EMIRATES TELECOMMUNICATIONS CORPORATIONS ... - … · Top 15 Telecom Companies in Middle East and...
Transcript of EMIRATES TELECOMMUNICATIONS CORPORATIONS ... - … · Top 15 Telecom Companies in Middle East and...
1
Etisalat Group
BAML Frontier Markets Conference 2013
November 20th – 21st , 2013 - Dubai
Agenda
2
1. Etisalat at a Glance
2. Key Company Highlights
3. Pillars of Etisalat’s Strategy
4. Update on Maroc Telecom
5. Financial Review
Emirates Telecommunications Corporation and its subsidiaries (“Etisalat” 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.
3
Disclaimer
1. Etisalat at a Glance
Etisalat Snapshot
5
143 million Aggregate Subscribers(1)
9.0 USD billion Revenue
60% Owned by Emirates Investment Authority(2)
1.5 USD billion Dividend
15 Countries in Operation
4.6 USD billion EBITDA
660 million People Under Licence
1.8 USD billion Net Profit
Aa3/AA-/A+ High Investment Grade Rating
13 %
Capex Intensity
1.1 USD billion Capex
25 USD billion Market Capitalisation
Note: Based on 2012 actual financials and operating metrics. (1) Aggregate subscribers including subsidiaries and associates. (2) 100% owned by Federal Government of the United Arab Emirates.
1976 The Emirates Telecomm. Corporation is founded
1982 Etisalat launches the Middle East’s first mobile network
1989 Etisalat establishes the Etisalat University College to create a talent pool of engineers to drive its future growth
1994 The Middle East’s first GSM service is introduced in the UAE
Etisalat launches Emirates Data Clearing House 1995 Internet services are rolled out across the country, another first in the region. Etisalat opens its SIM card factory, Ebtikar
1996 Etisalat is one of the founding investors in Thuraya 1999 Etisalat Launches the Middle East’s first ADSL service Etisalat buys a stake in Tanzanian operator Zantel 2000 Etisalat introduces the E-Vision brand Etisalat Academy is established
2002 Etisalat lists shares on Abu Dhabi Stock Exchange 2003 Etisalat launches the Middle East’s first 3G network, and offers MMS services to its customers 2004 Etisalat wins second license to operate in KSA Etisalat buys a 40% stake in Canar, Sudan 2005 Etisalat acquires 26% in PTCL, Pakistan and a 50% stake in Atlantique Telecom
2006 Etisalat wins license in Egypt and Afghanistan
Etisalat offers BlackBerry in UAE
2007 Etisalat acquires a 40% stake in green-field in Nigeria
2008 Etisalat completes nation-wide fibre optic backbone
Etisalat acquires 45% of Swan Telecom, India
2009 Etisalat acquires Tigo-Sri Lanka
2011 Etisalat launches 4G in UAE
2012 Etisalat exits India & decreased stake in XL Axiata to 4.2%
2013 Submits bid to acquire a majority stake in Maroc Telecom
1976-1980 1981-1985 1986-1990 1991-1995 1996-2000 2001-2005 2006-2013
Etisalat’s Key Milestones
6
FY’2012 139m subs
FY’2000 1m subs
Mobily KSA
27.5%
Etisalat UAE
100%
Etisalat Misr
(Egypt) 66%
Etisalat Lanka 100%
Etisalat Afghanistan
100%
PTCL Pakistan 23%(1)
Moov Togo 95%
Moov Gabon 90%
Telecel Niger 100%
Acell CAR
100%
Moov Cote
d’Ivoire 85%
Canar Sudan 89%
Etisalat Nigeria 40%
Zantel Tanzania
65%
Etisalat Benin 100%
Atlantique Telecom 100%
Ufone 100%
Fixed line Associates
7
Africa Cluster Asia Cluster
Overview of Etisalat’s Portfolio
Etisalat Group
Thuraya (UAE) 28%
(1) Effective 31-Dec-2012, Etisalat changed the accounting treatment of PTCL from an associate to subsidiary and consolidated PTCL’s balance sheet statement into the Group’s financials.
Fully Integrated
2. Key Company Highlights
Key Company Highlights
9
Experienced
Management Team with
Long Track Record in the
Sector
Leading Telecom
Operator With Third
Largest Market Cap
among Middle East &
Africa Telcos Diversified Operator
with Exposure to
Attractive and High
Growth Markets Across
Africa and Asia
Leading UAE Telco and
Meaningful Contributor to
Domestic Economy and
Innovation in the Region
Strong FCF Profile
with Consistent
History of
Returning Capital to
Shareholders
Highly Rated Telco
(Aa3/AA-/A+) with Low
Leverage and Strong UAE
Government
Support
1
3
5
6
7 2
4 Operating High Quality
Networks with the
Most Advanced
Technologies
$84bn
$32bn
$30bn
$29bn
$27bn
$25bn
$23bn
$18bn
$16bn
$15bn
SABIC
QNB
Al Rajhi
STC
Industries Qatar
Etisalat
Kingdom
Mobily
Saudi Electricity Co.
NBK
Top 15 Telecom Companies in Middle East and Africa(1) Top 10 GCC Companies(1)
10
$36bn
$29bn
$25bn
$21bn
$18bn
$16bn
$13bn
$12bn
$11bn
$11bn
$10bn
$8bn
$4bn
$3bn
$3bn
MTN
STC
Etilsalat
Bharti
Mobily
Vodacom
Turkcell
Ooredoo
Zain
Turk Telecom
Maroc Telecom
Du
Orascom
Telecom Egypt
Wataniya
Leading Middle East & Africa Telecom Operator and One of the Largest Companies in the GCC Region
Source: Bloomberg Data as at 11-November-2013
(1) Ranking by Market Cap
1
Etisalat Lanka, Sri Lanka Licence type Mobile
Number of
operators
Mobile, 5
Etisalat position 3rd
Diversified Telecom Operator with an Attractive MEA and Asian Footprint
11
Aggregate Subscribers:
143 million
Covered Population:
660 million
Operating Countries:
15
Consolidated 2012 Revenue:
AED 33 billion
Consolidated 2012 EBITDA:
AED 17 billion
Etisalat, UAE
Licence type Mobile, Fixed and internet
Number of operators
2
Etisalat position 1st
Thuraya, UAE
Licence type Satellite telecommunication
Network coverage
140 countries
Etisalat Misr, Egypt Licence type Mobile & Internet Number of operators Mobile, 3
Etisalat position 3rd
Etihad Etisalat (Mobily), Saudi Arabia Licence type Mobile & Internet
Number of operators
Mobile, 3
Etisalat position 2nd
EMTS, Etisalat Nigeria Licence type Mobile
Number of operators Mobile, 4
Etisalat position 4th
Atlantique Telecom, Moov – West Africa Licence type Mobile
Number of operators 2-6 per country
Etisalat position Top 3
Zantel, Tanzania Licence type Mobile & Internet
Number of operators
Mobile 6, Fixed 2
Etisalat position 4th (Mobile)
Canar, Sudan Licence type Fixed
Number of operators Fixed, 2
Etisalat position 2nd
Etisalat, Afghanistan Licence type Mobile
Number of
operators
Mobile, 4
Etisalat position 3rd
PTCL, Pakistan Licence type Mobile, Fixed and
Internet Number of
operators
Mobile 5, Fixed 11
Etisalat position 3rd (Mobile), 1st (Fixed)
2
Note: Etisalat market positions per WCIS
Consolidated 2012 Net Profit:
AED 7 billion
The Leading UAE Telecom Operator
12
3
Largest telecom operator in the Middle East and UAE
— Largest listed company in the UAE with a market cap of $25n
— Six largest corporation in the GCC
Highly innovative flagship telecom operator in the UAE
— Powering the UAE to be one of the top 10 nations in the world in terms of availability of new technologies
— Pioneer in next-generation networks for both fixed-line and wireless services
— Successfully deployed fiber-optic network in the UAE with more than 1.5 million home pass and making Abu Dhabi the world’s first city that is wholly covered by FTTH
— First to market with fourth-generation long-term evolution (4G LTE) networks in the UAE and MENA
Significant contributor to the UAE economy
— 23% of the UAE Federal Government budget in 2012 through Etisalat’s royalty and dividend payments
— Enabling UAE to become a data centre hub offering near field communication, mobile financial services, M2M and enhancing the contribution of ICT to the UAE economy.
— Reputable employer in the UAE with a stable local employee base
Operating High Quality Networks with the Most Advanced Technologies
13
4
Key Network Highlights
2010-2012 Cumulative Capex ($bn)
Avg. Capex as a % of Revenues
(2010-2012)
UAE Expanded the LTE network coverage to over 82% of the population Completed the highest 4G LTE speed test in the world, which reached 300 Mbps Deployed FTTH network through all UAE with 1.5 million home pass
1.6 8%
Egypt
First operator to deploy 3G network with 99% population coverage Commercial launch of 42 Mbps HSPA+ expected after completion of field testing First company in the MENA region and the second in the world to trial an 84 Mbps
HSPA+ connection
0.9 24%
Pakistan PTCL investments in network access (enabling two million copper lines) 0.9 24%
Asia First operator to acquire a 3G license and launch 3G services in Afghanistan First operator in Sri Lanka and South Asia to introduce the Duel Carrier HSPA+ network 0.7 66%
Nigeria
Nigeria network covers 77% PoPs with plans for further expansion
In 2013, Etisalat Nigeria signed a deal with Alcatel-Lucent in order to build 1,000 base transceiver stations
Achieved best quality network as per QoS indicators published by the regulator
1.0 74%
Africa
Atlantique acquired 3G licenses in Ivory Coast and Benin, which will enable faster mobile broadband connections to be launched, as well as a broader range of products and service
0.5 24%
KSA – Mobily
Continued expansion of network infrastructure with the latest and most advanced technologies
Advanced 4G network now covers more than 4,500 new sites 3.2 20%
Strong Financial Profile and Consistent Track Record of Shareholder Remuneration
14
Strong Cash
Flow
Generation,
Consistent
Reinvestment
and Robust
Balance Sheet
Operating Cash Flows (AED bn) Capex / Revenue (%) Net Cash Position (AED bn)
Consistent
History of
Attractive
Shareholder
Returns
Dividend Payout Ratio Total Dividends and Dividend Per Share
5
41.5% 48.8%
62.2%
81.2% 82.1%
72.8%
2008 2009 2010 2011 2012 H1'13
(1) In 2013 Operating cash flow and net cash position were impacted by changes in the method of payment of Federal royalty.
(1)
3.6
4.3 4.7 4.7
5.5
2.8
2008 2009 2010 2011 2012 H1'13
Total Dividends (AED bn) Cash Dividend (AED / Share)
0.6 0.6 0.6 0.6 0.7
0.35
(1)
10.6 10.9
7.3
2008 2012 9M'13
14%
13%
14%
2008 2012 9M'13
5.8
8.1
5.8
2008 2012 9M'13
AA AA- A+ A A- BBB+ BBB BBB-
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
4.0x
Gro
ss
De
bt
/ E
BIT
DA
Highest Rated Telco outside Asia with Strong Balance Sheet and Lowest Leverage Among Peers
15
6
EMEA Telco Ratings and Total Debt / EBITDA Etisalat’s Credit Rating and Metrics
A+/Stable/-- Notching Down from
Sovereign
AA-/Negative Watch/A-1+ +1 Notch
Aa3/Stable/-- Notching Down from
Sovereign
Credit Rating Sovereign Support
Consistently Cash
Positive Balance Sheet
Net Cash / EBITDA
Source: Company filings, Bloomberg
0.23x 0.21x
0.48x
0.31x
FY'10 FY'11 FY'12 H1'13FY’10 FY’11 FY’12 9M’13
Saleh Al Abdooli Chief Executive Officer Etisalat UAE Appointed CEO of Etisalat UAE
in April 2012
Prior to this appointment, he was CEO of Etisalat Misr
Experienced Management Team
16
Ahmad Abdulkarim Julfar Chief Executive Officer Etisalat Group Appointed Group CEO in
August 2011
Prior to this appointment, was Group COO
Serkan Okandan Chief Financial Officer Etisalat Group Joined Etisalat in January
2012 as Group CFO
Prior to this appointment, was Group CFO of Turkcell
Dr. Daniel Ritz, PhD Chief Strategy Officer Etisalat Group Appointed Group CSO in
February 2012
Prior to this appointment, was CSO at Swisscom Group
Rainer Rathgeber Chief Commercial Officer Etisalat Group Appointed Group CCO in
January 2013
Prior to joining Etisalat, was SVP of Marketing in Europe of the OTE Group
Saeed Al Hamli Chief Executive Officer Etisalat Misr Appointed CEO of Etisalat Misr
in April 2012
Prior to this appointment, was CEO of Etisalat Afghanistan
7
Jamal Aljarwan Chief Regional Officer/Asia Etisalat Group Appointed CRO of the Asian
cluster of EG in October 2011
Prior to this appointment, was CIIO of EG
Essa Al Haddad Chief Regional Officer/Africa Etisalat Group Appointed CRO, Africa, of the
Etisalat Group in January 2013
Prior to this appointment, was CCO of EG
Khalid Al Kaf Managing Director and Chief Executive Officer Etihad Etisalat (Mobily) Appointed CEO and MD of
Mobily in July 2005
Prior to this role, worked for over 19 years with Etisalat in various capacities
s
With a Coherent Vision, Mission & Strategy
17
7
To be the leading and most admired emerging markets telecom group
Vis
ion
M
issio
n • Provide best in class total customer experience for retail and business
• Deliver attractive returns to shareholders while investing in the company’s long term future
• Support economic development and job creation through ICT & socially responsible behavior
Attractive and Well-Balanced
Portfolio
Differentiated Service Offering
Superior Customer Experience
Operational
Excellence and Efficiency
“One Company”
Str
ate
gic
Pil
lars
3. Key Pillars of Etisalat’s Strategy
Key Pillars of Etisalat’s Strategy
19
Attractive and Well-Balanced
Portfolio
Differentiated Service Offering
Superior Customer
Experience
Operational
Excellence and Efficiency
“One Company”
Strong Focus on People &
Culture
Own and manage controlling stakes in well positioned operators in target markets, balancing growth and returns
Operate consistently across portfolio with a common set of processes and systems leveraging scale economies
Provide differentiated, innovative service, media and entertainment offerings – leveraging broadband infrastructure and network of partnerships
Serve customers pro-actively and consistently, with a common set of brand values based on in-depth customer understanding and trusted relationships
Manage with a strong focus on efficiency and effectiveness in all operational and support processes at Group and in OpCos
Attract, nurture and retain management talent; streamline internal processes, delegate responsibility, hold people accountable
1 3 2
Addressed in further detail
2012 Revenue and % Growth
20
Diversified Portfolio with Attractive Growth Prospects 1 1
Notes:
(1) Bubble size reflects active subscribers number per Opco as of December 2012.
(2) AT: Atlantique Telecom Countries are Benin, Central African Republic, Cote d’Ivoire, Gabon, Niger, Togo.
-2
-1
0
1
2
3
4
5
6
7
8
4
2
0
-2
-4
16
14
12
10
8
34
50
48
46
44
42
40
38
36
6
32
30
28
26
24
22
20
18
.
..
Nigeria
Sudan Tanzania
Sri Lanka
AT
Egypt Pakistan
Saudi UAE
Afghanistan
>5bn
3-5bn
1-3bn
0.5-1bn
0.1-0.5bn
<0.1bn
<5% 5-10% 10-20% 20-30% >30%
<5% 5-10% 10-20% 20-30% >40%
Revenues
% Growth
Strategic Priorities for the Portfolio
21
1
Current Footprint
New Businesses
Consolidation in fragmented markets through mergers, acquisitions, or select divestments
Stake increases in core operations
Acquisition of licenses and spectrum to further strengthen core operations
Focus is on market-led business development, strategic partnerships and Joint Ventures
For immature markets with limited sizeable M&A, will consider tuck-in acquisitions to accelerate business development in select areas
Select New Geographies
Will consider bolt-on acquisitions, if (a) adjacent to existing core operations, (b) # 1 or 2 market position, and (c) well managed and cash-generative
Will also consider management contracts as a way to enter new markets
Very selective on greenfields (must be sizeable opportunity adjacent to core operation)
Continued Focus on Maximising New Opportunities Across Markets
22
1
Licensing
Expand mobile broadband offering through 3G/4G licence acquisition
Improve network capacity through further spectrum assignment
Processes (2G renewal, 3G & LTE, MVNO)
Selected markets
Pakistan, Benin, Togo
Pakistan, Saudi Arabia, Egypt, Sri Lanka, Togo
Access Regulation
Grow wholesale revenues through commercially negotiated agreements
Optimise costs through further infrastructure sharing opportunities
KSA, UAE, Togo
CDI, Tanzania, Afghanistan
Competition Regulation
Enable a level-playing field conducive to market growth
Nigeria, Tanzania, Egypt
MTRs Review
Improve wholesale margins, i.e. net interconnection payments
Improve retail competitiveness
All markets
Nigeria, CDI, Togo, Benin
Compliance Ensuring continued commercial and technical
readiness on licence obligations All operations with particular focus on
Nigeria, CDI, Benin, Togo, Sri Lanka, Tanzania
National Equity Partners
Consider partnerships in selected countries to optimize performance
African operations
Differentiated Service Offering Across Geographies
23
2
UAE
Broadband push − Strong fixed broadband push alongside value-based customer acquisition focusing on 2-Play and 3-Play − Unmatched LTE speeds & coverage − More competitive data tariffs − Rich device portfolio and attractive bundles
Data revenue and new digital services to provide strategic growth Focus on high-value segments and customized offerings
Egypt Strong data revenue growth; commitment to innovative solutions that drive data penetration growth Focus more on high-value subscribers in order to maintain healthy ARPU levels
Pakistan Opportunities still exist in the Pakistani market
− Large broadband opportunity − 3G license: leveraging fixed and mobile assets to effectively capture data market
Asia Large broadband opportunity in all markets First to launch 3G in Afghanistan in May 12 Maintaining / increasing 3G momentum in Afghanistan and Sri Lanka
Nigeria Focus on network quality to enable innovative solutions Opportunity to provide segmented offerings and to leverage MNP
Africa 3G launch in Ivory Coast (Dec-12) and Benin (June-13); Togo pending license negotiation Introduction of mobile package with a number of benefits to young subscribers in CDI, Benin , Togo and Gabon
KSA – Mobily Significant growth in data, business segment and handset revenues Technology-centric segments as a strategic opportunity Committed to infrastructure investment to maintain mobile broadband leadership and expand fibre optic network
Delivering High Quality Services and Superior Customer Experience
24
Latest and Most Advanced
Networks
Monetising fiber investment by migrating fixed line subscribers to eLife services in the UAE
Maximizing mobile data usage in the UAE with 4G LTE Mobile Wi-Fi
Demonstrating leadership with roll-out of advanced 4G network in Saudi and HSPA+ broadband in Egypt
Innovative Products and
Solutions
Introducing value for money competitive data packages
Establishing partnership to facilitate joint projects and new product development through collaborative innovation
Launching smart handsets in the UAE (iPhone 5S and 5C, Samsung Note 3 and Galaxy S4, HTC 1X, Blackberry Curve 9320)
Enhanced Customer
Service
Launching business systems to increase efficiency and accuracy in response to customer queries in the UAE
Improving accessibility by adding 150 Atlantique service points across African footprint
Rolling out loyalty programs to ensure high quality services to high value customer base
3
Operational Excellence and Efficiency
25
3
The Customer
Quality of Service
Innovation
Operational Excellence
Integrity
Excellence
Empowerment
Teamwork
Growing People
Strong focus on customer care & support
Better reach through contact centers, distribution channels and retail shops
Be the innovator not only in terms of voice products…..
…… but also digital media services for the mobile broadband market
Drive operational efficiency through selective outsourcing & site sharing
Promote teamwork
Focus on delivering unmatched quality of network & service
Invest in people & empower them
Deploy strategic infrastructure sharing programs
Leverage scale benefits and efficiency programs
4. Update on Maroc Telecom
27
Update on Maroc Telecom transaction
Etisalat and Vivendi signed a Share Purchase Agreement on the 4th of November 2013
Etisalat to pay MAD 92.6 per share, payable in Euro 3.9 bn (AED 19.2 bn)
6.2 x 2013 EV/EBITDA
Etisalat to also pay cash for Vivendi’s share of the 2012 dividends Euro 0.3 bn (AED 1.5 bn) which will be kept in the Target Company at Closing
Transaction conditional upon (i) executing SHA with the Kingdom of Morocco and (ii) securing competition and regulatory approvals in the Kingdom of Morocco and certain other jurisdictions in Maroc Telecom’s footprint
Closing expected during Q1 2014
January 17th
Etisalat submitted
non binding offer
April 24th
Etisalat submitted
binding offer
May 28th
Shareholders
approval for financing
July 23rd
Vivendi granted
Etisalat exclusivity
Q1 2014
Expected closing
Nov 4th
Signed SPA
Overview of Maroc Telecom
28
Maroc Telecom was founded in 1998
Shareholder structure: Vivendi 53%, Kingdom of Morocco 30%, Free Float 17%
The leading telecom operator in all segments in Morocco and owns controlling stakes in four sub-Saharan incumbents (Mali, Mauritania, Gabon, Burkina Faso) covering a population of over 70 million
Highly profitable and cash generative operation with little debt
Incumbent with fixed and mobile – also IPTC and broadband
30.5m mobile subscribers, USD 7.3/month mobile ARPU, 1.6bn fixed-line subscribers, 683k broadband
subscribers in Morocco
€2.7bn 2012 revenues, € 1.5bn 2012 EBITDA - 56% EBITDA margin
Dual listed on Euronext Paris and Casablanca stock exchange
Strong local management with significant telecom operating experience
Strategic rationale
29
Additional pillar for Etisalat in Africa together with UAE, Egypt, KSA, Nigeria and Pakistan
Would create a leading French speaking West African cluster – potential to be the #1 regional operator (42m
subscribers covering a population of c.132m people in 10 Francophone countries)
Contributes additional experienced operational management with in-depth knowledge of the African market
and with particular experience of turning around incumbents
Ability to consolidate by acquiring majority control
Leading market positions with #1 and #2 positions in all markets
Minimum overlap with Etisalat’s exiting portfolio – Exception of Gabon
Significantly enhances Etisalat financial and operational profile and immediately accretive at Etisalat level
Opportunity for Etisalat to bring value e.g. reduced capex costs, mobile data expertise and digital services
Additional values through synergy potential and economies of scale in a number of areas
5. Financial Review
Etisalat Group
31
FY’10 FY’11 FY’12 FY’11-12 Growth
9 M ‘12 9 M ’13 9M ’12-13
Growth
Subs (m) (1) (2) 95 117 139 +18% 130 144 +11%
Revenue (AED m) 31,929 32,242 32,946 +2% 24,467 29,080 +19%
EBITDA (AED m) 16,561 15,882 16,855 +6% 12,556 14,519 +16%
EBITDA Margin 52% 49% 51% +2pp 51% 50% -2%
Net Profit 7,631 5,839 6,742 +15% 5,888 5,625 -4%
Net Profit Margin 24% 18% 20% +2pp 24% 19% -5pp
EPS (AED) 0.97 0.74 0.85 +15% 0.74 0.71 -4%
Maintained solid subscriber growth momentum with double digit growth
Revenue growth driven by strong performance in the domestic market
Continued data and internet revenue growth in all markets resulting from uptake of new products and services
One of the highest EBITDA margins in the global telecom sector despite changes in geographic and product mix
Improvement in net profit despite higher Federal royalties and forex losses and lower interest income
― Prior year net profit positively impacted by one-off related to partial sale of XL Axiata. Adjusting for the one-off, net profit would have increased Y/Y by 2%
(1) Subscriber numbers calculated as aggregate number of GSM, CDMA, fixed, dialup, fixed broadband and WLL lines generating revenue during the last 90 days. (2) Subscriber numbers reported in 2010-2012 have been adjusted to exclude XL Axiata operations due to the reclassification of XL Axiata investment as “other investments available for sale”
effective from September 2012.
Highlights
Domestic vs. Int’l International
24,467
29,079 1,580
(366)
3,693 21
(316)
9M'12 UAE Egypt Asia Africa Other 9M'13
Group Revenue
32
31,929 32,242 32,946
24,467 29,080
2% 1% 2% 2%
19%
FY'10 FY'11 FY'12 9M'12 9m'13
Revenue YoY growth %
Note: “Other revenues” consist of non-telecom revenues, management fees, etc.
Maintained revenue growth momentum with Y/Y growth of 19% driven by strong performance of domestic operations and Asia Cluster
Revenues from international operations grew by 48% and contributed 36% to consolidated Group revenue, an improvement of 7 points compared to 9M’12
— Revenue growth in Egypt impacted by currency devaluation
— Revenue growth in Asia Cluster benefited from consolidation of operations in Pakistan
— Revenue growth in Africa Cluster impacted by currency devaluation in Sudan and competitive environment in Ivory Coast
Highlights
Revenue (AED m) and YoY growth (%) Sources of Revenue growth – 9M’13 vs 9M’12 (AED m)
Revenue by Cluster (9M’13)
UAE 64%
Int’l 36%
Pakistan 36%
Egypt 33%
Afghan. 7%
Others 17%
Ivory Coast 6%
Others <1%
UAE 74%
Int’l 22%
Others 4%
Group EBITDA
33
In 9M’13, group consolidated EBITDA grew to AED 14.5bn representing YoY growth of 16%
EBITDA growth was mainly due to strong revenue growth in the UAE and Asia Clusters
In the UAE, 9M’13 EBITDA increased Y/Y by 6% to AED 10.7bn leading to EBITDA margin of 58% in comparison to 60% of the previous year
EBITDA of consolidated international operations increased Y/Y by 51% in 9M’13, resulting in 22% contribution to group EBITDA, an improvement of 5 points compared to 9M’12
― Egypt impacted by currency devaluation and higher network costs
― Asia Cluster benefited from the consolidation of Pakistan
― Africa Cluster impacted by higher operating and marketing expenses and new taxes on incoming international calls
16,561 15,882 16,855 12,576 14,530
52% 49% 51% 51% 50%
FY'10 FY'11 FY'12 9M'12 9M'13EBITDA EBITDA Margin
12,576
14,530 629
(177)
1,360
(117)
258
9M1'12 UAE Egypt Asia Africa Other 9M'13
Note: “Other EBITDA” consist of results from non-telecom operations, management fees, etc.
Highlights
EBITDA (AED m) & EBITDA Margin Sources of EBITDA growth – 9M’13 vs 9M’12 (AED m)
EBITDA by Cluster (9M’13)
Domestic vs. Int’l International
Pakistan 40%
Egypt 39%
Afgh. 3%
CDI 5%
Others 11%
Group CAPEX
34
5,899
4,300 4,164 2,694
4,186
18%
13% 13% 11%
14%
FY'10 FY'11 FY'12 9M'12 9M'13
CAPEX CAPEX/Revenue
CAPEX (AED m) & CAPEX/Revenue Ratio (%)
In 2013, capital spending during the year focused on capacity and coverage and deployment of 3G networks and expanding LTE rollout
Capital investment in the UAE focused on enhancing capacity and ensuring 4G leadership
− Etisalat has deployed over three million kilometres of fibre optic across the UAE
− The company expanded the LTE network coverage to over 82% of the population
− FTTH roll out progress to exceed 1.5 million home pass
Etisalat completed the highest 4G LTE speed test in the world, which reached 500 Mbps
Capital investment in international operations grew by 105% and contributed 63% of consolidated capex in 9M’13:
― Higher capex spend in Egypt to support network expansion
― Asia Cluster impacted by consolidation of Pakistan operations representing 20% of Group consolidated capex
― Higher spending in Africa Cluster due to the Universal Mobile License acquisition in Benin and 3G network deployment in Ivory Coast
Highlights
CAPEX by Cluster (9M’13)
UAE 36%
Int’l 63%
Domestic vs. Int’l International
Pakistan 31%
Egypt 28%
AT 28%
Others 13%
Highlights Net cash position (AED m) 9M’12 9M’13
Operating 8,403 7,335
Investing (56) (3,166)
Financing (5,994) (6,275)
Net change in cash 2,535 (2,107)
Effect of FX rate changes (149) 112
Ending cash balance 12,176 11,939
Borrowings by Operation (AED m)
1,856
1,594
1,097
805
380 374
Egypt AT Pakistan Afgh. Tanzania Sri Lanka
Group Balance Sheet & Cash Flows
35
Balance Sheet (AED m) FY‘12 9M’13
Cash & Cash Equivalent 13,934 11,939
Total Assets 79,951 77,933
Total Debt 5,806 6,106
Net Cash 8,128 5,833
Total Equity 46,056 44,716
(1) Atlantique Telecom Countries are Benin, Central African Republic, Cote d’Ivoire, Gabon, Niger, Togo.
(1)
Strong financial position
Cash balance and working capital impacted by payment of Federal royalties and higher dividends payment in April and August 2013
Operating cash flow impacted by royalty payments
36
Country by Country Financial Review
UAE: Solid execution drives growth
37
FY’10 FY’11 FY’12 FY’11-12 Growth
9 months ‘12
9 months ‘13
Growth
Subs(1) (m) 8.3 9.0 +8% 9.0 10.2 +13%
Revenue (AED m) 24,294 23,004 22,746 -1% 16,895 18,475 +9%
EBITDA (AED m) 15,168 13,256 13,456 +2% 10,058 10,686 +6%
EBITDA Margin 62% 58% 59% +1pp 60% 58% -2pp
Net Profit 7,419 5,969 5,907 -1% 4,459 4,633 +4%
Net Profit Margin 31% 26% 26% 0pp 26% 25% -1pp
CAPEX 2,262 1,767 1,795 +2% 1,264 1,506 +16%
CAPEX/Revenue 9% 8% 8% 0pp 7% 8% -1pp
Growth in active subscribers base steered by healthy growth in eLife and mobile subscribers
Strong revenue growth underpinned by data and wholesale segments and handsets sales
Healthy EBITDA margin at 58% despite higher proportion of low margin handset sales and higher marketing and network maintenance expenses
Improvement in net profit Y/Y despite higher Federal Royalty charges under the new royalty scheme
— Y/Y revenue growth impacted by lower interest income due to full payment of Federal Royalty in April 2013
Higher capex spend with focus on ensuring leadership in 3G/4G
(1) Subscriber numbers calculated as aggregate number of GSM, fixed, fixed broadband and eLife lines generating revenue during the last 90 days. Source: IMF, TeleGeography Reports, WCIS, TRA
Highlights Macro and Market Snapshot (2012)
Population (m) 7.9
GDP ($bn) 358.9
GDP Growth (%) 3.9
Penetration Rate (%) 180.7
ARPU ($) 34.6
Number of Players 2
Etisalat Position 1
0.75 0.81 0.79 0.89
450 458
FY'11 FY'12 Q3'12 Q3'13
Fixed BB ARPL
0.35
0.51 0.48
0.65
343 363
FY'11 FY'12 Q3'12 Q3'13
E-Life (2P & 3P) ARPL
0.94 1.11 1.23 1.25
5.40 5.96 5.82 7.01
146 136 129 124
FY'11 FY'12 Q3'12 Q3'13
Postpaid Prepaid Blended ARPU
UAE: Subscriber Growth in High Value Segments
38
1.17
1.10 1.11
1.06
116 107 111 108
FY'11 FY'12 Q3'12 Q3'13
Fixed 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.
Mobile Subs (m) & ARPU(1) (AED)
Fixed Broadband(3) Subs (m)
Fixed Subs (m) & ARPL(2) (AED)
eLife Subs – Double & Triple-Play (m)
64%
36%
UAE: The Leading Telecom Operator
39
Mobile Market Share (%)
Subscribers
Fixed Market Share(2) (%)
Revenue Subscribers Revenue
9M’13 EBITDA Margin (%) Q3’13 ARPU (AED)
Mobile Fixed
Total:15.2m Total: AED17.2bn Total:1.8m Total: AED7.8bn
Source: Latest company filings (1) Market Share data is based on first nine month results of FY 2013 (2) Fixed line subscribers include Etisalat fixed broadband and eLife double and triple play subscribers.
54.5%
45.5%
83.4%
16.6
%
57.8%
40.5% 124
106
1
108
1
NA
86.4%
13.6%
1,571
1,129 1,174
553
750 40%
25% 23%
15%
22%
FY'10 FY'11 FY'12 9M'12 9M'13
CAPEX CAPEX/Revenue
Egypt: Political unrest impacting performance
40
Maintained market position in a difficult macro and economic environment
Strong revenue growth in local currency driven by customer acquisitions and high growth in mobile data usage, despite political unrest
Revenue growth Y/Y impacted by currency devaluation
Maintained strong EBITDA margin at mid 30’s level despite change in revenue mix towards low margin terminals and higher network costs
Continued to invest in maintenance capex and capacity upgrade
Highlights
Total Subscribers (1) (m)
Macro and Market Snapshot (2012)
Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
4,114 4,500
5,075
3,773 3,407
35% 39% 39% 37% 36%
FY'10 FY'11 FY'12 9 months'12
9 months'13
Revenue EBITDA %
71
83
97 94 97
12% 17%
24% 24% 23%
FY'10 FY'11 FY'12 9M'12 9M'13
Subscribers Market Share %
Population (m) 84.6
GDP ($bn) 256.7
GDP Growth (%) 2.2
Penetration Rate (%) 105.2
ARPU ($) 4.4
Number of Players (Mobile) 3
Etisalat Position 3
(1) Subscribers and market share data as per statistic published by the Ministry of Information and Technology as of July 2013
Source: IMF, TeleGeography Reports, WCIS
29.4
34.1 35.8 35.8 36.5
FY'10 FY'11 FY'12 9M'12 9M'13
983
1,414 1,564
1,169
(25%) (13%)
11%
10%
30%
FY'10 FY'11 FY'12 9M'12 9M'13
Revenue EBITDA %
1,379
655
566
669
1,087 140%
46%
36%
36% 22%
FY'10 FY'11 FY'12 9M'12 9M'13
CAPEX CAPEX/Revenue
Asia: Steady Revenue Growth with Improved EBITDA Margin Afghanistan, Pakistan(1) and Sri Lanka
41
In 2013 Asia Cluster benefited from consolidation of Pakistan operations. Excluding Pakistan:
— Revenue growth Y/Y would have been flat
— EBITDA Margin would have been flat at 17%
Highlights
Subscribers (m)
Macro and Market Snapshot (2012)
Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
(1) Consolidation of Pakistan operations effective 1 Jan 2013. (2) Asia Cluster’s subscribers before consolidation of operations in Pakistan Source: IMF, TeleGeography Reports, WCIS`
Afghanistan Pakistan Sri Lanka
Population (m) 34.1 181.6 21.3
GDP ($bn) 19.9 231.9 59.4
GDP Growth (%) 10.2 3.7 6.4
Penetration Rate (%) 61.0 67.4 102.8
ARPU ($) 5.1 2.0 2.2
Number of Players (Mobile) 4 5 5
Etisalat Position 3 F1/M3 3
6.1 (2) 9.0 (2)
8.2 (2) 8.2 (2)
Higher Capex spend mainly due to Pakistan operations
4,862
23.3 25.1
27.6 27.6 28.5
FY'10 FY'11 FY'12 9M'12 9M'13
4,550 4,597 4,653
3,426
3,703 37% 33%
28%
19%
35%
FY'10 FY'11 FY'12 9M'12 9M'13
Revenue EBITDA %
1,038
917
1,094
944
833
24% 20%
24% 28% 22%
FY'10 FY'11 FY'12 9M'12 9M'13
CAPEX CAPEX/Revenue
Pakistan: Top-line and operating profit growth with improvement in margin
42
Enhanced profitability driven by continued revenue growth coupled with effective cost control measures
PTCL’s 9M’13 revenue increased by 8% compared to 9M’12
PTCL is the largest and fastest growing broadband service provider in Pakistan
— Launch of new broadband packages for wireline and wireless customers resulted in 37% increase in customers during 9M’13
Capacity of CDMA wireless network being increased by 100% with objective to provide quality service through expanded coverage in existing as well as un-served areas
Highlights
Subscribers (m)
Macro and Market Snapshot (2012)
Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
Source: IMF, TeleGeography Reports, WCIS
Population (m) 181.6
GDP ($bn) 231.9
GDP Growth (%) 10.0
Penetration Rate (%) 67.4
ARPU ($) 2.0
Number of Players (Mobile) 5
Etisalat Position Fixed 1 / Mobile 3
7.6
9.4
12.2 11.3
12.0
FY'10 FY'11 FY'12 9M'12 9M'13
2,141
2,549 2,775
2,066 2,087
17%
24% 26%
28%
22%
FY'10 FY'11 FY'12 9M'12 9M'13
Revenue EBITDA %
574
686
485
324
811
27% 27%
17% 16%
39%
FY'10 FY'11 FY'12 9M'12 9M'13
CAPEX CAPEX/Revenue
Africa: Deploying 3G networks to drive future growth Ivory Coast, Benin, Togo, Gabon, Niger, CAR(1), Tanzania, & Sudan
43
Strong subscriber acquisition mainly driven by growth in Ivory Coast, Benin and Togo
― Growth impacted by regulatory enforced SIM registration in Tanzania
Slower revenue growth in 9M’13 due to competitive pressures in Ivory Coast and currency devolution in Sudan
EBITDA margin impacted by introduction of a new tax on incoming international calls in West Africa and higher network rollout costs in 2013
Acquired Universal Mobile License in Benin and continued 3G network deployment in Ivory Coast
Highlights
Subscribers (m)
Macro and Market Snapshot (2012)
Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
(1) CAR stands for Central African Republic. (2) Atlantique Telecom Countries are Benin, Central African Republic, Cote d’Ivoire, Gabon, Niger, Togo.
(3) Fixed line market data. Source: IMF, TeleGeography Reports, WCIS
Atlantique Telecom Countries(2) Tanzania Sudan
Population (m) 59.9 48.6 35.5
GDP ($bn) 62.9 28.2 59.9
GDP Growth (%) 6.7 6.8 -4.4
Penetration Rate (%) 66.3 54.1 13.3(3)
ARPU ($) 6.2 3.8 NA
Number of Players Between 2 and 7 5 2(3)
Etisalat Position In the top 3 in each country 4 1(3)
6.8
10.8
14.9 14.6 15.8
FY'10 FY'11 FY'12 9M'12 9M'13
852
2,034
2,957
2,148
2,386
(61%)
(22%)
6%
5%
-1%
FY'10 FY'11 FY'12 9M'12 9M'13
Revenue EBITDA %
895
1,300 1,533
1,148
952
105%
64%
52% 53%
40%
FY'10 FY'11 FY'12 9M'12 9m'13
CAPEX CAPEX/Revenue
Nigeria: Maintained Growth Rates in highly competitive market
44
Steady growth in subscriber base driven by innovative and unique offers
Double digits revenue growth despite MTR cut and stringent competitive environment
Lower EBITDA margin as a result of higher network costs supporting network expansion and higher marketing expenses
EBITDA margin impacted by non-recurring items in 2013. Adjusting for these items, EBITDA would have been 2%
Population coverage of network exceeding 77%
Capex focused on expanding 3G coverage and reinforcing network quality
Highlights
Subscribers (m)
Macro and Market Snapshot (2012)
Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
Population (m) 169.1
GDP ($bn) 268.7
GDP Growth (%) 10.1
Penetration Rate (%) 66.7
ARPU ($) 6.5
Number of Players 4
Etisalat Position 4
Source: IMF, TeleGeography Reports, WCIS
3%
15,789
19,771
23,311
16,633 17,792
38%
37% 36%
36% 38%
FY'10 FY'11 FY'12 9M'12 9M'13
Revenue EBITDA %
3,242 3,648
4,792
3,815
3,188
21% 18%
21% 23%
18%
FY'10 FY'11 FY'12 9M'12 9M'13
CAPEX CAPEX/Revenue
Saudi Arabia: Profitable Growth with Increasing Dividend Pay-out
45
Mobily maintained its strong performance and posted solid results in 9M’13
— Revenues grew Y/Y by 7% with EBITDA margin increasing by 1 points to 38%
— Capex spending focused on ensuring leadership in 3G and LTE
Dividend of AED 735 million received from Mobily for the first 9 months of 2013 in addition to 10% stock dividends related to Q4’12
Highlights
Mobily Dividends Paid
Macro and Market Snapshot
Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
Population (m) 29.0
GDP ($bn) 727.3
GDP Growth (%) 8.6
Penetration Rate (%) 171.7
ARPU ($) 25.5
Number of Players (Mobile) 3
Mobily Position 2
2.00
3.25
4.15
3.00
3.55
376
570
763
565
735
FY'10 FY'11 FY'12 9M'12 9M'13
DPS (SAR) Total Dividends to Etisalat (AED m)
Source: IMF, TeleGeography Reports, WCIS
2013 Outlook: Management’s Guidance(1)
46
Revenue Growth %
EBITDA Margin%
CAPEX / Revenue Ratio
17% - 18%
49% - 50%
15% - 17%
19%
50%
14%
(1) All figures represent consolidated numbers and include potential impact of consolidation of Pakistan operations in 2013
Financial Objective Outlook 2013 Actual 9M 2013