Q Results. Emirates Integrated Telecommunications Company PJSC May 2014

Transcription

1 Q1 214 Results Emirates Integrated Telecommunications Company PJSC May 214

2 Disclaimer Emirates Integrated Telecommunications Company PJSC (hereafter du ) is a telecommunication services provider in the UAE. du cautions investors that certain statements contained within this document state management s intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. Management wishes to caution the reader that forward-looking statements are not historical facts and are only estimates or predictions. Actual results may differ materially from those projected as a result of risks and uncertainties, but are not limited to: Our ability to manage domestic and international growth and maintain a high level of customer service Future sales growth Market acceptance of our product and service offerings Our ability to secure adequate financing or equity to fund our operations Network expansion Performance of our network and equipment Our ability to enter into strategic alliances or transactions Co-operation by the incumbent in provisioning lines and enabling us to interconnect our equipment at the local exchange Regulatory approval processes Changes in technology Price competition Other market conditions and associated risks The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of future events, new information, or otherwise. For further information about the company, or material contained within this forward looking statement, please direct your enquiries to our Investor Relations team by at investor.relations@du.ae or by telephone on

3 Contents Slide Highlights of Q1 Results 4 Market Information 6 Financial Summary 8 Strategy and Outlook 22 3

4 4 Q1 Financial Highlights Total Revenue (AED M) EBITDA (AED M) Net Profit before Royalty (AED M) Free Cash Flow (AED M) Mobile 9 day net customer additions (s) +12.5% +12.3% +15.1% -11.3% +68.1% 2,955 1, ,626 1, Q1 213 Q1 214 Q1 213 Q1 214 Q1 213 Q1 214 Q1 213 Q1 214 Q1 213 Q1 214 Revenue growth Quarter on quarter revenue growth attributed primarily by mobile, fixed and wholesale services Mobile service data revenues increased 21.3% from Q1 213 to reach AED 639m EBITDA up EBITDA quarterly increase driven by continued focus on efficiencies Net profit increased Solid start for 214 stemming from increased performance in revenues as well as maintained focus on operating efficiencies Free cash flow maintained Q1 free cash flow decreased to AED 487m compared to Q1 213 Fulfilled various payments in Q1 214 Strong post-paid customer base Total mobile subscriber base grew to 7.6 million mobile customers Post-paid subscribers now represent 9.5% of total mobile subscribers compared to 8.3% in Q1 213

5 Contents Slide Highlights of Q1 Results 4 Market Information 6 Financial Summary 8 Strategy and Outlook 22 5

6 UAE Market Overview Market share consolidation increasing emphasis on growing revenue share UAE Mobile Subscribers - Market share quarterly evolution 6.% 5.% 4.% 3.% 2.% 1.%.% Etisalat du 52.7% 47.3% 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.% Source: TRA Market Statistics January 214, Internal estimates, Etisalat Quarterly/ annual financial reports UAE Telecom Market - Revenue share quarterly evolution.% Etisalat du * du revenue share for the last 12 months is 29.7% 69.6% 3.4% * du Mobile Subscribers Active 9 Days (s) du Total Revenues (AED M) 8, 6, 4, 2, - 6,64 6,654 6,896 7,244 7,55 3,5 3, 2,5 2, 1,5 1, 5-2,626 2,66 2,643 2,869 2,955 (213 e ) Population: 8.3 million Population growth: 3% GDP: US$ 396 bn GDP per capita: US$ 43,876 (Source: TRA January 214, UAE s National Bureau of Statistics (NBS), IMF: World Economic Outlook April 214, Internal estimates)

7 Contents Slide Highlights of Q1 Results 4 Market Information 6 Financial Summary 8 Strategy and Outlook 22 7

8 Total Revenues Mobile and fixed business main drivers of revenue growth Quarterly Revenue (AED M) Like for Like Revenue Breakdown Quarter Change (AED M) +12.5% 2,626 2,66 2,643 2,869 2,955 2, % 34.3% 14.4% -1.2%.6% 2,955 Year to Date Revenue (AED M) Revenue Split Q ,815 8,539 9,842 1,799 Wholesale 5.9% Fixed 17.3% Broadcasting 1.4% 2,626 2,955 FY 21 FY 211 FY 212 FY 213 Q1 213 Q1 214 Mobile 75.4% 8

9 Revenue Drivers - Mobile Mobile revenue continues to grow, increasing competition driving ARPU trend Quarterly Mobile Revenues (AED M) Year to Date Mobile Revenues (AED M) +8.3% 2,57 2,66 2,47 2,195 2,228 5,58 6,541 7,632 8,365 2,57 2,228 FY 21 FY 211 FY 212 FY 213 Q1 213 Q1 214 Mobile Subscribers Active 9 Days ( ) +13.7% 7,55 Quarterly Mobile ARPU (AED) -8.4% ,244 6,64 6,654 6,896 9

10 Revenue Drivers - Mobile In line with global trend of rising demand for data Quarterly Mobile Service Data Revenues (AED M) 2,5 2, 1,5 1, % % +21.3% % 29.3% Year to Date Mobile Service Data Revenues (AED M) % Mobile Data (AED M) 1,1 15.1% 1, % Mobile Data as % of Mobile Service Revenue 2, % 24.6% % 639 FY 211 FY 212 FY 213 Q1 213 Q % 29.% 28.% 27.% 26.% 25.% 24.% 23.% 22.% 3.% 25.% 2.% 15.% 1.% Mobile data continues to be a key market driver Mobile service data revenues achieved double digit growth from 527m in Q1 213 to AED 639m in Q1 214 Strong value propositions pushed to the market: o Smartphone Festival includes 1GB monthly free data for 12 months o Daily Saver Bundle provides customers access to all social media applications o Call for Data offers free data for calls made on prepaid lines o Convenient facilities such as the Data Manager Application allows customers to effectively monitor their data usage Mobile Data (AED M) Mobile Data as % of Mobile Service Revenue 1

11 Revenue Drivers Mobile Post-paid continues to be a focus for growth Postpaid contribution to growth Y on Y to mobile revenues (excluding inbound roaming and handset revenue) Quarterly Minutes of Use by Customer Segment 114.7% % Q1 213 Q Total Minutes of Use Prepaid Postpaid Significant contribution from post-paid Post-paid customers added significantly to mobile revenues, increasing to 114.7%, up from Q1 213 contribution of 46.8% in accordance with our ongoing strategy Overall minutes of use stable Increased emphasis on high value customers, usage among postpaid users increased to 611 minutes per subscriber Prepaid minutes of use per subscriber down to 27 a continuing trend 11

12 Revenue Drivers Fixed Strong growth in overall fixed business Fixed line subscription Quarterly Fixed Revenue (AED M) Quarterly Fixed Line Subscribers ( ) +28.3% Year to Date Fixed Revenue (AED M) Fixed Line Subscriber Breakdown Quarter Change ( ) 1,172 1,458 1,63 1, % 38.6% 21.9% -22.2% FY 21 FY 211 FY 212 FY 213 Q1 213 Q1 214 Q1 213 Landline Broadband TV Call Select Q

13 Revenue Drivers Broadcast & Wholesale Strong growth in wholesale driven by international hubbing Quarterly Wholesale Revenues (AED M) Quarterly Broadcast Revenues (AED M) +37.8% -8.8% National Wholesale International Hubbing Year to Date Wholesale Revenues (AED M) Year to Date Broadcast Revenues (AED M) FY 21 FY 211 FY 212 FY 213 Q1 213 Q1 214 FY 21 FY 211 FY 212 FY 213 Q1 213 Q

14 Gross Margin Steady gross margin performance Quarterly Gross Margin (AED M) and Gross Margin % Year to Date Gross Margin (AED M) and Gross Margin % 1,95 1,9 1,85 1,8 1,75 1,7 1,65 1,6 1,55 1, % +9.3% 1,794 1, % 67.4% 1,919 1, % 64.8% 8.% 75.% 7.% 65.% 8, 7, 6, 5, 4, 3, 2, 1, 4,6 67.5% 5, % 6,897 7, % 67.1% 66.7% 1, % 1, % 73.% 71.% 69.% 67.% 65.% 63.% 61.% 1,5 6.% FY 21 FY 211 FY 212 FY 213 Q1 213 Q % Steady increase in gross margin Q1 213 to Q1 214 increased by 163m Gross margin up from Q1 213 mainly due to the contribution from mobile data and fixed gross margin Lowered gross margin % from Q1 213 to Q1 214 due to reduced IDD rates as a result of price competition and VoIP 14

15 Gross Margin Breakdown by Segment Strong growth in overall fixed business Quarterly Mobile Gross Margin (AED M) Quarterly Fixed Gross Margin (AED M) +3.6% +34.% 1,6 1,5 1,4 1,3 1,2 1,1 1, 1,454 1,472 1,556 1,56 1, % 72.7% 71.3% 71.3% 69.9% 75.% 7.% 65.% 6.% % 83.3% 8.1% 8.3% 76.8% 1.% 95.% 9.% 85.% 8.% 75.% 7.% Quarterly Wholesale Gross Margin (AED M) Quarterly Broadcasting Gross Margin (AED M) % % % % % % 24.5% 25.% 39.9% 2.% % 18.1% 18.6% 15.% % 16.4% 1.% 55.% 5.% 45.% 4.% 35.% 3.% 25.% 2.% 15

16 Overheads Continuing improvement in operational efficiencies Quarterly Overheads (AED M) % 26.6% 26.3% 27.2% 24.8% 4.% 38.% 36.% 34.% 32.% 3.% 28.% 26.% 24.% 22.% 2.% Overheads as a % of Revenue Q1 213 Q4 213 Q1 214 Manpower 12.1% 14.2% 12.% Teleco license & related fees 2.7% 2.4% 2.4% Sales & marketing 2.4% 2.4% 1.9% Bad debts.6% 1.2%.2% Network operations & maintenance 6.9% 7.2% 6.7% Rent & utilities 1.% 1.%.7% Miscellaneous.8%.8%.7% Total Overheads as % of Revenue 26.6% 29.2% 24.8% Year to Date Overheads (AED M) Strategy focus on improving operational efficiencies 3, 2,5 2,583 2,984 2,899 2,955 5.% 4.% Overheads as a percentage of revenue was reduced by 1.8% from Q1 213 and 4.5% compared to Q , 1,5 1, % 35.% 29.5% 27.4% 26.6% 24.8% % 2.% 1.% Bad debt reduced due to improved collection from key accounts Improved operating efficiencies in manpower, rent and utilities FY 21 FY 211 FY 212 FY 213 Q1 213 Q1 214.% 16

17 Profitability Solid performance with increased EBITDA and profitability Quarterly EBITDA (AED M) Quarterly Net Profit before Royalty (AED M) 1,2 1,15 1,1 1,5 1, % +15.1% 1, 1, % % % 7 1,94 4.% 6 4.1% 4.2% 1,81 1,64 4.% 1,53 39.% % 28.6% 29.2% 29.% 29.3% % 37.% % 36.% Year to Date EBITDA (AED M) Year to Date Net Profit before Royalty (AED M) 4.% 38.% 36.% 34.% 32.% 3.% 28.% 26.% 24.% 22.% 2.% 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 3,999 4,292 2,916 2,18 4.6% 39.7% 4.1% 4.% 29.6% 34.2% 1,53 1,183 FY 21 FY 211 FY 212 FY 213 Q1 213 Q % 5.% 4.% 3.% 2.% 1.% 3, 2,5 2, 1,5 1, 5 2,823 3,14 1,812 1, % 28.7% 27.9% 28.6% % 18.% FY 21 FY 211 FY 212 FY 213 Q1 213 Q % 5.% 4.% 3.% 2.% 1.%.% 17

18 214 Royalty Regime Impact of royalty regime between 213 and 214 normalised for comparison purposes Quarterly Net Profit after Royalty (AED M)* Quarterly Royalty Compared (AED M)* +16.3% royalty rate 214 royalty rate Year to Date Net Profit after Royalty (AED M)* 214 royalty rate 213 royalty rate Year to Date Royalty Compared (AED M)* 2,27 1,939 1,344 1,31 1,98 1, , Q1 213 Q royalty rate 214 royalty rate *Net profit normalised for royalty adjustments made in Q4 213 *Agreed 214 royalty rate includes 1% on regulated revenues plus 25% of net profit *213 royalty rate includes 7.5% on regulated revenues plus 2% of net profit 18 (84) Q1 213 Q royalty rate 213 royalty rate

19 Capital Investments Quarterly CapEx Additions (AED M) Year to Date CapEx Additions (AED M) , 1,8 1,6 1,4 1,2 1, ,72 1,563 1,291 1, % 15.1% 15.9% 14.% 18.3% % 116 FY 21 FY 211 FY 212 FY 213 Q1 213 Q % 25.% 2.% 15.% 1.% 5.%.% Q1 214 CapEx Spend by Segment IT 29.7% Broadcasting 2.1% Others 3.1% CapEx CapEx spend for Q1 214 at AED 116m following a spike in Q4 213 due to ongoing infrastructure investments For the remainder of 214, CapEx will further focus on the mobile rollout including improvements to the products and services to enhance customer experience Fixed 49.3% Mobile 15.7% Investment in new innovative services for our consumer and enterprise customers key priority going forward 19

20 Cash & Debt Overview Q2 214 is scheduled royalty and TRA payments Quarterly Free Cash Flow (AED M) 2, 2, 4, Year to Date Free Cash Flow (AED M) 4, 1,5 1, 5 (5) 787 1, , ,41 (16) 1, (457) (332) (254) (425) (43) 1,5 1, 5 - (5) 3, 2, 1, (1,) (2,) 2,329 1,748 1, ,587 2,923 3,18 3,797 1, (1,27) (1,551) (1,546) (1,468) (457) (43) FY 21 FY 211 FY 212 FY 213 Q1 213 Q , 2, 1, (1,) (2,) Net Cash from Operations Net Cash from Investments Net Cash from Operations Net Cash from Investments Free Cash Flow Free Cash Flow Bank Facilities Debt Maturity Profile (AED M) Loan Sources (AED Millions) Available Drawn ECA - NSN Nordea ,897 ECA - NSN KFW Vendor - CISCO Capital Club Facility - Long Term Loan DBS - Bilateral Loan SCB-Bilateral Loan 1, Club Facility - Long Term Loan 1,839 1,839 TOTAL DEBT FACILITIES 4,628 3, TOTAL CASH IN HAND 5,264 FY14 FY15 FY16 FY17 2

21 Contents Slide Highlights of Q1 Results 4 Market Information 6 Financial Summary 8 Strategy and Outlook 22 21

22 Strategy and Outlook Efficiency and value creation: Positioning the company for success in a continually evolving telecommunications market Focus on profitable growth and increased value share Increase focus on mobile data and bundled offerings supported by continued emphasis on data network investments Provide seamless, superior and segmented customer experience Sustained investment in our capabilities to maintain a strong performance and position the company for future growth Maximise return on investments and cash flow generation for our shareholders 22

23 Q&A

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