Dialog Axiata PLC Sri Lanka's Premier Connectivity Provider Q2 2016 Results 10 th August 2016 an axiata company
Dialog Group Performance Dialog Axiata Company Performance Subsidiary Performance 2
Dialog Group Performance Highlights Dialog Posts Strong 1H despite 2 nd Quarter Challenges Group 1H of 2016 registered strong performance with growth across Mobile, TV and Fixed Businesses 1H Group Revenue at Rs42.2Bn, grew by 20% YTD 1H Group EBITDA at Rs14.1Bn, increased by 18% YTD 1H Group PAT grew significantly by 27% YTD to reach Rs4.9Bn Q2 2016 featured increase in consumption taxes with the introduction of VAT at 15% and NBT at 2% on Telecommunication and DTH Pay TV services and was further affected by impacts arising from the adverse weather condition Q2 Group Revenue remained flat at Rs21.1Bn Q2 Group EBITDA at Rs7.1Bn, up 1% QoQ Q2 Group PAT at Rs2.3Bn declined by 14% QoQ on the back of constrained revenue growth, higher depreciation and unrealised forex losses Dialog Group further strengthened its leadership in Sri Lanka s ICT sector during the quarter YTD Capex of Rs7.1Bn directed mainly towards investments in High-Speed Broadband infrastructure alongside extension and modernisation of its transmission network; Capex Intensity of 17% Commissioned the Ultra High Capacity 100G-Plus Bay of Bengal Gateway (BBG) Submarine Fibre Optic Cable in Q2 2016 with an aggregate investment in excess of USD34.5Mn (Rs5Bn) DBN reported solid EBITDA growth of 27% YTD on the back of growth in fixed LTE revenue, whilst DTV reported revenue growth of 12% YTD Subscriber Growth Parameters Mobile subscriber base surpassed the 11Mn milestone in Q2 16 TV subscriber base of over 748k with over 47k net adds during the quarter 3
Group Financial Summary Rs Mn Q2 16 QoQ 1H 16 YTD Revenue 21,065-0.4% 42,222 20% EBITDA 7,057 1% 14,076 18% PAT 2,287-14% 4,958 27% EBITDA Margin 33.5% 0.3pp 33.3% -0.6pp PAT Margin 10.9% -1.8pp 11.7% 0.6pp ROIC 15.1% -2.2pp 16.2% 2.4pp All financial metrics improved significantly YTD with ROIC improving by 2.4 percentage points Q2 Revenue and EBITDA performance impacted by increase in consumption taxes and adverse weather conditions. Q2 PAT was further diluted by increase in depreciation and unrealised forex losses 4
Q2 2016 Group Revenue remained flat at Rs21.1Bn impacted by introduction of VAT and NBT of 15% and 2% respectively, and adverse weather Group Revenue (Rs Mn) +19% +20% -0.4% 42,222 35,075 17,745 18,816 20,039 21,157 21,065 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 1H 16 1H 15 Introduction of VAT at 15% and NBT at 2% effective 2 nd May 2016 translates into increase in consumption taxes from 12.2% to 31.7% for data service whilst for Voice, Value added (VAS) and Pay TV services, the consumption taxes increased from 27.6% to 49.7% Q2 performance was further affected by impacts arising from the adverse weather conditions that prevailed in the country during the month of May 2016 Group Revenue growth momentum reported in previous quarters was constrained by the aforementioned externalities Prepaid and VAS revenue declined by 6% and 2% QoQ respectively Mobile data growth constrained to 8% QoQ Fixed revenue grew by 10% QoQ on the backdrop of strong growth in fixed LTE revenue Television revenue declined by 1% QoQ 5
14,0 00 12,0 00 10,0 00 8,00 0 6,00 0 4,00 0 2,00 0 - Q2 2016 Group PAT at Rs2.3Bn declined by 14% QoQ on the back of constrained Revenue growth, higher depreciation and unrealised forex losses Group EBITDA and PAT (Rs Mn) +19% +18% +1% 14,076 11,897 EBITDA (Rs Mn) PAT (Rs Mn) 5,919 6,314 5,613 1,907 679 620 7,019 7,057 2,670 2,287 4,958 3,888 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 1H 16 1H 15 EBITDA Margin % 33.4% 33.6% 28.0% 33.2% 33.5% 33.3% 33.9% PAT Margin % 10.7% 3.6% 3.1% 12.6% 10.9% 11.7% 11.1% Cost as a % of Revenue Q2 15 Q1 16 Q2 16 1H 16 1H 15 Total Group Cost 66.6% 66.8% 66.5% 66.7% 66.1% Direct Expenses 29.7% 29.9% 27.7% 28.8% 28.9% Sales & Marketing 13.1% 13.7% 13.8% 13.7% 12.7% Network Cost 9.9% 9.6% 9.8% 9.7% 10.4% Staff Cost 8.0% 7.8% 7.5% 7.7% 8.1% Bad debt 1.1% 1.0% 2.5% 1.7% 1.0% Overheads 4.9% 4.7% 5.2% 5.0% 5.1% Despite Group Revenue remaining flat, Q2 Group EBITDA grew by 1% QoQ on the back of lower operating costs YTD Group EBITDA improvement driven by growth in revenue Group PAT improved by 27% YTD in tandem with strong EBITDA performance while PAT declined by 14% QoQ due to increased depreciation and unrealised forex losses 6
10,0 00 8,00 0 6,00 0 4,00 0 2,00 0-120 % 100 % 80% 60% 40% 20% 0% Focused Capex Investments further Strengthen the Group s Leadership in Sri Lanka s ICT sector Capex (Rs Mn)* / Capex Intensity (%) +17% +41% +34% 10,618 7,091 3,536 3,683 20% 20% 53% 2,942 14% 5,276 4,148 20% 17% 15% Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 1H 16 1H 15 CAPEX CAPEX Intensity YTD Capex of Rs7.1Bn directed mainly towards investments in High-Speed Broadband infrastructure alongside extension and modernisation of the Group transmission network; Capex Intensity of 17% Commissioned the Ultra High Capacity 100G-Plus Bay of Bengal Gateway (BBG) Submarine Fibre Optic Cable in Q2 2016 with an aggregate investment in excess of USD34.5Mn (Rs5Bn) * Capex excluding CPE (Customer Premises Equipment) investments, capex for spectrum acquisition and license renewal 7
Structurally Strong Balance Sheet with Net debt to EBITDA Sustained at 1.0x (Rs Mn) 30 Jun 16 31 Mar 16 31 Dec 15 Gross Debt 31,850 31,540 22,910 Net Debt 28,197 21,799 18,481 Gross Debt / equity (x) 0.64 0.63 0.48 Gross Debt/ EBITDA (x) 1.13 1.12 1.02 Net Debt/ EBITDA (x) 1.00 0.78 0.82 8
Dialog Group Performance Dialog Axiata Company Performance Subsidiary Performance 9
40,0 00 35,0 00 30,0 00 25,0 00 20,0 00 15,0 00 10,0 00 5,00 0 - Dialog Axiata PLC (Company) YTD EBITDA and PAT improvement driven by Revenue Growth +17% +19% -2% 35,639 29,847 Revenue (Rs Mn) EBITDA (Rs Mn) PAT (Rs Mn) 15,157 16,089 17,007 17,972 17,667 4,905 5,581 4,804 6,283 5,898 1,831 1,050 921 3,028 2,322 12,181 9,959 5,350 3,777 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 1H 16 1H 15 EBITDA Margin % 32.4% 34.7% 28.2% 35.0% 33.4% 34.2% 33.4% PAT Margin % 12.1% 6.5% 5.4% 16.8% 13.1% 15.0% 12.7% Increase in consumption taxes coupled with adverse weather conditions constrained consumption resulting in QoQ revenue declining by 2% whilst strong growth in Data and VAS revenues drove the YTD Revenue improvement by 19% QoQ EBITDA declined by 6% on the back of drop in revenue; Contraction of PAT QoQ due to lower EBITDA, higher depreciation and forex losses EBITDA increased by 22% YTD in tandem with revenue growth while PAT grew by 42% YTD backed by strong performance in EBITDA 10
10, 000 8,0 00 6,0 00 4,0 00 2,0 00 0 Mobile Subscriber Growth Continues; up 5% QoQ and 9% YoY No of Mobile Subscribers 000 Blended ARPU (Rs) & MOU Total subs growth +5% qoq; +9% yoy Postpaid subs growth +11% qoq; +17% yoy Prepaid subs growth +4% qoq; +8% yoy 10,142 10,312 1,112 1,135 10,872 10,590 1,141 1,166 11,068 1,298 346 372 378 393 390 9,030 9,177 9,731 9,424 9,770 148 148 140 140 132 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Postpaid Subs Prepaid Subs Blended ARPUs Blended MOUs Mobile subscriber base surpasses 11Mn milestone as at end Q2 16 Growth in Prepaid segment underpins the YoY subscriber growth Impacted by increased consumption taxes and adverse weather conditions, ARPU and minutes of usage declined QoQ 11
Dialog Group Performance Dialog Axiata Company Performance Subsidiary Performance 12
Dialog Television Continues to Consolidate Revenue Growth with Revenue increasing by 12% YTD 3,80 0 3,30 0 2,80 0 2,30 0 1,80 0 1,30 0 800 300 (2 00) 3,70 0 3,20 0 2,70 0 2,20 0 1,70 0 1,20 0 700 200 (3 00) +16% -1% +12% 3,140 2,801 Revenue (Rs Mn) EBITDA (Rs Mn) PAT (Rs Mn) 1,345 1,463 1,516 1,577 1,563 516 202 70 23 31 183 212 114 (228) (26) (243) (184) (182) (46) Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 1H 16 1H 15 EBITDA Margin % 15.0% 4.8% 1.5% 2.0% 11.7% 6.8% 18.4% PAT Margin % -1.9% -16.6% -12.1% -11.5% -2.9% -7.3% 4.1% No of Television Subscribers 000 534 136 Total subs growth +7% qoq; +40% yoy Postpaid subs growth -0% qoq; +9% yoy Prepaid subs growth +18% qoq; +131% yoy 600 184 650 701 748 222 266 314 398 416 428 435 434 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Post paid Pre Paid YTD revenue improvement driven by strong subscriber growth while QoQ revenue impacted by reduced prepaid connection fee revenue Cost expansion arising from aggressive customer acquisition alongside service and product expansion activities resulted in a medium term contraction of EBITDA on a YTD basis Contraction of EBITDA translated to an equivalent negative impact on PAT leading to a net loss of Rs228Mn for 1H 2016 13
4,80 0 3,80 0 2,80 0 1,80 0 800 (2 00) 5,80 0 4,80 0 3,80 0 2,80 0 1,80 0 800 (2 00) Dialog Broadband Networks EBITDA improved significantly QoQ and YTD on the back of Strong uptake of LTE Services +26% +24% +8% 4,355 3,524 Revenue (Rs Mn) EBITDA (Rs Mn) PAT (Rs Mn) 1,791 1,815 1,969 2,095 2,260 1,782 1,402 802 655 814 1,032 750 128 (101) (80) (119) 79 (40) 48 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 1H 16 1H 15 EBITDA Margin % 44.8% 36.1% 41.4% 35.8% 45.7% 40.9% 39.8% PAT Margin % 7.1% -5.6% -4.1% -5.7% 3.5% -0.9% 1.4% Strong growth in fixed LTE revenue driving QoQ and YTD EBITDA improvement YTD PAT registered a net loss of Rs40Mn underpinned by increase in depreciation accruing from Fixed LTE related investments 14
Thank You 15