In Investo estor r Roads oadsho how 2 2 - 10 No 10 November - PowerPoint PPT Presentation

Cell Cell C C Limited Limited In Investo estor r Roads oadsho how 2 2 - 10 No 10 November ember 2017 2017

TABL ABLE E OF OF CONTE CONTENTS NTS 01 05 Financial Overview 04 25 Conclusion Operational 06 02 27 12 Questions 03 07 28 Disclaimer Strategy 15 04 20 Post Recapitalisation Governance

CEL CELL L C PRES C PRESENTIN ENTING G TEA TEAM Tyrone Soondarjee - Cell C CFO Tyrone, a Chartered Accountant who holds a BCompt Honours, provides 30 years of experience in the financial services industry. Before joining Cell C, Tyrone’s decade of distinguished service at the listed Sasfin Group started in 2007 as the Group’s Chief Financial Officer. In 2010 Tyrone was appointed as the Financial Director. Throughout his tenure, Tyrone served on several Boards within the Sasfin Group. Previously, he also held several executive level positions at the Deloitte & Touche Group over a 10 year period, and was the Financial Director at TNBS Mutual Bank. Robert Pasley - Cell C CSO A qualified Theoretical Physicist and Chartered Accountant, Robert has combined experience in finance and telecommunications since before the launch of mobile communications in South Africa. Robert was involved in the launch of the South African mobile industry, through the development of the original Vodacom business plans. He remained with Vodacom as Finance Executive and as Director of Corporate Strategy until 2004. Robert joined Cell C in 2012 as Chief Strategy Officer and subsequently took on the additional role of Chief Financial Officer while Cell C was recapitalised. From June 2017 Robert has returned to his preferred role in strategy. 3

Financ Financial Ov ial Over erview view

SUMMAR SUMMARY Y 20 2017 17 H1 H1 RES RESUL ULTS TS Total 02 Revenue 11% 03 R7.7 Service Billion Revenue EBITDA 12% 17% R6.3 Billion R1.6 Billion 01 Summary 2017 Results Active 04 Mobile EBIT Subscribers (4%) 12% R0.6 Billion 15.7 Million Capital 06 Expenditure (68%) 05 R561 million 5

20 2017 17 HAL HALF F YEA YEAR R RES RESUL ULTS TS Financial Key Performance Indicators R’m H1 2017 H1 2016 Var Var % Service Revenue 6 321 5 625 696 12% Non-Service Revenue 1 386 48 4% 1 338 Total Revenue 7 707 6 964 743 11% EBITDA 1 613 1 381 223 16% EBIT 605 629 (24) (4%) Net (loss)/profit (588) 3 (591) (>100%) Other Key Performance Indicators Var Var % Million H1 2017 H1 2016 Total Active Subscriber 15.7 14.0 1.7 12% Data Revenue (R’m) 2 603 1 953 650 33% Data Traffic Growth YOY 84% Smartphones on our network (million) 8.1 6

20 2017 17 HAL HALF F YEA YEAR R RES RESUL ULTS TS Total Expenditure R’m H1 2017 H1 2016 Var Var % Direct Expenditure 3 723 3 384 339 10% Operating Expenditure 2 471 2 365 106 5% Total Expenditure 6 194 5 749 8% 445 • Capital Expenditure was strategically focused to provide mobile voice and data services through a combination of our own LTE-Advance network overlaying our LTE, 3G and 2G networks. • Cell C’s capital expenditure slowed in H1 2017 due to the delayed recapitalisation but is expected to pick up again post recapitalisation. Total capital expenditure was: H1 2016 H1 2017 R 1 738 million R 561 million 7

REC RECAPIT APITALISA ALISATIO TION N IMP IMPACT CT • The company received R7.5 billion of fresh equity from new shareholders; • Uplifted approximately R9 billion to the SPV’s; • Rolled over R6.1 billion of the existing debt at transaction date; • Estimated tax losses of R19.8 billion of which R3.8 billion has been used to recognise a deferred tax asset at 31 December 2016. 1 8

POST POST-REC RECAPIT PITALISA LISATIO TION N STR STRUCTURE UCTURE Option to acquire Effective 13.68% OTL Effective 8.82% 100% Believe Trust 100% OTSAH MS15 49% 51% 100% Effective 7.5% OTSA CellSAf Lanun 60% 15% 25% 3C 100% 100% 100% SPV1 SPV2 SPV3 BLT Net1 M5 (Bonds) (Chinese) (Nedbank) 5.0% 16.0% 2.2% 45.0% 15.0% 5.0% 11.8% Subscription for equity Cash equity in exchange for debt to settle debt R3.6bn R4.6bn R0.7bn 9

REGUL REGULATOR ORY Y UPD UPDATE TE ON ON THE THE REC RECAPIT APITALISA ALISATIO TION ICASA  Cell C has made the necessary notification to ICASA as required in respect of the recapitalisation.  Despite this, CellSAf has made representations to ICASA that Cell C did not follow the correct process.  Based on the many and various detailed legal opinions from eminent Senior Counsel obtained by the parties to the recapitalisation, Cell C has in fact followed the correct process.  Cell C has now made extensive written and oral submissions to ICASA providing details of the structure and effect of the transaction. We are awaiting ICASA’s decision as to whether to accept Cell C’s position or to refer the matter to ICASA’s Complaints and Complian ce Committee (CCC) for adjudication. Competition Commission  The recapitalisation is not a merger within the meaning of the Competition Act.  Despite this, CellSAf has laid a complaint with the Competition Commission that Cell C has not obtained approval from the Competition Commission.  Cell C has now made an extensive submission to the Competition Commission to explain the factual and legal position as to why this is not a notifiable merger. CellSAf: High Court Litigation  In November 2016, CellSAf issued summons in the High Court of South Africa against the then parties to the recapitalisation transaction seeking to have the agreements that had been signed prior to that date set aside.  If this matter is ever heard by the Court on the merits of CellSAf’s claim, this is unlikely to be before 2019. 10

POST POST REC RECAP AP DEBT DEBT AN ANAL ALYSIS SIS & & SUMMAR SUMMARY Y TER TERMS MS Lender Currency Amount Amount Tenor Interest payment Capital repayment Hedge type Interest rate (USD'm) (ZAR'm) profile profile Bonds USD 184 2 466 3 years Semi-Annual Bullet FX Future 8.625% Cross currency CDB USD 131 1 702 3 years Semi-Annual 2020 swap LIBOR + 3.45% ICBC ZAR n/a 997 3 years Semi-Annual 2020 n/a JIBAR + 3.45% Nedbank ZAR n/a 768 3 years Semi-Annual 2020 n/a JIBAR + 5% DBSA ZAR n/a 180 3 years Semi-Annual 2020 n/a JIBAR + 5% Total 6 113 11

Ope Operational tional

KEY KEY PER PERFOR FORMANCE MANCE INDICA INDICATORS ORS Active Mobile Subscribers/millions H1 2016 H1 2017 14.0 15.7 ARPU H1 2016 H1 2017 75 75 Data percentage per subscriber Year on Year Growth MB per customer per month 72% Fibre H1 2017 New Connections 3 615 13

HAND HANDSET SET FIN FINANCE ANCE OVER VERVIEW VIEW 01 Purchase handsets from 02 CEC Provision for 08 future losses Sale to channel partners 03 Subscriber pays handset portion to CEC Contract activated for Telco and 07 handset Interest and subsidy paid monthly on behalf of 04 customer Handset Handset and contractually contract sold funded by 06 to CEC CEC 05 14

Str Strate tegy

THE THE MOBILE MOBILE TEL TELECOM ECOM MARKE MARKET T HAS HAS GR GROWN WN ABO ABOVE VE INFLATION … Mobile market service revenue (R’bn) Operator service revenue growth YOY Vodacom MTN Cell C - 11.7% 47% (2013 – 10.2%) Telkom CellC 43% 17% 16% 15% 12% 108 8% 9% 10% 9% 100 10% 91 84 84 1% 6% 4% 3% 4% 3% 2% -5% -3% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Mobile market subscribers (mln) Voice vs data revenue (R’bn) Voice revenue Data revenue 63 60 59 59 Cell C 16.6% 57 (2013 – 12.5%) CAGR (1.2%) 48 41 34 88 84 81 25 74 69 21 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 … with Cell C gaining market share 16

OPER OPERATOR OR CONSO CONSOLID LIDATION TION IS IS A REAL A REAL POSS POSSIBILITY IBILITY IN IN THE THE FUT FUTURE URE Spectrum Allocations 4.92Mhz 4.92Mhz 850Mhz Liquid Liquid 9.6Mhz 11Mhz 2.4Mhz 8.6Mhz 1.4Mhz 900Mhz Cell C Vodacom MTN Cell C MTN 12Mhz 12Mhz 12Mhz 12Mhz 12Mhz 12Mhz 10Mhz 1800Mhz Liquid MTN Telkom Cell C Vodacom Rain Rain TDD 15Mhz 15Mhz 15Mhz 15Mhz 5Mhz 10Mhz 2100Mhz Voda MTN Vodacom Cell C MTN Telkom TDD TDD 60Mhz 28Mhz 28Mhz 28Mhz 28Mhz 3500Mhz 2300Mhz Telkom Telkom Liquid Telkom Liquid 2.5Ghz 15Mhz 2600Mhz Sentech Rain TDD 17