2Q14 Change

Service revenue 719.2 852.3 -16%

Other revenue 16.7 17.2 -3%

EBITDA 326.4 385.2 -15%

Depreciation and amortization (166.9) (161.7) 3%

Gains/(losses) on sold PP&E and impairments (1.1) (24.5) n.m.

Other non-operating gains 4.3 0 n.m.

Operating income 162.7 199.0 -18%

Net financial expenses and income (62.2) (138.6) -55%

Foreign exchange gain / (loss) (5.7) (107.5) 95%

Profit/(loss) before tax 94.8 (47.2) n.m.

Income tax (67.2) (128.0) -48%

Profit/(loss) for the period 27.6 (175.2) n.m.

Minority interest 56.0 14.0 n.m.

Net income/(loss) attributable to shareholders1 (28.4) (189.2) n.m.

• Organic increase of 1% YoY

• Organic decline in service revenue of 2% YoY

• Decreased due to repayment of shareholder loan to VimpelCom

• Improvements in FOREX due to change of functional currency from EGP to USD

• Income tax decreased due to lower operating income in OpCos

• Minority interest increased due to sale of 51% in OTA in Algeria

1 Net income attributable to GTH shareholders


15

2Q15 Cash flow statement

• Income tax paid decreased due to lower operating income in OpCos

USD million 2Q15 2Q14 Change

Profit before tax 94.8 (47.2) n.m.

Adjustment to reconcile net profit to cash

flows from operating activities239.9 248.5 -3.5%

Net interest paid and received (33.8) (13.5) 150%

Income tax paid (46.5) (117.6) -60.5%

Net cash from operating activities 254.4 70.2 n.m.

Net cash from investing activities (204.7) (457.7) -55%

Net cash from financing activities 93.6 291.2 -68%

Net increase in cash and cash equivalents 143.3 (96.3) n.m.

• Higher interest paid on OpCo loans due to phasing of cash payments

• Due to the modernization programs completing in 2014; the Company plans to maintain its strategy to invest in high-speed data networks

• In 2Q15 Draw down of credit facility in Algeria for USD 51 mln and draw down under existing shareholder loan from VimpelCom


Debt by Entity

16

Debt Profile

As at 30 June 2015, in USD million

Outstanding debt Type of debt

Entity Loans Bonds Other Total

GTH Holding 1,048 - 11 1,059

Pakistan 318 46 3 367

Banglalink 132 300 1 433

Algeria 550 - - 550

Total at principal amount 2,048 346 15 2,409

Interest accrued & arrangement fees 71 4 - 75

Total gross debt 2,119 350 15 2,484


17

Corporate Calendar 2015

Ci-Capital Conference, Cape Town, SA

EFG London MENA Conference, London, UK

ARQAAM 2nd Annual Investor Conference, Dubai, UAE

3Q15 results

Morgan Stanley TMT Conference, Barcelona, Spain

August 24-25

September 7

September 14-15

November 6

November 11-12

2015


For your inquiries, please contact:

Ola TayelInvestor Relations Manager

E: [email protected]: +202 2461 5120F: +202 2461 5055/54W: www.gtelecom.com

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Contacts

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