Zain Group Financial Results Q1-2015

Transcription

1 Zain Group Financial Results Q1-2015

2 2 Disclaimer Mobile Telecommunications Company KSCP Zain Group has prepared this presentation to the best of its abilities, however, no warranty or representation, express or implied is made as to the adequacy, correctness, completeness or accuracy of any numbers, statements, opinions, estimates, or other information contained in this presentation. Certain portions of this document contain forward-looking statements, which are based on current expectations and reasonable assumptions, we can however give no assurance they will be achieved. The information contained in this presentation is subject to change and we disclaim any obligation to update you of any such changes, particularly those pertaining to the forward-looking statements. Furthermore, it should be noted that there are a myriad potential risks, uncertainties and unforeseen factors that could cause the actual results to differ materially from the forward-looking statements made herein. Accordingly, this presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for, or otherwise acquire or dispose of, securities in any company within Zain Group. For further information about Zain Group, or the materials contained within this presentation, please direct your enquiries to our Investor Relations team via at IR@zain.com

3 3 Contents Zain Group Overview Zain Operations Overview Financial Statements

4 4 GROUP Zain AT A GLANCE As Of 31 ST March, Million active customers 13.5 Million customers In Iraq 108 Million people under license 11.6 Million customers in Republic of Sudan $139 Million in net income 42.5 Million + daily total sms 4G Long term evolution (LTE) network in Kuwait, Saudi Arabia, Jordan, Bahrain and Lebanon 141 Million + total daily calls 5.2 Million km 2 under license Over 6,700 Employees $396 Million in EBITDA 329 TB of daily data usage $942 Million in revenues Market Leader In Kuwait, Iraq, Republic of Sudan, S. Sudan, Jordan and Lebanon

5 5 GROUP THE WORLD OF As Of 31 ST March, 2015 MOROCCO Ownership: 15.5% LEBANON Ownership: Management Contract Customers: 2.1 m Prepaid: 86% IRAQ Ownership: 76% Revenues: $304 m Customers: 13.5 m Prepaid: 99% Market Share: 43% JORDAN Ownership: 96.52% Revenues: $110 m Customers: 3.8 m Prepaid: 84% Market Share: 38% KUWAIT Ownership: 100% Revenues: $276 m Customers: 2.9 m Prepaid: 76% Market Share: 36% S WORLD CATERS TO 46.1 MILLION CUSTOMERS IN 8 COUNTRIES* SUDAN Ownership: 100% Revenues: $176 m Customers: 11.6 m Prepaid: 99% Market Share: 41% SOUTH SUDAN Ownership: 100% Revenues: $19 m Customers: 714K Prepaid: 99% BAHRAIN Ownership: 55% Revenues: $47 m Customers: 785K Prepaid: 72% SAUDI ARABIA Ownership: 37.05% Revenues: $459 m Customers: 10.6 m Prepaid: 95% Market Share: 18% * exclusive of Morocco, in which Zain has a 15.5% ownership in the mobile operator INWI

6 Thousand USD Million 6 USD Million USD Million GROUP Group Results CUSTOMERS REVENUES -0.4% -15% 46,054 46, ,104 EBITDA / MARGIN NET INCOME / EPS % % % 42.5% EBITDA EBITDA margin Net Income EPS ($)

7 USD Million 7 GROUP CAPEX & CAPEX / Revenues 10% 4% % 17% 16% 2015 F Capex Capex / Revenues F = Forecasted

8 8 GROUP Total CAPEX Group Total Capex (excluding KSA) = USD 134 million Opco Q USD Million % of Revenues Bahrain 4% Others 1% Kuwait 7 3% Iraq 55 18% Republic of Sudan 43% Sudan 58 33% KSA 79 17% Iraq 41% Jordan 7 6% Bahrain 6 13% Kuwait 6% Jordan 5% S. Sudan 0.2 1% Others 1 N/A

9 USD Million 9 USD Million GROUP Total Debt Net Debt & Net Debt / EBITDA 8% 25% 3,185 2,127 2,716 2,943 1,703 2, Long Term Net debt Net debt/ebitda Net Debt = Total interest bearing debts (excluding letter of guarantees) after deducting cash and cash equivalent

10 10 GROUP Zain Dividends DIVIDEND PAYOUT RATIO DIVIDEND YIELD (%) 274% 15% 80% 89% 77% 86% 8% 8% 7% 8% * * 2010 DIVIDEND PER SHARE (KD) CASH DIVIDEND (USD M) , * * 2010 * Zain Group distributed normal and exceptional dividends of Fils 200 reflecting the distribution of proceeds of the sale of Zain Africa assets to Bharti Airtel. However the EPS is made up of Normal EPS = Fils 80, Exceptional EPS = Fils 195

11 11 GROUP EBITDA Margins 49.5% 42.2% Group EBITDA margin 42.0% 38.9% 38.8% 36.1% 20.2% 1.0% Kuwait Jordan Bahrain Republic of Sudan Iraq KSA South Sudan

12 12 GROUP Market Penetration Rates 221% 181% 180% 127% 92% 84% 57% 19% Kuwait KSA Bahrain Jordan Iraq Lebanon Republic of Sudan South Sudan Source: World Cellular Information Services (WCIS).

13 13 GROUP Customers Contribution Customers Growth Lebanon 5% South Sudan 2% KSA 27% KSA 23% Republic of Sudan 25% Kuwait Lebanon 14% 4% Bahrain 1% Group -0.4% Bahrain 2% Jordan 8% South Sudan Jordan -1% -1% Iraq 29% Kuwait 6% Republic of Sudan Iraq -3% -15% * Customer base decline is due to the new definition of an active customer implemented by the regulator in Iraq and the new registration policy implemented by Sudan s regulator.

14 GROUP Blended ARPU Revenue Contribution $31 Kuwait 29% Bahrain 5% $19 $15 Iraq 33% $9 $9 $7 Jordan 12% $5 Republic of Sudan 19% South Sudan 2% Kuwait Bahrain KSA South Sudan Jordan Iraq Republic of Sudan

15 15 KD Million USD Million GROUP KUWAIT MARKET SHARE S 3.5 m Population $71,000 GDP/Capita Zain 36% % Penetration 2.9 m Customers 1983 Year of launch 100% Ownership Viva 32% Ooredoo 32% $ $31 ARPU Technology : 2G, 3G, 4G - Number of Sites : 1,843 - Coverage : 100% The Group s flagship operation was established in 1983 and made history in 1994 by becoming the first telecom operator to launch commercial GSM service in the region. Zain has been listed on the Kuwait Stock Exchange since 1985 with a market capitalization circa USD 7 billion closing at Fils 475 as of 31 st March, Zain Kuwait managed to increase its market share to a leading 36% from 35% in the last quarter of 2014, serving 2.9 million customers, which grew by 14% Y-o-Y. For the first three months, Zain Kuwait revenues decreased by 12% to USD 276 million due to lower voice and service revenues. EBITDA and net income decreased by 11% and 9% respectively mainly due to the impact on the top line performance. The operator reported a healthy EBITDA margin of 50% for the first quarter Notably, data revenues (excluding SMS & VAS) formed 35% of total revenues, reflecting an annual growth of 1%. Zain s nationwide 4G LTE network covered the entire population of Kuwait through a total of 1,843 network sites Revenues EBITDA Net Income

16 USD Million GROUP IRAQ MARKET SHARE S 35.5 m Population 92% Penetration $14,100 GDP/Capita 2003 Year of acquisition Zain 43% $ 13.5 m Customers $7 ARPU 76% Ownership Asia Cell 38% Korek 19% Technology : 2G, 3G - Number of sites : 4,101 - Coverage : 98% - License : expires in 2022 Zain has been providing mobile services in Iraq since December 2003 and is the largest mobile operator in the country today. After securing a 15-year license in August 2007, Zain Group owns 76% of the mobile entity. 432 Zain Iraq launched 3G services at the beginning of the year and is very active in rolling out 3G services across the country. The performance of Zain Iraq over the quarter was severely hampered by the escalation of political and social instability that has seen several million people displaced internally, coupled with Zain Iraq enduring frequent temporary network shutdowns and associated higher network operational costs. These exceptional circumstances coupled with intense competition and currency fluctuations, adversely affected the operation s financial performance, as its revenues for the first three months reached USD 304 million, with EBITDA reaching USD 110 million, and net income amounting to USD 34 million. On 30 April, 2015, the Iraq Securities Commission (ISC) formally approved Al Khatem JSC s (Zain s joint stock company in Iraq) application to list on the Iraq Stock Exchange and the company is in the process of completing all necessary and statutory procedures and steps to ensure that this process is completed in a timely fashion Zain Iraq is the largest contributor to Zain Group s customers, accounting for 29% of the base, while its revenues represent 33% of the Group s total consolidated revenues. By the end of March 2015, the operator had a total of 4,101 network sites, covering 98% of the population. Revenues EBITDA Net Income

17 17 SDG Million USD Million GROUP SUDAN MARKET SHARE S 39.4 m Population 57% Penetration $4,500 GDP/Capita 2006 Year of full acquisition Zain 41% 1, $ 11.6 m Customers $5 ARPU 100% Ownership MTN 32% Sudani 27% Technology : 2G, 3G - Number of sites : 2,419 - Coverage : 89% - License : expires in 2029 In February 2006, Zain acquired the remaining 61% stake of Mobitel, Republic of Sudan s first mobile operator, in a deal valued at USD 1.3 billion, resulting in 100% ownership. The company rebranded to Zain in September 2007 and subsequently renewed its license for a period of 20 years The operation performed well in both USD and local currency terms (SDG) with revenues increasing 10% Y-o-Y in USD terms to reach USD 176 million (up 17% Y-o-Y in SDG terms) mainly due to increase in voice, data and interconnect revenues. EBITDA increased 9% Y-o-Y to reach USD 68 million (up 15% in SDG terms) mainly on account of the healthy top line performance, with net income increasing 42% Y-o-Y to reach USD 43 million (up 51% in SDG terms) due to the positive EBITDA performance and lower currency variance The operator witnessed a 3% reduction of customers due to the new registration policy implemented by the country s regulator, now serving 11.6 million customers through a total number of 2,419 network sites, with 89% population coverage. Data revenues (excluding SMS and VAS) formed only 8% of total revenues, with a remarkable growth of 72% Y-o-Y (82% in SDG terms). Revenues EBITDA Net Income

18 18 USD Million GROUP KSA MARKET SHARE S 29.8 m Population $52,800 GDP/Capita Zain 18% 181% Penetration 2008 Year of acquisition $ 10.6 m Customers $15 ARPU 37% Ownership STC 44% Mobily 38% Technology : 2G, 3G, 4G - Number of sites : 6,315 - Coverage : 95% - License : expires in 2033 Zain launched commercial operations in the Kingdom on August The Group holds a 37% equity stake, a Saudi consortium owns 21%, and the remaining 42% are free float. Zain KSA is listed on the Saudi Stock Exchange (MTC KSA, 7030) with a market capitalization circa USD 2 billion (share price of SAR 10.8) on March 31 st, The operator witnessed the highest customer growth among the group with a remarkable 27% increase Y-o-Y to now serve more than 10.6 million customers representing 23% of the total group customer base. For the first three months 2015, the operator once again posted improved set of financial results, where revenues increased by 7% to reach USD 459 million up from USD 427 million in Q1-14, due to the increase in data and interconnect revenues. EBITDA increased by 16% to reach USD 93 million and EBITDA margin rose to 20% up from 19% last year. Net losses narrowed by 19% Y-o-Y to USD 69 million, down from USD 85 million last year, supported by healthy EBITDA performance. The operator witnessed 26% rise in data revenues (excluding SMS & VAS) Y-o-Y which represents 20% of total revenues as the company expands its state-of-the-art 4G LTE network that currently covers 95% of the population (69) (85) Revenues EBITDA Net Income

19 19 USD Million GROUP JORDAN MARKET SHARE S 7.6 m Population 127% Penetration $11,900 GDP/Capita 2003 Year of acquisition Zain 38% 3.8 m Customers 96.52% Ownership Umniah 31% Orange 31% $ $9 ARPU Technology : 2G, 3G, 4G - Number of sites : 2,119 - Coverage : 100% - License : expires in In 1994, Zain Jordan, formerly Fastlink, revolutionized the telecom sector in the Kingdom by being the first to introduce mobile services in the country. In 2003, it was the first to join what is now Zain Group s Middle East portfolio, it has been acquired for USD 419 million and today remains the market leader. Despite the heightening of price competition, Zain Jordan managed to maintain its lead in the market with 38% customer market share with 3.8 million customers. The operator s performance for the quarter witnessed a slight decrease in revenues of 2% to reach USD 110 million with net income reaching 22 million for the period Data revenues (excluding SMS & VAS) represented 26% of total revenues, which grew by 5% as compared with the same period last year. The operator covers the entire population through its 2,119 network sites. Revenues EBITDA Net Income

20 20 USD Million GROUP BAHRAIN S 1.4 m Population 180% Penetration 785 Thousand Customers $51,400 GDP/Capita 2003 Year of launch 55% Ownership $ $19 ARPU Technology : 2G, 3G, 4G - Number of sites : Coverage : 99% - License : expires in 2028 Zain began operations in the Kingdom of Bahrain in December Since its historic introduction of nationwide 3.5G, WiMAX and most recently 4G LTE, placing it and Bahrain firmly on the global telecom map. Zain Bahrain is listed on the Bahrain Bourse (BH) with a market capitalization circa USD 180 million (share price BD 0.184) on 31 st March, With an ARPU of USD 19, Zain Bahrain has the second highest ARPU in the Group. For the first quarter 2015, Zain Bahrain generated revenues of USD 47 million, a decrease of 5% as compared with USD 50 million last year, mainly due to lower voice revenues. EBITDA for the period reached USD 18 million, reflecting a healthy EBITDA margin of 39% and net income amounting to USD 3 million. Data revenues (excluding SMS & VAS) represented 33% of overall revenues, which grew by 8% as compared with last year Revenues EBITDA Net Income

21 21 USD Million GROUP SOUTH SUDAN S 12.3 m Population 19% Penetration 714 Thousand Customers $2,000 GDP/Capita 2006 Year of full acquisition 100% Ownership $ $9 ARPU Technology : 2G, 3G - Number of sites : Coverage : 50% - License : MOU Political unrest in South Sudan affected the results as the country also witnessed significant displacement of its people, with access to and repair of many network sites in parts of the country proving to be difficult, causing frequent interruptions and higher maintenance costs Zain maintained its leadership in the South Sudanese market, supported with the increase in its data revenues which is a preferred service in South Sudan and data revenues (excluding SMS & VAS) continues to grow significantly by 119% Y-o-Y representing 14% of the total revenues for the quarter. The operator had a total of 275 network sites, covering 50% of the population. (13) (24) Revenues EBITDA Net Income

22 22 GROUP TOUCH MANAGED BY MARKET SHARE 5.0 m Population $17,900 GDP/Capita Touch 53% 84% Mobile Penetration 2004 Year of acquisition 2.1 m Customers MC Ownership Alfa 47% Technology : 2G, 3G, 4G - Number of sites : 1,229 - Coverage : 99% - License : Management Contract (MC) Zain operates in Lebanon under a management contract since June 2004, when it was rebranded to mtc-touch, and subsequently to touch. The number of existing sites continues to increase as it reached 1,229 network sites as of March 2015, covering 99% of the population. The operation currently serves around 2.1 million customers.

23 23 GROUP BALANCE SHEET Assets Unaudited Audited Unaudited 31-Mar Dec Mar-14 KD 000 Current assets 317, , ,050 Cash and bank balances 392, , ,027 Trade and other receivables 26,564 16,836 25,873 Inventories 1,609 1,941 1,835 Investment securities at fair value through profit or loss 738, , ,785 Non-current assets 34,189 37,717 42,947 Investment securities available for sale 236, , ,625 Investments in associates and joint ventures 334, , ,953 Dues from associates 23,246 22,772 19,442 Other assets 887, , ,882 Property and equipment 1,191,999 1,094, ,926 Intangible assets and goodwill 2,707,691 2,556,339 2,325,775 3,445,855 3,277,063 3,055,560 Unaudited Audited Unaudited 31-Mar Dec Mar-14 Liabilities and Equity KD 000 Current liabilities Trade and other payables 724, , ,571 Due to banks 140, , ,429 Non-current liabilities 865, , ,000 Due to banks 816, , ,792 Other non-current liabilities 63,442 38,769 36,644 Equity Attributable to the Company s shareholders 879, , ,436 Share capital 432, , ,637 Share premium 1,707,164 1,707,164 1,707,104 Treasury shares (567,834) (567,834) (567,834) Legal reserve 216, , ,134 Foreign currency translation reserve (658,739) (677,007) (688,526) Treasury shares reserve 1,967 1,967 1,967 Investment fair valuation reserve (1,680) 1, Hedge reserve (2,805) (1,931) (1,471) Retained earnings 397, , ,659 1,525,102 1,625,403 1,476,024 Non-controlling interests 175, , ,100 Total equity 1,700,411 1,793,969 1,621,124 Total Liabilities and Equity 3,445,855 3,277,063 3,055,560

24 24 GROUP INCOME STATEMENT Three months ended 31 March KD 000 Revenue 278, ,131 Cost of sales (74,022) (84,216) Gross profit 204, ,915 Operating and administrative expenses (86,922) (90,935) Depreciation and amortization (52,027) (45,867) Provision for impairment trade and other receivables (875) (3,804) Operating profit 65,095 86,309 Interest income 2,567 4,722 Investment income (305) 2,471 Share of results of associates and joint ventures (7,677) (8,491) Other expense (1,286) (743) Finance costs (6,231) (6,535) Loss on currency revaluation (2,042) (7,450) Board of Directors remuneration (86) (108) Contribution to Kuwait Foundation for Advancement of Sciences (226) (375) National Labour Support Tax and Zakat (1,590) (1,695) Profit for the period before income tax 48,219 68,105 Income tax expenses (4,123) (6,284) Profit for the period 44,096 61,821 Three months ended 31 March Earnings per share Basic Fils Attributable to: Shareholders of the Company 41,114 55,914 Non-controlling interests 2,982 5,907 44,096 61,821

25 25 GROUP CASH FLOW STATEMENT Three months ended 31-Mar KD 000 Cash flows from operating activities Profit for the period before income tax 48,219 68,105 Adjustments for: Depreciation and amortization 52,027 45,867 Interest income (2,567) (4,722) Investment income 305 (2,471) Share of results of associates and joint ventures 7,677 8,491 Finance costs 6,231 6,535 Loss on currency revaluation 2,042 7,450 Operating profit before working capital changes 113, ,255 Increase in trade and other receivables (46,309) (10,047) Increase in inventories (9,258) (11,334) Increase in trade and other payables 69,487 5,777 Cash generated from operations 127, ,651 Paid to Kuwait Foundation for Advancement of Sciences (700) (3,949) Income tax paid (4,195) (3,902) Net cash from operating activities 122, ,800 Cash flows from investing activities Deposits maturing after three months and bank balances blocked Three months ended 31-Mar KD 000 (2,854) (3,466) Purchase of investments (105) - Net cash outflow on acquisition of a subsidiary (1,798) - Proceeds from sale of investments 40 3,823 Acquisition of property and equipment (net) (42,571) (26,361) Acquisition of intangible assets (90,962) (10,712) Interest received 3,024 2,714 Net cash used in investing activities (135,226) (34,002) Cash flows from financing activities Proceeds from bank borrowings 209, ,107 Repayment of bank borrowings (64,302) (162,518) Loan to an associate (9,645) (9,610) Capital contribution including share premium employees stock option Dividends paid to Company s shareholders (148,802) (185,446) Dividends paid to minority shareholders of subsidiaries (1,641) (1,163) Finance costs paid (7,956) (3,829) Net cash used in financing activities (23,283) (124,765) Net decrease in cash and cash equivalents (35,550) (52,967) Effect of foreign currency translation 7,073 (691) Cash and cash equivalents at beginning of period 221, ,687 Cash and cash equivalents at end of period 192, ,029

26 Q&A For More Information Please Contact Zain Group Investor Relations Team : IR@zain.com Note: All population, GDP per Capita and Mobile Penetration figures are sourced from EIU, WCIS & CIA Fact Book as the end of Zain Group, Head Office Building P.O. Box 22244, Safat, Kuwait City, Kuwait Tel: , Fax: