Grameenphone Ltd. – Second Quarter Michael Patrick Foley, CEO
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2Q 2018 Highlights Seasonality and Healthy growth market competition with solid margins Crossed 2 Mn 4G 2.3 Mn new data subscribers subscribers
2Q 2018 Healthy topline growth in a challenging quarter Seasonality and Competitive pressure Stable voice price market competition on data price • Heavy rainfall, storm and • Optimization of offers • Implementation of regulatory commercial power outage directive in Pay Per Use limit • Positive engagement with ½ • Impact of Ramadan & World Cup • Offering new value proposition paisa/second on-net offer • 1 GB at BDT 16 • Ongoing competition intensity • Improving revenue generating • 2 GB at BDT 42 base and usage • 6 GB at BDT 199
Crossed 2 Mn 4G subscriber milestone 37% 4G devices 3000+ 4G sites with 4G SIM rollout* Avg. 27% data volume 3G volume growth growth after conversion after 4G conversion *As of 15 July 2018
2Q 2018 MyGP: Growing MAU with enriched features for engagement 2.5 Figure in Mn 2.1 2.1 1.6 1.6 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 • Cross channel promotion i.e. Bioscope, WowBox • 60% growth (YoY) in MAU* • Capability of contextual product offering • 4.4 Mn transactions during June’18 • Fully digitized loyalty program (Star) and in-App • Contribution in savings as well as in revenue redemption *Considered end of period
2Q 2018 Regulatory landscape Mobile Number Telecom VAS Tariff Circuit Tower Co. licensing Portability Services guideline Revision of Voice guideline (MNPS) • BTRC published the TVAS • Licensing guideline was • BTRC is working to revise • During Apr’18 a revised guideline on 31 May’ 18 published on 1 Apr’18 deadline of 31 Jul’18 was tariff circuit in order to • MNOs can provide services • MNOs will not be eligible to introduce single floor price agreed with BTRC in for all MNOs presence of ICT adviser to their own subscribers participate • GP opposed this proposal • Issued new directive giving • Majority of the other • BTRC received 8 • Engagement efforts are on- the ported number routing concerns are addressed applications as per media responsibility to MNOs • MNOs are eligible to apply reports going • Raising concerns, a joint • Writ petition filed by GP • Government is yet to come for license to offer operator letter from all CEOs of before the Hon’ble High agnostic services up with the final decision MNOs was sent to BTRC • Evaluating different options Court challenging few provisions for license application • Hon’ble High Court issued rule to Government and BTRC
Priorities going forward • Planned rollout completion, modernization and capacity enhancement to maintain network superiority • Continued drive on quality subscriber acquisition • Optimization of voice offers and usage stimulation with new data value proposition • Focus on organizational efficiency initiatives • Regulatory engagement for upcoming developments
Grameenphone Ltd. – Second Quarter Karl Erik Broten, CFO
2Q 2018 EBITDA growth with solid margins 3.3% Subscription 60.6% EBITDA and Traffic revenue margin** growth* 11.6% BDT 8.00 Capex/Sales*** Earnings per share * Revenues generated by own subscription (excludes interconnection) **As per IAS 18 **Capex excluding license fees; Capex/sales = moving average last 4 quarters
2Q 2018 4.7% normalized subscription and traffic revenue growth* Revenue (BDT Bn) and Growth (YoY) DSTR** (BDT Mn) and Growth (YoY) 328 33.2 32.6 323 32.4 32.2 318 319 317 31.2 18.0% 15.3% 15.5% 12.8% 12.4% 8.0% 2.0% 0.5% 5.7% 3.3% Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 • 3.8% normalized total revenue growth* • 1.0% voice revenue growth • BDT 1.4 Bn lower content and device revenue *Normalized for accounting practice changes **Daily revenues generated by own subscription (excludes interconnection)
2Q 2018 28% data subscriber and 91% volume growth Data Revenue (BDT Bn) and % of Service Revenue* Active Data Users** (Mn) and % of Sub-base 6.1 34.5 5.8 32.2 5.7 31.2 5.6 30.0 27.0 5.1 49.9% 19.0% 47.7% 47.8% 46.9% 18.7% 17.9% 43.9% 17.8% 16.5% Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 • Competitive data offers driving user growth and • 18.5% data revenue growth customer experience *Revenues generated by own subscription (includes interconnection) ** Minimum 150 KB usage within last 90 days
2Q 2018 8.6% service ARPU and 7.2% data ARPU drop from competitive offers Service ARPU, AMPU and APPM Data ARPU, AMBPU and APPMB 986 261 257 247 246 245 851 807 754 171 170 161 155 156 660 63 63 60 60 59 0.63 0.65 0.64 0.66 0.65 0.10 0.08 0.07 0.07 0.06 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 ARPU (BDT) AMPU APPM (BDT) ARPU (BDT) AMBPU APPMB (BDT) • 50% AMBPU growth along with 28% user growth • 6.0% service AMPU decline mainly from lower • 38% APPMB decline from competitive offers interconnection minutes • 9.2% outgoing MoU growth
2Q 2018 BDT 1.0 Bn normalized EBITDA uplift with solid margin Opex (BDT Bn) and Margin** EBITDA* (BDT Bn) and Margin** 3.3% 1.3% 11.9% 9.2% YoY QoQ YoY YoY 11.6 19.9 19.5 19.6 19.0 11.0 11.0 11.2 18.0 10.0 61.2% 60.6% 58.7% 58.8% 57.6% 36.9% 34.1% 34.0% 33.2% 30.9% Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 • Normalized opex growth of 1.4%*** • Normalized EBITDA growth of 5.4% and margin improvement of 2.8 pp*** * EBITDA before other items **As per IAS 18 ***Normalized for Q2’17, one -off items and IAS 18
2Q 2018 Investment mainly for 4G rollout and network modernization • 4G site rollout along with network modernization *Capex (BDT Bn) and Capex/Sales% • 288 2G and 203 3G sites addition 4.7 4.5 • Total number of 2G and 3G sites stands at 3.8 3.3 13,585 and 12,719 • Investment to continue to provide superior 2.1 network experience 12.4% 11.3% 11.6% 12.0% 10.7% Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 * Capex excluding license fees Capex/sales = moving average last 4 quarters
2Q 2018 Normalized earnings growth of 12.3%* NPAT (BDT Bn) and Margin** Earnings Per Share (BDT)** 36.3% 69.0% 36.3% 69.0% YoY QoQ YoY QoQ 10.8 8.00 7.9 5.87 7.0 5.16 6.4 4.74 6.0 4.42 33.1% 24.4% 21.0% 20.4% 18.5% Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 • One-off reversals of excess tax provisions • Normalized EPS of BDT 6.04* • Normalized NPAT margin of 25%* • Accelerated depreciation for network modernization *Normalized for one-off tax reversals, IAS 18 and Q2’17 one -off items ** On reported basis
2Q 2018 BDT 15.2 Bn OCF and Net debt/EBITDA of 0.12 *OCF (BDT Bn) and OCF/Sales% Net debt (BDT Bn) and Net debt/EBITDA** 17.5 12.2 16.6 15.2 14.3 14.1 9.2 7.3 52.5% 51.2% 46.5% 45.2% 44.2% 3.4 0.16 0.12 1.8 0.10 0.02 0.04 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 * 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
2Q 2018 125% cash interim dividend for 2018 Earnings and Dividend per Share (BDT) Payout Ratio 109% 20.50 105% 17.50 20.31 16.00 14.00 101% 16.68 12.50 14.67 14.59 98% 12.74 96% 2014 2015 2016 2017 2018(Interim) EPS DPS 2014 2015 2016 2017 2018(Interim) • Consistent high dividend payout • Shareholders as of the record date 05 August 2018 will be entitled
Summary • Healthy topline growth in a challenging quarter • Data user growth with SIM market share improvement • EBITDA uplift with solid margin • Positive end to the quarter with improving performance *In consideration of the local regulations, Grameenphone Ltd. does not provide any forward looking statements.
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