Grameenphone Ltd. – First Quarter Michael Patrick Foley, CEO
Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’) . Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the following presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Grameenphone Ltd. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.
1Q 2018 Highlights Launch of 4G Intense market services competition 67.5 Mn 1.1 Mn new data subscribers subscribers
1Q 2018 Set to offer best 4G experience in combination of additional spectrum and neutrality • Same data portfolio for simplicity • 4G SIM replacement with free 1.5 GB • D2D replacement service for convenience • Free replacement for high value customers • Affordable 4G handset portfolio
1Q 2018 Robust 4G rollout to ensure seamless experience 691 sites rollout by March 2018 4800+ sites by July 2018 All district cities under coverage
1Q 2018 Network modernization to consolidate superior position Capacity and future Coverage and Efficiency and readiness experience resilience • Up-gradation of all radio units • Technology neutral equipment; • Reduced power consumption Single RAN • Re-farming & spectrum • Lean site design with less • Capacity enhancement with efficiency footprint new technology
1Q 2018 Healthy topline growth amidst continuing competitive environment Seasonality and Consolidation of Competitive pressure voice offers market competition on data price • Prolonged winter with lower • ½ paisa/second on-net offer for • 3 new offers under contextual activity during January BDT 21 and 49 marketing platform • Generous data offers on 4G • Marginal drop in APPM • New 1.5 GB offer at BDT 104 SIM replacement and channel • Positive results in revenue • 4G SIM replacement, device and incentives generating base and usage service experience is key • New subscriber acquisition offer
1Q 2018 Simplification journey is a strategic priority for value creation Customer processes Simplest for B2B simplification & digitalization Self-service Robust IT services transformation
1Q 2018 Regulatory landscape Mobile Number Tower Co. licensing GP-Railway Fiber BTRC Audit Portability Services guideline Contract (MNPS) • BTRC audit commenced on • Fiber sub-lease option was • Licensing guideline was • On 30 Nov’17 BTRC 3 Aug’2016 published on 1 Apr’18 cancelled by BTRC due to awarded MNP license • Received a summary of the NTTN license guideline • MNOs will not be eligible to • BTRC published final • GP-BR joint committee draft audit observations on participate process on 21 Mar’18 11 Dec'17 agreed upon an • 4 licenses will be awarded keeping the previous • After the submission of arrangement and draft implementation deadline of with application deadline of agreement was sent to 31 Mar’18 intact feedback on 18 Jan’18, a 13 May’18 BTRC • Revised deadline agreed tri-party meeting was held • Industry holds its existing on 18 Feb’18 regarding • BR will lease and GP is with BTRC in presence of position on legal rights to clarification entitled to 63% of revenue ICT adviser is 31 Jul’18 build, maintain, operate • Waiting for the final • On process of regulatory and co-locate towers outcome of the report approval
Grameenphone Ltd. – First Quarter Karl Erik Broten, CFO
1Q 2018 Healthy topline growth with stable EBITDA 5.7% Subscription 57.6% EBITDA and Traffic revenue margin** growth* BDT 4.74 10.7% Earnings per share Capex/Sales*** * Revenues generated by own subscription (excludes interconnection) **As per IAS 18 **Capex excluding license fees; Capex/sales = moving average last 4 quarters
1Q 2018 Changes in contracts and accounting practices Handset Revenue VAS Revenue • Prime consideration of principal versus • Prime consideration of principal versus agent in whole arrangement agent • Arrangement for branded content sale is • Grameenphone acts as an agent while a joint operation selling handsets • Revenue from such joint operation is • Revenue from sale of handset is recognized on proportionate(net) basis recognized on net basis
1Q 2018 7.1% normalized subscription and traffic revenue growth* Revenue (BDT Bn) and Growth (YoY) DSTR** (BDT Mn) and Growth (YoY) 33.2 323 319 318 317 32.4 32.2 31.2 301 30.6 18.0% 15.5% 15.3% 14.8% 12.8% 11.1% 12.4% 8.0% 2.0% 5.7% Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 • 3.9% voice revenue growth • BDT 1.3 Bn lower content and device revenue *Normalized for accounting practice changes **Daily revenues generated by own subscription (excludes interconnection)
1Q 2018 28% data user and 75% volume growth Data Revenue (BDT Bn) and % of Service Revenue* Active Data Users** (Mn) and % of Sub-base 5.8 5.7 32.2 5.6 31.2 30.0 27.0 5.1 25.2 4.7 47.7% 47.8% 18.7% 46.9% 43.9% 17.9% 17.8% 42.2% 16.5% 15.9% Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 • Competitive data offers driving user growth and • 23.9% data revenue growth customer experience *Revenues generated by own subscription (includes interconnection) ** Minimum 150 KB usage within last 90 days
1Q 2018 6.2% service ARPU and 3.0% data ARPU drop Service ARPU, AMPU and APPM Data ARPU, AMBPU and APPMB 262 261 257 851 247 246 807 754 170 171 660 165 161 155 621 63 63 61 60 60 0.65 0.66 0.63 0.65 0.63 0.10 0.10 0.08 0.07 0.07 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 ARPU (BDT) AMPU APPM (BDT) ARPU (BDT) AMBPU APPMB (BDT) • 37% AMBPU growth along with 28% user growth • 6.0% service AMPU decline • 29% APPMB decline from competitive offers • Improving daily voice AMPU
1Q 2018 Stable EBITDA with higher investment in market Opex (BDT Bn) and Margin** EBITDA* (BDT Bn) and Margin** 5.0% 1.2% 14.7% 5.0% YoY QoQ YoY QoQ 19.9 19.5 11.6 19.0 11.0 11.0 18.0 17.8 10.1 10.0 61.2% 58.7% 58.8% 58.1% 57.6% 36.9% 34.1% 32.8% 33.2% 30.9% Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 • One off appeal deposit fee of BDT 379Mn • Normalized EBITDA margin of 58.8%*** • 4G related spending and higher acquisition costs • Normalized opex growth of 11.5%*** * EBITDA before other items **As per IAS 18 **Normalized for appeal deposit fee and IAS 18
1Q 2018 Investment mainly for network coverage and capacity • Regulatory capex of BDT 17.1 Bn for 4G license, *Capex (BDT Bn) and Capex/Sales% spectrum and tech-neutrality conversion fee 4.7 4.5 • 691 4G sites rollout after launch on 19 Feb’18 3.8 • 303 2G and 184 3G sites addition during Q1 3.3 • Total number of 2G and 3G sites stands at 2.1 13,297 and 12,516 13.9% 12.0% 12.4% 11.3% 10.7% • Investment to continue to provide superior network experience Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 * Capex excluding license fees Capex/sales = moving average last 4 quarters
1Q 2018 Marginal decline in earnings NPAT (BDT Bn) and Margin* Earnings Per Share (BDT)* 2.5% 2.5% 7.0% 7.0% QoQ QoQ YoY YoY 7.9 5.87 7.0 6.6 5.16 6.4 4.86 4.74 6.0 4.42 24.4% 21.4% 21.0% 20.4% 18.5% Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 • Accelerated depreciation of BDT 519 Mn for core network modernization * On reported basis
1Q 2018 BDT 14.1 Bn OCF and Net debt/EBITDA of 0.04 *OCF (BDT Bn) and OCF/Sales% Net debt (BDT Bn) and Net debt/EBITDA** 17.5 16.6 12.2 14.3 14.1 13.3 7.6 7.3 52.5% 51.2% 45.2% 44.2% 43.4% 3.4 0.16 1.8 0.11 0.10 0.04 0.02 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 * OCF equals EBITDA minus Capex on a reported basis **Net Debt = Short term debt + Long term debt - Cash and Cash equivalents 12 months rolling EBITDA
Summary • Launch of 4G services with robust rollout and modernization plan • Healthy topline and subscriber growth in a competitive quarter • Consolidated superior network experience and market offers to drive growth *In consideration of the local regulations, Grameenphone Ltd. does not provide any forward looking statements.
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