Dialog Axiata PLC · CSELK:DIAL.N0000
Dialog Axiata — Dialog Telekom — 9M 2006 Earnings Presentation
35 slides from Dialog Axiata's earnings presentation, November 2006
Slide 1: Investor Forum
Investor Forum Interim Results Nine months to 30 September 2006
Slide 2: Agenda
Agenda Highlights Highlights Financials Subsidiary Performance Key Performance Indicators Updates
Slide 3: Highlights: Key Financials
Highlights Key Financials Units Nine months ended 30 September 2006 2006 2005 Group Company Company Revenue Rs.Mn 18,890 18,500 12,813 EBITDA Rs.Mn 10,059 9,797 6,845 Profit after Tax Rs.Mn 7,549 7,459 5,147 EPS Rs. 1.05 1.03 0.90 Key Financials Units Nine months ended 30 September 2006 2006 2005 Gr
Slide 4: Highlights: Subscribers and ARPU
Highlights Subscriber Base Units Nine months ended 30 September 2006 2005 Total Net Additions Thousands 711 565 Total active subscriber base Thousands 2,835 1,925 Nine months ended Operational Results Units 30 September 2006 2005 Blended ARPU Rs. 680 698 Pre-paid ARPU Rs. 438 424 Postpaid ARPU Rs. 1
Slide 5: Financials
Highlights Financials Financials Subsidiary Performance Key Performance Indicators Updates
Slide 6: P&L Highlights
P&L Highlights (all figures in Rs. Mn. Three Months Ended 30 September Nine Months Ended 30 September except for ratios) 2006 2006 2005 2006 2006 2005 Group Company Company Group Company Company Net Revenue* 6,611 6,469 4,674 18,890 18,500 12,813 Growth (%) 41 38 47 44 Direct Costs 2,255 2,181 1,651
Slide 7: Revenue Growth
Revenue Growth • Steady growth in revenue– 44 per cent increase over nine months ended 30 September 05. • Prepaid revenue- the dominant contributor to revenue with 42 per cent share • Termination revenue increased by 79 per cent. • SMS revenue accounts for approx. 6 per cent of total revenue for the
Slide 8: Revenue Drivers
Revenue Drivers Subscriber (Thousands) +47% +11% • Market leadership with sustained growth 2,835 in subscribers ( 47 per cent YoY) 2,562 2,302 2,359 • Pre/post mix: 83:17 2,123 2,093 1,925 1,840 • Coverage and Quality of Service 1,682 1,505 Improvements. • Blended ARPU down 6 per cent with subscribe
Slide 9: Healthy EBITDA and PAT Margins
Healthy EBITDA and PAT Margins • PAT and EBITDA margins up 4 points each in 3Q06 compared to 3Q05. • The reduction in margins on an immediate QoQ basis is attributable to increase in operating expenses. PAT (Rs. Mn.) EBITDA (Rs. Mn.) +51% +47% 42% +2% 40% 40% 54% 53% 53% Rs. Mn 2,574 36% 36% 2,311 2
Slide 10: EBITDA Margin analysis
EBITDA Margin analysis • Margins have improved by 4 points in 3Q06 compared to 3Q05.ITDA margin 2Q0 EBITDA margin 3Q05 •Direct and selling expenses had a 49% favourable impact on the margin improvement. +2.46% Direct Expenses excl dep (@23.57%) +3.06% Sales &Marketing(@12.16%) -2.01% Other expenses
Slide 11: Direct Costs
Direct Costs • Direct costs relative to revenue has improved by 1 percentage point in 3Q06 compared to performance in the 3Q05 . Direct cost(Rs. Mn.) 37% 35% 34% 0.12% 35% 35% 33% 0.08% 32% 3.90% 34% 34% 31% 4.43% 1,957 2,067 2,085 2,181 30% 29% 1,651 28% 30.20% 27% 28.63% 26% 25% 1-3Q05 1-3Q06 3Q05
Slide 12: Network Costs
Network Costs Period ended 30 September 2005 % of Revenue 2006 % of Revenue (all figures in Rs.Mn.) Net Revenue 12,813 18,500 Network Related Costs Lease Circuit Rental 169 1.32 284 1.53 International Telecommunication Levy 335 2.62 640 3.46 Telecom equipment depreciation 1,180 9.21 1,749 9.46 Inter
Slide 13: Operating Costs
Operating Costs • Opex as a percentage of revenue improved by 1 percentage point during the first nine months of 2006 compared to same period in 2005. • The improvement in cost efficiency is attributed to relative cost reductions with respect to maintenance and selling expenses. Period ended 30 Sept
Slide 14: Selling Expenses
Selling Expenses • Selling Expenses maintained below 13 per cent of Revenue despite 47 per cent growth in subscribers YoY. Period ended 30 September 2005 % of Revenue 2006 % of Revenue (all figures in Rs.Mn.) Net Revenue 12,813 18,500 Selling expenses: Sales Commission 956 7.46 1,022 5.52 Advertisin
Slide 15: Balance Sheet
Balance Sheet • Balance Sheet remains healthy. • The fair value of the net assets, of Asset Media Pvt Ltd. has been incorporated in the Consolidated Balance Sheet of the Group as at 30 September 2006. • Net Assets per share has improved. (all figures in Rs.Thousands) 30 September 2006 31 December 20
Slide 16: Cash Flow Highlights
Cash Flow Highlights • Strong cash flows. Net Cash flows from operating activities up 41 per cent compared to nine months ended 30 September 2005. ( all figures in Rs.Mn.) Period ended 30 September 2006 2005 Company Net cash from operating activities 8,558 6,067 Net cash used in investing activities
Slide 17: Reconciliation of Cash generated from Operations
Reconciliation of Cash generated from Operations (all figures in Rs. Mn.) Period ended 30 September 2006 2005 Company Profit before Tax 7,530 5,177 Adjustments for: Interest Expenses 237 127 Depreciation 1,865 1,402 Amortisation 130 134 Retirement Benefit Obligation 24 18 Other Adjustments* (1,050)
Slide 18: Lenders
Lenders Facility Type Period Outstanding as at (all figures in US $ Mn.) 30 September 2006 USD SLR Total <12 months > 12 months Citi/Commercial Syndicated loan 4.2 16.8 21 2.59 6.47 9.06 Standard Chartered Bank - 25 25 - 24.05 24.05 International Finance Corporation 30 - 30 2.50 11.25 13.75 HSBC - 2
Slide 19: International Business
International Business Gross contribution as a % to DTL bottom line 8 per cent. International termination revenue increased by 79 per cent from Rs. 0.92 Bn to Rs. 1.65 Bn during the first nine months of 2006 as traffic grew by 86 per cent.
Slide 20: Internet Business
Internet Business Established in 2001. Provides retail and wholesale internet services. No. of revenue generating customers approximately 5000. IP Infrastructure to facilitate future convergence.
Slide 21: Subsidiary Performance
Highlights Financials Subsidiary SubsidiaryPerformance Performance Key Performance Indicators Updates
Slide 22: Dialog Broadband Networks (Pvt) Ltd. (DBN)
Dialog Broadband Networks (Pvt) Ltd.(DBN) Revenue, EBITDA and PAT DBN recorded a revenue of Rs.206 Mn., in 3Q06 - up 12 per cent relative to the revenue recorded in 2Q06. EBITDA recorded at Rs.87 Mn.for 3Q06 up 13 per cent relative to 2Q06. PAT for 3Q06 recorded at Rs. 41 Mn. relative to the l
Slide 23: Asset Media (Pvt) Ltd.
Asset Media (Pvt) Ltd. On 29 September 2006, DTL acquired a 90 per cent stake in Asset Media (Private) Ltd, for a purchase consideration of Rs. 325 Mn. Asset Media possesses licenses from the Ministry of the Media and the Telecommunications Regulatory Commission of Sri Lanka requisite to carry o
Slide 24: Key Performance Indicators
Highlights Financials Subsidiary Performance Key KeyPerformance PerformanceIndicators Indicators Updates
Slide 25: Earnings per Share
Earnings per Share • EPS increased 15 per cent to Rs. 1.03 per share. Period ended 30 September Description Units 2006 2005 Company Net Income Applicable to ordinary shares Rs. Mn. 7,459 5,147 Par Value Rs. 1 1 Ordinary Shares at the beginning Mn. 7,403 37 Issuance of shares during the period Mn. -
Slide 26: KPIs
KPIs • Leverage ratios have improved indicating increased financial flexibility. Ratio Units 31-Dec-05 30-Sep-06 Company Net tangible assets per share Rs. 2.32 3.01 Gearing Ratio Times 0.37 0.25 Net Debt to EBITDA ratio Times 0.36 0.21 Total Debt to equity Times 0.58 0.43 Return on Equity % 41 45 Re
Slide 27: Return on Equity (ROE) analysis
Return on Equity (ROE) analysis • Constituents of ROE has improved yielding enhanced ROE. PAT Margin 40.32% (1-3Q 06) 40.17% (1-3Q 05) Asset Turnover ROE +15.39% 0.64 (1-3Q06) 0.61 (1-3Q05) 44.69% (1-3Q06) 38.73% (1-3Q05) Asset/ Equity 1.73 (1-3Q06) 1.57 (1-3Q05)
Slide 28: Productivity Indicators
Productivity Indicators • Key Productivity Indicators have been enhanced relative to 3Q05. Subscribers per Em ployee 1364 1,331 1,315 1,267 1,241 • Asset Turnover improved to 0.64x from 0.54x in 3Q05. Asset Turnover 3Q05 4Q05 1Q06 2Q06 3Q06 0.67 0.66 0.64 0.54 0.54 3Q05 4Q05 1Q06 2Q06 3Q06
Slide 29: Updates
Highlights Financials Subsidiary Performance Key Performance Indicators Updates Updates
Slide 30: 3G License
3G License •The regulator offered frequencies for third generation, or 3G, spectrum, with a stipulation to invest USD10 Mn during the first 2 years of operations. • Dialog Commenced commercial 3G services in the City of Colombo with effect from 16th August 2006. •Sri Lanka becomes the first country
Slide 31: CDMA (fixed wireless operations)
CDMA (fixed wireless operations) Commercial operations expected to commence from end 2006/ 1Q07. Delayed due to issues in spectrum clearance. Spectrum Cleared in 9 Districts. All – Island Spectrum by end of 2Q07.
Slide 32: Tariff cuts
Tariff cuts Dialog Continues to be Aggressive with respect to the retention and growth of market share Parallel Focus on network scale economies, operational cost curtailment initiatives, and reduction in effective capital expenditure per subscriber and cost per minute has enabled Dialog to enha
Slide 33: Key Initiatives & Developments
Key Initiatives & Developments •Introduced Dialog Plans for HNB credit card holders. •Payment of Dialog bill or reload KIT via sms with HSBC credit card. •Payment of internet bills online for Sampath Bank credit card holders. •Introduced international collect calls . •Revised IDD rates w.e.f. 3 Sept
Slide 34: Investments in Social and Community Development
Investments in Social and Community Development •Launched Sri Lanka’s first Interactive Distance Education Network in partnership with the Ministry of Education on World Teachers Day. Logos , pics etc •The Disaster and Emergency Warning Network Devices developed by the Dialog UOM Lab is short listed
Slide 35: Thank you
Thank you Thr Dialog TELEKOM