investor presentation march 2014telecom...• ufone (25.0 million) • zong (23.7 million) • warid...

Investor Presentation March 2014

Investor Presentation © Global Telecom Holding S.A.E. 2014

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 forward-looking 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

Disclaimer


4Q13 Highlights 4

Shareholder Structure 5

Global Presence 6

Market Position 7

GTH Operations 8

Appendix 22

Agenda

3


Djezzy1: 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

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

908

834

4Q12 4Q13

425 397

4Q12 4Q13

84 89

4Q12 4Q13

47.7% 46.8%

Customers1&2

Total Revenues3

Group EBITDA3 & EBITDA Margin

6% Organic

3% Organic

4Q13 Highlights

4


ALTIMO TELENOR

OJSC VIMPELCOM

KYIVSTAR

GTH FREE FLOAT

WIND ITALY GTH

56.2% (Economic) 33.0% (E) 10.8% (E)

100.0% 100.0% 100.0% 51.9%

47.9% (Voting) 43.0% (V) 9.2% (V)

48.1%

VIMPELCOM FREE FLOAT

Shareholder Structure

5


GTH serves a population of approximately 459 million with an average penetration of 57%

BANGLADESH Population: 163.6 million GDP Growth: 6.1% GDP/Capita PPP: USD2,000 Pop. Under 15 years: 33% Mobile Penetration: 70%

ZIMBABWE Population: 13.2 million GDP Growth: 4.4% GDP/Capita PPP: USD600 Pop. Under 15 years: 39% Mobile Penetration: 71%

CENTRAL AFRICA REPUBLIC Population: 5.2 million GDP Growth: 4.1% GDP/Capita PPP: USD900 Pop. Under 15 years: 41% Mobile Penetration: 18%

BURUNDI Population: 10.9 million GDP Growth: 4.0% GDP/Capita PPP: USD600 Pop. Under 15 years: 46% Mobile Penetration: 24%

ALGERIA Population: 38.1 million GDP Growth: 3.3% GDP/Capita PPP: USD7,300 Pop. Under 15 years: 28% Mobile Penetration: 88%

PAKISTAN Population: 193.2 million GDP Growth: 4.4% GDP/Capita PPP: USD3,100 Pop. Under 15 years: 34% Mobile Penetration: 68%

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

CANADA2

Population: 34.6 million GDP Growth: 1.7% GDP/Capita PPP: USD42,300 Pop. Under 15 years: 15% Mobile Penetration: 85%

Global Presence1

6


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

Market Position

7


Algeria

8


Population1: 38 million GDP/capita1: USD 7,300

• 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

• 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

• 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

Market shares3

53%

25%

22% Djezzy

Mobilis

Ooredoo

Market size2: 33.4 million Penetration2: 88%

Market players (subs): • Djezzy (17.6 million) • Mobilis (8.4 million) • Ooredoo (7.4 million)

• 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

Competitive landscape

Macro environment Regulatory environment

Strategic direction

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

Djezzy - Overview

9


14.1 14.6 15.1 16.2 16.7 17.6

2008 2009 2010 2011 2012 2013

134.7 135.6 129.3 135.6 143.3 143.1

2008 2009 2010 2011 2012 2013

Mobile Customers1 (Millions) Revenues (DZD Billions)

CAPEX2 (DZD Billions) & CAPEX/Revenue

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

Operating Cash Flow3 (DZD Billions)

EBITDA (DZD Billions) & EBITDA Margin

78.8 73.2 68.7 80.4 85.2 84.0

58.5% 54.0% 53.2%

59.3% 59.4% 58.7%

2008 2009 2010 2011 2012 2013

10.8

19.0

6.9

2.9 4.5

6.7 8.1%

14.0%

5.4%

2.2% 3.1%

6.2%

2008 2009 2010 2011 2012 2013

67.9

54.3 61.8

77.5 80.7 77.3

2008 2009 2010 2011 2012 2013

Djezzy - KPIs

10


Pakistan

11


29%

25% 19%

18%

10% Mobilink

Telenor

Ufone

Zong

Warid

1. CIA factbook 2. Market share as provided by the regulator as of November 30, 2013

• 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

• 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

• 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

Market size2: 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 shares2

• 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



Strategic direction

Mobilink - Overview


12


37.7

12.8 12.2

22.6 17.2 19.8

42.9%

14.7% 12.9%

23.0%

16.3% 18.4%

2008 2009 2010 2011 2012 2013

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

Mobile Customers (Millions) Revenues (PKR Billions)

CAPEX1 (PKR Billions) & CAPEX/Revenue

EBITDA (PKR Billions) & EBITDA Margin

Operating Cash Flow2 (PKR Billions)

-2.4

18.9

25.2

17.5

28.4 25.0

2008 2009 2010 2011 2012 2013

35.3 31.7 37.3 40.0

45.6 44.8 40.2%

36.5% 39.6%

40.9% 43.1%

41.6%

2008 2009 2010 2011 2012 2013

Mobilink - KPIs

13

28.5 30.8 31.8 33.4

36.1 37.6

2008 2009 2010 2011 2012 2013

87.8 86.9 94.3 97.9

105.8 107.6

2008 2009 2010 2011 2012 2013


Bangladesh

14



1. CIA Factbook 2. Penetration figures are provided based on BTRC published figures 3. BTRC market share as at January 31, 2014

• 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

• 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

• banglalink: 2nd 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

Market size3: 114.8 million Penetration2: 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)

• 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

25%

42%

22%

7% 1%

3% bangalink

Grameenphone

Robi

Airtel

Citycell

Teletalk

Market shares3

banglalink - Overview

15


28.6

8.7

16.4

11.9 10.2 10.3

143.0%

36.3% 51.1%

31.3% 22.6% 26.3%

2008 2009 2010 2011 2012 2013

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

Mobile Subscribers (Millions) Revenues (BDT Billions) EBITDA (BDT Billions) &

EBITDA Margin

CAPEX1 (BDT Billions) & CAPEX/Revenue

Operating Cash Flow2 (BDT Billions)

0.4

7.0 9.0

13.0 15.7 14.6

2.0%

29.2%

28.1%

34.2%

34.7% 37.1%

2008 2009 2010 2011 2012 2013

-28.2

-1.7 -7.4

1.1 5.5

4.3

2008 2009 2010 2011 2012 2013

10.3 13.9

19.3

23.8 25.9

28.8

2008 2009 2010 2011 2012 2013

banglalink - KPIs

16

20.0 24.0

32.0

38.0

45.4 39.4

2008 2009 2010 2011 2012 2013

Appendix


5,184

2,838 2,346

4,757

2,026

2,731

Gross Debt Cash Net Debt

4Q13 4Q12

89%

11%

USD

Local

87%

4% 8%

1% 1%

GTH

Pakistan

Bangladesh

Algeria

Others

Debt by Currency

Gross & Net Debt (USD Millions)

Debt by Entity

Debt by Entity

GTH

4,495

Pakistan 198

Bangladesh 412

Algeria 47

Others 32

Total 5,184

18

Debt Profile


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

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

EBITDA1 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 Sale2 (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 Assets4 (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 Parent5 (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. Net debt is calculated as a sum of short term debt, long

term debt, less cash and cash equivalents

20

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 Debt1 2,345,653 2,731,499


21

Cash Flow Statement

USD thousands 31 December

2013 31 December

2012

Cash Flows from Operating Activities

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

(547,658) (412,481)

Proceeds from Disposal of Property and Equipment, Subsidiaries and Financial Assets

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


For your inquiries, please contact:

Mamdouh Abdel Wahab Head of Investor Relations

E: [email protected] T: +202 2461 5120/21 F: +202 2461 5055/54 W: www.gtelecom.com

22

Contacts

mailto:[email protected]



http://www.gtelecom.com/





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