Investor Presentation March 2014
Disclaimer This presentation contains forward-looking statements about Global Telecom Holding ( GTH ). Such statements are not historical facts and include expressions about confidence and strategies of management and expectations of management about new and existing programs, technology and market conditions. Although GTH believes its expectations are based on reasonable assumptions, these forwardlooking statements are subject to numerous risks and uncertainties. These statements may not be regarded as a representation that anticipated events will occur or that expected objectives will be achieved. The forward-looking statements in this presentation are only valid until the date of this document and GTH does not undertake to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. This presentation is not an offer to sell securities or the solicitation of an offer to buy securities, nor shall there be any offer or sale of securities in any jurisdiction in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. 2
Agenda 4Q13 Highlights 4 Shareholder Structure 5 Global Presence 6 Market Position 7 GTH Operations 8 Appendix 22 3
4Q13 Highlights Customers 1&2 Total Revenues 3 Group EBITDA 3 & EBITDA Margin 908 46.8% 47.7% 84 89 6% Organic 834 425 3% 397 Organic 4Q12 4Q13 Djezzy 1 : Despite the on-going regulatory restrictions and limitations on 2G, Djezzy increased the customer base by 5% YoY to 17.6 million Mobilink: Customers grew 4% YoY to 37.6 million, as a result of continued churn management coupled with a focus on reactivation offers, the launch of competitive on-net bundles and data products banglalink: Customers base increased 11% YoY to 28.8 million customers, driven by high gross additions, following the launch of different attractive channel and customer promotions 4Q12 Group revenues were adversely impacted by the local currency devaluation against the USD, mainly in Pakistan and Algeria Djezzy: Revenue decreased 3% YoY in local currency, negatively impacted by the restrictions on Djezzy s commercial activities and propositions with the ongoing ban Mobilink: Revenue decreased 6% YoY in local currency, adversely affected by outages due to Mobilink s network swap, unstable security situation, higher withholding taxes, and government requested network shutdowns, and higher power outages banglalink: Revenue decreased 11% YoY in local currency, driven by unstable macro environment alongside the disconnection of suspected VoIP customers as per regulatory measures Reported EBITDA in US dollar decreased 7% YoY to USD 397 million Djezzy: EBITDA decreased 4% YoY in local currency, due to the continued lack of competitive pricing plans for B2B and high value customers, in parallel with the increase in network and IT costs Mobilink: EBITDA decreased 18% YoY in local currency, pressure on top line, higher tax absorption due to the increased sales of low price SIMs, partially offset by lower interconnect cost due to lower outgoing traffic to other operators as a result of attractive on-net offers banglalink: EBITDA decreased 20% YoY in local currency, mostly as result of revenue decline, higher customer acquisition costs and dealer commission on additions 1. As announced on July 1 2013, during an internal investigation with regards to Djezzy s active customers, management found a technical bug that overstated Djezzy s customer base by 1.4 million. The customers base comparative figures for 4Q12 were adjusted accordingly. This event does not impact historical reported revenue or EBITDA, but positively affect MOU and ARPU 2. Total customers in Millions 3. Group indicators in USD Millions 4Q13 4Q12 4Q13 4
Shareholder Structure ALTIMO TELENOR VIMPELCOM FREE FLOAT 56.2% (Economic) 33.0% (E) 10.8% (E) 47.9% (Voting) 43.0% (V) 9.2% (V) 100.0% 100.0% 100.0% 51.9% GTH FREE FLOAT OJSC VIMPELCOM KYIVSTAR WIND ITALY GTH 48.1% 5
Global Presence 1 GTH serves a population of approximately 459 million with an average penetration of 57% CANADA 2 Population: 34.6 million GDP Growth: 1.7% GDP/Capita PPP: USD42,300 Pop. Under 15 years: 15% Mobile Penetration: 85% ALGERIA Population: 38.1 million GDP Growth: 3.3% GDP/Capita PPP: USD7,300 Pop. Under 15 years: 28% Mobile Penetration: 88% ZIMBABWE Population: 13.2 million GDP Growth: 4.4% GDP/Capita PPP: USD600 Pop. Under 15 years: 39% Mobile Penetration: 71% BANGLADESH Population: 163.6 million GDP Growth: 6.1% GDP/Capita PPP: USD2,000 Pop. Under 15 years: 33% Mobile Penetration: 70% PAKISTAN Population: 193.2 million GDP Growth: 4.4% GDP/Capita PPP: USD3,100 Pop. Under 15 years: 34% Mobile Penetration: 68% BURUNDI Population: 10.9 million GDP Growth: 4.0% GDP/Capita PPP: USD600 Pop. Under 15 years: 46% Mobile Penetration: 24% CENTRAL AFRICA REPUBLIC Population: 5.2 million GDP Growth: 4.1% GDP/Capita PPP: USD900 Pop. Under 15 years: 41% Mobile Penetration: 18% 1. Figures from CIA factbook. Mobile Penetration are based on December 31, 2013 customers figures and market share 2. GTH has 65% indirect economic ownership in Globalive Investment Holding Canada, but a minority voting stake 6
Market Position Algeria: Despite limitations, Djezzy remains a profitable market leader with significant mobile data potential Pakistan: Mobilink leads the market, and has great potential for revenue growth through mobile data, MFS and VAS Bangladesh: In a large market with low penetration levels, banglalink is a leading operator with strong focus on increasing value share in a rapidly growing market Telecel Globe: Leading positions in markets with low penetration levels, healthy APPM, and high growth potential. Internet is a mobile story in Africa Canada: WIND Mobile continues its "Value Plus" strategy execution, adding primarily postpaid subscribers while carefully managing prepaid economics for both voice and mobile broadband customers 7
Algeria 8
Djezzy - Overview Population 1 : 38 million GDP/capita 1 : USD 7,300 Market size 2 : 33.4 million Penetration 2 : 88% Market players (subs): Djezzy (17.6 million) Mobilis (8.4 million) Ooredoo (7.4 million) Market shares 3 22% Djezzy 25% 53% Mobilis Ooredoo Macro environment GDP growth for FY 2012/2013 of ~2.5% Government, trade and agricultural sectors account for over 60% of GDP 28% of the population is under 15 years old Presidential elections expected to commence in April 2014 Competitive landscape Djezzy: high brand perception with solid market leadership with high control over distribution Mobilis: incumbent operator maintained by the government, has a strong relationship with the regulator and has been very active on the commercial front lately Ooredoo: seen as a multimedia operator that offers lower prices, more promotions, subsidies and higher incentives to the retail channel Regulatory environment Djezzy continues to face stringent conditions from regulator commercial activities and propositions Djezzy awarded a 3G license in December 2013 and received an exceptional approval from the Bank of Algeria for foreign payments for 3G equipment Government plans to list 10 public companies on ASE, including Mobilis Strategic direction Launch 3G services in 2Q14 targeting high value data users Maintain leadership in customer experience and NPS Emphasize Djezzy as the preferred Algerian mobile brand while launching 3G Maintain a solid network performance from 3G roll out and 2G network modernization and expansion 1. CIA factbook 2. Penetration figures are provided based on OTA closing base and our data warehouse (DWH) figures for competition 3. DWH market share 9
Djezzy - KPIs Mobile Customers 1 (Millions) Revenues (DZD Billions) EBITDA (DZD Billions) & EBITDA Margin 14.1 14.6 15.1 16.2 16.7 17.6 134.7 135.6 129.3 135.6 143.3 143.1 58.5% 54.0% 53.2% 78.8 73.2 68.7 59.3% 59.4% 58.7% 80.4 85.2 84.0 10.8 CAPEX 2 (DZD Billions) & CAPEX/Revenue 19.0 14.0% Operating Cash Flow 3 (DZD Billions) 77.5 80.7 77.3 67.9 61.8 54.3 8.1% 6.9 6.7 5.4% 2.9 4.5 6.2% 2.2% 3.1% Note: Foreign exchange rate DZD 79.6587/ USD 1 1. As announced on July 1 2013, during an internal investigation with regards to Djezzy s active customers, management found a technical bug that overstated Djezzy s customer base by 1.4 million. The customers base comparative figures were adjusted accordingly. This event does not impact historical reported revenue or EBITDA, but positively affect MOU and ARPU 2. CAPEX figures excluding license fees and may differ from previously released figures 3. Operating Cash Flow is EBITDA less CAPEX 10
Pakistan 11
Mobilink - Overview Population 1 : 193 million GDP/capita 1 : USD 3,100 Market size 2 : 132.3 million Penetration: 68% Market players (subs): Mobilink (37.7 million) Telenor (33.0 million) Ufone (25.0 million) Zong (23.7 million) Warid (12.9 million) Market shares 2 10% Mobilink 18% 29% Telenor Ufone 19% 25% Zong Warid Macro environment GDP growth for FY 2012/2013 of ~3.7% Continued devaluation of the Rupee against the USD Power shortfalls persist 34% of the population under 15 years old New government elected and in place since May 2013, working on achieving political stability and economic reform Competitive landscape Mobilink: market leader in a five player market Telenor: value-driven operator with strong market position via youth, mobile data offers and MFS Ufone: positive mass market perception and aggressive pricing strategy Zong: aggressive on pricing and market share gain Warid: conducting due diligence to exit the market Regulatory environment New PTA chairman appointed in 4Q13 3G/4G auction planned in April 2014 Government increased withholding tax on recharge to 15% and also increased commercial electricity tariffs by 30% effective October 1, 2013 Trends of fewer forced network shutdowns Strategic direction Continued focus on network modernization to achieve 3G readiness Further enhance operational excellence initiatives Retain leadership in mobile data Capture market opportunity in MFS Enhance customer experience through better quality of service 1. CIA factbook 2. Market share as provided by the regulator as of November 30, 2013 12
Mobilink - KPIs Mobile Customers (Millions) Revenues (PKR Billions) EBITDA (PKR Billions) & EBITDA Margin 28.5 30.8 31.8 33.4 36.1 37.6 87.8 86.9 94.3 97.9 105.8 107.6 40.2% 36.5% 35.3 31.7 40.9% 39.6% 37.3 40.0 43.1% 41.6% 45.6 44.8 42.9% CAPEX 1 (PKR Billions) & CAPEX/Revenue Operating Cash Flow 2 (PKR Billions) 25.2 28.4 25.0 37.7 14.7% 12.9% 12.8 12.2 23.0% 22.6 16.3% 18.4% 17.2 19.8 18.9 17.5-2.4 Note: Foreign exchange rate PKR 101.5918/ USD 1 1. CAPEX figures excluding license fees and may differ from previously released figures 2. Operating Cash Flow is EBITDA less CAPEX 13
Bangladesh 14
banglalink - Overview Population 1 : 164 million GDP/capita 1 : USD 2,000 Market size 3 : 114.8 million Penetration 2 : 70% Market players (subs): GP (47.6 million) banglalink (28.9 million) Robi (25.6 million) Airtel (8.3 million) CityCell (1.4 million) TeleTalk (2.8 million) Market shares 3 22% 1% 7% 3% 25% 42% bangalink Grameenphone Robi Airtel Citycell Teletalk Macro environment GDP growth for FY 2012/2013 of ~6% The world s highest population density 33% of the population under 15 years old BDT continued to appreciate against the USD Unstable macro environment Competitive landscape banglalink: 2 nd in a six player market with an innovative brand positioning among youth segment Grameenphone: largest network, perceived as best in quality and coverage Robi: aggressive on prices and communication Airtel: mainly focused on youth CityCell: CDMA operator TeleTalk: Run by national fixed incumbent BTCL Regulatory environment Four 3G licenses were awarded in September 2013 during an auction for 8 blocks of spectrum, each consisting of 5 MHz (uplink and downlink). 5 of the 8 blocks were awarded banglalink launched 3G services in October 2013 The government reduced SIM tax to BDT 300 from BDT 606 during 2Q13 Strategic direction Capitalize on introduction of 3G and maximize revenue from mobile data segment Improve Revenue Market Share Grow beyond the core and expand on MFS and VAS fronts Maintain price leadership strategy Focus on spectrum optimization, network sharing and modernization 1. CIA Factbook 2. Penetration figures are provided based on BTRC published figures 3. BTRC market share as at January 31, 2014 15
banglalink - KPIs Mobile Subscribers (Millions) 28.8 23.8 25.9 19.3 13.9 10.3 Revenues (BDT Billions) 45.4 38.0 39.4 32.0 24.0 20.0 0.4 EBITDA (BDT Billions) & EBITDA Margin 29.2% 7.0 28.1% 9.0 34.2% 13.0 34.7% 37.1% 15.7 14.6 2.0% CAPEX 1 (BDT Billions) & CAPEX/Revenue Operating Cash Flow 2 (BDT Billions) 28.6 143.0% 8.7 36.3% 16.4 51.1% 11.9 31.3% 10.2 10.3 22.6% 26.3% 5.5 1.1 4.3-1.7-7.4-28.2 Note: Foreign Exchange Rate BDT 78.0784/ USD 1 1. CAPEX figures excluding license fees and may differ from previously released figures 2. Operating Cash Flow is EBITDA less CAPEX 16
Appendix
Debt Profile Debt by Entity 1% 1% Debt by Entity Debt by Currency 4% 8% GTH Pakistan GTH 4,495 Pakistan 198 Bangladesh 412 11% 87% Bangladesh Algeria Others Algeria 47 Others 32 Total 5,184 89% USD Local Gross & Net Debt (USD Millions) 5,184 4,757 2,838 2,026 2,731 2,346 Gross Debt Cash Net Debt 4Q13 4Q12 18
Income Statement USD thousands 4Q13 4Q12 Change FY13 FY12 Change Revenue 833,589 908,345 (8%) 3,447,412 3,626,767 (5%) Other Income 12,889 16,062 23,050 33,933 Total Expense (448,931) (505,262) (1,813,862) (1,912,155) Net unusual Items - 6,358-6,113 EBITDA 1 397,547 425,503 (7%) 1,656,600 1,754,658 (6%) Depreciation and Amortization (270,108) (174,260) (772,986) (705,096) Impairment of Non-Current Assets 2,843 (6,979) (6,132) (12,269) Gain (Loss) on Disposal of Non- Current Assets (6,696) (12,722) (8,152) (17,862) Impairment of Assets Held for Sale 2 (10,687) - (57,964) - Operating Income 112,899 231,542 n.m. 811,366 1,019,431 n.m. Financial Expense (128,747) (124,726) (503,270) (457,858) Financial Income 11,344 21,433 42,872 77,090 Foreign Exchange Gain (Loss) 3 (23,023) (89,471) (269,406) (74,139) Share of Profit (Loss) from Associates (38,698) (26,234) (139,155) (103,279) Impairment of Financial Assets 4 (625,429) (339,126) (625,429) (339,126) Other non-operating cost - (74,399) - (74,399) Profit Before Tax (691,654) (400,981) n.m. (683,022) 47,720 n.m. Income Tax (57,125) (67,925) (241,300) (253,480) Profit from Continuing Operations (748,779) (468,906) n.m. (924,322) (205,760) n.m. Profit for the Period (748,779) (468,906) n.m. (924,322) (205,760) n.m. Attributable to: Equity Holders of the Parent 5 (754,048) (473,364) n.m. (944,320) (224,928) n.m. Earnings Per Share (USD/GDR) 6 (0.71) (0.45) n.m. (0.88) (0.20) n.m. Minority Interest 5,269 5,457 19,998 19,168 Net Income (748,779) (468,906) n.m. (924,322) (205,760) n.m. Footnotes: 1. Management presentation developed from IFRS financials 2. GTH fully impaired its assets in Canada by USD 619 million, mainly relating to the challenges the Group is facing in the country, which resulted in the strategic decision to withdraw from the 700 MHz spectrum auction and the reassessment of the prospects for continuing operations in the country 3. Impairment of assets held for sale by USD 58 million, as to reflect the fair value of our operations in CAR and Burundi, which amounted to USD 100 million 4. Foreign exchange loss incurred during 4Q13 is mainly driven by the unrealized foreign exchange losses resulting from the revaluation of the shareholder loan from VimpelCom, due to the appreciation of the US dollar against the Egyptian pound, which was offset against unrealized foreign exchange gains that resulted from the revaluation of Globalive (WIND Mobile Canada) loan receivable balance as of 4Q13 5. Equates to net income after minority interest. 6. Based on a weighted average for the outstanding number of GDRs of 1,049,138,124 19
Balance Sheet USD thousands 31 December 2013 31 December 2012 Assets Property and Equipment (net) 2,043,998 2,493,620 Intangible Assets 1,425,596 1,448,712 Other Non-Current Assets 88,194 858,099 Total Non-Current Assets 3,557,788 4,800,431 Cash and Cash Equivalents 2,838,448 2,025,844 Trade Receivables 225,641 233,477 Assets Held for Sale 170,380 - Other Current Assets 1,153,541 1,064,216 Total Current Assets 4,388,010 3,323,537 Total Assets 7,945,798 8,123,968 Equity Attributable to Equity Holders of the Company 801,168 1,572,681 Minority Share 95,214 74,492 Total Equity 896,382 1,647,173 Liabilities Long Term Debt 151,010 4,074,700 Other Non-Current Liabilities 189,669 232,956 Total Non-Current Liabilities 340,679 4,307,656 Short Term Debt 5,033,091 682,643 Trade Payables 814,643 695,624 Other Current Liabilities 861,003 790,872 Total Current Liabilities 6,708,737 2,169,139 Total Liabilities 7,049,416 6,476,795 Total Liabilities and Shareholder s Equity 7,945,798 8,123,968 Net Debt 1 2,345,653 2,731,499 Footnotes: 1. Net debt is calculated as a sum of short term debt, long term debt, less cash and cash equivalents 20
Cash Flow Statement USD thousands Cash Flows from Operating Activities 31 December 2013 31 December 2012 Loss for the Period (924,323) (205,760) Depreciation, Amortization and Impairment of Non-Current Assets 1,404,547 717,365 Income Tax Expense 241,300 253,480 Net Financial Charges 729,804 454,907 Share of Loss (Profit) of Associates 139,155 103,279 Impairment of Financial Assets 57,964 339,126 Other (44,236) 129,084 Changes in Assets Carried as Working Capital (241,863) 24,156 Changes in Other Liabilities Carried as Working Capital 169,868 (8,748) Income Tax Paid (252,560) (500,793) Interest Expense Paid (113,495) (114,911) Net Cash Generated by Operating Activities 1,166,161 1,191,185 Cash Flows from Investing Activities Cash Outflow for Investments in Property and Equipment, Intangible Assets, and Financial Assets and Consolidated Subsidiaries Proceeds from Disposal of Property and Equipment, Subsidiaries and Financial Assets (547,658) (412,481) 27,486 (16,478) Advances and Loans made to Associates and other parties - (161,313) Dividends and Interest Received 12,062 10,489 Net Cash Used in Investing Activities (508,110) (579,783) Cash Flows from Financing Activities Proceeds from loans, banks' facilities and bonds 1,282,929 1,300,806 Payments for loans, banks' facilities and bonds (1,152,367) (881,948) Net Payments from financial liabilities (2,386) (79,429) Net Change in Cash Collateral 30,818 120,964 Net Cash generated by Financing Activities 158,994 460,393 Net Increase in Cash and Cash Equivalents 817,045 1,071,795 Cash included in Assets Held for Sale (26,014) (7) Effect of Exchange Rate Changes on Cash and Cash Equivalents 21,628 (59,487) Cash and Cash Equivalents at the Beginning of the Period 2,025,773 1,013,543 Cash and Cash Equivalents at the End of the Period 2,838,432 2,025,844 21
Contacts For your inquiries, please contact: Mamdouh Abdel Wahab Head of Investor Relations E: IR@gtelecom.com T: +202 2461 5120/21 F: +202 2461 5055/54 W: www.gtelecom.com 22