Dialog Axiata PLC Sri Lanka's Premier Connectivity Provider Q2 2017 an axiata company
Dialog Group Performance Dialog Axiata Company Performance Subsidiary Performance 2
Dialog Group Performance Highlights Q2 2017 Strong 2 nd Quarter Performance on the back of Aggressive Revenue and Cost Initiatives Solid Growth in Q2 backed by Strong Recovery in Core Revenue Streams and Aggressive Cost Initiatives Q2 2017 Group Revenue at Rs23.0Bn, grew 4% QoQ Q2 2017 Group EBITDA at Rs8.1Bn, grew 13% QoQ Q2 2017 Group PAT grew significantly by 52% QoQ to reach Rs2.3Bn Notwithstanding YTD Revenue and EBITDA improvement, NPAT Impacted by Higher Finance Cost and Depreciation 1H 2017 Group Revenue at Rs45.2Bn, grew 7% YTD 1H 2017 Group EBITDA at Rs15.4Bn, increased by 9% YTD; Group EBITDA Margin improved to 34% 1H 2017 Group PAT declined 21% YTD to reach Rs3.9Bn Majority of Investments Focused Towards Expanding Data Network including Internet Data Centre (IDC) 1H 2017 Capex of Rs9.5Bn up 34% YTD; Capex Intensity at 21% All Business Units Continued to Consolidate Performance Amidst Aggressive Competitive Environment Dialog Mobile continued to grow Subscriber Market Share and Data adoption Data Growth of 12% QoQ and 44% YTD Dialog Broadband Networks (DBN) Second consecutive quarter of positive PAT (Rs568Mn for 1H 2017) Dialog Television (DTV) EBITDA growth of 70% in Q2 2017 with Net Loss declining QoQ Aggressive Subscriber Growth Mobile subscriber base of over 12.4Mn up 1% QoQ and 13% YTD TV subscriber base of over 910k up 5% QoQ and 22% YTD Dialog Continued to be in the Forefront of New Technology Adoption Commercial launch of South Asia s first 4.5G TDD LTE network First successful trial of next-generation, Massive MIMO (Multiple-Input Multiple-Output) Technology; Capable of delivering speeds up to 1 Gbps 3
Group Financial Summary Strong Q2 Performance Amidst External Challenges Rs Mn 2Q 17 QoQ 1H 2017 YTD Revenue 23,012 4% 45,177 7% EBITDA 8,130 13% 15,351 9% PAT 2,346 52% 3,893-21% PAT (Norm) 1 2,607 44% 4,418-15% EBITDA Margin 35.3% 2.8pp 34.0% 0.6pp PAT Margin 10.2% 3.2pp 8.6% -3.1pp ROIC 13.5% 1.6pp 13.5% -2.7pp QoQ : All Key Performance Indicators improved on a QoQ basis; Uplift in Revenue and efficient cost management driving QoQ performance, further benefited by lower unrealised forex losses YTD : Revenue and EBITDA Improved by 7% and 9% respectively while PAT impacted by increase in depreciation, net finance cost and unrealised forex losses 1 Normalised for non-cash translational foreign exchange losses 4
Group Revenue Up by 4% QoQ led by Strong Recovery in Core Revenue Streams; Data Growth of 12% QoQ while Drop in Termination Curtailed to 2% Strong Recovery of Core Revenue Streams Amidst Constrained Consumer Spending +9% +7% +4% 45,177 42,222 23,012 22,165 21,065 Increase in Consumption Taxes continued to moderated revenue growth across Mobile, Fixed, Broadband and Pay Television Businesses Mobile Data continued its upward trend, recording a growth of 12% QoQ and 44% YTD driven by increased Smartphone penetration and improved coverage Mobile Voice recovered to 2% QoQ albeit declined 1% YTD Drop in International Termination Revenue curtailed to 2% QoQ through partnerships with key International Retail Operators 4G LTE coverage Expansion driving Fixed Home Broadband Revenue growth of 7% QoQ and 62% YTD Television Revenue grew 1% QoQ on the back of strong growth in Pre-paid subscribers and stabilising ARPUs 5
18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 4,800 4,200 3,600 3,000 2,400 1,800 1,200 600-30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Q2 Profitability Growth Delivered on Solid Revenue Growth and Cost Efficiencies; EBITDA Margin Improved 2.8pp QoQ Strong EBITDA Growth and Improved EBITDA Margins PAT Improved by 52% QoQ while YTD Decline led by Higher Depreciation and Finance Cost +15% +9% +3% -21% +13% 15,351 14,076 45.0% +52% 3,893 4,958 8,130 7,221 7,057 35.3% 32.6% 33.5% 34.0% 33.3% EBITDA EBITDA Margin 35.0% 25.0% 2,346 2,287 1,546 10.2% 10.9% 11.7% 7.0% 8.6% PAT PAT Margin Total Cost Total Cost as a % of Revenue Improved by 2.8pp QoQ on the back of Aggressive Cost Initiatives with Realised Cost Savings of Rs1.3Bn in 1H 2017 Q2 17 Rs14,882Mn As % of revenue 64.7% Q1 17 Rs14,944Mn As % of revenue 67.4% Q2 16 Rs14,007Mn As % of revenue 66.5% YTD 17 Rs29,825Mn As % of revenue 66.0% QoQ -0.4% YoY 6% YTD 6% Direct Expenses 25.4% 26.6% 27.7% 26.0% -1% -0.1% -4% Sales & Marketing 14.2% 15.2% 13.8% 14.7% -3% 13% 15% Network Cost 12.7% 13.5% 11.9% 13.1% -2% 17% 17% Staff Cost 7.3% 8.4% 7.5% 7.8% -9% 6% 8% Overheads 3.5% 3.0% 3.1% 3.3% 21% 25% 35% Bad Debt 1.6% 0.7% 2.5% 1.1% 133% -31% -30% 6
Dialog Contributed Rs19.1Bn to Government Revenue in 1H 2017, Up 13% YTD Dialog Group remitted a total of Rs19.1Bn to GoSL during the six months ended 30th June 2017. Total remittances included direct taxes and levies as well as consumption taxes collected on behalf of the GoSL Payments to GoSL Up 13% In Rs Mn 1H 2017 1H 2016 % Direct Taxes, Fees & Levies 5,674 6,453-12.1 Consumption Taxes collected on behalf of GoSL 13,412 10,464 65.4 Telco Levy 7,001 6,578 6.4 VAT 3,640 1,832 98.7 Total 19,086 16,918 12.8 7
12,0 00 10,0 00 8,00 0 6,00 0 4,00 0 2,00 0-4,300 3,800 3,300 2,800 2,300 1,800 1,300 800 300 (200) Q2 17 Q1 17 Q2 16 1H 1 7 1H 1 6 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Focused Capex Investments to Support Rapid Growth in Mobile Broadband and Home Broadband Revenues. Capex Intensity for 1H 2017 at 21% Capex Investment Focused towards Coverage Expansion for 4G and Fixed LTE Positive OFCF with Strong Operating Cashflows and Focused Capex +33% +34% -84% -60% +39% 9,528-80% 4,257 Capex Intensity 7,091 5,534 3,994 4,148 24% 18% 14% 21% 17% 280 1% 1,429 1,697 1,709 6% 8% 4% 10% OFCF As % of revenue 1H 17 Capex of Rs9.5Bn directed mainly towards investments in High-Speed Broadband infrastructure consisting of capacity upgrades and LTE focused coverage expansion Investment in Data Infrastructure includes: 3G Capacity and Coverage Expansion 4G capacity upgrades and coverage expansion *Capex excluding CPE (Customer Premises Equipment) investments, capex for spectrum acquisition and license renewal 8
Group Net Debt to EBITDA Maintained Below 1.0x with Improved Profitability and Working Capital Management 30 Jun 17 31 Mar 17 30 Jun 16 Gross Debt 33,402 33,041 31,850 Net Debt 28,887 28,919 28,197 Cash and Cash Equivalents 4,515 4,123 3,653 Gross Debt / Equity (x) 0.61 0.59 0.64 Gross Debt/ EBITDA (x) 1.09 1.14 1.13 Net Debt/ EBITDA (x) 0.94 1.00 1.00 Group continued to maintain a strong balance sheet, with Net Debt to EBITDA maintained at below 1.0x Demonstrates the Group s financial strength and capacity to drive business growth via timely and aggressive investments 9
Dialog Group Performance Dialog Axiata Company Performance Subsidiary Performance 10
Dialog Axiata PLC (Company) Dialog Continues to Capture Market Share Despite Aggressive Competitive Environment; Data Driving Recovery in QoQ ARPUs 35, 000 30, 000 25, 000 20, 000 15, 000 12, 000 10, 000 8,0 00 6,0 00 4,0 00 2,0 00 0 Revenue Grew 4% QoQ Driven by Data up 12% and Voice up 2% Data ARPU 1 Driving ARPU Growth Supported by 4G Conversion and Coverage Expansion +8% +4% 19,036 18,333 17,667 37,370 +5% 35,639 450 400 350 300 250 200 150 100 50 392 406 393 375 383 4% 2% 0% 133 128 123 132-3% -5% 120 10% 8% 6% 4% 2% 0% -2% -4% - Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Blended ARPU Blended MOU Blended ARPU Growth -6% Aggressive Subscriber Acquisition led to the Growth in Subscribers QoQ Profitability Improved on the back of Revenue Growth and Cost Initiatives Total subs growth +1% QoQ; +13% YTD Postpaid subs growth +1% QoQ; +7% YTD Prepaid subs growth +1% QoQ; +14% YTD 10,957* 11,313 11,825 12,268 12,429 1,187 1,209 1,253 1,260 1,271 9,770 10,103 10,572 11,008 11,158 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q2 17 QoQ 1H 17 YTD EBITDA 6,454 13% 12,188 +0.1% PAT 2,345 35% 4,083-24% EBITDA Margin % 33.9% +2.6pp 32.6% -1.6pp PAT Margin % 12.3% +2.8pp 10.9% -4.1pp Postpaid Subs Prepaid Subs *Restated 11
Dialog Group Performance Dialog Axiata Company Performance Subsidiary Performance Condensed Version Slide 14 12
Dialog Television Significant Improvement in QoQ EBITDA and PAT Amidst Affordability Pressure and Aggressive Competition 3,0 00 2,5 00 2,0 00 1,5 00 1,0 00 TV Revenues Grew QoQ and YTD Despite Unfavorable Macro Conditions QoQ EBITDA Expanded on the back of Growth in Revenue and Aggressive Cost Initiatives -3% norm 1 +4% -4% norm 1 +4% +1% 3,015 3,140 1,517 1,498 1,563 Q2 17 QoQ 1H 17 YTD EBITDA 110 70% 174-18% PAT -217 30% -528 >-100% EBITDA Margin % 7.2% +2.9pp 5.8% -1.0pp PAT Margin % -14.3% +6.4pp -17.5% -10.3pp Prepaid Subscriber Base Continued to Register Strong Growth of 10% QoQ and 54% YTD (in 000s) 748 314 363 Total subs growth +5% QoQ; +22% YTD Postpaid subs growth +0% QoQ; -2% YTD Prepaid subs growth +10% QoQ; +54% YTD 791 839 867 911 408 440 484 434 428 431 426 427 DTV Revenue improved 1% QoQ led by significant growth in Pre-paid subscribers while YTD revenue dropped 4% as a result of change in accounting for Prepaid CPE sales; Normalised Revenue grew 4% YTD DTV Rebound initiatives gaining traction with QoQ EBITDA improving by 70% leading to a decline in Net Loss by 30% QoQ DTV EBITDA contracted 18% YTD on the back of Rupee depreciation affecting Content and Transponder cost Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Post paid Pre Paid 1 Normalsied for prepaid CPE 13
Dialog Broadband Networks Fixed Business Revenue Growth Underpinned by Home Broadband (HBB) on the back of Network Coverage Enhancements 6,0 00 5,5 00 5,0 00 4,5 00 4,0 00 3,5 00 3,0 00 2,5 00 2,0 00 1,5 00 1,0 00 Fixed Revenue Improvement Driven by HBB Second Consecutive Quarter of Positive PAT on the back of Strong Revenue Growth +34% +36% Q2 17 QoQ 1H 17 YTD +4% 5,940 EBITDA 1,651 10% 3,151 77% 3,028 2,912 2,260 4,355 PAT 331 40% 568 >100% EBITDA Margin % 54.5% +3.0pp 53.0% +12.1pp PAT Margin % 10.9% +2.8pp 9.6% +10.5pp Strong growth in HBB Revenue driving QoQ and YTD Revenue improvement QoQ and YTD EBITDA improvement driven by strong growth in Revenue On the back of healthy EBITDA performance, DBN recorded its second consecutive quarter of positive PAT. Net profit of Rs568Mn for 1H 2017 14
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