Results 2Q 2014 / 22 July 2014 1
2Q14 Key Highlights • 2Q service revenue* back to positive growth - Strong product portfolio driven by # Hotlink and MaxisONE Plan - +0.6% QoQ • Solid EBITDA margin trends (normalised) - 53.5% EBITDA margin on service revenue# - 51 .1% EBITDA margin • Network modernisation progressing well - Extensive single RAN migration - Focused 4G LTE coverage expansion • Dividend declared *Service Revenue: Group revenue excluding device & hubbing revenues. - Second interim dividend of RM600 million @ 8 sen # EBITDA margin on Service Revenue: EBITDA has adjusted for costs solely related to the provision of service revenue defined above. per share 2
2Q14 Key Numbers QoQ YoY 2Q14 2Q13 1Q14 RM mn Total Revenue (TR) 2,294 2,119 2,082 -9.2% -1 .7% Service Revenue (SR) 2,136 2,037 2,049 -4.1% +0.6% Non-Service Revenue 158 82 33 -79.1% -59.8% EBITDA 1 1 ,165 1 ,073 1 ,064 -8.7% -0.8% EBITDA 1 Margin - TR 50.8% 50.6% 51 .1% +0.3pp +0.5pp EBITDA 1 Margin - SR 54.4% 53.0% 53.5% -0.9pp +0.5pp PAT 2 560 517 480 -14.3% -7.2% PAT 2 Margin 24.4% 24.4% 23.1% -1 .3pp -1 .3pp 1 EBITDA normalised for the reversal of one-time contract obligation of RM22m in 2Q14. 2 PAT normalised for one-off items (after tax effects) for contract obligation reversal and accelerated depreciation amounting to RM30m in 2Q13, RM29m in 1Q14 and RM29m in 2Q14. 3
2Q14 Key Numbers RM mn 2Q14 2Q13 3Q13 4Q13 1Q14 QoQ YoY 2,037 2,136 2,049 2,127 2,108 +0.6% -4.1% Service Revenue 1 ,953 2,062 1 ,958 2,050 2,024 +0.3% -5.0% Mobile* 969 1 ,047 972 1 ,055 1 ,008 +0.3% -7.2% - Prepaid 1 ,015 984 986 995 - Postpaid 1 ,016 +0.2% -2.9% Enterprise Fixed 58 59 62 58 61 +5.1% +6.9% Home 16 29 19 25 23 +16.0% +81 .2% 112 112 116 116 82 82 33 33 -59.8% -79.1% 158 Non-Service Revenue 95 43 56 40 5 -87.5% -94.7% - Device 69 60 42 28 -33.3% -55.6% 63 - Hubbing * Mobile service revenue includes revenue from International Gateway. 4
Service revenue back to positive growth • Mobile data drives growth -4.1% - MI/ VAS revenue grew 8.0% QoQ; partially mitigating lower voice & SMS +0.6% usage - Worry free internet propositions gaining traction • Steady contributions from Home & Enterprise Fixed 2,136 2,127 2,108 2,049 2,037 2Q13 3Q13 4Q13 1Q1 4 2Q14 Service Revenue (RM mn) 5
Positive prepaid development • # Hotlink base growing; survivability improving • Postpaid stable; launched Maxis OnePlan - Excluding WBB, added 34k new customers - WBB subscriptions at 531k • High churn from Hotlink Youth Club & legacy plans ending • Home business to continue; working on strategic roadmap 13,873 - Added 7k new home subscriptions; wholesale 13,213 12,893 12,602 12,4 ,401 arrangements improving 66 66 3,376 3,368 59 59 3,365 3,364 3,359 52 52 43 43 36 36 10,4 ,497 9, 9,845 9, 9,528 9, 9,238 9,042 9, 2Q13 3Q13 4Q13 1Q1 4 2Q14 2Q13 3Q13 4Q13 1Q4 2Q14 Hotlink (Prepaid) ('000) Maxis (Postpaid & WBB) ('000) 6
ARPU & MOU remain stable • • # Hotlink ARPU steadily closing the gap on Prepaid MOU driven by usage stimulation legacy ARPU • Postpaid MOU trending in-line with • Postpaid ARPU supported by incremental continuous data substitution RGS & early signs of upgrade to new plans ARPU (RM/ month) MOU (mins) 307 307 103 298 101 293 100 283 283 97 97 96 96 278 67 67 67 67 67 67 66 66 64 64 161 156 155 154 153 50 50 49 49 48 48 48 48 46 46 124 119 119 117 117 118 118 116 116 34 34 33 33 33 33 33 33 31 31 2Q13 3Q13 4Q13 1Q4 2Q14 2Q13 3Q13 4Q13 1Q1 4 2Q14 Postpaid Prepaid Blended Postpaid Prepaid WBB Blended 7 -net MOU is calculated based on outgoing calls only
Worry free internet propositions driving higher data usage 45.0% • Data share of mobile revenue at 44.4 .4% 44.4 .4% 44.0% 43. 3.9% 29% 928 898 903 858 870 • Blended smart-phone penetration at 135 48%; up 5% points QoQ 122 117 117 99 99 110 110 - Primarily contributed by new mid-tier 205 257 smart-phones (Lenovo, Xiaomi & Oppo) 298 275 224 224 • Continued declined in Messaging & WBB; in-line with industry trend 566 524 524 506 506 495 2Q13 3Q13 4Q13 1Q1 4 2Q14 MI+VAS Messaging WBB Non-Voice Mobile Revenue as a % of Mobile Revenue Non-Voice Mobile Revenue (RM mn) 8
Good progress in network modernisation 12.7% 10.1% • Capex spend to accelerate in 2H; 7.6% 6.6% 5.8% overall 2014 capex in-line with guidance • Network modernisation in key market centres nearing completion - 3G pop coverage to reach 88% by end 2014 267 - Expand transport & core network to 216 support data traffic growth 155 141 • Maintain LTE leadership 118 118 - 824k LTE devices, up 24% QoQ 2Q13 3Q13 4Q13 1Q1 4 2Q14 Capex (RM mn) Capex/ Service Revenue (%) 9
Solid margin trends supported by cost efficiency • EBITDA margin* on service revenue 51 .5% 51 .1% 50.8% 50.6% 48.6% at 53.5% - EBITDA margin* at 51 .1% 1,081 1,064 1,165 1,154 1,073 • 2Q direct expenses down almost 6.4 .4% 6.0% 6.5% 6.0% 6.8% 8% due to lower traffic & device 1 .0% 0.7% 0.6% 0.4 .4% 0.5% 5.1% 4.8% 5.2% 5.5% 5.5% expenses 4.8% 3.4% 3.4 3.4% 3.4 3.9% 3. 4.8% - Device expenses will continue to step down as guided • 2Q Opex increase mainly from 34.3 .3% 34.1% 33.4 3.4% 33. 3.0% 31 .3% .3 higher marketing spend, as guided 2Q13 3Q13 4Q13 1Q1 4 2Q14 Direct Expenses S&M Staff Bad Debts G&A + Others EBITDA Margin (%) Normalised EBITDA (RM mn) 10 * Normalised for one-off items in 3Q13, 4Q13 and 2Q14 amounting to RM102m, RM110m and RM22m respectively.
Profit After Tax lower QoQ • 2Q PAT* impacted by lower 24.6% 24.4 .4% 24.4 .4% normalised EBITDA and PPE 23. 3.1% impairments/ written-off 21 .0% - 14.3 .3 % -7.2% 560 550 550 517 480 466 2Q13 3Q13 4Q13 1Q1 4 2Q14 PAT (RM mn) PAT Margin (%) * Normalised for one-off items after accounting for tax effects: RM30m in 2Q13, RM76m in 3Q13, RM174m in 4Q13, RM29m in 1Q14 & RM29m in 2Q14 11
Cash Flow RM mn mn 2Q13 3Q13 4Q13 1Q14 2Q14 RM mn mn 1Q14 2Q14 Debt# 7,513 8,695 Cash flow from operating 1, 1,189 908 653 653 447 447 1,178 1, activities Cash 991 1 ,353 Cash flow used in investing Net Debt 6,522 7, 7,342 activities (179) (161) (269) (155) (91) Purchase of property, plant & Total Equity 5,896 5,148 equipment (121) (90) (208) (100) (21) Purchase of intangible assets (58) (71) (61) (55) (70) Ratios 1Q14 2Q14 Cash flow befo fore financing Net debt to 1 .52x 1 .70x activities 1,010 1, 747 747 384 292 1,087 1, EBITDA* Net debt to 1 .11x 1 .43x Equity Cash flow used in financing activities (1, 1,263) (104) (753) (109) (725) # Includes derivative financial instruments for hedging; excludes vendor financing Dividends paid (1 ,200) - (1 ,200) - (1 ,801) * Annualised Debt drawdown - - 500 - 1 ,150 • 2 nd interim dividend of 8 sen per Debt repayment (4) - - - - Payment of finance costs (60) (115) (57) (117) (73) share Others 1 11 4 8 (1) • Gearing approaching internal Net change in cash (253) 643 643 (369) 183 362 362 target of 2x net debt/ EBITDA Opening Cash Balance 787 534 534 1,177 808 991 991 Closing Cash Balance 534 534 1,177 1, 808 991 991 1,353 1, 12
2Q14 Key Highlights • 2Q service revenue* back to positive growth - Strong product portfolio - Transformation on track • Solid EBITDA margin trends (normalised) • Network modernisation progressing well • Dividend declared *Service Revenue: Group revenue excluding device & hubbing revenues. # EBITDA margin on Service Revenue: EBITDA has adjusted for costs solely related to the provision of service revenue defined above. 13
FY2014 Outlook • Service revenue slightly lower; EBITDA margin at similar level to FY2013 • Capex spend maintained at RM1 .1 billion to deliver best network experience & key IT initiatives 14
thank you 15
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