Etisalat Group. Aspire Forward. EFG Hermes 4 th London MENA Conference th September 2014, London

Transcription

1 Etisalat Group EFG Hermes 4 th London MENA Conference Aspire Forward 15-17th September 2014, London

2 Disclaimer Emirates Telecommunications Corporation and its subsidiaries ( Etisalat 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. Etisalat at a Glance 2. Key Company Highlights 3. Financial Overview 3

4 1. Etisalat at a Glance

5 Etisalat at a Glance 182 million Aggregate Subscribers (1) 10.6 USD billion Revenue (2) 60% Owned by the Federal Government of the UAE 19 Countries in Operation (1) 5.1 USD billion EBITDA (2) 25 USD billion Market Capitalisation (3) 749 million People Under Licence (1) 2.1 USD billion Profit for the Year (2) Aa3/AA-/A+ High Investment Grade Rating (1) Aggregate subscribers and operating countries include subsidiaries and associates as at June 30,2014 (2) Financial Data for FY2013 (3) Share price as of 1-Sept-2014 as per Abu Dhabi Stock Exchange 5

6 2. Key Company Highlights

7 Key Company Highlights 5 Highly Rated Telco (Aa3/AA-/A+) with Low Leverage 1 Leading Telecom Operator With Third Largest Market Cap among Middle East & Africa Telcos 2 Diversified Operator with Exposure to Attractive and High Growth Markets Across Africa and Asia 4 Strong FCF Profile with Consistent History of Returning Capital to Shareholders 3 Strong Market Position across Key Geographies 7

8 1 Leading Telecom Operator in the Middle East and Africa Top Telecom Companies in ME & Africa Top 10 GCC Companies (1) Top 10 UAE Companies (1) MTN STC Etisalat $25bn $42bn $40bn SABIC STC $40bn $106bn Etisalat Emaar $25bn $23bn Mobily $19bn QNB $38bn FGB $20bn Vodacom Turkcell $18bn $13bn Al Rajhi $34bn NBAD $18bn Maroc Telecom $11bn Industries Qatar $32bn DP World $16bn Ooredoo Zain Du $11bn $10bn $7bn Etisalat Kingdom $25bn $23bn Emirates NBD ADCB $15bn $12bn Vodafone Qatar Global Telecom AsiaCell $5bn $4bn $4bn Emaar FGB $23bn $20bn Aldar DIB $9bn $9bn Telecom Egypt $3bn Saudi Electricity $20bn DFM $8bn Source: Bloomberg Data as at 1-Sept-2014 (1) Ranking by Market Cap 8

9 2 Diversified Telecom Operator Maroc Telecom, Morocco Sotelma, Mali Etisalat Misr, Egypt Canar, Sudan Etisalat, Afghanistan Licence type % Ownership (1) 53% Mobile, Fixed & Internet Licence type % Ownership (2) 51% Mobile, Fixed & Internet Licence type Mobile & Internet % Ownership 66% Licence type Fixed % Ownership 90% 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 Onatel, Burkina Faso Licence type Mobile % Ownership (3) 100% % Ownership (2) 51% Mobile, Fixed & Internet Maroc Telecom (4) Other Africa Middle East Asia Thuraya, UAE Licence type % Ownership 28% Network coverage Etisalat, UAE Licence type Satellite telecommunication 140 countries % Ownership 100% Mobile, Fixed & Internet Gabon Telecom, Gabon Licence type % Ownership (2) 51% Mobile, Fixed & Internet EMTS, Etisalat Nigeria Licence type Mobile % Ownership 40% Zantel, Tanzania Licence type Mobile & Internet % Ownership 82% 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. (3) Post the sale of operations in Benin, Central African Republic, Gabon, Cote D Ivoire, Niger and Togo to Maroc Telecom, Etisalat s effective interest will be 48% through its ownership in Maroc Telecom. (4) Pro-forma sale of Etisalat s operations in Benin, Central African Republic, Gabon, Cote D Ivoire, Niger and Togo to Maroc Telecom. 9

10 3 Strong Market Position Across Key Geographies Market Position Market Share Brand Country Mobile Fixed Mobile Fixed % 87% % 88% 2 NA 40% NA 3 NA 31% NA Misr % 73% 10

11 4 Strong Financial Profile and Consistent Track Record of Shareholder Remuneration Strong Cash Flow Generation, Consistent Reinvestment and Robust Balance Sheet Operating Cash Flows (AED bn) Capex / Revenue (%) Net Cash/(Debt) Position (AED bn) % % % H1'14 (10.8) H1' H1'14 Dividend Payout Ratio (%) Dividend (AED bn) & DPS (AED Dividend Yield (%) 82.1% 78.2% % Consistent History of Attractive Shareholder Returns 61.1% % 6.2% H1'14 1. Annualized dividend yield stock price is based on actual payment date of 13 August H1'14 Dividend (AED bn) DPS H1'14 (1) 11

12 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 AA-/Stable Etisalat 0.46X AA - A+/Stable STC 0.48X A + Aa3/Stable Net Cash (Net Debt) / EBITDA Batelco 2.0X BB x 0.51x Bharti BB X Ooredoo A X H1' x Source: Company filings, Bloomberg 12

13 3. Financial Overview

14 Etisalat Group FY 11 FY 12 FY 13 FY YoY Growth H1 13 H1 14 H YoY Growth Subs (m) (1) % % Revenue (AED m) 32,242 32,946 38, % 19,486 22, % EBITDA (AED m) 15,882 16,855 18, % 9,902 10,805 +9% EBITDA Margin 49% 51% 49% -3pp 51% 48% -3pp Net Profit 5,839 6,742 7,078 +5% 3,801 4, % Net Profit Margin 18% 20% 18% -2pp 20% 20% 0pp EPS (AED) % % Highlights Double-digit growth in subscriber base due to consolidation of Maroc Telecom Group Robust revenue growth led by strong performance of UAE operations and consolidation of Maroc Telecom Steady improvement in EBITDA level in absolute terms EBITDA margin impacted by higher cost of sales, interconnect costs and regulatory costs. Higher net profit due to higher EBITDA and other income (1) Subscriber numbers calculated as aggregate number of GSM, CDMA, fixed, fixed broadband and WLL lines generating revenue during the last 90 days. 14

15 Group Revenue UAE 59% Revenue (AED m) and YoY growth (%) 32,242 32,946 1% 2% Geographical Split of Revenue (H1 14) Domestic vs. Int l Others 1% Int'l 40% 38,853 18% 19,486 18% International Others 11% MT Group (2) 23% AT (1) 12% 22,478 15% Revenue YoY growth % Egypt 26% Pakistan 28% H Highlights Maintained revenue growth momentum with Y/Y revenue growth of 15% mainly attributed to strong performance of UAE and Egypt, and consolidation of Maroc Telecom Adjusting for Maroc Telecom, revenue growth Y/Y is 4% Revenue growth in the UAE of 8% mainly due to strong customer acquisition coupled with string data revenue performance Revenue from international operations increased Y/Y by 31% and contributed 41% of consolidated revenues mainly due to: First time consolidation of Maroc Telecom Improved performance in Egypt (1) Atlantique Telecom countries are Benin, Central African Republic, Cote d Ivoire, Gabon, Niger and Togo (2) Maroc Group countries are Burkina Faso, Gabon, Mali, Mauritania and Morocco. 15

16 Group EBITDA EBITDA (AED m) & EBITDA Margin H Highlights Consolidated EBITDA increased by 9% 15,882 16,855 18,901 Excluding Maroc Telecom (like for like), EBITDA would have declined by 3% 49% 51% 49% 9,902 10,805 51% 48% EBITDA of UAE operations grew by 7% due to higher revenue and better cost measures EBITDA of consolidated international operations increased by EBITDA EBITDA Margin Geographical Split of EBITDA (H1 14) Domestic vs. Int l International 59% resulting in 32% contribution to Group EBITDA, an improvement of 10 points compared to H1 13 Positive contribution from Egypt due to better revenue; UAE 70% Others -2% Inter- National 32% MT Group (2) 35% Others 4% AT (1) 9% Egypt 26% Pakistan 26% Higher network & regulatory costs in Pakistan; Competitive pressure coupled with the election process slowed down activities in Afghanistan; and Flat performance of African operations. EBITDA Margin declined to 48% mainly due to higher cost of sales, interconnection costs and higher regulatory charges. (1) Atlantique Telecom countries are Benin, Central African Republic, Cote d Ivoire, Gabon, Niger and Togo. (2) Maroc Group countries are Burkina Faso, Gabon, Mali, Mauritania and Morocco. 16

17 Group CAPEX CAPEX (AED m) & CAPEX/Revenue Ratio (%) 4,300 4,164 13% 13% Geographical Split of CAPEX (H1 14) Domestic vs. Int l UAE 22% Others 1% 6,334 16% AT (1) 7% 2,917 15% International MT Group 13% Others 2% (2) Egypt 12% 4,323 19% CAPEX CAPEX/Revenue 12% H Highlights Capital spending focused on license acquisition and renewal, network deployment and capacity upgrade Capex increased Y/Y by 48% mainly attributed to 3G license acquisition and 2G license renewal in Pakistan and consolidation of Maroc Telecom On a like for like Capex/Revenue ratio is 12% Capital spending in the UAE focused on enhancing coverage and customer experience Capital expenditure in international operations increased by 84% and contributed 77% of consolidated capex in H1 14: Higher capex spend in Pakistan due to 3G license acquisition and 2G license renewal; Higher capex spend in Egypt for capacity upgrade; Int l 77% Pakistan 66% First time consolidation of Maroc Telecom effective from May (1) Atlantique Telecom countries are Benin, Central African Republic, Cote d Ivoire, Gabon, Niger and Togo (2) Maroc Group countries are Burkina Faso, Gabon, Mali, Mauritania and Morocco. 17

18 Group Balance Sheet & Cash Flows Balance Sheet (AED m) Dec-13 Jun-14 Cash & Cash Equivalent 15,450 15,547 Total Assets 85, ,622 Total Debt 5,872 26,350 Net Cash / (Debt) 9,579 (10,803) Total Equity 49,593 58,065 H Highlights Maintained strong cash balance and enhanced financial flexibility Balance sheet impacted by the consolidation of Maroc Telecom Significant increase in total debt to fund the acquisition of 53% stake in Maroc Telecom resulting in net debt position for the first time and improving the capital structure Net cash position (AED m) 6M 13 6M 14 Operating 2,633 5,145 Investing (2,277) (19,867) Financing (3,324) 14,749 Net change in cash (2,969) 24 Effect of FX rate changes Ending cash balance 10,997 15,547 Operating cash flow impacted by consolidation of Maroc Telecom and other income in Q2 14 Cash flow from investing activities impacted by AED 18.7 billion cash acquisition of Maroc Telecom Cash flow from financing increased due to the bond issuance to finance acquisition of Maroc Telecom 18

19 Debt Profile Borrowings by Operation H1 14 (AED m) Borrowings by Currency H ,495 MAD 14% Others, 10% USD 7% EGP 6% 4,642 1,812 1,740 1, EURO 65% (1) (2) Group MT Egypt AT Afghanistan Pakistan EIP Tanzania Sri Lanka Debt by Source H1 14 (AED m) Repayment Schedule 15,495 18,296 9,899 5, ,999 Bonds Bank Borrowings Vendor Financing Others FY'14 FY'15 FY'16 Beyond (1) West Africa Countries are Benin, Central African Republic, Cote d Ivoire, Gabon, Niger, Togo. (2) Advances from non controlling interest from minority shareholders of Etisalat Pakistan International. 19

20 Country by Country Financial Review 20

21 UAE: Disciplined execution drives growth in revenue and profitability FY 11 FY 12 FY 13 FY Growth H1 13 H1 14 YoY Growth Subs (1) (m) % % Revenue (AED m) 23,004 22,747 24,763 +9% 12,311 13,337 +8% EBITDA (AED m) 13,256 13,456 14,047 +4% 7,109 7,575 +7% EBITDA Margin 58% 59% 57% -1pp 58% 57% -1pp Net Profit 5,969 5,907 6,094 +3% 3,058 3, % Net Profit Margin 26% 26% 25% -1pp 25% 25% 0pp CAPEX 1,767 1,795 2, % 1, % CAPEX/Revenue 8% 8% 8% 0pp 9% 7% -2pp H Highlights Subscriber growth steered by mobile and elife segments Strong revenue growth attributed to fixed and mobile data and handset sales Improved EBITDA level as a result of improvement in revenue trends and cost discipline Healthy EBITDA margin at 57% despite higher proportion of low margin handset sales and higher interconnection costs Net profit improvement attributed to higher EBITDA level and lower operating expenses Capex spend focused on network modernization Macro and Market Snapshot (2013) (2) Population (m) 9.3 GDP per Capita($) 43,043 GDP Growth (%) 5.2 Penetration Rate (%) M 201; F 25 ARPU ($) 31.0 Number of Players 2 Country Position 1 (1) Subscriber numbers calculated as aggregate number of GSM, fixed, fixed broadband and elife lines generating revenue during the last 90 days. (2) Source: IMF, Business Monitor International 21

22 UAE: Subscriber growth in mobile and elife segments Mobile Subs (m) & ARPU (1) (AED) Fixed Subs (m) & ARPL (2) (AED) Q2'13 Q1'14 Q2'14 Postpaid Prepaid Blended ARPU Q2'13 Q1'14 Q2'14 Fixed ARPL elife Subs Double & Triple-Play (m) Fixed Broadband(3) Subs (m) Q2'13 Q1'14 Q2'14 E-Life (2P & 3P) ARPL Q2'13 Q1'14 Q2'14 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. 22

23 UAE: The Leading Telecom Operator Mobile Market Share (%) Fixed Market Share (1) (%) Subscribers Revenue Subscribers Revenue 13% 17% 43% 57% 37% 63% 87% 83% H1 14 EBITDA Margin (%) Q2 14 ARPU (AED) Mobile Fixed 57% % 103 NA Etisalat Du 1 1 Source: Latest company filings (1) Fixed line subscribers include Etisalat fixed broadband and elife double and triple play subscribers. 23

24 Egypt: Top-line growth coupled with margin expansion Total Subscribers (1) (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) ,500 5,075 4,742 1,129 1,174 1,229 39% 39% 36% 2,291 2,354 25% 23% 26% % 39% 17% 17% Revenue EBITDA % CAPEX CAPEX/Revenue H Highlights Growing subscriber base with focus on post-paid segment Revenue growth Y/Y attributed mainly to data segment Strong improvement in EBITDA level in absolute terms underpinned by effective cost measures EBITDA margin expanded by 4 points Y/Y Capex/Revenue Ratio stable at 17% with capital spending mainly focussed on network expansion Macro and Market Snapshot (2013) (2) Population (m) 82.1 GDP per Capita($) 3,160 GDP Growth (%) 2.2 Penetration Rate (%) 122 ARPU ($) 3.3 Number of Players (Mobile) Country Position 3 3 (1) Subscribers and market share data as per statistic published by the Ministry of Information and Technology (2) Source: IMF, Business Monitor International 24

25 Asia: Stable EBITDA margins with investment in 2G/3G licenses in Pakistan Pakistan, Afghanistan and Sri Lanka Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) ,269 2,252 1,801 71% ,414 1,564 11% 31% 3,293 3,162 32% 32% 46% % % % -13% Revenue EBITDA % CAPEX CAPEX/Revenue H Highlights Macro and Market Snapshot (2013) (1) Subscriber growth impacted by operations in Pakistan Revenue growth was impacted by adverse competitive environments in Afghanistan and Sri Lanka and currency devaluation in Pakistan Maintained stable EBITDA margins at 32% level Higher capital spending in H1 14 driven by Pakistan operations Afghanistan Pakistan Sri Lanka Population (m) GDP per Capita ($) 770 1,223 3,168 GDP Growth (%) Penetration Rate (%) 72 M 72 / F ARPU ($) Number of Players (Mobile) Etisalat Position 3 F1/M3 3 (1) Source: IMF, Business Monitor International 25

26 Pakistan: Capitalizing on strategic investments in 3G and fixed broadband Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) ,597 4,653 4,761 2, % 28% 35% 2,503 2,490 36% 36% 917 1,094 1, % 20% 24% 29% 26% Subscriber growth impacted by cleaning exercise of mobile subscribers Revenue growth in local currency underpinned by growth in fixed data Ufone was the first operator to launch 3G services in Pakistan EBITDA margin stable at 36% level despite higher network costs, regulatory costs and staff cost Significant increase in capital spending due to 3G license acquisition and 2G license renewal during Q2 14 (1) Source: IMF, Business Monitor International Revenue EBITDA % CAPEX CAPEX/Revenue H Highlights Macro and Market Snapshot (2013) (1) Population (m) GDP per Capita ($) 1,223 GDP Growth (%) 3.6 Penetration Rate (%) Mobile 72 / Fixed 3 ARPU ($) 2.0 Number of Players (Mobile/ Fixed) 5 Country Position Fixed 1/Mobile 3 26

27 Africa: Increased footprint in West Africa by 4 Countries Benin, Burkina Faso, CAR, Gabon, Ivory Coast, Mali, Mauritania, Morocco, Niger, Togo, Tanzania, & Sudan Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) 3,503 1, ,549 2,775 2,793 24% 26% 19% 1,388 24% 43% 24% % % 44% 31% 45% % 17% H Highlights Revenue EBITDA % CAPEX CAPEX/Revenue Macro and Market Snapshot (2013) (1) Africa Cluster operational and financial results benefited from the consolidation of Maroc Telecom effective from May 2014 Excluding the impact of Maroc Telecom: Subscriber growth is flat impacted by SIM registration in Tanzania Revenue growth is flat EBITDA margin is stable at 24% level Capex/revenue ratio is 17% Atlantique Telecom Countries Maroc Telecom Countries Tanzania Sudan Population (m) GDP per Capita ($) 3,299 14, ,587 GDP Growth (%) Penetration Rate (%) ARPU ($) Number of Players Between 2 and 7 Between 3 and Etisalat Position In the top 3 in each country (1) Source: IMF, Business Monitor International, Maroc Telecom H results presentation 27

28 Maroc Telecom: Leadership position across all markets Burkina Faso, Gabon, Mali, Mauritania and Morocco Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) 13, ,686 12,477 2,478 2,339 2, ,256 6,550 1, % 56% 57% 58% 55% 19% 18% 17% 19% 14% Revenue EBITDA % CAPEX CAPEX/Revenue H Highlights Started to consolidate the results of Maroc Telecom from May 2014 Strong subscriber acquisition with Y/Y growth exceeding 9% Revenue growth driven by strong performance of international operations Maintained healthy EBITDA margin at 55% level Capital spending is focused on deployment of ultra-high-speed fixed broadband and mobile services Macro and Market Snapshot (H1 14) (1) Morocco Burkina Faso Gabon Mali Mauritania Population (m) GDP per Capita ($) 5,699 1,667 20,612 1,157 2,349 GDP Growth (%) Penetration Rate (%) M132/F ARPU ($) Number of Players Country Position (1) Source: IMF, Business Monitor International, Maroc Telecom H results presentation 28

29 Nigeria: Continued strong operational and financial performance trend Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) ,034 2,957 3,341 2,106 1,300 1,533 1, % 6% 1% 1,564 4% 13% 64% 52% 45% % % Highlights Revenue EBITDA % CAPEX CAPEX/Revenue Macro and Market Snapshot (2013) (1) Strong growth in subscriber base driven by new services and products launched, better quality network and MNP Significant revenue growth of 35% driven by improved commercial activities Continuous increase in EBITDA margin attributed to improvement in revenue trend and operational cost control Maintained investment in network quality Population (m) GDP per Capita ($) 2,897 GDP Growth (%) 5.5 Penetration Rate (%) 73% ARPU ($) 6.8 Number of Players 4 Country Position 3 (1) Source: IMF, Business Monitor International 29

30 2014 Outlook : Management Guidance (1) Financial Objective Guidance 2014 Actual 6M 2014 Revenue Growth % 25% - 27% 15% EBITDA Margin% 49% - 50% 48% CAPEX / Revenue Ratio 18% - 20% 19% (1) Above guidance includes consolidation of Maroc Telecom Group with effect from May

31 Etisalat Investor Relations Website: 31