Grameenphone Ltd. October, 2018

Transcription

1 Grameenphone Ltd. October,

2 Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ( relevant persons ). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the following presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. 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 securities in Grameenphone Ltd. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.

3 Mobile market leader in a fast-growing economy 3

4 BANGLADESH AT A GLANCE Demographics Economics Age distribution 28% 40% Real GDP growth (Avg. of last 10 years) 5.9% 6.0% 6.2% 19% 5.0% 5.2% 7% 6% 0-14 yrs yrs yrs yrs >64 yrs Population of 168m, growing by >1% per year Young population, 47% below 25 years Expanding middle class Nigeria Kenya Sri Lanka Vietnam Bangladesh GNI per capita of USD 1,330 Largely a cash based economy Main sectors: Service, manufacturing and agriculture Stable inflation and currency performance 4 Sources: WorldBank, CIA Factbook

5 24 YEARS OF MOBILE TELECOM SERVICES Mobile-Mobile service launch Launch of brand name Citycell by PBTL (restructured HBTL) mn subscriber Formation of Bangladesh Telecommunication Regulatory commission Prepaid service launch Launch of state owned operator Teletalk as the 5th player major GSM players currently named GP, Banglalink and Robi came into operation Commercial operation of HBTL (Hutchison Bangladesh Telecom Ltd.) with AMPS technology 2004 New interconnection regime (ICX, IGW & IIG) Launch of separate Broadband Wireless Access (Wimax) operation Introduction of SIM tax Launch of Warid Telecom as the 6th player Banglalink re-launch after Orascom s acquisition SIM re-registration through NID & Biometric Verification System 100 mn subscribers 3G cellular mobile phone services Entry of Airtel Bangladesh by acquiring Warid Telecom 90%+ population coverage 50 Mn subscribers Merger of Robi and Airtel Renewal of 2G spectrum for 15 years Launch of 4G services 5

6 AN ATTRACTIVE AND GROWING MOBILE MARKET DOMINATED BY PREPAID Industry Subscribers (Mn) 156 million subscribers, of which 98% prepaid Multi-SIM market with around 55% real mobile penetration* % internet penetration*, rapidly increasing ARPU of around USD 2 Scale benefit drives healthy margin for top 3 players Continuously developing regulatory landscape ** 2017 Sep' *Based on estimation **Subscriber adjustment due to bio-metric verification during 2016

7 % 75% 70% 65% 60% 55% 50% 45% GRAMEENPHONE IS THE UNDISPUTED MARKET LEADER WITH SOLID FINANCIAL PERFORMANCE Total revenue market shares* Revenues (BDT Bn) and EBITDA margin (%)*** 25% 25% 26% 24% 28% 28% % 22% 23% 22% 19% 18% 59% 53% 53% 51% 53% 53% 54% 51% 53% 53% 55% 2013% H Grameenphone Banglalink Robi Revenue EBITDA Margin 71.4 million subscribers and #1 brand in Bangladesh Largest network: 14,140 2G and 13,619 3G sites Widest distribution: More than 373k points of sales 7% revenue CAGR and 12% EBITDA CAGR in 4 years Growing EBITDA margin with efficiency improvements 14% operating cash flow CAGR with margin improvement 7 *Source: Company Website **Airtel merged wih Robi from Q4'2016 *** EBITDA before other items

8 % 23.0% 18.0% 13.0% 8.0% 3.0% -2.0% % 180.0% 130.0% 80.0% 30.0% % 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 3Q2018: STRONG BUSINESS PERFORMANCE DRIVEN BY VOICE AND DATA Revenue (BDT Bn) and Growth (YoY) EBITDA* (BDT Bn) and Margin** NPAT (BDT Bn) and Margin % % % 0.5% 3.40% % 58.8% 57.6% 60.6% 61.9% 21.0% 18.5% 20.4% 33.1% 26.20% Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 6.1% normalized total revenue growth* 9.6% voice revenue growth Normalized EBITDA growth of 7.2% and margin improvement of 2.2 pp*** One-off reversal of excess provision Normalized NPAT margin of 25.7%* 8 *Normalized for accounting practice changes **As per IAS 18 *88Normalized for IAS 18, Q3 18 reversal and Q3 17 one-off items

9 4745 4G sites rollout* 44% 4G devices with 4G SIM* Reached 3.8 Mn 4G users* 36.3 Mn overall data subscribers 3G volume growth after 4G conversion *As of 30 September 2018 Q3 2018

10 Priorities for 2018 Planned rollout completion, modernization and capacity enhancement to maintain network superiority Continued drive on quality subscriber acquisition Optimization of voice offers and usage stimulation with new data value proposition Focus on organizational efficiency initiatives Regulatory engagement for upcoming developments

11 Significant Growth Opportunities 12

12 VOICE SEGMENT REMAINS IMPORTANT AND STILL OFFERS ATTRACTIVE GROWTH OPPORTUNITIES Voice AMPU and APPM (BDT) Real mobile penetration currently at approx. 55%, expected to increase Affordability of marginal subscriber improving 0.77 Leverage expanded network and distribution footprint Improving price perception and simplicity in offers Strengthen position in B2B, postpaid and youth segment Voice AMPU APPM (BDT) 13

13 60% 50% 40% 30% 20% 10% 0% 40% 35% 30% 25% 20% 15% 10% 5% 0% INCREASING DATA USAGE WILL BE THE PRIMARY REVENUE GROWTH DRIVER GOING FORWARD Average data usage (MB per month) Data users and revenue contribution % 50.90% 42% % 17% 18.80% % 5% 8% 12% M M 2018 Usage driven by video streaming and social media 72% of monthly active data users use facebook Flagship Digital Bangladesh vision of Government to act as an enabler 19.5% total data revenue growth in first 9 months of 2018 Support from 3G/4G network coverage expansion Proliferation of affordable smartphones will be key 14

14 STRATEGIC PRIORITIES GROWTH EFFICIENCY SIMPLIFICATION Business Environment Management Winning Team Responsible Business Conduct

15 INVESTING IN NETWORKS TO CAPTURE DATA GROWTH 13,619** no of 3G sites is covering 94.5%** of population 3G/4G sites & Pop. coverage per operator* G sites rolled out in the first nine months of GP Robi BL Network modernization ongoing to consolidate superior position % Strong end-to-end fiber backhaul across the country % Expansion of indoor coverage to address rapid urbanization and vertical city expansion 3000 Constrained fixed broadband market 3G 4G 3G Population Coverage 16 *Source: Company website (Q2 end 2018) ** End of Q3 2018

16 Physical Distribution has been a Major Strength 17

17 WHILE PHYSICAL DISTRIBUTION REMAINS THE CORE, DIGITAL DISTRIBUTION IS SHAPING UP Convenience is driving recharge through digital channel Most digital interaction starts from physical location Bridging the digital and physical world with GP Express stores i.e. integration of e-commerce platform Digitization of tools and processes to ensure empowerment and efficiency of channel Recharge through digital channels (% of sales) 11.7% 10.4% 8.2% 0.1% 0.5%

18 SIMPLIFICATION JOURNEY IS A STRATEGIC PRIORITY FOR VALUE CREATION Customer processes simplification & digitalization Continue with the journey embarked 3 years back Simplify and digitize new processes identified by the structured approach under process council Simplest for B2B Enterprise self-service with reporting, execution and complaint management module Self-service for all possible after sales activities in phases Self-service transformation Focus on USSD, IVR and social media self service uptake Enriched features of MyGP with cross channel promotion, contextual product offering, digitized loyalty program etc. Robust IT services Minimize IT system defects and critical system outages Improvement scope in infrastructure, process, application, architecture and security 18

19 A TRACK RECORD OF CONTROLLED OPEX DESPITE GROWTH AND SIGNIFICANT NETWORK EXPANSION Opex (BDT Bn) and Margin Item wise Opex growth of 2017 (YoY) % 41% 38% 36% 35% 33% 12% 6% 1% 12% -40% -18% *Rev. & Sub. driven Rent & Energy Personnel **Regulatory Market Spend O & M ***Others :1.5% opex growth against 7% revenue growth, 8% base stations growth and 9% sub-base growth Opex margin reduced from 41% to 33% 3.4% opex growth in 2017 with further margin improvement Continued simplification of IS/IT platforms Efficiency in network operations and market spending Organizational restructuring 20 *Revenue sharing with BTRC is included ** Regulatory cost involves revenue share, WPPF, spectrum charges and license fees ***Main component is consultancy. Includes one-off items for 2017

20 COMMITMENT TO FURTHER EFFICIENCY Technology Market Personnel Support New operating model for network management activities IT & network service contract re-negotiation and scope rationalization Rent reduction through contract negotiation with service provider Elimination of hard copy subscriber acquisition form with electronic version Optimization of channel incentives Increased sales through digital channels Optimized shift in digital media for market spending Effect realization of headcount efficiency Further exercise ongoing for Head Quarter staff Optimization of support and overhead costs Control over discretionary costs 21

21 MANAGING RISKS IN THE BUSINESS ENVIRONMENT While there are substantial challenges in the business environment, Grameenphone has more than 20 years of experience in successfully managing regulatory and policy risks Government s Vision of Digital Bangladesh Realization of Digital Bangladesh remains a political priority and expected to enable growth in the telecom industry Recognition of Telecom and ICT sectors as enablers of economic and socioeconomic development Numerous initiatives undertaken for enabling local ecosystem for software and IT services e.g. e- government, public-private partnerships Regulatory Developments Formulation of new regulations and revision of existing ones through public as well as industry consultation Nascent regulations regarding digital services, but so far have been conducive to continued growth i.e. e- commerce policy Bangladesh Labour Act is under review; anticipation of further clarity for service sector employees Business Environment Management Establishment as a trusted partner of the Government as well as a service provider, value creator and innovator contributing towards Digital Bangladesh vision Aspiration to strengthen sustainability initiatives and role in empowering society Considerable priority towards managing regulatory and policy risks by the company Collaboration with local and international stakeholders 22

22 DEVELOPING REGULATORY LANDSCAPE BTRC Audit BTRC audit commenced on 3 Aug 2016 and received a summary of the draft audit observations on 11 Dec'17 After submission of feedback on 18 Jan 18, a tri-party meeting was held on 18 Feb 18 regarding clarification Received the final audit report on 26 Aug 18. GP submitted its response in two phases on 6 th and 19 th Sep 18 Tariff Circuit on Data Mobile Number Portability Services (MNPS) Tower Co. Licensing Guideline BTRC intends to introduce floor and ceiling price for data. On 9 th Oct 18, in a consultation meeting, BTRC has asked operators to submit their views/inputs GP supports this notion and submitted its proposals on 18 th Oct We expect some consultation at BTRC BTRC revised tariff circuit in order to introduce single floor price for all MNOs effective from 14 Aug 18 Revised floor and ceiling rate are BDT 0.45/Min and BDT 2/Min respectively No pricing differentiation allowed for on-net and off-net calls in any customer offer All operators have launched MNP services on 1 Oct 18 Licensing guideline was published on 1 Apr 18 where MNOs will not be eligible to participate 4 selected firms have deposited the application fees along with bank guarantee in the 3rd week of Sept 18 Company formation allowed till 20 Oct 18 for awarding license BTRC is in the process of issuing license 23

23 CONTINGENCIES Sl. Items 1 Information system audit by BTRC 2 SIM tax on replacement SIMs ( ) 3 SIM tax on replacement SIMs ( ) 4 Claim for VAT based on C&AG audit 5 VAT rebate on 2G license renewal fee 6 Interest on SIM Tax ( ) Refer to Annual Report 2017 and 3Q2018 Financial Statements for details. ( com/about/investorrelations/ir-financial-report) 7 Interest for delayed payment of Guaranteed Annual Rent to Bangladesh Railway 24

24 HEALTHY SHAREHOLDER RETURN Payout Ratio and Dividend Yield* Total Shareholder Return** 320% 129% 109% 96% 105% 101% 98% 270% 220% 170% 7.5% 4.9% 4.7% 5.9% 4.8% 3.2% 120% 70% 20% -30% (Interim ) Dividend policy states at least 50% dividend payout of NPAT; last three years average payout was 101% Total shareholder return of 200% from 2013 Outperformed local market index (DSEX) by 162 percentage points 27 *Considered closing price of prior trading session of record date **Including dividend reinvestment and end period of 30 August 2018

25 CONTRIBUTION TO THE BANGLADESH ECONOMY Investment BDT Bn Contribution to National Exchequer BDT Bn G license fees M M Bn (70.4% or revenues) contributed to exchequer in the form of taxes, VAT, duties, spectrum assignment, neutrality, network coverage, capacity enhancement and license fees. 27

26 Summary* Strong market leader in an attractive growth market Investing to maintain superior network and service position Growth and operating efficiencies to drive future profitability *In consideration of the local regulations, Grameenphone Ltd. does not provide any forward looking statements.

27 27 Thank you