Etisalat Group 3Q 2016 Results Presentation 27 October 2016
Disclaimer Emirates Telecommunications Group Company PJSC and its subsidiaries ( Etisalat Group 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
1. Business Overview Saleh Abdulla Alabdooli Chief Executive Officer Etisalat Group
Etisalat Group Financial Highlights AED Million Q3 2016 Growth YoY% Growth QoQ% 9M 2016 Growth YoY% Revenue EBITDA EBITDA Margin Net profit Net profit Margin Capex Capex/Revenue 13,244 +3% -1% 6,816 +3% 0% 51% 0pp 0pp 1,870-4% -19% 14% -1pp -3pp 1,789-7% 0% 14% -1pp 0pp 39,423 +2% 20,038 0% 51% -1pp 6,186 +9% 16% +1pp 5,223-2% 13% 0pp 3Q2016 Highlights Revenue growth in all key markets in local currencies EBITDA growth with stable EBITDA margin Net profit decline is attributed to one-off non-recurring item of sale of Canar; Adjusted net profit would have resulted in 16% Y/Y growth. Consolidated capital expenditure is slightly lower with higher spending in the domestic operations (1) Financial figures are restated to exclude the impact of discontinued operations 4
Q3 2016 Highlights Domestic Operations Continued positive trends in subscribers acquisition Data monetisation is driving revenue growth Sustained Y/Y profitable growth Investing for the future launching Etisalat Digital International Operations Continued revenue growth and increased profitability in Maroc Telecom Group Strong performance in Egypt and acquisition of 4G license Enhanced results in the mobile segment in Pakistan Strategic Priorities On track to deliver 2016 financial guidance One more step in completed in portfolio optimisation Defend leadership position in key markets Focus on cash flow generation and profitability 5
2. Financial Overview Serkan Okandan Chief Financial Officer Etisalat Group
Etisalat Group Financial Highlights Revenue Breakdown 3Q 2016 (AED m) EBITDA Breakdown 3Q 2016 (AED m) 25% 8% 8% 24% 7% 5% 4% 13.2 bn 56% 3% 6.8 bn 60% UAE MT Egypt Pakistan Others +3% +3% UAE MT Egypt Pakistan Others YoY Growth UAE +4% YoY Growth UAE -1% MT Group (LC +2%) +2% MT Group (LC +2%) +1% Egypt (LC +9%) -4% Pakistan (LC +2%) +1% Egypt (LC +10%) -3% Pakistan (LC +24%) +22% (1) Financial figures are restated to exclude the impact of discontinued operations Represents others 7
Int l Operations Financial Highlights 3Q 2016 Revenue (AED m)/ebitda (AED m) / EBITDA Margin (%) Maroc Telecom Group Revenue & EBITDA (AED m) / EBITDA Margin (%) / YoY Growth % 3Q 2016 YoY Growth in AED Growth in MAD 44% 45% 45% 58% Revenue 3,267 +2% EBITDA 1,658 +1% 2% 2% 5,598 5,458 5,604 Etisalat Misr EBITDA Margin 51% 3Q 2016 0pp YoY Growth in AED 0pp YoY growth in EGP 20 % Revenue 1,094-4% EBITDA 484-3% +9% +10% 2,473 2,459 2,542 Pakistan EBITDA Margin 44% 3Q 2016 0pp YoY Growth in AED 0pp YoY growth in PKR 19 % Revenue 1,047 +1% EBITDA 354 +22% +2% +24% Revenue EBITDA EBITDA Margin 34% +6pp +6pp (1) Financial figures are restated to exclude the impact of discontinued operations 8
Group Revenue Revenue (AED m) and YoY growth (%) Sources of Revenue growth Q3 16 vs Q3 15 (AED m) 12,883 13,326 13,244 12,883 293 61 44 7 45 13,244-1% 2% 3% UAE 56% Domestic vs. Int l Revenue YoY growth % Revenue by Cluster (Q3 16) Int'l 42% Others 2% International MT 58% Egypt 20% Pakistan 19% Others 3% Note: (1) Financial figures are restated to exclude the impact of discontinued operations (2) Others revenues consist of domestic non-telecom operations, other international operations, management fees, etc. Q3'15 UAE MT Group Egypt Pakistan Others Q3'16 Highlights In Q3 16 consolidated revenue increased Y/Y by 3% attributed to UAE and MT Group operations Growth in the UAE is attributed to higher fixed and mobile broadband and wholesale revenues. Revenues from international consolidated operations is flat, resulting in 42% contribution to Group revenues, 1 point lower than Q3 15 attributed to currency devaluation Growth in MT Group mainly driven by int l operations Revenue growth in Egypt impacted by currency devaluation; continued to grow in local currency Revenue growth in Pakistan driven by mobile operations 9
Group EBITDA EBITDA (AED m) & EBITDA Margin Sources of EBITDA growth Q3 16 vs Q3 15 (AED m) 6,631 6,799 6,816 6,631 23 167 6,816 64 55 15 51% 51% 51% EBITDA EBITDA Margin EBITDA by Cluster (Q3 16) Domestic vs. Int l International Q3'15 UAE MT Group Egypt Pakistan Others Q3'16 Highlights In Q3 16 consolidated EBITDA increased Y/Y by 3% to AED 6.8 billion UAE 60% Int'l 37% Others 3% MT 65% Egypt 19% Pakistan 14% Others 2% EBITDA in the UAE impacted by higher cost of sales and operating expenses EBITDA of consolidated international operations increased Y/Y by 3%, resulting in 37% contribution to Group EBITDA Positive contribution from Maroc Telecom Group and Pakistan Egypt impacted by currency devaluation; despite growth in local currency Note: (1) Financial figures are restated to exclude the impact of discontinued operations (2) Others revenues consist of domestic non-telecom operations, other international operations, management fees, etc. 10
Group CAPEX CAPEX (AED m) & CAPEX/Revenue Ratio (%) Sources of Capex growth Q3 16 vs Q3 15 (AED m) 1,913 1,795 1,789 1,913 1,789 203 250 40 33 4 15% 13% 14% CAPEX CAPEX/Revenue Q3'15 UAE MT Group Egypt Pakistan Others Q3'16 Domestic vs. Int l CAPEX by Cluster (Q3 16) International Highlights In Q3 16 consolidated capex decreased Y/Y by 7% resulting in Capex/ Revenue ratio of 14%. UAE 52% Int'l 48% MT 62% Egypt 16% Pakistan 22% Note: (1) Financial figures are restated to exclude the impact of discontinued operations (2) Others revenues consist of domestic non-telecom operations, other international operations, management fees, etc. Higher capital spend in the UAE due to acceleration in capitalisation of projects Capital expenditure in international operations decreased by 29% and contributed 48% of consolidated Group Capex Lower capex in MT focused on enhancing networks speed in Morocco and networks expansion in Int l operations Lower capex in Egypt focused on network capacity Lower capex in Pakistan focused on mobile network 11
Group Balance Sheet & Cash Flows Balance Sheet (AED m) Dec-15 Sep-16 Investment Grade Credit Ratings Cash & bank Balances 21,422 19,879 Total Assets 128,265 126,387 AA-/Stable Total Debt 22,080 23,202 Net Cash / (Debt) (658) (3,324) Total Equity 59,375 57,538 Aa3/Negative (1) Net cash position (AED m) Sep 15 Sep 16 Operating 11,566 11,547 Investing (5,212) (4,880) Financing (6,742) (8,403) Net change in cash (388) (1,736) Effect of FX rate changes 282 135 Reclassified as held for sales (1) 56 Highlights Strong liquidity position Maintained low net debt to EBITDA level Stable operating cash flow Higher financing cash flow due to lower net borrowing and higher cash dividend payment Ending cash balance 18,277 19,879 (1) Moody s changed its view on the outlook of the UAE and GRE. 12
Debt Profile: Diversified debt portfolio Borrowings by Operation Q3 2016 (AED m) Borrowings by Currency Q3 2016 15,558 USD 23% 4,564 Euro 47% MAD 15% 1,928 1,270 Others 15% Group MT Group Egypt Pakistan Debt by Source Q3 2016 (AED m) Repayment Schedule 14,888 16,571 7,520 4,720 330 582 1,067 961 Bonds Bank Borrowings Vendor Financing Others 2016 2017 2018 Beyond 2018 13
Country by Country Financial Review 14
UAE: Growth in both top and bottom-line Revenue (AED m) / YoY Growth (%) 21,868 22,469 EBITDA (AED m) / EBITDA % 12,393 12,315 58% 56% 55% 57% 55% 7,168 7,718 7,461 9% 8%% 4,138 4,336 4,083 6% 3% 4% 3% 9M'15 9M'16 Revenue YoY growth % 9M'15 9M'16 EBITDA EBITDA % Net Profit (AED m) / Profit Margin (%) CAPEX (AED m) & CAPEX/Revenue Ratio (%) 25% 27% 26% 5,496 5,884 25% 26% 2,256 1,973 1,825 2,057 1,942 737 10% 605 8% 939 13% 10% 9% 9M'15 9M'16 Net Profit Margin % 9M'15 9M'16 Capex Capex/Revenue 15
UAE: Steady growth in subscribers base Mobile Subs (m) & ARPU (1) (AED) Fixed Subs (m) & ARPL (2) (AED) 117 112 112 125 144 136 7.94 8.32 8.37 0.90 0.82 0.81 1.71 1.90 1.91 Postpaid Prepaid Blended ARPU Fixed ARPL elife Subs Double & Triple-Play (m) 398 404 401 Fixed Broadband (3) Subs (m) 498 500 504 0.84 0.91 0.93 1.04 1.08 1.10 E-Life (2P & 3P) ARPL 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. 16
Maroc Telecom: Growth in Morocco and Int l subsidiaries Morocco, Benin, Burkina Faso, CAR, CDI, Gabon, Mali, Mauritania and Togo Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) 50.7 53.0 52.3 9,247 9,587 1,800 1,943 51% 51% 51% 3,206 3,201 3,267 52% 51% 775 24% 21% 638 20% 526 16% 19% 20% 12% 17% 9M'15 9M'16 Revenue EBITDA % EBITDA %2 9M'15 9M'16 CAPEX CAPEX/Revenue Domestic vs. Int l Revenue Breakdown Q3 16 Int l Domestic vs. Int l Capex Breakdown Q3 16 Int l Morocco 58% Int'l 39% Historical subsidiaries 67% New subsidiaries 33% Morocco 58% Int'l 42% Historical subsidiaries 49% New subsidiaries 51% Others -3% 17
Egypt: Strong performance in local currency muted by currency devaluation Total Subscribers (1) (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) 93 96 96 3,298 3,311 540 569 24% 24% 24% 44% 40% 44% 39% 40% 280 1,138 1,052 1,094 176 15% 27% 136 12% 16% 17% 9M'15 9M'16 9M'15 9M'16 Subscribers Market Share Revenue EBITDA % CAPEX CAPEX/Revenue Highlights Revenue growth Y/Y impacted by currency devaluation Maintained strong revenue growth momentum in local currency at 9% level Revenue growth is mainly attributed to increase in data revenues Maintained EBITDA margin Y/Y at 44% level Capital spending focused on network rollout 4G license acquisition in October 2016 (1) Subscribers and market share data as per statistic published by the Ministry of Information and Technology 18
Pakistan: Recovery in the mobile segment Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) 22.8 23.6 22.5 3,245 3,114 666 683 36% 34% 28% 1,040 1,039 1,047 31% 34% 218 21% 286 27% 185 18% 21% 22% 9M'15 9M'16 Revenue EBITDA % 9M'15 9M'16 CAPEX CAPEX/Revenue Highlights Revenue growth Y/Y driven by mobile operations partially offset by fixed segment due to price competition in international voice segment and lower terminal sales EBITDA in absolute terms and EBITDA margin improvements as a results of cost optimization initiatives Lower capex spending focused on enhancing capacity of the mobile network 19
Nigeria: Worsening macro conditions impacting operations Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%) 23.5 22.3 22.4 3,123 2,742 719 545 52% 1,057 998 662 12% 13% 14% 12% 7% 9M'15 9M'16 Revenue EBITDA % 87 23% 175 9% 40 6% 6% 9M'15 9M'16 CAPEX CAPEX/Revenue Highlights Subscriber growth Y/Y in Q3 is impacted by subscriber disconnections in compliance with the regulatory mandated registration process. Resumed Q/Q subscriber growth since Q2 Revenue growth Y/Y impacted by lower subscriber base and lower handset sales EBITDA in absolute term declined due to lower revenue, higher cost of sales and higher rental charges; resulting in decline in EBITDA margin Slowing down capex spend resulted in capex intensity ratio of 6% 20
2016 Actual Against Guidance: Raising the full year management guidance Financial KPI Guidance 2016 In AED Guidance 2016 Constant Currencies (1) Revised Guidance 2016 In AED Revised Guidance 2016 Constant Currencies (1) Actual 9M 2016 In AED Actual 9M 2016 Constant Currencies Revenue Growth % Stable Low single digits around 2% 3%-4% 1.8% 3.4% EBITDA Margin% ~ 48% - 50% around 50% 50.8% CAPEX / Revenue % ~ 18% 18% - 20% 13.4% (1) Constant currency: Financial results assuming constant foreign currency exchange rates used for translation based on the rates in effect for the comparable prior-year period. In order to compute our constant currency results, we multiple or divide, as appropriate, our current AED results by the current year monthly average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior year monthly average foreign exchange rates. 21
Etisalat Group Investor Relations Email: ir@etisalat.ae Website: www.etisalat.com/en/ir/index.jspr 22