Dialog Axiata PLC · CSELK:DIAL.N0000
Dialog Axiata — Dialog Telekom — FY2006 Earnings Presentation
43 slides from Dialog Axiata's earnings presentation, Dec 31, 2006
Slide 1: Investor Forum
Investor Forum Financial year ended 31 December 2006 Page 1
Slide 2: Agenda
Agenda Financials Financials Subsidiary / SBU Performance Future
Slide 3: Snapshot - FY 2006
Snapshot -FY 2006 Key Financials YoY Growth PAT Rs. 10.12 Bn 44% EBITDA Rs. 13.74 Bn 46% Revenue Rs. 25.69 Bn 42% Cellular subscribers 3.11 Mn 46% Infrastructure Rs. 16.12 Bn investments/commitments 55 cents per share Proposed dividends ( 40% payout of earnings) 2% PAT contribution from Dialog Subsi
Slide 4: Highlights
Highlights Key Financials Units Year ended 31 December 2006 2006 2005 Group Company Company Revenue Rs.Mn 25,679 25,149 18,034 EBITDA Rs.Mn 13,744 13,362 9,416 Profit after Tax Rs.Mn 10,119 10,049 7,012 EPS Rs. 1.40 1.39 1.15 Key Financials Year ended 31 December Units 2006 2006 2005 Group Company C
Slide 5: Highlights
Highlights Subscriber Base Units Year ended 31 December 2006 2005 Postpaid Thousands 484 441 Pre-paid Thousands 2,621 1,682 Total active subscriber Thousands 3,106 2,124 base Total Net Additions Thousands 982 765 Year ended 31 December Operational Results Units 2006 2005 Blended ARPU Rs. 661 697 661
Slide 6: P&L Highlights
P&L Highlights (all figures in Rs. Mn. Three Months Ended 31 December Year Ended 31 December except for ratios) 2006 2006 2005 2006 2006 2005 Group Company Company Group Company Company Net Revenue* 6,789 6,649 5,222 25,679 25,149 18,034 Growth (%) 30 27 42 39 Direct Costs 2,296 2,204 1,968 8,822 8,
Slide 7: Revenue Growth
Revenue Growth • Steady growth in revenue– 39 per cent increase over FY 2005. • Prepaid revenue- the dominant contributor to revenue with 43 per cent share. • Termination revenue increased by 62 per cent. • Value added services accounts for approx. 9 per cent of total revenue for FY2006. Revenue (Rs
Slide 8: Revenue Drivers
Revenue Drivers Subscriber (Thousands) +46% +10% • Market leadership with sustained growth Net Subscribers (‘000) 3,106 in subscribers ( 46 per cent YoY) 2,835 2,562 2,621 • Pre/post mix: 84:16 2,123 2,302 2,359 • Coverage and Quality of Service 2,093 1,840 Improvements. 1,682 • Dilution of Blended
Slide 9: Healthy EBITDA and PAT Margins
Healthy EBITDA and PAT Margins • PAT and EBITDA margins up 3 and 5 points each in 4Q06 compared to 4Q05. PAT (Rs. Mn.) +39% 42% EBITDA (Rs. Mn.) 40% 40% 39% Rs. Mn 2,574 2,574 36% 2,311 2,590 +39% +5% 1,865 54% 54% 53% 53% 49% 3,402 3,565 Rs. Mn. 3,325 3,070 4Q05 1Q06 2Q06 3Q06 4Q06 2,571 PAT PAT Ma
Slide 10: EBITDA Margin analysis
EBITDA Margin analysis • Margins have improved by 5 points in 4Q06 compared to 4Q05.ITDA margin 2Q0 EBITDA margin 4Q05 •Direct and selling expenses had a 49% favourable impact on the margin improvement. +4.32% Direct Expenses (@33.15%) +0.06% Sales &Marketing(@11.51%) -0.13% Other expenses (@13.65%)
Slide 11: Direct Costs
Direct Costs • Direct costs relative to revenue has improved by 4 percentage points in 4Q06 compared to performance in the 4Q05 . 35% Direct cost(Rs. Mn.) 0.09% 34% 0.15% 37% 33% 35% 4.38% 34% 34% 32% 3.96% 33% 31% 2,181 2,204 30% 2,067 2,085 29% 29.99% 29.83% 28% 1,957 27% 2005 2006 4Q05 1Q06 2Q06
Slide 12: Network Costs
Network Costs (all figures in Rs. Mn.) 2005 % of Revenue 2006 % of Revenue Net Revenue 18,034 25,149 Network Related Costs Lease Circuit Rental 234 1.30 329 1.31 International Telecommunication Levy 503 2.79 861 3.42 Telecom equipment depreciation 1,657 9.19 2,431 9.67 International Origination Cost
Slide 13: Operating Costs
Operating Costs • Opex as a percentage of revenue improved by 1 percentage point for the year ended 31 December 2006 compared to 2005. • The improvement in cost efficiency is attributed to relative cost reductions with respect to administration and selling expenses (all figures in Rs. Mn.) 2005 % 20
Slide 14: Selling Expenses
Selling Expenses • Selling Expenses maintained below 13 per cent of Revenue despite 46 per cent growth in subscribers YoY. (all figures in Rs. Mn.) 2005 % of Revenue 2006 % of Revenue Change % Net Revenue 18,034 25,149 Selling expenses: Sales Commission 1,235 6.85 1,361 5.41 10.16 Advertising 401 2.
Slide 15: Balance Sheet
Balance Sheet • Balance Sheet remains healthy. • The Goodwill resulting from the acquisition of CBN and CBN SAT has been reflected in the Consolidated Financial Statements of the Group. The intangibles of Asset Media as at the 31 December 2006 have been tested for impairment. • Net Asset per share h
Slide 16: Cash Flow Highlights
Cash Flow Highlights • Strong cash flows. Net Cash flows from operating activities up 34 per cent compared to FY2005. ( all figures in Rs.Mn.) Year ended 31 December 2006 2005 Company Net cash from operating activities 12,046 9,012 Net cash used in investing activities (13,004) (10,139) Net cash use
Slide 17: Reconciliation of Cash generated from Operations
Reconciliation of Cash generated from Operations (all figures in Rs. Mn.) Year ended 31 December 2006 2005 Company Profit before Tax 10,105 7,054 Adjustments for: Interest Expenses 387 195 Depreciation 2,597 1,940 Amortisation 190 213 Retirement Benefit Obligation 30 28 Other Adjustments* (862) (140
Slide 18: KPIs
KPIs • Leverage ratios have improved indicating increased financial flexibility. Ratio Units 31 December 2005 2006 Company Net tangible assets per share Rs. 2.32 3.37 Gearing Ratio Times 0.37 0.33 Net Debt to EBITDA ratio Times 0.36 0.74 Total Debt to equity Times 0.58 0.49 Return on Equity % 40.76
Slide 19: Earnings per Share
Earnings per Share • EPS increased 21 per cent to Rs. 1.39 per share. Year ended 31 December Description Units 2006 2005 Company Net Income Applicable to ordinary shares Rs. Mn. 10,049 7,012 Par Value Rs. 1/- 1/- Ordinary Shares at the beginning of period Mn. 7,403 37 Issuance of shares during the p
Slide 20: Lenders
Lenders Facility Type Period Outstanding as at (all figures in US $ Mn.) 31 December 2006 USD SLR Total <12 months > 12 months Citi/Commercial Syndicated loan 4.2 16.8 21 2.52 5.64 8.16 Standard Chartered Bank - 25 25 - 23.23 23.23 International Finance Corporation 15 - 15 2.50 10.00 12.50 HSBC - 25
Slide 21: Proposed Dividend to Shareholders
Proposed Dividend to Shareholders In view of the Group’s strong financial performance, the Board of Directors of Dialog Telekom, has resolved to propose a first and final Dividend amounting to 40% (payout) of 2006 earnings, which translates to 55 Cents per share and is subject to the approval of t
Slide 22: Investments in Infrastructure
Investments in Infrastructure Aggressive investments in infrastructure and matching performance in capital project implementation. 50% growth in Base Stations over 2005 The Group invested / committed a total of Rs16.12Bn in infrastructure during 2006 resulting in : large scale expansion of ser
Slide 23: Affordability Enhancement – Connecting 3 Million Sri Lankans
Affordability Enhancement – Connecting 3 Million Sri Lankans Aggressive tariff reductions combined with rapid expansion of coverage areas across all provinces of Sri Lanka resulted in the company reaching the milestone subscriber base of 3 Million in the month of November 2006, and reaching an Yea
Slide 24: Subsidiary / SBU Performance
Financials Subsidiary Subsidiary//SBU SBUPerformance Performance Future
Slide 25: Dialog Broadband Networks (Pvt) Ltd.(DBN)
Dialog Broadband Networks (Pvt) Ltd.(DBN) Revenue, EBITDA and PAT DBN recorded a PAT of Rs. 152.92 Mn. For FY2006 representing a contribution of approximately 2 per cent to group PAT (after fair value adjustments). For the year ended 31 December 2006, DBN recorded a revenue of Rs.774.62 Mn up 42
Slide 26: International Business
International Business Contribution to DTL group bottom line - 10 per cent. 62% growth in International termination revenue with a 63% growth in traffic volumes Widest International Fibre backbone through SMW3 and SMW4 Best in Class International Gateway infrastructure with Soft switching to
Slide 27: Internet Business
Internet Business Introduced Kitnet – A fast, convenient and affordable mode of prepaid Internet access. Mobile internet access is exhibiting significant growth driven by the increasing penetration of GPRS and EDGE & 3G enabled handsets. Increased adoption of mobile email and connectivity soluti
Slide 28: Asset Media (Pvt) Ltd.
Asset Media (Pvt) Ltd. The Goodwill resulting from the acquisition of CBN and CBN SAT has been reflected in the Consolidated Financial Statements of the Group. The intangibles of Asset Media as at the 31 December 2006 have been tested for impairment. Launched Commercial Operations under Dialog
Slide 29: Future
Financials Subsidiary / SBU Performance Future Future
Slide 30: Wireless Development Is Correlated With Income Level
Wireless Development Is Correlated With Income Level Sri Lanka
Slide 31: The Mobile Market
The Mobile Market Market expected to grow in line with economic growth. 4,000 60 3,500 GDP (at markt price) 50 3,000 Mobile Penitration (%) 40 2,500 Rs. Bn. % 2,000 30 1,500 20 1,000 10 500 - 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Mobile penetration in Sri Lanka to reach minimum 5
Slide 32: Handset Prices
Handset Prices Affordability of handsets will further increase the market penetration 60 $250 ASP of low-end GSM handset ASP 50 40 $200 ASP of silicon for low-end GSM 30 handset $150 20 10 $100 0 05 06 07 08 09 10 $50 GSM BW + SMS GSM Co lo ur + po ly $0 GSM Camera CDMA BW + SMS 95 96 97 98 99 00 05
Slide 33: Strongly placed to continue market leadership
Strongly placed to continue market leadership Dialog – Subscriber Growth Dialog – Market Share Dialog Subscribers 100% 3.50 90% 3.10 80% 3.00 70% 2.50 2.12 60% Dialog 2.00 in Mn. 50% Others 1.36 1.50 40% 1.00 0.83 30% 0.49 20% 0.50 0.28 10% 0.00 0% 2001 2002 2003 2004 2005 2006 95 96 97 98 99 00 01
Slide 34: Technology Lifecycle and Cost Structures
Technology Lifecycle and Cost Structures The Importance of Technology Choices If an operator/country does not move in to the next generation of technology at the right time, consumer/operator/country would suffer. This is due to high cost of service pertaining to obsolete Technology Cost (Capex/
Slide 35: Wireless Economics – Technologies, Capacity and Costs
Wireless Economics – Technologies, Capacity and Costs Example : Today’s 2.5G/3G wireless networks can carry far more traffic capacity at a far lesser cost than Analog networks. Cost per Minute Network Capacity Analog High Networks 2.5G /3G Networks Analog 2.5G/3G Networks Networks Low 1990 2007
Slide 36: WCDMA handset prices
WCDMA handset prices A similar trend for 3G handsets, linked to volume – 85 million WCDMA users world wide q3 06
Slide 37: Dialog's NGN Evolution Roadmap
Dialog’s NGN Evolution Roadmap Dialog Adopt Technology New Fill New Acquisitions Evolution Licenses License Gaps Technology Dialog - Next Generation Network • 3G Mobile • Wireless Broadband • Fixed Mobile Convergence • Digital TV • Quad Play (Voice, Video, Data with Mobility) Consumer
Slide 38: Technology Evolution towards NGN
Technology Evolution towards NGN
Slide 39: Dialog in Quadruple play
Dialog in Quadruple play Quadruple Play (Mobile and Fixed Telephony, Broadband and Media) architecture to fuel future growth in keeping with technology evolution and consumer demand. Roadmap realised through related acquisitions: Acquisition Stake Segment Dialog Broadband 100% in 2005 Fixed Tele
Slide 40: Pay TV in Sri Lanka
Pay TV in Sri Lanka Current pay TV penetration at 1% of TV viewership – a virgin market. 6 90% Households (Mn.) 5 80% 4 70% 3 60% 2 1 50% - 40% 2006 2007 2008 2009 2010 2011 2012 Households (Mn) TV penetration (% of households) Dialog’s Brand identity and strengths in retail distribution will be l
Slide 41: Broadband – Untapped Market
Broadband – Untapped Market Sri Lanka’s internet penetration is below regional peers- Growth potential in the underserved retail broadband market in Sri Lanka. Internet Penetration in the Region 7.00% 6.00% 5.00% Bangladesh India 4.00% Maldives 3.00% Pakistan 2.00% Sri Lanka 1.00% 0.00% 2000 2001 20
Slide 42: Strategic Business Matrix
Strategic Business Matrix Long term Mobile – 3G Optical Fibre Internet Broadband Returns BPO Current/Immediate International CDMA-WLL Wholesale Carrier Media Mobile – 2G Existing New Infant Stage of Business Line Development
Slide 43: Thank you
Thank you Thr Dialog TELEKOM