the egyptian company for mobile services “mobinil” · egypt is characterized by sharp income...
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The Egyptian Company for Mobile Services “Mobinil”
One on One - EFG Hermes conference
March, 2010
Disclaimer
This presentation contains “forward-looking statements” about Mobinil. Such statements are not actualfacts and include expressions about management’s opinions on the results of its strategies andmanagement’s expectations about new and existing programs, opportunities, technology and market
diticonditions.
Although Mobinil believes its expectations are based on reasonable assumptions, these forward lookingstatements are subject to numerous risks and uncertainties. These statements should not be regarded as arepresentation that anticipated events will occur or that expected objectives will be achievedrepresentation that anticipated events will occur or that expected objectives will be achieved.
Important factors that could cause actual results or performance to differ materially from the resultsanticipated in The forward-looking statements include, among other things, the success of theannounced plans and the,Mobinil’s other strategic, financial and operating initiatives, changes in economic, business andcompetitive market, risks and uncertainties attendant upon International operations, technological trends,exchange rate fluctuations and market regulatory factors.
The forward looking statements in this presentation speak only as of the date hereof and Mobinil doesThe forward-looking statements in this presentation speak only as of the date hereof and Mobinil doesnot undertake to update any forward-looking statement to reflect events or circumstances after the datehereof or to reflect the occurrence of unanticipated events.
This presentation does not constitute an offer or invitation to purchase any shares or other securities inp p ythe company and neither it nor any part of it shall form the basis of, or be relied upon in connection with,any contract or commitment whatsoever.
Any decision to purchase shares or other securities in the Company is the sole responsibility of thei t h h ll b ibl f hi d dili ”
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 2
investors who shall be responsible for his own due diligence.”
Agenda
1. Economy and Market Overview
2. Mobinil Overview
3. Competitive Environment
4. Regulatory Environment
5. Operational Highlights
6. Q & A
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 3
Economy and Market Overview
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 4
Egypt the largest market in the region in terms of population
Population: 77 6Population: 77.6
43% urban; 57% rural
58 % < 25 years of age
Literacy rate: 57%
97% f i h bit li 4% f l d
Area: 997,739 km2
97% of inhabit. live on 4% of land
2009GDP Est. : $163 Bn EGP.
GDP per capita (09 Est): $2,450
Sources: World Bank, Oct 09
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 5
Egypt update – FY2009
Key indicators 2009 2010 2011 2012 2013
Real GDP growth (%) 4.7 4.5 5 5.5 6
Consumer price inflation (avg %) 16.2 8.5 8 7.5 7
Source : International Monetary Fund, World Economic Outlook Database, October 2009
Inflation drops and global slowdown appears to stabilize
• CPI declined by 1.3 %(m/m) in Dec 2009, to maintain the annual inflation rate broadlyunchanged at 13 24 %compared to 13 29 percent in Nov 2009unchanged at 13.24 %compared to 13.29 percent in Nov 2009
• Dec 09 is the second consecutive month, the negative monthly inflation rate was largely due tolower prices of fruits and vegetables which have been the key drivers of headline inflation sinceFeb 2009.
• In the meantime, annual core inflation inched up to 6.85 % in Dec compared to 6.59 % inNov.
• Meanwhile, annual real GDP growth recorded 4.9 % in 2009/10 Q1. While this outturnremains below the 7% average registered over the past three years it reflects a steadyremains below the 7% average registered over the past three years, it reflects a steadyimprovement in economic activity. There are encouraging signs that the global slowdown hasstabilized somewhat over recent months and the outlook for the international economyappears to have improved as well.
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 6
Source : CBE Feb 2010
Egypt is characterized by sharp income differentials
• Egyptian market is characterized by two extremely large segments one high-end small in size yet big in value
and the other is cost conscious yet demanding lower-end segments mass market.
Richest 10% A10%
Egyptian market is divided:wealthy, status conscious high-end segment cost conscious yet demanding lower-end segments
( k t & lt l d) 30% of GDP
Next 10% 14% of GDP
10%
B: 10%
(mass market & ultra-low end)
Enterprise subscribers have different requirements from personal users, therefore, different value proposition
Ke and Large acco ntsSecond 20% 20% of GDP
Thi d 20%
C: 20%
Clearly all three mobile operators are trying to capture both value and volume by
Key and Large accountsSME’s positioning
Third 20% 15% of GDP
Fourth 20% 12% of GDP
D: 20%
E: 20%
to capture both value and volume, by targeting 4 segments
High value personalMass marketLow end 12% of GDP
Poorest 20% 9% of GDPF: 20%
Low end Enterprise
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 7
SEC division may not be hard & fast. Some Class B will fall under High Value, and some D will gravitate to Mass market offerings, and so on
Egyptian telecommunications market
• Fixed line subscribers and penetration remained stable over the last years – future negativeimpact due to fierce mobile competition.
• The mobile market offers significant growth potential with penetration rates standing at• The mobile market offers significant growth potential with penetration rates standing at76.4%.
89 6% 100%80
59
71
56.6%
76.4%
89.6%
60%
80%
100%
50
60
70
80
31
43
15% 16% 13% 13%
42.2%
20%
40%
60%
20
30
40
Milli
ons
11 12 10 10
15% 16% 13% 13%
0%
20%
0
10
2007 2008 2009 2010
Fixed line subs Mobile line Fixed line Penetration% Mobile Penetration%
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 8
Source: Company estimates
Mobinil’s strategy: the challenges
Critical challengingg g
Managing sever
Managingsmartly the
Maintaining leadership
Build the rightcapabilities
Improvingand
Closing the service quality
competition that leads to an aggressive
price war
yimpact of the
global financial crisis anticipated to
pposition
Drive the market with
p
Modernizing and
enhancing
optimizing organization
efficiency
q ygap (actual
and perceived)
price war anticipated to continue
through 2010
market with the right plan
Quest for
enhancing the
infrastructure and systems
new source for value creation
y
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 9
Mobinil Overview
In our vision lies our mission
Our MissionOur Vision
To maintain our position as the leading mobile
To be part of people’s daily lives by providing
service provider in Egypt, providing the best quality
of service for our
reliable and simple services that help people
interact and communicate customers, the best
working environment for our employees top value
better.
our employees, top value for our shareholders and proudly contributing to the development of our the development of our
community.
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 11
Ownership structure
OTH 28.75% of Mobinil
Orascom Telecom Holding SAE 20%
FT/Orange 71.25% of Mobinil ECMS Mobinil Telecommunications 51.03%
Free Float 28.97%
36.4% of indirect ownership of ECMS 34.6% of direct/indirect ownership of ECMS
www.francetelecom.com www.otelecom.com
• One of the world's leading telecommunication operators
• 189 million subscribers in 30 countries at 2009, September 30.
• Leading international telecommunications groups• Over 88 million subscribers as of September,
2009,operating in eleven emerging markets having a population under license of 498 million .
• Increasing focus on transformation of the group into an integrated operator.
• Operating GSM networks in high growth markets across the MENA , Africa and South Asian markets.
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 12
Key strengths
Leading mobile operator in Egypt Strong majority
Focus on the E ti bil 1 with around 42%
market share
Strong majority shareholders (France
Telecom and Orascom Telecom)
2Egyptian mobile market – not
participating in regional expansion
10 1
GSM market penetration has still room for expanding3Healthy EBITDA level9
Favorable market demographics –
young population 4Low leverage8 young population (60% under 25 years
of age)
4Cost of customer
Low leverage8Significant un-
realized spending power 5Significant bias to a
pre-paid subscriber model – low 6
Cost of customer acquisition is low as
there are limited handset subsidies
7
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 13
doubtful receivables
Corporate priorities
structuring structuring the customers Data &
information Acquire maximum
Market Share profitably
Sustain future growth by expanding in new
territories
A more segmented Maintain competitive
advantage of being the Enhancegapproach to meet
dynamic market needs –Customer Centric
advantage of being the operator of choice for all
Egyptians – Customer intimacy
EnhanceQuality and Standards
ff b ibEnhance efficiency & agility Belong proudly to Mobinil Subscriber Base
management
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 14
The Strategy forward
Focus to consolidate and capitalize on the position being the preferred operator, and enhance our network and technology
High end and Low end
Customer Intimacy InvestmentInvestment Operational ExcellenceCustomer Intimacy• Deeper understanding of
customer needs• Maintain the emotional bond
and relationship with customers
Investment Choice
Investment Choice
I t t
p• Aligning costs to value• Continuously improve quality,
efficiency and reliability of operational processesp
• Service excellence Investment Choice
p p• Service adaptability
Driver of quantitative growth Driver of qualitative growth
Technology • Smart investment to compete
effectively
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 15
3U’s Steer commercial priorities
Low cost to serve• e-Recharge• No handset subsidy
Hi h CS t ti
The preferred brand.
Effective pricing• On net
Users
• High CS automation• Low CS costs
Innovative distribution channels:• University kiosks• Vans
• On-net• Regional offers• Simple tariffs• Segmented usage simulation
tariff
Active retention• Dedicated high value initiatives• Handset renewal programs• Point Scheme
Machine to machine• Strong development
of GSM PoS Card Systems
• GSM based meters Sales Force
Usage Uses• Point Scheme
Innovate mobile data• Instant Messaging• Internet packs• Prepaid MBB• Expanded use of musical apps
Sales Force Automation
New technologies• 3G• M-Wallet • M-Banking• Expanded use of musical apps.
• WAP portal functionalities• Business Everywhere• Blackberry, I-phone & push e-
mail• Streaming and WAP
M Banking• M-Advertising• Mobile TV
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 16
Competitive Environment
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 17
Competitive environment (1/2)
Key milestones mark the fiercely competitive 2009
S d G h H1 09• Steady Growth, H1 09Series of successful promotions secured Mobinilmarket leadership across all KPIs with significantgrowth during H1 09 compared to H1 08 Mobinil 19 pt. Etisalat 19 pt. Vodafone 19 pt.growth during H1 09 compared to H1 08.
• Paradigm Shift, May’09Th C N t d d “ diti d” t th
Khat El Masraeyeen
The Cross-Net door opened “unconditioned” to themasses with the launch of Etisalat aggressive tariff plan“19 pt Ahlan Kol ElNas” changing market parameters. Ahla Kalam Ahla Kalam Etisalat 15 pt.
• Price War, Q3 09To contain revenue loss and churn to competition dueto the Cross-Net move by Etisalat, Mobinil and
B l d t R d R dy ,
Vodafone responded first with aggressive On-Net tariffplans followed by matching – to Etisalat – Cross-Netplans coupled with Ramadan promo.
Baladeyat Ramadan Ramadan
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 18
Competitive environment (2/2)
Continued Price War (Unlimited and Prepaid Lines), Nov’09Aggressive launches from all three operators continued; with Mobinil’s
“Khat El Masry” offering the lowest on-net rate of EGP 0.08, and
Vodafone’s Kol El Masrayeen which offers a flat rate of EGP 0.19.
Etisalat followed by re-launching “Ahlan Kol El Nas” and adding an World in Your Hands
Kol El Doniay g g
extra promotion to revamp it (90 free Minutes). On the Post-Paid
front, Etisalat was the first to launch their “Unlimited” line, and
Mobinil and Vodafone matched their offer ith “Star Unlimited” and Kh t El K l El M K l ELN
Your Hands
Mobinil and Vodafone matched their offer with “Star Unlimited” and
“Vodafone Line Unlimited”.
A i I t ti l R t D ’09
Khat El Masry
Kol El Masryeen Kol ELNasReLaunch
Aggressive International Rates, Dec’09Etisalat closed the year by launching an aggressive International tariff
mid December, a EGP 1.99/minute flat rate to any destination in the Star Vodafone Green Line
world. Vodafone matched it two weeks later. Mobinil launched a 15%
discount promotion late 2009 followed by matching to competition in
Q1 2010.
Unlimited Unlimited Unlimited
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 19
Q
Mobile broadband (1/2)
• Mobinil launched a variety of Mobile Broadband offers tosuit different customer segments and address their variousneeds :
– First to launch prepaid MBB in Feb-09– Launched Student’s offer with a dedicated tariff plan
in Mar-09.– Launched limited 1.5GB new tariff plan in Jun-09 or
HP Mini2140
Compaq Mini Net book Offer
Launched limited 1.5GB new tariff plan in Jun 09 ormedium to high usage customers.
– New Broadband offer in Oct-09 that features aCompaq Mini Netbook, free data line + free 3G USBmodem all for EGP 2 222modem all for EGP 2,222.
– Launched a Laptop financing program in Nov-09.– New Mobinil Wi-Fi Adaptor that allows customer to
have Wi-Fi coverage without waiting for ADSL (usingh Wi Fi d d H i USB d f
Huawei mobile internet router
Laptop Financing
the Wi-Fi adaptor and a Huawei USB modem fromMobinil)
– Launched a Mobile Broadband Unlimited tariff inDec-09. USB modems: ZTE, Huawei, Sony Ericsson, HTC
– Launched prepaid blackberry in Nov-09.
• In addition, Mobinil also offers customers a wide varietyof updated devices to facilitate the use of MBB and offer a
Asus EEEPC
Wi-Fi Adaptor
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 20
of updated devices to facilitate the use of MBB and offer acomplete - easy to use - solution:
Mobile broadband (2/2)
• An internet Direct Marketing campaign was launched in November to promote and increase awareness about Mobinil’s Mobile Broadband offers. Mobinil vans visited selected locations, and distributed giveaways to potential high-end customers at exclusive holiday destinations, and residential areas in Greater Cairo that are potential high end customers at exclusive holiday destinations, and residential areas in Greater Cairo that are not served by DSL
• Mobinil continued its aggressive “عيش عالنت” internet promotions as follows:– Offered ultra-portable hp mini Netbook + free Mobinil Internet line + free 3G USB modem on Jun-7th
– Launched on Jun-24th its MBB promotion where customers can buy the USB modem for only EGP 280 and get the Internet Line for free. Offered 50% discount on USB modems and Mobile Internet Routers on Jun 29th– Offered 50% discount on USB modems and Mobile Internet Routers on Jun-29th.
– Offered the USB modem for free on Oct-22nd. EGP 99 is paid upfront, and refunded to the customer over 6 monthly instalments.
– Offered a Mobile Broadband Unlimited Bucket on Dec-12th.
عالنتعيش campaign
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 21
June 7th June 24th June 24th June 29th Oct 22nd Dec 12th
Regulatory Environment
Regulatory environment
I t ti
• Mobinil insists that termination rates between the 3 mobile operators should be symmetric as ithas always been.
Inter-connection • Mobinil is currently in dispute with Telecom Egypt in respect to mobile fixed interconnectionrates and insist on applying the original interconnection with Telecom Egypt by whichtermination revenue is shared on a 60:40 basis in favour of Mobinil.
• There is actually in Egypt 2 international gateways: one operated by Telecom Egypt and the
InternationalGateway
e e s actua y gypt te at o a gate ays o e ope ated by e eco gypt a d t esecond by Etisalat (limited to its own traffic). Both Mobinil and Vodafone Egypt routeinternational traffic via Telecom Egypt.
• Current outgoing and incoming international calls from Mobinil network uses TE’s gateway,Mobinil gets discount on outgoing traffic only according to a matrix agreed upon between twooperators in the currently applied Interconnection Agreement.
Competitive Practices
• The NTRA set new rules regarding all pricing moves, including informing in advance the NTRAof the new prices. NTRA has the right to stop any new price or promotion.The interconnection prices are excluded from new rules and must be approved by NTRA InCompetitive Practices • The interconnection prices are excluded from new rules and must be approved by NTRA. Inaddition, NTRA gave itself the right to amend at any time the interconnection prices, which willbe subject to quarterly review. Mobinil objected to this decision.
• Mobinil has a 3G coverage obligation as a result of acquiring a 3G license
Minimum Investment Obligations
– Year 1 – more than 25% of populated areas to be covered, Year 2 – more than 40% ofpopulated areas to be covered, Year 3 – more than 70% of populated areas to be covered,Year 4 – more than 86% of populated areas to be covered and Year 5 – more than 97% ofpopulated areas coveredS ifi i t l l t t hi h d ti d
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 23
– Specific coverage requirements also apply to most highways and connecting roads.
Operational Highlights
Network rollout
2G Network Map• Mobinil is covering 99.66% of
the Egyptian population as ofthe Egyptian population as ofDecember 2009.
• Mobinil provides exclusivecoverage to major oil fields andremote farms.
• Mobinil has added more than• Mobinil has added more than1,525 HSDPA 3G sites since 3GLaunch in Sep 08.
• Almost 10,000 2G cells withEDGE feature enabled.
• Mobinil covers the major touristic destinations.
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 25
• Mobinil 3G coverage is extended to almost all major cities.
Cell site installation – FY 09
• 570 2G sites and 721 3G sites.• Added 74 BSCs to network representing a +20% increase to Mobinil network in one year.• Added more than 15 MBHCA capacity for switches representing a +20% increase YoYAdded more than 15 MBHCA capacity for switches representing a +20% increase YoY• Installed 14.8 KTRX to cater for traffic and subscribers increase representing a +22% increase
YoY.• Added 5 new soft switches, and launching the new generation HLR (SDM) with capacity of 39M
SubsSubs.
Cell site installation
• Mobinil has 4,299 2G and 1,5253G cell sites in 2009.
Key facts
3 000
4,000
5,000
• Covering 2,600 cities, towns andvillages and more than 71highways.
1,000
2,000
3,000
highways.• Equivalent to approximately
99.66% of Egypt’s population,and 24 87% geographic coverage
-
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2G 3G
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 26
and 24.87% geographic coverage.2G 3G
Subscriber base growth
25 000
30,000
Postpaid Prepaid Closing Base 25M subscriber milestone
20,000
25,00020M subscriber milestone
15,000 10M subscriber milestone
10,000
915
756
745
701
647
606
575
555
555
586
609
639
659
667
694
686
6,05
0
6,47
4
7,36
1
8,56
6
10,0
22
11,2
95
13,1
47
14,5
63
15,6
06
16,9
33
18,3
02
19,4
77
20,5
20
22,1
87
23,9
31
24,6
68
6,96
5
7,23
1
8,10
6
9,26
7
10,6
69
11,9
01
13,7
22
15,1
18
16,1
61
17,5
18
18,9
11
20,1
15
21,1
79
22,8
53
24,6
25
25,3
54
0
5,000
Q1 06 * Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
1st growth phase 2nd growth phase
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 27
* Reclassification of 180K from Postpaid to Prepaid
The subscribers grew from 10million subs to 25million subs in 3 years.
Key operational performance indicators
Global ARPU (EGP)2009 Market Share
60
65
Vodafone
38.14%
Mobinil
41.95%
59 5955
48 47 47 4744
39 4038 37
35
40
45
50
55
Etisalat
19.91%
38 37
20
25
30
Q1 07
Q2 07
Q3 07
Q4 07
Q1 08
Q2 08
Q3 08
Q4 08
Q1 09
Q2 09
Q3 09
Q4 09
Global Revenue (M EGP) Global AUPU
Q Q Q Q Q Q Q Q Q Q Q Q
3,000 161170
1 64
44
0 725
18 351,500
2,000
2,500
125129
144
132127
140145
136141 142
136
125
140
155
1,78
6
2,08
3
2,24
3
2,13
6
2,25
4
2,44
1
2,66
2,64
2,49
0
2,7
27 27
0
500
1,000
95
110
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 28
0
Q1
07
Q2
07
Q3
07
Q4
07
Q1
08
Q2
08
Q3
08
Q4
08
Q1
09
Q2
09
Q3
09
Q4
09
80
Q1
07
Q2
07
Q3
07
Q4
07
Q1
08
Q2
08
Q3
08
Q4
08
Q1
09
Q2
09
Q3
09
Q4
09
Prepaid subscriber base
• The Egyptian mobile market is predominantly a prepaid market – with 97% of the subscriberbase being prepaid customers.
• Average revenues per user (ARPU) is taking a declining trend as new low value clients areadded, however total revenues have increased based on subscribers growth.
Revenue / Average Revenue Per User
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 29
Revenues without connection fees, roaming revenue and equipment sales
Post-paid subscriber base
• Post paid subscribers represent a minority, accounting for some 667k of Mobinil’s totalsubscriber base.
• Post paid ARPU has shown a recent decline as a result of price reductions in Mobinil’s offering –• Post paid ARPU has shown a recent decline as a result of price reductions in Mobinil s offering –this market remains somewhat price inelastic and hence price declines were not matched withincreased usage (tariff reductions were viewed to be necessary to reduce the gap betweenprepaid and postpaid tariffs).p p p p )
Revenue / Average Revenue Per User
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 30
Revenues without connection fees, roaming revenue and equipment sales
Summary financials – P&L
20092008200720062005(EGP in Millions)10,80710,0158,2486,3625,364Total operating revenues1,9071,6601,2861,114857Depreciation & Amortization
(5,686)(5,333)(4,548)(3,146)(2,610)Other operating expenses3,2143,0222,4142,1021,897Operating Income(641)(554)(92)(138)(85)Other Income/expenses
2 5732 4682 3221 9641 812Net profit before tax 2,5732,4682,3221,9641,812Net profit before tax (535)(499)(497)(437)(368)Income tax
2,0381,9691,8251,5271,444Net Income for the year after tax(0.4)(1.2)1.61.30.36Minority interest
20.2718.1616.9314.1113.14Earnings per share
Revenue (EGPm) / Revenue Growth EBITDA (EGPm) / EBITDA Growth
Some figures have been changed for comparative purpose
19% 19%
30%
21%20%
25%
30%
35%
8,000
10,000
12,000 24%
17%14%
27%
20%
25%
30%
4,000
5,000
6,000
5,36
4
6,36
2
8,24
8
0,01
5
,807
8%
5%
10%
15%
20%
2,000
4,000
6,000
754
216
673
681
122
14%
9%
5%
10%
15%
1,000
2,000
3,000
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 31
5 6 8 1 10 0%0
2005 2006 2007 2008 2009
2, 3, 3, 4, 5,
0%0
2005 2006 2007 2008 2009
Summary financials – Balance Sheet
20092008200720062005(EGP in Millions)1,8691,5881,347968923Current assets
12,77012,0708,7066,4085,522Long term assets14 63913 65810 0537 3766 445Total assets 14,63913,65810,0537,3766,445Total assets 6,0005,4294,4843,5823,157Current liabilities 4,9615,9873,8142,1611,751Long term liabilities
10,96111,4168,2985,7434,908Total liabilities 3,6792,2421,7551,6331,537Total shareholders equity (inc minority interest)
814650415282440Cash303253264232177Accounts receivable
2,5212,0871,2711,053906Accounts payable 2,5212,0871,2711,053906Accounts payable 4,9805,5504,1292,2681,775Borrowing (ST+LT)
Net Debt Development (EGPm) / Net Debt / EBITDANet Debt Development (EGPm) / Net Debt / EBITDA
1.01 1.05100%
150%
4,000
6,000 Net Debt Net Debt/EBITDA
335
987
715
900
166
0.480.62
0.81
50%
100%
2,000
4,000
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 32
1,3
1,9
3,7
4,9
4,1
0%0
2005 2006 2007 2008 2009
Summary financials – Cash Flow20092008200720062005(EGP in Millions)
2,0381,9691,8251,5271,444Net Income1,9071,6601,2861,114857Depreciation & Amortisation
97(73)200221(44)Other reconciliation adjustments (net)j4,0423,5563,3112,8622,257Cash flow from operating activities
(2,241)(2,671)(2,806)(1,959)(1,441)Capital expenditure(124)(861)(446)(123)(167)Other investments (net)
(2 365)(3 532)(3 252)(2 082)(1 608)Cash flow from investing activities (2,365)(3,532)(3,252)(2,082)(1,608)Cash flow from investing activities(932)(1,197)(1,771)(1,501)(1,915)Dividends paid7501,8202,677790979Proceeds of borrowing
(1,517)(417)(1,040)(408)(631)Repayments of borrowings00(8)7446Oth Fi i ( t) 00(8)7446Other Financing (net)
(1,699)206(142)(1,045)(1,521)Cash flow from financing activities(21)230(83)(265)(872)Net change in cash25427645129440Cash balance year end
Interest (EGPm) / (FFO/Interest Cover) FFO (EGPm) / (FFO / Net Debt)401,000 Interest Expense
FFO/Interest172%
133%
200%6,000 FFO
FFO/Net Debt
129 166 124 724
17.8 15.9
25.1
6.2 5.5
20500
2,30
1
2,64
1
3,11
0
3,63
0
3,94
5
133%
84% 74% 95%100%
2,000
4,000
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 33
129 166 124 587 724 00
2005 2006 2007 2008 2009
2 2 3 3 3
0%0
2005 2006 2007 2008 2009
Funds From Operations (FFO) calculated by adding depreciation and amortization expenses to earnings.
Financial return ratios
Mobinil continues to develop strong returns for its stakeholders.
Return metrics
120%
94% 93%
104%
88%
80%
100%
120%
55%58% 55%
43%37% 37%
40%
60%
80%
22% 21% 18%14% 14%
0%
20%
2005 2006 2007 2008 2009
ROE ROA ROCE
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 34
Investing into the future
8,000 3000C
Capital Expenditure / Subs Addition
• Capex
2 680 2 571
5,851 4,998 5,239
4,000
6,000
,
2000 Thou
sand
s
Millio
ns CapexSubscribers Additions
expenditure in line with subscriber base growth
1,44
1
1,95
9
2,80
6
2,67
1
2,24
1
2,680 2,571
0
2,000
0
1000
900
2005 2006 2007 2008 2009
Capex / Net Adds (EGP)Capex / Revenue
692
801
635 600
700
800
27%31%
34%
27%20%
30%
40%
558 499
200
300
400
500 27% 27%
21%
0%
10%
20%
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 35
200
2005 2006 2007 2008 2009
• Reduced Capex expenditure per new add excluding 3G increment in 2008
• High Capital investment to meet growing capacity requirements
2005 2006 2007 2008 2009
Performance measures
Revenue Per Line Lines per Employee1000
3 134 3,350 3,500 8,000
Line per employee
400
600
800
0 7 8 8 2,065
2,471
2,870
3,134
2,500
3,000
4,000
6,000 Employee
R li h d li d th b ib b h ffi i h h i ifi i
801 687 546 498 426200
2005 2006 2007 2008 2009
3,24
3
3,75
0
5,26
7
6,41
8
7,56
8
2,000 2,000
2005 2006 2007 2008 2009
• Revenue per line has declined as the subscriber base has increased.
• Efficiency has shown significant increase.
EBITDA Margin Net Income Margin55.0% 30 0%
45 0%
50.0%
55.0%
% % % % %10 0%
20.0%
30.0%
51.3
%
50.5
%
44.5
%
46.7
%
47.4
%
40.0%
45.0%
2005 2006 2007 2008 2009
26.9
%
24.0
%
22.1
%
19.7
%
18.9
%
0.0%
10.0%
2005 2006 2007 2008 2009
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 36
• Commensurate with other operators Mobinil maintains strong EBITDA margins of between 45 - 50%.
• Return on sales has been impacted by imputed interest, 3G revenue sharing obligations and license amortization.
2005 2006 2007 2008 2009
Stock performance
• Mobinil will continue to focus on maximizing shareholders’ wealth via dividend distribution witha cautious approach to maintain our strong Balance Sheet against market turmoil.
25300 Stock Price EPSP/E EPS (EGP)
13.14 14.1116.93
18.1620.26
15
20
25
200
250
300 Stock Price EPS
15.25
12.86
12 1011.87
16.93 18.1620.26
15 00
20.00
25.00
12.00
14.00
16.00
18.00 P/E EPS (EGP)
.2 .4 .9 .9 .5
5
10
50
100
15012.10
8.0913.14 14.11
5.00
10.00
15.00
4.00
6.00
8.00
10.00
200
181
204
146
240
00
2005 2006 2007 2008 2009
0.00 0.00
2.00
2005 2006 2007 2008 2009
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 37
Dividend policy
• Mobinil has no formal declared dividend policy, however over the past 6 years the company hasmade 2 interim payments preceding the final payment per year
– First payment declared post first half with payment made in September.Second payment declared post 3rd quarter with payment made in December– Second payment declared post 3rd quarter with payment made in December.
– Third payment declared after annual results with payment made in March / April.• The employees profit share is 10% of the distributed profit (required under Egyptian Law) with
a maximum of annual gross salary.• Mobinil expects to maintain a degree of flexibility in dividend policy as required (this was
demonstrated in 2008 and 2009 when dividend payout was reduced to enhance cash flowflexibility, secure capital growth, payment for 3G license and Link dot net anticipatedacquisition).
Total Dividend Payout / Dividend Per Share (EGP)
99%150%20.0
95% 99%70%
0%
100%
10.0
15.0
12.4
14.0
16.7
12.7
2
10%
0%
50%
-
5.0
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 38
2005 2006 2007 2008 2009
DPS Dividends Payout Ratio
Funding and liquidity policy
• Mobinil adopts a conservative funding policy which aims to minimise currency risk (borrowingsin Egyptian Pounds where possible) and match the life of assets as possible.
• Mobinil maintains no exposure to banking institutions in that cash is immediately offset againstMobinil maintains no exposure to banking institutions in that cash is immediately offset againstexisting bank overdrafts / revolving facilities.
• Mobinil’s operations generate gross monthly cash flows of between EGP700-800m.• Mobinil seeks to have funding in place at least one month prior to any known or expected
ditexpenditure.
• Collections against post-paid invoices, Prepaid cards and sale of new lines are
Cash collectiong
made at Banks, shops, home collection, E-payment and ATM providing a widevariety of collection sources.
• Only certified checks are accepted.
• Cash deposited in interest bearing bank account on daily basis and reconciliation
Cash concentration• Cash deposited in interest bearing bank account on daily basis and reconciliation
is made to assure the proper recording.• Cheques deposited at a bank that accelerates clearing process and invests
available cash in secured assets with the minimum risk.
Cash disbursements • 60-90 days from invoices presentation via checks or wire transfers.
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 39
Local bond
On 31st of Dec 2009 ECMS published a PSN for local bond issuance with the following conditions:
Issuance type Straight Bond Issuance (“Bond”)
Issuance size EGP 1.5 Billion
Issuance volume 15 Million bonds (14 Million Private placement and 1 Million public)Issuance volume 15 Million bonds. (14 Million Private placement and 1 Million public)
Bonds value EGP 100 per bond
Issuance rating (A), (Entity Rating A+)
Maturity and repayment 5 years Bullet repayment at Maturity
Bond status and securitySenior unsecured unsubordinated obligations ranking at least pari passu with all other present and future senior obligations of the Issuer other than obligations y p g gpreferred by law
Interest / Coupon rate Fixed interest of 12.25% per annum to be paid on a semi-annual basis in arrears
Financial covenants Net Debt /EBITDA ratio to be equal to or lower than 3 0xFinancial covenants Net Debt /EBITDA ratio to be equal to or lower than 3.0x.
Issuance purpose
Financing the capital expenditures, network expansion and repayment of part of the bank’s short term facilities.
Prepayment is available for part or all of the issuance at the last 2 years of the
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 40
Prepayment is available for part or all of the issuance at the last 2 years of the bond
Funding profile
• Mobinil’s four long term bank facilities:
Facility Size Signed Maturity Terms
Facility 1 EGP1.8bn 2005 2013 3 year grace period, 11 semi annual payments of EGP163.5m, final payment of EGP165m
Facility 2 EGP2.3bn 2007 2014 EGP460m due after year 5, EGP690m due after year 6 d EGP1150 d ft 7Facility 2 EGP2.3bn 2007 2014 and EGP1150m due after year 7
Facility 3 EGP2.2bn 2008 2015 EGP80m due August 2010 followed by 9 semi annual instalments of EGP 235.5m2 years Grace period 6 semi annual payments of EGP
Debt maturing profile – Long term debt
Facility 4 EGP 610mn 2009 2014 2 years Grace period,6 semi annual payments of EGP 101.7m
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 41
Leading from the top
Our driving force behind the scenes
Alex ShalabyChairman, Egyptian Companyfor Mobile Services (ECMS) –
Mobinil Telecommunications SAE
Ahmed El BardeiCEO REEFY Company;Representing public
Aldo MareuseGroup CFO, Orascom Telecom
Holding
Bertrand du BoucherVP Finance and Strategy for
Europe and Middle East
Claude BenmussaSenior Advisor Price Water House
(PWH);
David HobleyManaging Director, Deutsche Bank
AG, London;
Hassan KabbaniCEO, Egyptian Company
for Mobile Services (ECMS) p g pshareholders on ECMS BoD
gRepresenting Orascom Telecom
Holding on ECMS BoD
pRepresenting Mobinil
Telecommunications on ECMS BoD
( );Representing Mobinil
Telecommunications on ECMS BoD
, ;Representing Mobinil
Telecommunications on ECMS BoD
for Mobile Services (ECMS) –Mobinil Telecommunications SAE
Nadia Makram EbeidExecutive Director, Center for
Naguib SawirisChairman, Orascom
Olaf SwanteeSenior Executive VP, Personal C i i S i d
Onsi SawirisChairman, Orascom Group of
Sheikh Fahd El ShobokshiChairman, Nile City Investment
Isabelle HautotMrs. Isabelle Hautot is currently
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 43
ecut e ecto , Ce te oEnvironment & Development for
the Arab Region & Europe; representing public shareholders
on ECMS BoD
C a a , O ascoTelecom Holding
Representing Mobinil Telecommunications in the
ECMS BoD
Communication Services and UK/EME Operations
Representing Mobinil Telecommunications on ECMS
BoD
C a a , O asco G oup oCompanies; Representing as Honorary Chairman on ECMS
BoD
C a a , e C ty est e tRepresenting public shareholders on
ECMS BoD
s sabe e autot s cu e t yGeneral Counsel, International
Affairs of France Telecom Orange Group and honorary
member of the Paris Bar.
Our competent and strong executive team has positioned Mobinil market leader
Hassan KabbaniCEO
Audette HannaVP, Human Resources
Yasser Asaad RadwanVP, Commercial
Khalid EllaicyVP, Finance
Marwan HayekVP, Technology
Rana AbbadiVP, Quality and
Magdy GabraVP Enterprise Market
Mohamed NabihVP, Corporate
Corporate Support Strategy and Business Development
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 44
We will always lead and th ill f llothers will follow…
Mobinil remains the leader
The Egyptian Company for Mobile Services (Mobinil) – One on One, EFG Hermes conference – March 2010 page 45
Mobinil remains the leader the market trend setter
Q & A