Etisalat Group. Aspire Forward. Investor Presentation. September 2016

Transcription

1 Etisalat Group Investor Presentation September 2016 Aspire Forward

2 Disclaimer Emirates Telecommunications Group Company PJSC and its subsidiaries ( Etisalat Group or the Company ) have prepared this presentation ( Presentation ) in good faith, however, no warranty or representation, express or implied is made as to the adequacy, correctness, completeness or accuracy of any numbers, statements, opinions or estimates, or other information contained in this Presentation. The information contained in this Presentation is an overview and should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. Where this Presentation contains summaries of documents, those summaries should not be relied upon and the actual documentation must be referred to for its full effect. This Presentation includes certain forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve risks of uncertainties. Actual results may differ materially from these forward-looking statements. 2

3 Agenda 1. Key Company Highlights 2. Financial Overview 3. Appendix 3

4 1. Key Company Highlights

5 Key Company Highlights 1 Most valuable Telecom Operator With Largest Market Cap among Middle East & Africa Telcos 5 2 Highly Rated Telco (Aa3/AA-) with Low Leverage Leading Telecom Operator With highest revenue and EBITDA among Middle East & Africa Telcos 4 Strong FCF Profile with Consistent History of Returning Capital to Shareholders 3 Diversified Operator with Exposure to Attractive and High Growth Markets Across Africa and Asia 5

6 1 Most Valuable Telecom Operator in the Middle East and Africa Top Telecom Companies in ME & Africa (1) Top 10 GCC Companies (1) Top 10 UAE Companies (1) Etisalat $47bn SABIC $66bn Etisalat $47bn STC $30bn Etisalat $47bn DP World $15bn Vodacom $16bn Qatar National Bank $39bn FGB Bank $15bn MTN Group Maroc Tel $15bn $11bn STC $30bn Emaar Proporties $14bn Ooredoo $9bn Al Rajhi Bank $24bn NBAD $13bn Du $8bn Saudi Electricity $22bn Emirates NBD $12bn Turk Cell $7bn Industries Qatar $19bn Emaar Malls $10bn Mobily $5bn DP World $15bn ADCB $10bn Zain Group Vodafone Qatar $4bn $3bn FGB Bank $15bn DIB $6bn Global Telecom $2bn Emaar Proporties $14bn Aldar Properties $6bn Source: Bloomberg Data as at 29 August 2016 (1) Ranking by Market Cap 6

7 2 Leading Telecom Operator in the Middle East and Africa H Revenue (USD bn) Top 10 Telecom Companies in Middle East and Africa H EBITDA (USD bn) Etisalat Group 7.1 Etisalat Group 3.6 STC 7.0 STC 2.6 MTN Group 5.1 Ooredoo 1.7 Ooredoo 4.4 MTN Group 1.2 Vodacom 3.2 Vodacom 1.2 Turk Telecom 2.7 Maroc Tel 0.9 Turk Cell 2.3 Zain Group 0.8 Zain Group 1.8 Turk Cell 0.8 Maroc Tel 1.8 Du 0.7 Mobily 1.8 Mobily 0.6 Source: Bloomberg Data as at 29 August

8 3 Diversified Telecom Operator Maroc Telecom, Morocco Licence type % Ownership (1) 53% Mobile, Fixed & Internet Sotelma, Mali Licence type % Ownership (2) 51% Mobile, Fixed & Internet Etisalat Misr, Egypt Licence type Mobile & Internet % Ownership 66% Etisalat, Afghanistan Licence type Mobile % Ownership 100% PTCL, Pakistan Mauritel, Mauritania Licence type % Ownership (2) 41% Mobile, Fixed & Internet Licence type % Ownership 23% Mobile, Fixed & Internet Etisalat Lanka, Sri Lanka Licence type Mobile % Ownership 100% Atlantique Telecom, Moov West Africa Licence type Mobile % Ownership (2) 100% Thuraya, UAE Licence type % Ownership 28% Network coverage Satellite telecommunication 140 countries Onatel, Burkina Faso Licence type % Ownership (2) 51% Mobile, Fixed & Internet Maroc Telecom (4) Other Africa Middle East Etisalat, UAE Licence type % Ownership 100% Mobile, Fixed & Internet Gabon Telecom, Gabon Licence type % Ownership (2) 51% Mobile, Fixed & Internet EMTS, Etisalat Nigeria Licence type Mobile % Ownership 40% Asia Etihad Etisalat (Mobily), Saudi Arabia Licence type % Ownership 27% Mobile & Internet (1) The 53% stake in Maroc Telecom is held by Etisalat Investment North Africa LLC (EINA), an indirect subsidiary of Etisalat in which Etisalat holds effective ownership of 91.3% and Abu Dhabi Fund for Development holds the remaining 8.7%. (2) Maroc Telecom ownership. 8

9 4 Strong Financial Profile and Consistent Track Record of Shareholder Remuneration Operating Cash Flows (AED bn) Capex / Revenue (%) Net Debt/(Cash) Position (AED bn) Strong Cash Flow Generation, Consistent Reinvestment and Robust Balance Sheet % 20% 13% 13% H'15 1H' H'15 1H' H'15 1H' Dividend Payout Ratio (%) Dividend (AED bn) & DPS (AED Annual Dividend Yield (%) (1) Consistent History of Attractive Shareholder Returns 64.3% 84.2% 93.7% 80.6% % 6.1% 5.1% H'15 1H'16 1. Annual dividend yield stock price is based on actual payment dates H'15 1H'16 Dividend (AED bn) DPS

10 5 Highest Rated Telco outside Asia with Strong Balance Sheet and Lowest Leverage Among Peers MEA Telco Ratings and Total Debt / EBITDA Etisalat s Credit Rating Ratings A A - xxx STC, A- Etisalat, AA- Ooredoo, A- AA-/Stable Aa3/Negative (1) 8 Net Debt / EBITDA 6 A A - 4 Batelco, BB 0.22X 0.17X 2 MTN, BBB- Bharti, BBB- 0.07X 0.02X -2 yyy Debt/EBITDA H1'15 H1'16 Source: Company filings, Bloomberg (1) Moody s changed its view on the outlook of the UAE sovereign and consequently GRI. 10

11 2. Financial Overview

12 Etisalat Group Financial Highlights H Revenue Breakdown H (AED m) EBITDA Breakdown H (AED m) 24% 26.2 bn 9% 8% 2% 24% 13.2 bn 6% 6% 2% 57% 62% +1% -1% YoY Growth YoY Growth UAE +2% UAE 0% MT Group (LC +6%) +5% MT Group (LC +1%) 0% Egypt (LC +14%) +3% Pakistan (LC -3%) -6% Egypt (LC +17%) +4% Pakistan (LC +2%) -1% Represents others 12

13 Group Revenue Revenue (AED m) and YoY growth (%) Sources of Revenue growth H1 16 vs H1 15 (AED m) 48,509 51,737 25, ,178 38, % 26% 25,850 26,178 18% 7% 1% H1'15 UAE MT Group Egypt Pakistan Others H1'16 Revenue YoY growth % Geographical Split of Revenue (H1 2016) Key Highlights Domestic vs. Int l International Positive revenue growth in the UAE driven by mobile and fixed data revenue Egypt 20% Higher contribution from international consolidated operations UAE 57% Int'l 42% MT Group 58% Pakistan 19% Growth in MT Group driven by int l subsidiaries & domestic operations Revenue growth in Egypt despite currency devaluation Others 1% Others 3% Revenue growth in Pakistan impacted by increased competition in international voice segment 13

14 Group EBITDA EBITDA (AED m) & EBITDA Margin Sources of EBITDA growth H1 16 vs H1 15 (AED m) 18,513 23,212 26,526 13, , % 48% 51% 13,340 13,222 52% 51% EBITDA EBITDA Margin Geographical Split of EBITDA (H1 2016) Domestic vs. Int l International H1'15 UAE MT Group Egypt Pakistan Others H1'16 Key Highlights EBITDA in the UAE negatively impacted by higher cost of sales and network costs. Higher contribution of EBITDA of consolidated international UAE 62% Int'l 37% MT Group 66% Egypt 17% Pakistan 15% operations despite currency impact due to: Positive contribution from Maroc Telecom Group driven by int l subsidiaries Positive contribution from Egypt due to higher revenue Others 1% Others 2% Pakistan contribution impacted by currency devaluation while grew in local currency 14

15 Group CAPEX CAPEX (AED m) & CAPEX/Revenue Ratio (%) Sources of Capex growth H1 16 vs H1 15 (AED m) 8,914 10,309 3, ,510 6, % 18% 20% 3,470 3,510 13% 13% CAPEX CAPEX/Revenue H1'15 UAE MT Group Egypt Pakistan Others H1'16 Geographical Split of CAPEX (H1 2016) Domestic vs. Int l International Others 3% Misr 18% Key Highlights Lower capital spend in the UAE Increased Capital expenditure in international operations due to: UAE 29% Int'l 68% MT Group 60% (2) Pakistan 21% Higher capex spend in MT Group due to License acquisition in Ivory Coast and Togo Network rollout in Egypt Expanding coverage and capacity in Pakistan Others 3% Others 1% 15

16 Group Balance Sheet, Cash Flows and Debt Profile Balance Sheet (AED m) Dec-15 Jun-16 Investment Grade Credit Ratings Cash & bank Balances 21,422 19,332 Total Assets 128, ,077 AA-/Stable Total Debt 22,080 23,897 Net Cash / (Debt) (658) (4,566) Total Equity 59,375 58,529 Aa3/Negative (1) Net cash position (AED m) Jun 15 Jun 16 Operating 5,576 4,862 Investing (3,419) (3,484) Financing (2,170) (3,552) Net change in cash (13) (2,173) Effect of FX rate changes (251) 99 Reclassified as held for sales (1) (17) Highlights Strong liquidity position Maintained low net debt to EBITDA level Operating cash flow impacted by change in working capital Maintained high credit ratings; Outlook change is triggered by Moody s revised outlook of the UAE sovereign. Ending cash balance 18,277 19,332 (1) Moody s changed its view on the outlook of the UAE sovereign and consequently GRI. 16

17 Debt Profile: Diversified debt portfolio Borrowings by Operation H1 16 (AED m) Borrowings by Currency 15,322 USD 23% MAD 15% 5,023 2,280 1,272 Euro 40% Others 13% EGP 9% Group MT Group Egypt Pakistan Debt by Source H1 16 (AED m) Repayment Schedule 14,766 16,418 8,334 5, ,298 1,178 Bonds Bank Borrowings Vendor Financing Others Beyond

18 Country by Country Financial Review 18

19 UAE: Maintained revenue growth with strong profitability UAE Market Facts (1) Financial Performance +19M Total Subscribers 222% Mobile Penetration AED Million FY 15 YoY% H1 16 YoY% Revenue 28,774 +6% 15,008 +2% EBITDA 16,279 +9% 8,232 0% EBITDA % 57% +1pp 55% -1pp Profit 7,325 0% 3,942 +7% 26% Fixed Penetration 15% BB Penetration Capex 4, % 1,034-32% Key Highlights Revenue growth driven by strong performance of fixed and > 88% FTTH Coverage > +80% Smartphone Penetration > 90% LTE Coverage mobile broadband Margin weakening on higher interconnection and roaming and network costs Profit improvement due to lower royalty charges Capital spending focused on network maintenance and ICT capabilities (1) Market penetration based on Regulator s reported statistics 19

20 Etisalat UAE financial Performance: Revenue (AED bn) / YoY Growth (%) EBITDA (AED bn) / EBITDA % % 55% 57% 56% 55% 9% 9% 6% %% 10% 2% Revenue YoY growth % EBITDA EBITDA % Net Profit (AED bn) / Profit Margin (%) Free Cash Flow (1) (AED bn) / FCF margin (%) % % 25% 25% 26% % 46% % 46% 48% Net Profit Margin % FCF FCF% (1) Free Cash Flow represents EBITDA less Capex 20

21 UAE: Consistent high value subscriber growth Mobile Subs (m) & ARPU (1) (AED) Fixed Subs (m) & ARPL (2) (AED) Q2'15 Q1'16 Q2'16 Postpaid Prepaid Blended ARPU Q2'15 Q1'16 Q2'16 Fixed ARPL elife Subs Double & Triple-Play (m) Fixed Broadband (3) Subs (m) Q2'15 Q1'16 Q2'16 E-Life (2P & 3P) ARPL Q2'15 Q1'16 Q2'16 Fixed BB ARPL (1) Mobile ARPU ( Average Revenue Per User ) calculated as total mobile voice, data and roaming revenues divided by the average mobile subscribers. (2) ARPL ( Average Revenue Per Line ) calculated as fixed line revenues divided by the average fixed subscribers. (3) Fixed broadband subscriber numbers calculated as total of residential DSL (Al-Shamil), corporate DSL (Business One) and E-Life subscribers. 21

22 UAE: Competitive dynamics Mobile Market Share (%) Fixed Market Share (%) 55.8% 44.2% 83.6% 16.4% Mobile Value Share (%) Fixed Value Share (%) 34.2% 82.1% 17.9% 65.8% Du Etisalat Based on Company s disclosures for the period ending June 30,

23 Int l Operations Financial Highlights H Revenue (AED m)/ebitda (AED m) / EBITDA Margin (%) Revenue & EBITDA (AED m) / EBITDA Margin (%) / YoY Growth % Maroc Telecom Group FY 2015 YoY Growth in AED Growth in MAD 31% 39% 43% 44% 44% Revenue 6,320 +5% +6% 58% EBITDA 3,202 0% +1% 21,107 22,344 Etisalat Misr EBITDA Margin 51% FY pp YoY Growth in AED -2pp Growth in EGP Revenue 2,217 +3% +14% 13,182 20% EBITDA % +17% 10,822 10,939 EBITDA Margin +37% 0pp 0pp 8,306 9,571 Pakistan FY 2015 YoY Growth in AED Growth in PKR 4,035 4,806 4,824 19% Revenue 2,067-6% EBITDA 719-1% -3% +2% Revenue EBITDA EBITDA Margin 35% +2pp +2pp (1) Financial figures are restated to exclude the impact of discontinued operations 23

24 Maroc Telecom: Steady growth in int l operations coupled with recovery in Morocco Morocco, Benin, Burkina Faso, CAR, Gabon, Ivory Coast, Mali, Mauritania, Niger and Togo Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) ,477 12,728 12,316 3, % 54% 51% 53% 51% 2,159 1,995 6,041 6,320 1,417 17% 16% 29% 1,025 17% 22% 12% 17% Key Highlights Revenue EBITDA % CAPEX CAPEX/Revenue Macro and Market Snapshot (H ) (2) (3) Subscriber growth driven by domestic and Int l operations Morocco Burkina Faso Gabon Mali Mauritania Moov (1 Revenue growth attributed to strong performance of international operations and local domestic fixed segment Int l contribute 44% of Group revenues EBITDA margin impacted by higher interconnection costs and regulatory charges Increase in capital spending due to acquisitions of 3G license in Togo and universal license in Ivory Coast Population (m) GDP per Capita ($) (4) 2, , ,371 1,951 GDP Growth (%) Penetration Rate (%) M125/F ARPU ($) Number of Players Between 2 and 5 Country Position (1) Moov Operations are in Benin, CAR, CDI, Gabon, Niger and Togo (2) Source: World Bank and GSMA Intelligence (3) Based on latest available statistics 24

25 Egypt: Strong performance muted by currency depreciation Total Subscribers (1) (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) ,742 4,844 4,544 1,229 1,229 23% 23% 24% 24% 24% % 36% 37% 2,160 2,217 37% 37% 26% 26% 19% % 20% Market Subs Market Share Revenue EBITDA % CAPEX CAPEX/Revenue Key Highlights Revenue growth Y/Y impacted by currency depreciation Double digit revenue growth in local currency due to strong performance across all segments EBITDA growth in local currency despite higher network costs, interconnections and termination costs. Sustained EBITDA margin at 37% level Higher capex spending focused on network expansion capacity and coverage Macro and Market Snapshot (H1 2016) (2) (3) Population (m) 91.6 GDP per Capita($) 3,615 GDP Growth (%) 4.2 Penetration Rate (%) 103 ARPU ($) 3.3 Number of Players (Mobile) 3 Country Position 3 (1) Subscribers and market share data as per statistic published by the Ministry of Information and Technology (2) Source: IMF, Business Monitor International (3) Based on latest available statistics 25

26 Pakistan: Improvement in the mobile segment Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) ,761 4,719 4,236 2, ,205 2,067 1,392 63% 35% 27% 30% 33% 35% 29% 1,028 24% 20% 24% Revenue EBITDA % CAPEX CAPEX/Revenue Key Highlights Macro and Market Snapshot (H ) (1) (2) Subscriber growth driven by mobile operations Revenue growth impacted by currency depreciation and lower contribution from international incoming traffic. Growth in mobile operations driven by increase in subscriber base and strong contribution from data. EBITDA margin improved due to costs optimisation measures Higher Capital spending focused on mobile network enhancement Population (m) GDP per Capita ($) 1,429 GDP Growth (%) 5.5 Penetration Rate (%) Mobile 71 / Fixed 3 ARPU ($) 2.0 Number of Players (Mobile/ Fixed) 4 Country Position Fixed 1 / Mobile 4 (1) Source: IMF, Business Monitor International (2) Based on latest available statistics 26

27 Nigeria: Growth impacted by challenging regulatory and macro economic environments Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) ,343 4,230 1,487 1, ,341 1,114 1% 15% 18% 1,891 2,080 15% 14% 45% 34% 26% 175 8% 135 6% Revenue EBITDA % CAPEX CAPEX/Revenue Key Highlights Macro and Market Snapshot (H ) (1) (2) Maintained Y/Y subscriber growth Slow down is attributed to regulatory mandated registration process Revenue growth Y/Y impacted by currency devaluation & competitive data pricing EBITDA Margin impacted by higher interconnect & Roaming costs and site rental charges. Lower capex spend Population (m) GDP per Capita ($) 2,640 GDP Growth (%) 2.7 Penetration Rate (%) 80% ARPU ($) 8.2 Number of Players 4 Country Position 3 (1) Source: IMF, Business Monitor International (2) Based on latest available statistics 27

28 2016 Actual Against Guidance: Confident in delivering the full year management guidance Financial KPI Guidance 2016 In AED Guidance 2016 Constant Currencies (1) Actual H In AED Actual H Constant Currencies Revenue Growth % Stable Low single digits +1% +3% EBITDA Margin% ~ 48% - 50% 51% CAPEX / Revenue % ~ 18% 13% (1) Constant currency: Financial results assuming constant foreign currency exchange rates used for translation based on the rates in effect for the comparable prioryear period. In order to compute our constant currency results, we multiple or divide, as appropriate, our current AED results by the current year monthly average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior year monthly average foreign exchange rates. 28

29 3. Appendix

30 Etisalat Group Etisalat Group Consolidated FY 14 FY 15 YoY Growth H1 15 H1 16 YoY Growth Subs (m) (1) % % Revenue (AED m) 48,508 51,737 +7% 25,850 26,178 +1% EBITDA (AED m) 23,212 26, % 13,340 13,222-1% EBITDA Margin 48% 51% +3pp 52% 51% -1pp Net Profit 8,601 8,263-4% 3,712 4, % Net Profit Margin 18% 16% -2pp 14% 16% +2pp EPS (AED) % % Etisalat UAE FY 14 FY 15 YoY Growth H1 15 H1 16 YoY Growth Subs (1) (m) % % Revenue (AED m) 27,095 28,774 +6% 14,700 15,008 +2% EBITDA (AED m) 14,957 16,279 +9% 8,255 8,232 0% EBITDA Margin 55% 57% +1pp 56% 55% -1pp Net Profit 7,309 7,325 0% 3,671 3,942 +7% Net Profit Margin 27% 25% -2pp 25% 26% +1pp CAPEX 2,524 4, % 1,520 1,034-32% CAPEX/Revenue 9% 17% +8pp 10% 7% -3pp (1) Subscriber numbers calculated as aggregate number of GSM, CDMA, fixed, fixed broadband and WLL lines generating revenue during the last 90 days. 30

31 Currency Trend: USD / MAD USD / EGP Average EoP Average EoP USD / PKR USD / NGN Average EoP Average EoP Source: Bloomberg 31

32 Etisalat Investor Relations Website: 32