Etisalat Group. BAML MENA & Frontier Markets Conference th November 2014, Dubai

Transcription

1 Etisalat Group BAML MENA & Frontier Markets Conference th November 2014, Dubai

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 % million USD billion Owned by the Federal Aggregate Subscribers (1) Revenue (2) 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 September 30,2014 (2) Financial Data for FY2013 (3) Share price as of 1-Nov-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 in the 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 $41bn $39bn SABIC QNB $42bn $89bn Etisalat Emaar $25bn $20bn Vodacom $18bn STC $40bn FGB $20bn Mobily Turkcell $16bn $13bn Industries Qatar $32bn NBAD $18bn Maroc Telecom $12bn Al Rajhi $28bn DP World $16bn Ooredoo Zain Du $11bn $10bn $7bn Etisalat Kingdom $25bn $23bn Emirates NBD ADCB $15bn $12bn Vodafone Qatar Global Telecom Telecom Egypt $5bn $3bn $3bn Emaar FGB $23bn $20bn DIB Aldar $8bn $7bn AsiaCell $3bn Saudi Electricity $19bn DFM $6bn Source: Bloomberg Data as at 1-Nov-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 85% 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% Market Share Data as at June

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) 17% % % M' M'14 Dividend Payout Ratio (%) M'14 Dividend (AED bn) & DPS (AED Dividend Yield (%) (8.1) 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 1.08 AA - A+/Stable STC 0.55 A + Aa3/Stable Batelco 1.28 BB + Net Cash (Net Debt) / EBITDA Bharti 2.24 BB x 0.51x Ooredoo 3.19 A M' x Source: Company filings, Bloomberg 12

13 3. Financial Overview

14 Etisalat Group FY 12 FY 13 FY YoY Growth 9M 13 9M 14 9M YoY Growth Q3 13 Q3 14 YoY Growth Subs (m) (1) % % % Revenue (AED m) 32,946 38, % 29,080 35, % 9,594 13, % EBITDA (AED m) 16,855 18, % 14,520 17, % 4,617 6, % EBITDA Margin 51% 49% -3pp 50% 50% 0pp 48% 53% +5pp Net Profit (AED m) 6,742 7,078 +5% 5,625 6, % 1,825 2, % Net Profit Margin 20% 18% -2pp 19% 19% 0pp 19% 18% -2pp EPS (AED) % % % Highlights Subscriber growth positively impacted by consolidation of Maroc Telecom Group Revenue growth led by continued strong performance of UAE operations and consolidation of Maroc Telecom Continued progress in EBITDA level in absolute terms with EBITDA margin expansion through revenue growth Improvement in net profit level (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 Revenue (AED m) and YoY growth (%) 9M 2014 Highlights 32,242 32,946 38,853 29,080 35,723 Sustained revenue growth mainly attributed to good performance of UAE and Egypt, and consolidation of 18% 19% 23% Maroc Telecom Adjusting for Maroc Telecom, revenue 1% 2% growth Y/Y is 5% FY'11 FY'12 FY'13 9M'13 9M'14 UAE 56% Geographical Split of Revenue (9M 14) Domestic vs. Int l Others 1% Int'l 43% Revenue YoY growth % International MT Group (2) 34% Others 10% AT (1) 10% Egypt 23% Pakistan 23% Revenue growth in the UAE of 9% mainly due to strong customer acquisition coupled with strong data revenue performance Revenue from international operations increased Y/Y by 50% and contributed 43% 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 9M 2014 Highlights 15,882 16,855 18,901 14,520 17,782 Consolidated EBITDA increased by 22% Excluding Maroc Telecom, EBITDA growth is 2% EBITDA of UAE operations grew by 7% due to higher revenue and better cost measures 49% 51% 49% 50% 50% FY'11 FY'12 FY'13 9M'13 9M'14 EBITDA EBITDA Margin Geographical Split of EBITDA (9M 14) Domestic vs. Int l International EBITDA of consolidated international operations increased by 97% resulting in 35% contribution to Group EBITDA, an improvement of 13 points compared to 9M 13 Positive contribution from Egypt due to better revenue; Higher network & regulatory costs in Pakistan; Others 1% Others 3% Competitive pressure coupled with the election Egypt 23% process slowed down activities in Afghanistan; and UAE 64% Inter- National 35% MT Group (2) 47% Pakistan 20% Consolidation of Maroc Telecom. EBITDA Margin stable at 50%. AT (1) 7% (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 (%) 9M 2014 Highlights 6,334 6,165 Capital spending focused on license acquisition and renewal, 4,300 4,164 4,187 network deployment and capacity upgrade Capex increased Y/Y by 47% mainly attributed to 3G license 13% 13% 16% 14% 17% acquisition and 2G license renewal in Pakistan and consolidation of Maroc Telecom FY'11 FY'12 FY'13 9M'13 9M'14 UAE 26% Geographical Split of CAPEX (9M 14) Domestic vs. Int l Others 1% Int l 73% CAPEX CAPEX/Revenue AT (1) 7% International MT Group 19% (2) Egypt 15% Pakistan 56% Others 3% On a like for like Capex/Revenue ratio is 17% Capital spending in the UAE focused on enhancing coverage and customer experience Capital expenditure in international operations increased by 68% and contributed 73% of consolidated capex in 9M 14: Higher capex spend in Pakistan due to 3G license acquisition and 2G license renewal; Higher capex spend in Egypt for capacity upgrade; 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 Sept-14 Cash & Cash Equivalent 15,450 15,854 Total Assets 85, ,613 Total Debt 5,872 23,956 Net Cash / (Debt) 9,579 (8,102) Total Equity 49,593 56,770 Highlights Maintained strong cash balance Balance sheet impacted by the consolidation of Maroc Telecom Increase in debt is due to funding the acquisition of 53% stake in Maroc Telecom Net cash position (AED m) 9M 13 9M 14 Operating 7,335 10,783 Investing (3,166) (21,454) Financing (6,275) 10,453 Net change in cash (2,107) (219) Effect of FX rate changes Ending cash balance 11,939 15,854 Operating cash flow impacted by consolidation of Maroc Telecom and other income in Q2 14 Cash flow from investing activities impacted by investment in Maroc Telecom and License acquisition/ renewal in Pakistan Cash flow from financing increased due to the bond issuance 18

19 Debt Profile Borrowings by Operation 9M 14 (AED m) Borrowings by Currency 9M 14 14,540 Others 5% USD 25% 3,793 1,563 1,480 1, EURO 64% EGP 6% Group MT West Africa(1) Egypt Pakistan Afghanistan Sri Lanka Tanzania Debt by Source 9M 14 (AED m) Repayment Schedule 14,540 19,247 8, ,506 1,592 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. 19

20 Country by Country Financial Review 20

21 UAE: Disciplined execution drives growth in revenue and profitability FY 12 FY 13 FY Growth 9M 13 9M 14 YoY Growth Q3 13 Q3 14 YoY Growth Subs (1) (m) % % % Revenue (AED m) 22,747 24,763 +9% 18,475 20,117 +9% 6,165 6, % EBITDA (AED m) 13,456 14,047 +4% 10,686 11,425 +7% 3,578 3,850 +8% EBITDA Margin 59% 57% -1pp 58% 57% -1pp 58% 57% -1pp Net Profit (AED m) 5,907 6,094 +3% 4,633 5,070 +9% 1,575 1,712 +9% Net Profit Margin 26% 25% -1pp 25% 25% 0pp 26% 25% 0pp CAPEX 1,795 2, % 1,506 1,616 +7% % CAPEX/Revenue 8% 8% 0pp 8% 8% 0pp 7% 10% +3pp 9M 2014 Highlights Subscriber growth steered by mobile and elife segments 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 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 (1) growth mainly driven by mobile postpaid and elife segment Mobile Subs (m) & ARPU (1) (AED) Fixed Subs (m) & ARPL (2) (AED) Q3'13 Q2'14 Q3'14 Q3'13 Q2'14 Q3'14 Postpaid Prepaid Blended ARPU Fixed ARPL elife Subs Double & Triple-Play (m) Fixed Broadband (3) Subs (m) Q3'13 Q2'14 Q3'14 E-Life (2P & 3P) ARPL Q3'13 Q2'14 Q3'14 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% 46% 54% 37% 63% 87% 18% 82% 9M 14 EBITDA Margin (%) Q3 14 ARPU (AED) Mobile Fixed 57% 42% 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 (%) % 23% 23% 24% 4,500 5,075 4,742 3,407 3,551 1,129 1,174 1, % 39% 39% 36% 36% 39% 25% 23% 26% 22% 19% FY'11 FY'12 FY'13 9M'13 9M'14 FY'11 FY'12 FY'13 9M'13 9M'14 FY'11 FY'12 FY'13 9M'13 9M'14 Market Subs Market Share Revenue EBITDA % CAPEX CAPEX/Revenue 9M 2014 Highlights Year on year improvement in subscriber market share Revenue growth attributed strong performance of data segment Improvement in EBITDA level underpinned by effective cost measures leading to expansion of EBITDA margin by 3 points Capex/Revenue Ratio at 19% 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 Pakistan: Capitalizing on strategic investments in 3G and fixed broadband Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) 2, ,597 4,653 4,761 3,703 3, % 28% 35% 34% 34% 917 1,094 1, % FY'11 FY'12 FY'13 9M'13 9M'14 FY'11 FY'12 FY'13 9M'13 9M'14 20% 24% 29% 22% FY'11 FY'12 FY'13 9M'13 9M'14 Revenue EBITDA % CAPEX CAPEX/Revenue 9M 2014 Highlights Macro and Market Snapshot (2013) (1) Subscriber growth impacted by cleansing of mobile subscribers base Revenue growth in local currency underpinned by growth in fixed data DSL ad EVO subscribers increased Y/Y by 25% and 48% respectively Ufone was the first operator to launch 3G services in Pakistan EBITDA margin stable at 34% level despite higher network costs, regulatory costs and staff cost Higher Capex due to 3G license acquisition and 2G license renewal 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 (1) Source: IMF, Business Monitor International 25

26 Maroc Telecom: Leadership position in most markets Morocco, Burkina Faso, Gabon, Mali and Mauritania Subscribers (m) Revenue (AED m) / EBITDA Margin 9M 2014 Highlights ,985 12,686 12,477 9,322 9,707 Maintained growth in subscriber base with Y/Y increase of 10% Solid revenue growth in local currency driven by international operations and return to growth in domestic market FY'11 FY'12 FY'13 9M'13 9M'14 55% 56% 57% 58% 55% FY'11 FY'12 FY'13 9M'13 9M'14 Revenue EBITDA % Stabilized Group EBITDA in absolute terms Maintained high EBITDA margin level despite pressure in local market Moroc co 73% Domestic vs. Int l Int'l 29% Others -2% Revenue Breakdown 9M 14 Mali 34% Int l Gabon 20% Others -1% Maurita nia 19% Burkin a Faso 28% 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 26

27 Nigeria: Continued strong operational and financial performance trend Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) ,034-22% 2,957 6% 3,341 1% 2,386 (1%) 3,230 15% 1,300 64% 1,533 52% 1,487 45% % 1,015 31% FY'11 FY'12 FY'13 9M'13 9M'14 9M 2014 Highlights FY'11 FY'12 FY'13 9M'13 9M'14 Revenue EBITDA % FY'11 FY'12 FY'13 9M'13 9M'14 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 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 27

28 2014 Outlook : Full-year outlook reiterated Financial Objective Guidance 2014 Actual 9M 2014 Revenue Growth % 25% - 27% 23% EBITDA Margin% 49% - 50% 50% CAPEX / Revenue Ratio 18% - 20% 17% 28

29 Etisalat Investor Relations Website: 29