Kcell JSC Q1 218 Financial results Astana Lake
Kcell JSC Q1 218 Financial Results 2 Q1 218 quarterly highlights Challenges in consumer segment service revenue, while handset sales increased by 45.9 percent EBITDA in line with the previous year Reshaping of the product portfolio improves interconnect balance Digital transformation initiatives aimed at greater efficiency and effectiveness Good progress in enterprise segment, driven by strong demand for business solutions Recommendation of an annual dividend for 217 at the 216 level, amounting to KZT 11,678 million, or KZT 58.39 per ordinary share, representing 87 percent of the Company s net income for 217
Kcell JSC Q1 218 Financial Results 3 Q1 218 summary Net sales KZT 36,386m (35,632) Service revenue KZT 32,267m (32,797) Data revenue KZT 11,514m (1,849) Increase of 2.1% year-on-year Decrease of 1.6% year-on-year Increase of 6.1% year-on-year Handset sales EBITDA* EBITDA* margin KZT 4,137m (2,836) KZT 13,456m (13,26) 37.% (37.2) Increase of 45.9% year-on-year Increase of 1.5% year-on-year Net income Subscribers B2B revenue KZT 3,752m (3,951) 9,958 thousand (9,979) KZT 3,744m (2,886) Decrease of 5.% year-on-year Decrease by 21, year-on-year Increase of 29.8% year-on-year *excluding non-recurring items
Kcell JSC Q1 218 Financial Results 4 Commercial trends 22,2 4G device penetration % 4 35 3 25 2 15 1 5 37,9 33, 28, 26, Q1'17 Q2' 17 Q3' 17 Q4' 17 Q1'18 4G data users (million) 1 5 1 3 1 46 1 1 1 277 1 154 9 7 913 5 681 3 1-1 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Bundled customers as share of total subs: Q1 217 33% Q1 218 4% Bundled subs share of revenue: Q1 217 67% Q1 218 71% OTT users () MFF users () 55 8 45 35 25 15 212 342 46 526 478 7 6 5 4 3 2 27,8 45,5 7,1 5-5 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 1 1,5 2 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
KZT in bln KZT in bln KZT in bln Kcell JSC Q1 218 Financial Results 5 Revenue Net sales Service revenue B2B revenue 4 3 35,6 36,1 +2.1% 37,5 38,2 36,4 4 3 32,8 33,4-1.6% 34,7 34,6 32,3 4 3 1,3 1,7 +29.8% 1,8 2,2 2,1 2 2 2 1,6 1,6 1,5 1,5 1,6 1 1 1 Mobile revenue Business solutions
Mln GB Kcell JSC Q1 218 Financial Results 6 Data usage & revenues Smartphone penetration % 7 6 5 57,4 61,2 4 49,9 41, 3 31, 2 1 214 215 216 217 Q1 218 Average revenue per MB,3,3,2,2,2,2,2,1, Data traffic Data revenue 6 5 4 3 42,3 43,8 +37.8% 5,5 56,1 58,3 12 1 8 6 1.9 11,2 12, 12,2 11,5 32% 32% 32% 32% 31% 31% 2 1 4 2 31% 31% 31% 3% Data services % of total revenues
Kcell JSC Q1 218 Financial Results 7 Operational data Minutes of usage (MOU) 25 2 22 231 229 15 1 222 26 Blended ARPU (KZT) 1 2 1 1 112 1 129 1 176 1 167 1 9 8 6 4 5 2 Voice traffic & ARMU (KZT) Total subscribers ( ) 6 5 4 3 2 5 545 5 827 5 748 5 558 5 125 7 6 5 4 3 2 12 1 8 6 4-21k 9,979 9,992 1,1 1,9 9,958 1 1 2 Traffic mln minutes ARMU
Kcell JSC Q1 218 Financial Results 8 Financial highlights KZT in millions, except per share data, number of shares and changes Q1 218 Q1 217 Chg (%) FY 217 Net Sales 36,386 35,632 2.1 147,475 of which service revenue 32,267 32,797-1.6 135,47 EBITDA excluding non-recurring items 13,456 13,26 1.5 57,647 EBITDA margin (%) 37. 37.2 39.1 Operating income 7,246 7,63-5. 31,827 Operating income excluding non-recurring items 7,246 7,63-5. 34,5 Net income 3,752 3,951-5. 13,786 Earnings per share (KZT) 18.8 19.8-5. 68.9 CAPEX to sales (%) 7.6 16.6 14.7 Free cash flow 1,53 1,748-14. 1,899
Kcell JSC Q1 218 Financial Results 9 EBITDA* development KZT in bln 42,2% 2 38,9% 37,2% 37,4% 37,% 15 16,1 14,6 13,5 13,3 13,5 1 5 % margin 4% 3% 2% Interconnect balance 7 MKZT higher due to active migration of Hello KZ subscribers to other tariffs and lower off-net allowances by other operators Devices net: positive impact from increased sales of devices Subcontracted works: optimization in maintenance and support expenses Energy for production: higher expenses as a result of 9% increase in number of sites and 1% in average price Other expenses: increase in other expenses mainly due to higher bad-debt provision due to updated estimate and effect of IFRS 15 Network rent: higher due to increased number of sites *excluding non-recurring items
Kcell JSC Q1 218 Financial Results 1 CAPEX-TO- SALES 2% 12,2% 11,2% 11,% 17,% 16,6% LTE traffic 4% of total traffic data 7,6% LTE population coverage % FY13 FY14 FY15 FY 16 Q1-17 Q1-18 49% Total area coverage 47% *216 excludes KZT 26, million for LTE frequencies
Kcell JSC Q1 218 Financial Results 11 Tax audit In July 217, the Kazakhstan tax authority completed its comprehensive tax audit for the period from 212 and 215. Following the audit, the tax authority made a total claim of KZT 9. billion, of which KZT 5.8 billion is for unpaid taxes and KZT 3.2 billion represents fines and penalties for late payment. The Company considers it unlikely that the full amount of the claim will become payable following the appeal process. Kcell submitted administrative appeals to the highest level of Kazakhstan s government and to the Ministry of Finance. In January 218, Kcell filed an appeal with the Court of First Instance, the claim was dismissed. This ruling has not been enforced yet; the Company will appeal it to the court of higher instance (the Court of Appeal).
Kcell JSC Q1 218 Financial Results 12 Dividends The Board of Directors approved a decision to convene the Annual General Meeting of shareholders ( AGM ) on 3 May 218 The Board of Directors has recommended the annual dividend at the 216 level, amounting to KZT 11,678 million, or KZT 58.39 per ordinary share. This represents 87 percent of the Company s net income for 217 The proposed record date of Shareholders entitled to receive the dividends is 31 May 218 The starting day of dividend payment is 1 August 218
Kcell JSC Q1 218 Financial Results 13 Q&A
Kcell JSC Q1 218 Financial Results 14 Financial key ratios Q&A 31 Mar 218 31 Dec 217 Return on equity* % 17.5 18.2 Return on capital employed* % 17.5 23.9 Equity/assets ratio % 43.9 41.8 Net debt/equity ratio % 71.6 76.4 Net debt/ebitda* rate % 1.3 1.5
Kcell JSC Q1 218 Financial Results 15 Forward looking Q&A statement Statements made in this document relating to future status or circumstances, including future performance and other trend projections are forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to many factors, many of which are outside the control of Kcell.