investor presentation march 2014telecom...• ufone (25.0 million) • zong (23.7 million) • warid...
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Investor Presentation March 2014
Investor Presentation © Global Telecom Holding S.A.E. 2014
This presentation contains forward-looking statements about Global Telecom Holding (“GTH”). Such statements are not historical facts and include expressions about confidence and strategies of management and expectations of management about new and existing programs, technology and market conditions. Although GTH believes its expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties. These statements may not be regarded as a representation that anticipated events will occur or that expected objectives will be achieved. The forward-looking statements in this presentation are only valid until the date of this document and GTH does not undertake to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. This presentation is not an offer to sell securities or the solicitation of an offer to buy securities, nor shall there be any offer or sale of securities in any jurisdiction in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
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Disclaimer
Investor Presentation © Global Telecom Holding S.A.E. 2014
4Q13 Highlights 4
Shareholder Structure 5
Global Presence 6
Market Position 7
GTH Operations 8
Appendix 22
Agenda
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Investor Presentation © Global Telecom Holding S.A.E. 2014
Djezzy1: Despite the on-going regulatory restrictions and limitations on 2G, Djezzy increased the customer base by 5% YoY to 17.6 million
Mobilink: Customers grew 4% YoY to 37.6 million, as a result of continued churn management coupled with a focus on reactivation offers, the launch of competitive on-net bundles and data products
banglalink: Customers’ base increased 11% YoY to 28.8 million customers, driven by high gross additions, following the launch of different attractive channel and customer promotions
Group revenues were adversely impacted by the local currency devaluation against the USD, mainly in Pakistan and Algeria
Djezzy: Revenue decreased 3% YoY in local currency, negatively impacted by the restrictions on Djezzy’s commercial activities and propositions with the ongoing ban
Mobilink: Revenue decreased 6% YoY in local currency, adversely affected by outages due to Mobilink’s network swap, unstable security situation, higher withholding taxes, and government requested network shutdowns, and higher power outages
banglalink: Revenue decreased 11% YoY in local currency, driven by unstable macro environment alongside the disconnection of suspected VoIP customers as per regulatory measures
Reported EBITDA in US dollar decreased 7% YoY to USD 397 million
Djezzy: EBITDA decreased 4% YoY in local currency, due to the continued lack of competitive pricing plans for B2B and high value customers, in parallel with the increase in network and IT costs
Mobilink: EBITDA decreased 18% YoY in local currency, pressure on top line, higher tax absorption due to the increased sales of low price SIMs, partially offset by lower interconnect cost due to lower outgoing traffic to other operators as a result of attractive on-net offers
banglalink: EBITDA decreased 20% YoY in local currency, mostly as result of revenue decline, higher customer acquisition costs and dealer commission on additions
1. As announced on July 1 2013, during an internal investigation with regards to Djezzy’s active customers, management found a technical bug that overstated Djezzy’s customer base by 1.4 million. The customers’ base comparative figures for 4Q12 were adjusted accordingly. This event does not impact historical reported revenue or EBITDA, but positively affect MOU and ARPU
2. Total customers in Millions 3. Group indicators in USD Millions
908
834
4Q12 4Q13
425 397
4Q12 4Q13
84 89
4Q12 4Q13
47.7% 46.8%
Customers1&2
Total Revenues3
Group EBITDA3 & EBITDA Margin
6% Organic
3% Organic
4Q13 Highlights
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Investor Presentation © Global Telecom Holding S.A.E. 2014
ALTIMO TELENOR
OJSC VIMPELCOM
KYIVSTAR
GTH FREE FLOAT
WIND ITALY GTH
56.2% (Economic) 33.0% (E) 10.8% (E)
100.0% 100.0% 100.0% 51.9%
47.9% (Voting) 43.0% (V) 9.2% (V)
48.1%
VIMPELCOM FREE FLOAT
Shareholder Structure
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Investor Presentation © Global Telecom Holding S.A.E. 2014
GTH serves a population of approximately 459 million with an average penetration of 57%
BANGLADESH Population: 163.6 million GDP Growth: 6.1% GDP/Capita PPP: USD2,000 Pop. Under 15 years: 33% Mobile Penetration: 70%
ZIMBABWE Population: 13.2 million GDP Growth: 4.4% GDP/Capita PPP: USD600 Pop. Under 15 years: 39% Mobile Penetration: 71%
CENTRAL AFRICA REPUBLIC Population: 5.2 million GDP Growth: 4.1% GDP/Capita PPP: USD900 Pop. Under 15 years: 41% Mobile Penetration: 18%
BURUNDI Population: 10.9 million GDP Growth: 4.0% GDP/Capita PPP: USD600 Pop. Under 15 years: 46% Mobile Penetration: 24%
ALGERIA Population: 38.1 million GDP Growth: 3.3% GDP/Capita PPP: USD7,300 Pop. Under 15 years: 28% Mobile Penetration: 88%
PAKISTAN Population: 193.2 million GDP Growth: 4.4% GDP/Capita PPP: USD3,100 Pop. Under 15 years: 34% Mobile Penetration: 68%
1. Figures from CIA factbook. Mobile Penetration are based on December 31, 2013 customers’ figures and market share 2. GTH has 65% indirect economic ownership in Globalive Investment Holding Canada, but a minority voting stake
CANADA2
Population: 34.6 million GDP Growth: 1.7% GDP/Capita PPP: USD42,300 Pop. Under 15 years: 15% Mobile Penetration: 85%
Global Presence1
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Investor Presentation © Global Telecom Holding S.A.E. 2014
Algeria: Despite limitations, Djezzy remains a profitable market leader with significant mobile data potential
Pakistan: Mobilink leads the market, and has great potential for revenue growth through mobile data, MFS and VAS
Bangladesh: In a large market with low penetration levels, banglalink is a leading operator with strong focus on increasing value share in a rapidly growing market
Telecel Globe: Leading positions in markets with low penetration levels, healthy APPM, and high growth potential. Internet is a mobile story in Africa
Canada: WIND Mobile continues its "Value Plus" strategy execution, adding primarily postpaid subscribers while carefully managing prepaid economics for both voice and mobile broadband customers
Market Position
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Investor Presentation © Global Telecom Holding S.A.E. 2014
Algeria
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Investor Presentation © Global Telecom Holding S.A.E. 2014
Population1: 38 million GDP/capita1: USD 7,300
• GDP growth for FY 2012/2013 of ~2.5%
• Government, trade and agricultural sectors account for over 60% of GDP
• 28% of the population is under 15 years old
• Presidential elections expected to commence in April 2014
• Djezzy continues to face stringent conditions from regulator commercial activities and propositions
• Djezzy awarded a 3G license in December 2013 and received an exceptional approval from the Bank of Algeria for foreign payments for 3G equipment
• Government plans to list 10 public companies on ASE, including Mobilis
• Launch 3G services in 2Q14 targeting high value data users
• Maintain leadership in customer experience and NPS
• Emphasize Djezzy as the preferred Algerian mobile brand while launching 3G
• Maintain a solid network performance from 3G roll out and 2G network modernization and expansion
Market shares3
53%
25%
22% Djezzy
Mobilis
Ooredoo
Market size2: 33.4 million Penetration2: 88%
Market players (subs): • Djezzy (17.6 million) • Mobilis (8.4 million) • Ooredoo (7.4 million)
• Djezzy: high brand perception with solid market leadership with high control over distribution
• Mobilis: incumbent operator maintained by the government, has a strong relationship with the regulator and has been very active on the commercial front lately
• Ooredoo: seen as a multimedia operator that offers lower prices, more promotions, subsidies and higher incentives to the retail channel
Competitive landscape
Macro environment Regulatory environment
Strategic direction
1. CIA factbook 2. Penetration figures are provided based on OTA closing base and our data warehouse (DWH) figures for competition 3. DWH market share
Djezzy - Overview
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Investor Presentation © Global Telecom Holding S.A.E. 2014
14.1 14.6 15.1 16.2 16.7 17.6
2008 2009 2010 2011 2012 2013
134.7 135.6 129.3 135.6 143.3 143.1
2008 2009 2010 2011 2012 2013
Mobile Customers1 (Millions) Revenues (DZD Billions)
CAPEX2 (DZD Billions) & CAPEX/Revenue
Note: Foreign exchange rate DZD 79.6587/ USD 1 1. As announced on July 1 2013, during an internal investigation with regards to Djezzy’s active customers, management found a technical bug that overstated Djezzy’s customer
base by 1.4 million. The customers’ base comparative figures were adjusted accordingly. This event does not impact historical reported revenue or EBITDA, but positively affect MOU and ARPU
2. CAPEX figures excluding license fees and may differ from previously released figures 3. Operating Cash Flow is EBITDA less CAPEX
Operating Cash Flow3 (DZD Billions)
EBITDA (DZD Billions) & EBITDA Margin
78.8 73.2 68.7 80.4 85.2 84.0
58.5% 54.0% 53.2%
59.3% 59.4% 58.7%
2008 2009 2010 2011 2012 2013
10.8
19.0
6.9
2.9 4.5
6.7 8.1%
14.0%
5.4%
2.2% 3.1%
6.2%
2008 2009 2010 2011 2012 2013
67.9
54.3 61.8
77.5 80.7 77.3
2008 2009 2010 2011 2012 2013
Djezzy - KPIs
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Investor Presentation © Global Telecom Holding S.A.E. 2014
Pakistan
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Investor Presentation © Global Telecom Holding S.A.E. 2014
29%
25% 19%
18%
10% Mobilink
Telenor
Ufone
Zong
Warid
1. CIA factbook 2. Market share as provided by the regulator as of November 30, 2013
• GDP growth for FY 2012/2013 of ~3.7%
• Continued devaluation of the Rupee against the USD
• Power shortfalls persist
• 34% of the population under 15 years old
• New government elected and in place since May 2013, working on achieving political stability and economic reform
• New PTA chairman appointed in 4Q13
• 3G/4G auction planned in April 2014
• Government increased withholding tax on recharge to 15% and also increased commercial electricity tariffs by 30% effective October 1, 2013
• Trends of fewer forced network shutdowns
• Continued focus on network modernization to achieve 3G readiness
• Further enhance operational excellence initiatives
• Retain leadership in mobile data
• Capture market opportunity in MFS
• Enhance customer experience through better quality of service
Market size2: 132.3 million Penetration: 68%
Market players (subs): • Mobilink (37.7 million) • Telenor (33.0 million) • Ufone (25.0 million) • Zong (23.7 million) • Warid (12.9 million)
Market shares2
• Mobilink: market leader in a five player market
• Telenor: value-driven operator with strong market position via youth, mobile data offers and MFS
• Ufone: positive mass market perception and aggressive pricing strategy
• Zong: aggressive on pricing and market share gain
• Warid: conducting due diligence to exit the market
Competitive landscape
Macro environment Regulatory environment
Strategic direction
Mobilink - Overview
Population1: 193 million GDP/capita1: USD 3,100
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Investor Presentation © Global Telecom Holding S.A.E. 2014
37.7
12.8 12.2
22.6 17.2 19.8
42.9%
14.7% 12.9%
23.0%
16.3% 18.4%
2008 2009 2010 2011 2012 2013
Note: Foreign exchange rate PKR 101.5918/ USD 1 1. CAPEX figures excluding license fees and may differ from previously released figures 2. Operating Cash Flow is EBITDA less CAPEX
Mobile Customers (Millions) Revenues (PKR Billions)
CAPEX1 (PKR Billions) & CAPEX/Revenue
EBITDA (PKR Billions) & EBITDA Margin
Operating Cash Flow2 (PKR Billions)
-2.4
18.9
25.2
17.5
28.4 25.0
2008 2009 2010 2011 2012 2013
35.3 31.7 37.3 40.0
45.6 44.8 40.2%
36.5% 39.6%
40.9% 43.1%
41.6%
2008 2009 2010 2011 2012 2013
Mobilink - KPIs
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28.5 30.8 31.8 33.4
36.1 37.6
2008 2009 2010 2011 2012 2013
87.8 86.9 94.3 97.9
105.8 107.6
2008 2009 2010 2011 2012 2013
Investor Presentation © Global Telecom Holding S.A.E. 2014
Bangladesh
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Investor Presentation © Global Telecom Holding S.A.E. 2014
Population1: 164 million GDP/capita1: USD 2,000
1. CIA Factbook 2. Penetration figures are provided based on BTRC published figures 3. BTRC market share as at January 31, 2014
• GDP growth for FY 2012/2013 of ~6%
• The world’s highest population density
• 33% of the population under 15 years old
• BDT continued to appreciate against the USD
• Unstable macro environment
• Four 3G licenses were awarded in September 2013 during an auction for 8 blocks of spectrum, each consisting of 5 MHz (uplink and downlink). 5 of the 8 blocks were awarded
• banglalink launched 3G services in October 2013
• The government reduced SIM tax to BDT 300 from BDT 606 during 2Q13
Competitive landscape
Macro environment Regulatory environment
Strategic direction
• banglalink: 2nd in a six player market with an innovative brand positioning among youth segment
• Grameenphone: largest network, perceived as best in quality and coverage
• Robi: aggressive on prices and communication
• Airtel: mainly focused on youth
• CityCell: CDMA operator
• TeleTalk: Run by national fixed incumbent BTCL
Market size3: 114.8 million Penetration2: 70%
Market players (subs): • GP (47.6 million) • banglalink (28.9 million) • Robi (25.6 million) • Airtel (8.3 million) • CityCell (1.4 million) • TeleTalk (2.8 million)
• Capitalize on introduction of 3G and maximize revenue from mobile data segment
• Improve Revenue Market Share
• Grow beyond the core and expand on MFS and VAS fronts
• Maintain price leadership strategy
• Focus on spectrum optimization, network sharing and modernization
25%
42%
22%
7% 1%
3% bangalink
Grameenphone
Robi
Airtel
Citycell
Teletalk
Market shares3
banglalink - Overview
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Investor Presentation © Global Telecom Holding S.A.E. 2014
28.6
8.7
16.4
11.9 10.2 10.3
143.0%
36.3% 51.1%
31.3% 22.6% 26.3%
2008 2009 2010 2011 2012 2013
Note: Foreign Exchange Rate BDT 78.0784/ USD 1 1. CAPEX figures excluding license fees and may differ from previously released figures 2. Operating Cash Flow is EBITDA less CAPEX
Mobile Subscribers (Millions) Revenues (BDT Billions) EBITDA (BDT Billions) &
EBITDA Margin
CAPEX1 (BDT Billions) & CAPEX/Revenue
Operating Cash Flow2 (BDT Billions)
0.4
7.0 9.0
13.0 15.7 14.6
2.0%
29.2%
28.1%
34.2%
34.7% 37.1%
2008 2009 2010 2011 2012 2013
-28.2
-1.7 -7.4
1.1 5.5
4.3
2008 2009 2010 2011 2012 2013
10.3 13.9
19.3
23.8 25.9
28.8
2008 2009 2010 2011 2012 2013
banglalink - KPIs
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20.0 24.0
32.0
38.0
45.4 39.4
2008 2009 2010 2011 2012 2013
Appendix
Investor Presentation © Global Telecom Holding S.A.E. 2014
5,184
2,838 2,346
4,757
2,026
2,731
Gross Debt Cash Net Debt
4Q13 4Q12
89%
11%
USD
Local
87%
4% 8%
1% 1%
GTH
Pakistan
Bangladesh
Algeria
Others
Debt by Currency
Gross & Net Debt (USD Millions)
Debt by Entity
Debt by Entity
GTH
4,495
Pakistan 198
Bangladesh 412
Algeria 47
Others 32
Total 5,184
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Debt Profile
Investor Presentation © Global Telecom Holding S.A.E. 2014
Footnotes: 1. Management presentation developed from IFRS
financials 2. GTH fully impaired its assets in Canada by USD 619
million, mainly relating to the challenges the Group is facing in the country, which resulted in the strategic decision to withdraw from the 700 MHz spectrum auction and the reassessment of the prospects for continuing operations in the country
3. Impairment of assets held for sale by USD 58 million, as to reflect the fair value of our operations in CAR and Burundi, which amounted to USD 100 million
4. Foreign exchange loss incurred during 4Q13 is mainly driven by the unrealized foreign exchange losses resulting from the revaluation of the shareholder loan from VimpelCom, due to the appreciation of the US dollar against the Egyptian pound, which was offset against unrealized foreign exchange gains that resulted from the revaluation of Globalive (WIND Mobile Canada) loan receivable balance as of 4Q13
5. Equates to net income after minority interest. 6. Based on a weighted average for the outstanding
number of GDRs of 1,049,138,124
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Income Statement
USD thousands 4Q13 4Q12 Change FY13 FY12 Change
Revenue 833,589 908,345 (8%) 3,447,412 3,626,767 (5%)
Other Income 12,889 16,062 23,050 33,933
Total Expense (448,931) (505,262) (1,813,862) (1,912,155)
Net unusual Items - 6,358 - 6,113
EBITDA1 397,547 425,503 (7%) 1,656,600 1,754,658 (6%)
Depreciation and Amortization (270,108) (174,260) (772,986) (705,096)
Impairment of Non-Current Assets 2,843 (6,979) (6,132) (12,269)
Gain (Loss) on Disposal of Non-Current Assets
(6,696) (12,722) (8,152) (17,862)
Impairment of Assets Held for Sale2 (10,687) - (57,964) -
Operating Income 112,899 231,542 n.m. 811,366 1,019,431 n.m.
Financial Expense (128,747) (124,726) (503,270) (457,858)
Financial Income 11,344 21,433 42,872 77,090
Foreign Exchange Gain (Loss)3 (23,023) (89,471) (269,406) (74,139)
Share of Profit (Loss) from Associates
(38,698) (26,234) (139,155) (103,279)
Impairment of Financial Assets4 (625,429) (339,126) (625,429) (339,126)
Other non-operating cost - (74,399) - (74,399)
Profit Before Tax (691,654) (400,981) n.m. (683,022) 47,720 n.m.
Income Tax (57,125) (67,925) (241,300) (253,480)
Profit from Continuing Operations
(748,779) (468,906) n.m. (924,322) (205,760) n.m.
Profit for the Period (748,779) (468,906) n.m. (924,322) (205,760) n.m.
Attributable to:
Equity Holders of the Parent5 (754,048) (473,364) n.m. (944,320) (224,928) n.m.
Earnings Per Share (USD/GDR)6 (0.71) (0.45) n.m. (0.88) (0.20) n.m.
Minority Interest 5,269 5,457 19,998 19,168
Net Income (748,779) (468,906) n.m. (924,322) (205,760) n.m.
Investor Presentation © Global Telecom Holding S.A.E. 2014
Footnotes: 1. Net debt is calculated as a sum of short term debt, long
term debt, less cash and cash equivalents
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Balance Sheet
USD thousands 31 December
2013 31 December
2012
Assets
Property and Equipment (net) 2,043,998 2,493,620
Intangible Assets 1,425,596 1,448,712
Other Non-Current Assets 88,194 858,099
Total Non-Current Assets 3,557,788 4,800,431
Cash and Cash Equivalents 2,838,448 2,025,844
Trade Receivables 225,641 233,477
Assets Held for Sale 170,380 -
Other Current Assets 1,153,541 1,064,216
Total Current Assets 4,388,010 3,323,537
Total Assets 7,945,798 8,123,968
Equity Attributable to Equity Holders of the Company 801,168 1,572,681
Minority Share 95,214 74,492
Total Equity 896,382 1,647,173
Liabilities
Long Term Debt 151,010 4,074,700
Other Non-Current Liabilities 189,669 232,956
Total Non-Current Liabilities 340,679 4,307,656
Short Term Debt 5,033,091 682,643
Trade Payables 814,643 695,624
Other Current Liabilities 861,003 790,872
Total Current Liabilities 6,708,737 2,169,139
Total Liabilities 7,049,416 6,476,795
Total Liabilities and Shareholder’s Equity 7,945,798 8,123,968
Net Debt1 2,345,653 2,731,499
Investor Presentation © Global Telecom Holding S.A.E. 2014
21
Cash Flow Statement
USD thousands 31 December
2013 31 December
2012
Cash Flows from Operating Activities
Loss for the Period (924,323) (205,760)
Depreciation, Amortization and Impairment of Non-Current Assets 1,404,547 717,365
Income Tax Expense 241,300 253,480 Net Financial Charges 729,804 454,907 Share of Loss (Profit) of Associates 139,155 103,279 Impairment of Financial Assets 57,964 339,126 Other (44,236) 129,084 Changes in Assets Carried as Working Capital (241,863) 24,156
Changes in Other Liabilities Carried as Working Capital 169,868 (8,748)
Income Tax Paid (252,560) (500,793) Interest Expense Paid (113,495) (114,911)
Net Cash Generated by Operating Activities 1,166,161 1,191,185
Cash Flows from Investing Activities
Cash Outflow for Investments in Property and Equipment, Intangible Assets, and Financial Assets and Consolidated Subsidiaries
(547,658) (412,481)
Proceeds from Disposal of Property and Equipment, Subsidiaries and Financial Assets
27,486 (16,478)
Advances and Loans made to Associates and other parties - (161,313)
Dividends and Interest Received 12,062 10,489
Net Cash Used in Investing Activities (508,110) (579,783)
Cash Flows from Financing Activities
Proceeds from loans, banks' facilities and bonds 1,282,929 1,300,806
Payments for loans, banks' facilities and bonds (1,152,367) (881,948)
Net Payments from financial liabilities (2,386) (79,429) Net Change in Cash Collateral 30,818 120,964
Net Cash generated by Financing Activities 158,994 460,393
Net Increase in Cash and Cash Equivalents 817,045 1,071,795
Cash included in Assets Held for Sale (26,014) (7)
Effect of Exchange Rate Changes on Cash and Cash Equivalents 21,628 (59,487)
Cash and Cash Equivalents at the Beginning of the Period 2,025,773 1,013,543
Cash and Cash Equivalents at the End of the Period 2,838,432 2,025,844
Investor Presentation © Global Telecom Holding S.A.E. 2014
For your inquiries, please contact:
Mamdouh Abdel Wahab Head of Investor Relations
E: [email protected] T: +202 2461 5120/21 F: +202 2461 5055/54 W: www.gtelecom.com
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