Q Results. Emirates Integrated Telecommunications Company PJSC July 2014

Transcription

1 Q2 214 Results Emirates Integrated Telecommunications Company PJSC July 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 Q2 Results 4 Market Information 8 Financial Summary 1 Strategy and Outlook 22 3

4 4 Q2 Financial Highlights Total Revenue (AED M) EBITDA (AED M) Net Profit before Royalty (AED M) Free Cash Flow (AED M) Mobile 9-day active subscribers (s) +13.7% +17.9% +22.% % +7.6% 2,66 3,24 1,94 1, (16) 6,654 7,161 (333) Q2 213 Q2 214 Q2 213 Q2 214 Q2 213 Q2 214 Q2 213 Q2 214 Q2 213 Q2 214 Healthy revenue growth All segments showing healthy growth in revenue Mobile service data revenues continues to grow at 18.6% in Q2 214 from Q2 213 Positive EBITDA Favourable improvement in operating expenses as a % of revenue from 26.3% in Q2 213 to 23.9% in Q2 214 through efficiency achieved in various parts of the business as well as the favorable settlements of prior year provisions Strong net profit Continued growth in net profit after solid start in 214 Scheduled payments made Royalty payment of AED 1.1 billion made in Q2 214 AED.8 billion in Q2 213 TRA payment also made in Q2 214 for AED 231m Mobile subscribers steady increase Total mobile subscriber base grew to 7.1 million mobile customers My Number My Identity deadline during Q2 214 resulted in churn of 468K active subscribers in line with TRA regulations

5 5 6 months Financial Highlights Total Revenue (AED M) EBITDA (AED M) Net Profit before Royalty (AED M) Free Cash Flow (AED M) Mobile 9-day active subscribers (s) +13.1% +15.2% +18.6% -63.8% +7.6% 5,287 5,979 2,147 2,473 1,53 1,814 6,654 7, mo mo mo mo mo mo mo mo mo mo 214 Healthy revenue growth All segments showing healthy growth in revenue Mobile service data revenues continues to grow at 19.9% in H1 214 from H1 213 Positive EBITDA Operating expenses as a % of revenue dropping from 26.4% in H1 213 to 24.3% in H1 214 through efficiency achieved in various parts of the business Strong net profit Continued growth in net profit after solid start in 214 Scheduled payments made Royalty payment of AED 1.1 billion made in Q2 214 AED.8 billion in Q2 213 Mobile subscribers steady increase Total mobile subscriber base grew to 7.1 million mobile customers My Number My Identity deadline resulted in 468K churn in line with TRA regulations

6 Progressive Dividend Payment 6 Proposed dividend payment* AED per share Q2 213 Q2 214 Special Dividend (one-off payment).1 - Interim Dividend Total Sustained focus on creating shareholder value Proposed return of AED 549 million to shareholders, subject to OGM approval Du commenced an interim dividend programme from Q2 213 *An Ordinary General Meeting will be held on 25 th August To approve the proposed dividend payment. The company will send an official notification to shareholders prior to the OGM date

7 Contents Slide Highlights of Q2 Results 4 Market Information 8 Financial Summary 1 Strategy and Outlook 22 7

8 UAE Market Overview Market share consolidation increasing emphasis on growing revenue share UAE Mobile Subscribers - Market share quarterly evolution* UAE Telecom Market - Revenue share quarterly evolution 6.% 55.% 5.% 45.% 4.% 35.% 54.6% 45.4% Etisalat du Q2-13 Q3-13 Q4-13 Q1-14 Q % 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% 7.3% 29.7% Etisalat du Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Source: TRA Market Statistics January 214, Internal estimates, Etisalat Quarterly/ annual financial reports * Etisalat subscribers are estimates du Mobile Subscribers Active 9 Days (s) du Total Revenues (AED M) 7,8 7,6 7,4 7,2 7, 6,8 6,6 6,4 6,2 7,55 7,244 7,161 6,896 6,654 (213 e ) Population: 8.3 million Population growth: 3% GDP: US$ 396 b GDP per capita: US$ 43,876 3,1 3, 2,9 2,8 2,7 2,6 2,5 2,4 2,66 2,643 (Source: TRA January 214, UAE s National Bureau of Statistics (NBS), IMF: World Economic Outlook April 214, Internal estimates) 2,869 2,955 3,24

9 Contents Slide Highlights of Q2 Results 4 Market Information 8 Financial Summary 1 Strategy and Outlook 22 9

10 Total Revenues Mobile and Fixed revenues contributing to growth in revenue Quarterly Revenue (AED M) Like for Like Revenue Breakdown Quarter Change (AED M) +13.7% 2,869 2,955 3,24 2, % 34.4% 12.3% -1.6%.8% 3,24 2,66 2,643 Yearly Revenue (AED M) Revenue Split Q ,815 8,539 9,842 1,799 5, % 5,979 Fixed 17.9% Wholesale 5.9% Broadcasting 1.3% FY 21 FY 211 FY 212 FY mo mo 214 Mobile 74.8% 1

11 Revenue Drivers - Mobile Consistent growth in mobile despite deactivated subscribers due to, My Number My Identity Quarterly Mobile Revenues (AED M) Yearly Mobile Revenues (AED M) 2,66 2, % 2,195 2,228 2,263 5,58 6,541 7,632 8,365 4, % 4,491 FY 21 FY 211 FY 212 FY mo mo 214 Mobile Subscribers Active 9 Days ( ) Quarterly Mobile ARPU (AED) 6,654 6, % 7,244 7,55 7, %

12 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 68.8% % Q2 213 Q2 214 Total Minutes of Use - Mobile Postpaid Prepaid Focus on post-paid customers Continued strategy focus on post-paid customers drove contribution of postpaid revenue to the total mobile revenue growth up from 46.5% in Q2 213 to 68.8% in Q2 214 Overall minutes of use stable Increased emphasis on high value customers, usage among postpaid users increased to 625 minutes per subscriber from 65 in Q2 213 Prepaid minutes of use per subscriber maintained at 27 minutes per subscriber 12

13 Revenue Drivers Fixed Strong growth in overall fixed business Fixed line subscription Quarterly Fixed Revenue (AED M) Quarterly Fixed Line Subscribers ( ) +3.1% Yearly Fixed Revenue (AED M) Fixed Line Subscriber Breakdown Quarter Change ( ) 1,172 1,458 1,63 1, % 1, % 37.5% 24.4% -18.4% FY 21 FY 211 FY 212 FY mo mo 214 Q2 213 Landline Broadband TV Call Select Q

14 Revenue Drivers Broadcast & Wholesale Strong growth in wholesale driven by international hubbing Quarterly Wholesale Revenues (AED M) Quarterly Broadcast Revenues (AED M) +33.7% -12.5% National Wholesale International Hubbing Yearly Wholesale Revenues (AED M) Yearly Broadcast Revenues (AED M) % % FY 21 FY 211 FY 212 FY mo mo 214 FY 21 FY 211 FY 212 FY mo mo

15 Gross Margin Steady gross margin performance Quarterly Gross Margin (AED M) and Gross Margin % Yearly Gross Margin (AED M) and Gross Margin % 2,2 2, 1,8 1,6 1,4 1, % 1,919 1,915 1,794 1, % 67.4% 66.9% 64.8% 2, % 8.% 75.% 7.% 65.% 6.% 55.% 5.% 45.% 8, 7, 6, 5, 4, 3, 2, 1, 67.5% 4,6 69.1% 5,91 6, % 7, % +1.8% 67.1% 3, % 3, % 7.% 65.% 6.% 55.% 5.% 45.% 4.% 35.% 1, 4.% FY 21 FY 211 FY 212 FY mo mo % Strong growth in gross margin Quarterly gross margin saw a 12.2% increase from Q2 213 Gross margin % decreased by 1.4% due to a change in the mix of revenues in comparison with the same period last year. However, absolute gross margin saw strong double digit growth 15

16 Gross Margin Breakdown by Segment Strong growth in mobile, fixed and wholesale business Quarterly Mobile Gross Margin (AED M) Quarterly Fixed Gross Margin (AED M) +7.2% +28.6% 1,6 1,55 1,5 1,45 1,4 72.7% 1, % 1,431 1, % 1, % 1, % 75.% 73.% 71.% 69.% 67.% % % 8.1% % 79.7% 1.% 95.% 9.% 85.% 8.% 75.% 1,35 65.% 7.% Quarterly Wholesale Gross Margin (AED M)* Quarterly Broadcasting Gross Margin (AED M) % -18.3% % % 43.6% % % % 37.6% 25.% % 24.5% 25.% 18.6% 2.% 16.4% 5 15.% 6.% 5.% 4.% 3.% 2.% *AED 1m reclassification from Mobile to Wholesale business 16

17 Overheads Continuing improvement in operational efficiencies 85 Quarterly Overheads (AED M) % Overheads as a % of Revenue 6 mo mo 214 Manpower 12.3% 11.4% Teleco license & related fees 2.5% 2.6% % 26.3% 27.2% 24.8% 23.9% 35.% 3.% 25.% 2.% Sales & marketing 2.3% 2.2% Bad debts.3%.5% Network operations & maintenance 7.1% 6.3% Rent & utilities 1.%.6% Miscellaneous.8%.8% Total Overheads as % of Revenue 26.4% 24.3% Yearly Overheads (AED M) Strategy focus on improving operational efficiencies 3, 2,5 2, 1,5 1, 5 2, % +4.% 2,984 2,899 2,955 1, % 1, % 27.4% 26.4% 24.3% 5.% 4.% 3.% 2.% 1.% Overhead savings coming from manpower cost due to efficiency in different areas of business FY 21 FY 211 FY 212 FY mo mo 214.% 17

18 Profitability Solid performance with significant growth of 22% on Net Profit before Royalty Quarterly EBITDA (AED M) Quarterly Net Profit before Royalty (AED M) +17.9% +22.% 1,4 1,2 1, ,94 1,64 1, % 4.2% 37.7% 1,183 4.% 1, % 5.% 45.% 4.% 35.% 3.% 25.% 1, % 29.% % % % 35.% 3.% 25.% 2.% 15.% 2.% 1.% Yearly EBITDA (AED M) Yearly Net Profit before Royalty (AED M) 4,5 4, 3,5 3, 2,5 2, 1,5 1, % 4,292 3,999 2, % 41.4% 2,473 2,18 4.6% 39.7% 2, % 34.2% FY 21 FY 211 FY 212 FY mo mo % 5.% 4.% 3.% 2.% 1.%.% 3, 2,5 2, 1,5 1, % 2,823 3,14 1,812 1,814 1,53 1, % 27.9% 28.9% 3.3% 18.% 21.2% FY 21 FY 211 FY 212 FY mo mo % 5.% 4.% 3.% 2.% 1.%.% 18

19 Net Profit after Royalty Impact of royalty regime between 213 and 214 normalised for comparison purposes Quarterly Net Profit after Royalty (AED M) Quarterly Royalty Compared (AED M)* +24.9% % 42.3% 34.9% 35.1% 37.6% % 45.% 35.% 25.% 15.% 5.% -5.% NP based on 213 Royalty regime NP based on 214 Royalty regime Royalty Royalty as % of net profit before Royalty Royalty Methodology Compared Royalty Royalty rate on Regulated Revenue 7.5% 1.% 12.5% 15.% Royalty rate on Net Profit 2.% 25.% 3.% 3.% *213 Royalty normalized for 212 adjustment 19

20 Capital Investments Quarterly CapEx Additions (AED M) Year to Date CapEx Additions (AED M) -1.5% 2, 18.3% -41.3% 1, % 1, ,5 17.5% 1, % 1, % 1, % 45 2.% 15.% 1.% 5.% FY 21 FY 211 FY 212 FY mo mo 214.% CapEx Additions (AED M) CapEx Additions as % of Revenue Q2 214 CapEx Spend by Segment Fixed 3.8% Mobile 47.4% IT 17.8% Broadcasting 2.3% Others 1.7% Focus to further improve key infrastructure CapEx spend for Q2 214 at AED 289m in comparison with AED 323m in Q Due to seasonality of the projects the CapEx spend expected to increase in the remainder of the year For the remainder of 214, CapEx will further focus on the mobile 3G and LTE rollout including improvements to the products and services to enhance customer experience Investment in new innovative services for our consumer and enterprise customers key priority going forward 2

21 Cash & Debt Overview Royalty and TRA payments made in Q2 214 Quarterly Free Cash Flow (AED M) Year to Date Free Cash Flow (AED M) 2, 1,5 1, 5 (5) (1,) 787 1, ,523 (16) 1, (69) (332) (254) (425) (43) (263) (333) 1,2 1, (2) (4) (6) 5, 4, 3, 2, 1, (1,) (2,) 2,329 1,748 1,377 1,587 2,923 3,18 3,797 1, (1,551) (1,546) (1,27) (1,468) (789) (666) 444 FY 3621 FY 211 FY 212 FY mo mo 214 2,5 2, 1,5 1, 5 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 ECA - NSN KFW Vendor - CISCO Capital DBS - Bilateral Loan SCB-Bilateral Loan Club Facility - Long Term Loan TOTAL DEBT FACILITIES 4,81 4,85 TOTAL CASH IN HAND 4, ,18 1,564 FY14 FY15 FY16 FY17 FY18 and beyond 21

22 Contents Slide Highlights of Q2 Results 4 Market Information 8 Financial Summary 1 Strategy and Outlook 22 22

23 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 Maximize return on investments and cash flow generation for our shareholders 23

24 Q&A

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