Telkom Sa Soc Ltd. · JSE:TKG
Telkom Sa Soc — Telkom — H1 2006 Earnings Presentation
47 slides from Telkom Sa Soc's earnings presentation, Nov 23, 2005
Slide 1: Driving the future of communication
Driving the future of communication Vodacom Group (Proprietary) Limited Interim results for the six months ended September 30, 2005 November 14, 2005
Slide 2: Content
Alan Knott-Craig Chief Executive Officer Operational highlights Leon Crouse Chief Financial Officer Financial review Content
Slide 3: Operational highlights
Operational highlights Alan Knott-Craig Chief Executive Officer
Slide 4: Prepaid basket
Prepaid basket Affordable cellular service Vodacom’s 4U tariff plan ranked 13 th out of the 61 operators in 30 countries, i.e. one of the top 20 most affordable prepaid tariff options available. Worldwide prepaid tariff comparison Source: Teligen T-Basket Model developed for OECD
Slide 5: Affordable cellular service
Affordable cellular service High-end basket Medium (leisure) basket Worldwide medium and high-end user comparison Vodacom ranked 33 rd out of 61 operators in 30 countries. Vodacom ranked 26 th out of 61 operators in 30 countries. Source: Teligen T-Basket Model developed for OECD
Slide 6: Affordable cellular service and a high penetration rate (2004)
Affordable cellular service and a high penetration rate (2004) Source: Teledensity: BMI-T, Tariff data: Teligen
Slide 7: Vodacom South Africa prepaid tariffs
Vodacom South Africa prepaid tariffs 4U peak off-net R2.99/min 16.9% 4U “Happy Hours” on-net R1.49/min 58.6% Average outgoing prepaid tariff off-net R2.26/min 3.9% Average outgoing prepaid tariff on-net R1.89/min 18.8% 4U peak on-net R2.99/min 8.0% 4U off-peak R1.05/min 1.0%
Slide 8: Group highlights
Group highlights for the six months ended September 30, 2005 vs. the same period in the previous financial year Total customers 19.1 million 41.8% High gross connections: increase of 52.0% year-on-year to 5.3 million Low churn: decrease of 0.6% points year-on-year to 19.5% Revenue R16.2 billion 22.3
Slide 9: South Africa – market share 57%
South Africa – market share 57% Population 48.3 million, penetration 58.0% 5.3% pts 14.5% 9.2% Capex as a % of revenue 22.5% R14,764 million R12,057 million Revenue 47.4% R4,060 million R2,754 million Profit from operations 10.9% R147 R165 ARPU 34.6% 3,829 2,845 Customers per employee 16.0% R1,422 R
Slide 10: Strong Vodacom South Africa operational indicators
Strong Vodacom South Africa operational indicators Gross connections up 55.9% year-on-year to a new high of 4.2 million Customers up 39.0% year-on- year to 15.8 million Total traffic increased by 19.3% to 8.0 billion minutes year-on-year Vodacom South Africa gross connections Vodacom South Africa cu
Slide 11: South Africa – impressive mobile market growth
South Africa – impressive mobile market growth
Slide 12: Improved South Africa churn and inactive customers
Improved South Africa churn and inactive customers Contract churn low at 9.3% Prepaid churn decreased to 18.7% Contract inactive customers increased from 1.5% in March 2005 to 1.8% Prepaid inactive customers decreased from 9.0% in March 2005 to 8.9% Vodacom South Africa churn history
Slide 13: Lower South Africa prepaid and contract ARPU
Lower South Africa prepaid and contract ARPU Prepaid ARPU decreased 10.1% to R71 year-on-year Contract ARPU decreased 7.7% to R588 year-on-year Blended ARPU decreased 10.9% to R147 year-on-year Lower incoming revenue per customer Lower average usage Vodacom South Africa ARPU per month
Slide 14: 3G and Vodafone Live!
3G and Vodafone Live! Over 13 thousand increase in 3G data cards from March 2005 Over 94 thousand increase in Vodafone Live! users from April 2005 3G data cards Vodafone Live! users
Slide 15: South Africa market estimated at million by 2011
South Africa market estimated at 43 million by 2011 Vodacom strategically placed for continued market leadership Lowest cost operator Extensive distribution Market share defence Key market and focus Strong recognised brand Strong and stable management Other indicators supporting market share Revenue
Slide 16: Service Provider strategy in South Africa
Service Provider strategy in South Africa Vodacom South Africa Control 81.8% of contract customers Control 99.2% of prepaid customers Autopage Vodacom contract customers of 183 thousand Vodacom prepaid customers of 92 thousand Nashua Vodacom contract customers of 197 thousand Vodacom prepaid custome
Slide 17: Coverage Map South Africa - GSM & GPRS
Coverage Map South Africa - GSM & GPRS
Slide 18: Coverage Map South Africa EDGE
Coverage Map South Africa EDGE
Slide 19: 3G Phase & Coverage - (Live on air)
3G PHASE 1 & 2 Coverage - (Live on air) 3G SITES Current 1,332 1 December 1,445 1 February 1,580
Slide 20: Tanzania – market share 58%
Tanzania – market share 58% Population 36.5 million, penetration 7.6% 0.6% pts 17.0% 17.6% Capex as a % of revenue 29.4% R611 million R472 million Revenue 59.7% R115 million R72 million Profit from operations 19.8% R73 R91 ARPU 55.5% 4,330 2,785 Customers per employee 33.4% R904 R1,358 Capex per cus
Slide 21: Lesotho – market share 80%
Lesotho – market share 80% Population 1.9 million, penetration 11.2% 11.2% pts 14.3% 3.1% Capex as a % of revenue 18.5% R77 million R65 million Revenue 188.9% R26 million R9 million Profit from operations 15.4% R77 R91 ARPU 33.2% 2,625 1,971 Customers per employee 23.4% R1,271 R1,659 Capex per custo
Slide 22: Democratic Republic of Congo (DRC) – market share 49%
Democratic Republic of Congo (DRC) – market share 49% Population 65.0 million, penetration 3.9% 9.9% pts 21.6% 31.5% Capex as a % of revenue 9.3% R649 million R594 million Revenue >200.0% R47 million R7 million Profit from operations 19.8% R89 R111 ARPU 2.3% 2,070 2,119 Customers per employee 14.6%
Slide 23: Mozambique – market share 26%
Mozambique – market share 26% Population 18.6 million, penetration 7.0% 44.3% R1,886 R3,387 Capex per customer 41.3% pts 104.1% 62.8% Capex as a % of revenue 72.1% R74 million R43 million Revenue 92.7% (R25 million) (R341 million) Loss from operations 34.9% R41 R63 ARPU 17.4% 2,271 1,934 Customers p
Slide 24: Financial review
Financial review Leon Crouse Chief Financial Officer
Slide 25: Accounting changes
Accounting changes For the six months ended September 30, 2005 Note : Prior years restated according to latest IFRS requirements. Impact on profit from operations immaterial (0.8) IAS 17: Leases Prior year adjustments (before taxation): 92.7 IAS 19: Long-term incentives (115.4) IAS 16: Property, pla
Slide 26: Group results
Group results Income statement 128.7% (237) – Impairment 65.1% 2,386 1,446 1,377 Net profit (31.3%) (1,455) (1,108) (771) Taxation (17.4%) (10,612) (9,042) (7,291) Operating expenses excluding depreciation, amortisation and impairment 32.8% 5,563 4,189 3,693 EBITDA 0.8% (1,406) (1,418) (1,247) Depre
Slide 27: Group revenue analysis
Group revenue analysis By country 18.5% Lesotho 22.5% 14,764 12,057 10,293 South Africa 22.3% 16,175 13,231 10,984 72.1% – Mozambique 9.3% DRC 29.4% Tanzania H1 2005 % change H1 2006 H1 2004 R million Revenue driven by strong customer growth Other African operations contribution 8.7% (H1 2005: 8.9%)
Slide 28: EBITDA growth and margin analysis
EBITDA growth and margin analysis EBITDA margin by country Mozambique (negative 82.4%) Strong EBITDA performance Increased 32.8% year-on-year to R5.6 billion EBITDA margin increased 2.7% points year-on- year to 34.4% South Africa EBITDA Increased 32.3% year-on-year to R5.2 billion EBITDA margin incr
Slide 29: Group revenue analysis
Group revenue analysis By revenue type Revenue analysis – H1 2006 R16,175 million Revenue analysis – H1 2005 R13,231 million Airtime contribution up 0.1% points; revenue up 22.5% to R9.6 billion Interconnect contribution down 2.5% points; revenue up 8.4% to R3.2 billion Data contribution up 1.1% poi
Slide 30: Data revenue growth
Data revenue growth By country South Africa data revenue up 51.5%, due to customer growth and new technologies (3G, Vodafone Live!, BlackBerry®) Tanzania data revenue up 42.9% due to customer growth and SMS marketing 51.5% 42.9% 144.4%
Slide 31: Group operating expenses
Group operating expenses By expense type Operating expense analysis – H1 2006 R11,950 million Operating expense analysis – H1 2005 R10,696 million Direct network operating cost contribution up by 1.7% points; costs up 15.3% to R6.6 billion Payments to other operators contribution up 1.2% points; cos
Slide 32: Operating expenses
Operating expenses Acceptable growth in other direct network costs, despite high levels of connections 20.2% growth in payments to other network operators Depreciation and amortisation Decreased with 0.8% year-on-year to R1.4 billion Impairment reversal Negative R237 million to positive R68 million
Slide 33: Group profit from operations analysis
Group profit from operations analysis 188.9% – Lesotho (93.9%) (99) Holding companies and other 59.7% Tanzania 6.9% pts 26.1% 19.2% 22.3% Profit from operations margin (%) 66.7% 4,225 2,534 2,446 92.7% (25) (341) – Mozambique >200.0% (6) DRC 47.4% 4,060 2,754 2,497 South Africa H1 2005 % change H1 2
Slide 34: Profit from operations and margin analysis
Profit from operations and margin analysis Profit growth of 66.7% year-on-year to R4.2 billion South Africa (47.4% year-on-year growth to R4.1 billion) Exceptional growth of 39.0% in customers Reduced interconnect margin to 35.5% vs. 40.8% for the same period in the previous financial year Tanzania
Slide 35: Factors affecting trends and margins
Factors affecting trends and margins Gross South Africa customer connections of 4.2 million Prepaid customer connections of 3.9 million; an increase of 62.5% Contract customer connections of 0.3 million; an increase of 3.3% Gross other African customer connections of 1.1 million, an increase of 39.2
Slide 36: Factors affecting trends and margins (continued)
Factors affecting trends and margins (continued) South Africa traffic mix Outgoing traffic increased 23.2% year-on-year to 5.3 billion minutes Incoming traffic increased 12.5% year-on-year to 2.7 billion minutes Mobile to mobile traffic increased 25.8 % to 6.3 billion minutes Mobile/fixed traffic in
Slide 37: Productivity measures
Productivity measures Consolidated customers per employee Increased 28.1% year-on-year to 3,524 based on 5,426 employees Consolidated gross capex as a % of revenue increased to 15.3% from 10.7% for the same period in the previous financial year Investment in new technologies Increased capacity Custo
Slide 38: Strong cash generation
Strong cash generation Cash generated from operations increased 27.9% to R4.9 billion Cash utilised in investing activities increased 36.0% to R2.2 billion Free cash flow increased 26.5% to R1.0 billion Cash generated from operations Free cash flow 27.9% year-on- year 26.5% year-on- year
Slide 39: Capex additions and capex composition
Capex additions and capex composition Capex gross additions – H1 2006 R2,475 million Capex gross additions – H1 2005 R1,413 million Capex as a % of revenue = 15.3% vs. last year of 10.7% South Africa capex gross additions increased 93.1% to R2.1 billion Other African capex additions increased 11.0%
Slide 40: Net debt maturity profile
Net debt maturity profile 4,499 6,018 Gross debt 1,813 3,431 Bank overdrafts – – – – – Lesotho – – – – – – Other 1,215 (4,803) 2,587 1,382 Total 2005 2,686 1,590 Debt excluding bank overdrafts (2,567) Bank and cash balances – 2008 – 2007 – – 2009 1,382 2006 1,399 – – DRC 1,932 Net debt – Tanzania So
Slide 41: Debt composition
Debt composition Gross debt composition including bank overdrafts – H1 2006 R6,018 million Gross debt composition including bank overdrafts – H1 2005 R4,499 million Net debt to equity ratio 13.9% (H1 2005: 26.4%) Adjusting for dividends and STC on dividends payable: net debt to equity ratio of 35.8%
Slide 42: Shareholder distributions
Shareholder distributions Dividends and interest on shareholders’ loans 6.3% year-on- year The level of future dividend payments is dependent on the extent of investment activities
Slide 43: Questions?
Questions?
Slide 44: Disclaimer
Disclaimer This presentation has been prepared and published by Vodacom Group (Proprietary) Limited. Vodacom Group (Proprietary) Limited is a private company and as such is not required by the Companies Act 61 of 1973, as amended, to publish its results. Vodacom Group (Proprietary) Limited makes no
Slide 45: Group balance sheets
Group balance sheets Extracts as at 26.2% 14,481 11,474 11,241 Current liabilities 12.2% 25,357 22,595 21,681 Total equity and liabilities (33.8%) 2,140 3,233 3,111 Non-current liabilities 10.8% 8,736 7,888 7,329 EQUITY AND LIABILITIES Capital and reserves 12.2% 25,357 22,595 21,681 Total assets 17.
Slide 46: Group cash flow statements
Group cash flow statements Extracts for the six months ended September 30, 81.7% 1,372 (565) Cash and cash equivalents at the end of the year 73.9% (12) (46) (16) Effect of foreign exchange rate changes 36.0% 2,173 1,598 Cash and cash equivalents at the beginning of the year 1.0% (789) (797) (1,197)
Slide 47: Thank you
Thank you