mena overview - mtn group · 2019-02-15 · 3 mena overview • subscriber growth of 2.7% across...
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MENA Overview
Ismail Jaroudi – VP MENA
AGENDA
1 Overview
2 MTN Syria
3 MTN Sudan
4 MTN Yemen
5 MTN Afghanistan
6 MTN Cyprus
7 Looking ahead
3
MENA overview
• Subscriber growth of 2.7% across the region(Q3 16 vs. Q3 15)
• Improved economic outlook expected for Yemen in 2018
• Good EBITDA growth in Syria, Sudan and Cyprus
• Afghanistan and Yemen EBITDA affected by the drop in revenue
performance
• Yemen EBITDA further affected by the licence provision
• PAT affected by exchange losses as well as lower EBITDA
performance in Afghanistan and Yemen
65%
8%
10%
7%9% 1%
53%
7%
15%
12%
8%5%
57%
6%
15%
12%
5% 5%
Subscribers September 2016(% contribution)
Revenue June 2016 (% contribution)
EBITDA June 2016 (% contribution)
Iran* Syria Sudan Yemen Afghanistan Cyprus* Iran added back to revenue and EBITDA for purpose of this presentation. Equity accounted on an IFRS basis.
MTN Syria
5
Syria – country overview
Population 17.0m Market share 40.9% Penetration 84%
Economics
GDP per capita $1 000 (2016 forecast)
Inflation 48%
Exchange rate US$ = 540 SYP
Demographics
Language Arabic
Religion 90% Muslim, 10% Christian
6
Syria – country overview
The state of unrest still dominates the country
0
5
10
15
20
25
30
35
2011 2012 2013 2014 2015
• Impact of unrest resulted in:
- Decreased population by 40% from 2011 to 2015
- Exterminated poverty index increased to 25% in 2016
vs.11.2% in 2010
- Depreciation of currency against USD
- Hyperinflation
• Geographical spread and level of violence have
dramatically increased, especially in Aleppo province
• MTN continues to operate mainly in safe zone, including
coastal areas and Capital Damascus
Gross domestic product (GDP)(US$bn)
Exchange rate SYP vs US$
0
50
100
150
200
250
300
2010 2011 2012 2013 2014 2015
7
0%
20%
40%
60%
80%
100%
Dec 2014 Dec 2015 Jun 2016
Market share Penetration
Syria – market overview
• Number of people displacement by end of 2016 will reach
4.3 million
• Regulator has the right to grant a 3rd entrant a mobile
license
• Competition is investing aggressively on their network
mainly on Mobile Broadband (MBB) and hybrid solutions
• Brand re-position
• Focused and segmented market approach through below-
the-line (BTL) campaigns (Regional, Youth).
• Enhanced traffic consumption is underpinned by better
network availability due to continuous investment in the
network infrastructure
• Capex authorised for 2016 is R1 543 million
Market share vs Penetration
8
MTN SyritelSyrian Telecom
(fixed line)
Launch date 2001
(BOT effective Jun 02)
2001 1975
Subscribers 5.9m (Sep 16) 8.6m (Sep 16) 3.5m (Apr 16)
Coverage 75% geographical
98% population
N/A N/A
Shareholders MTN 75%
Teleinvest 25%
Drex Technologies Syrian government
Syria – market players
9
Syria – management structure
CEO
ZiadSabah
GM: Bus. Risk
MaherBairakdar
GM: Cust. Care
SamerKaddouh
CO:HR
AhmadRamadan
CO:Operating
AbdallahHomsi
CO:Finance
KamalSantina
SM:Consumer
GhiathBazerbashi
GM:Sales & Dist.
TarekNoureddine
GM:Capital Proj.
MohamadMassoud
CO:Technical
Bashar El Naboulsi
Acting CO:IT
MazenFarah
10
Syria – licence
Commenced in 1 January 2015 (conversion of BOT)
20 years Licence from commencement order date (6/1/2015), on a revenue share basis, renewable
with new conditions
Period
Fees
Spectrum/
technologies
Coverage
Year 1 – 50 % of total revenues
Year 2 & 3 – 30 % of total revenues
Year 4 to 20 – 20 % of total revenues
6.4 MHz on 897-900, 942-954, 906-909.4, 951-954.4 band
12 MHz on 1830-1842, 1735-1747 band
10 MHZ on 1930-1940, 2120-2130 band
76% of population
11
Syria – operational performance
*Constant currency ('organic') information**In ZAR terms***Excluding hyperinflation
Satisfactory performance despite a challenging environment
Subscribers increased by 1.1% QoQ
Revenue increased 10.5%*
• Supported by 16.9%* increase in data revenue,
contributing 28.8% to total revenue
EBITDA margin increased 12.3pp
• Supported by the conversion of the BOT licence and cost
optimisation
Capex increased by 241.1% to R191 million
• Added 92 co-located 3G sites and 3 LTE sites
26 436 26 468 29 295
26 844 29 392
53 280 55 860
29 295
Dec 14*** Dec 15*** Jun 16***
Revenue SYP (million)
H2
H1
38 56 191319
918357
974
191
Dec 14*** Dec 15*** Jun 16***
Capex ZAR (million)
H2
H1
18.9%** 17.7%** 28.6%** EBITDA margin
Launched Jun 2002 Market share 40.9% Population 17.0m Market size 2016 14.8m Penetration 84% Shareholding 75%
12
Syria – coverage
June 2016June 2016
% land 63%
% population 76%
Total number of sites2 915 (37% out of service
sites)
3G population coverage 65%
13
Prolongation of crisis
High inflation and currency depreciation
Sanctions
In-country skill shortage
Syria – looking forward
20 year licence
3G and growth of data
Expected country rebuild
Educated population
Opportunities Challenges
MTN Sudan
15
Sudan – country overview
Population 37.6m Market share 33.8% Penetration 69%
Economics
GDP per capita $1 850
Inflation 19%
Exchange rate US$ = 8.73 SDG
Demographics
Language Arabic
Religion Islam, Christian
16
67
63
66
74
84
60
65
70
75
80
85
2011 2012 2013 2014 2015
Sudan – country overview
The country still suffers tension with South Sudan – disputed borders and oil revenue
• Impact of unrest resulted in:
- Degradation of economic climate – consumer
consumption behaviour changes
- Increased poverty and unemployment
- Depreciation of currency against USD
- High inflation
• Hope for the ongoing national dialogue, movements to
end conflict, bring about political stability and socio-
economic development
Gross domestic product (GDP) (US$bn)
17
0%10%20%30%40%50%60%70%80%
Dec 2014 Dec 2015 Jun 2016
Market share Penetration
Sudan – market overview
• Negotiating LTE licence with regulator
• Mobile Money regulations are being redrafted – launch
expected in December 2016
• Competition is investing aggressively on new
technologies (e.g. LTE) and coverage areas
• Competitors offering extremely discounted tariffs on data
bundles
• Capex authorised for 2016 is R1 280 million
Market share vs Penetration
18
MTNZain
(previously Mobitel)Sudani(CDMA)
Sudatel(fixed line)
Canar(Limited mobility)
Launch date 2005 1997 2006 1993 2006
Subscribers 7.7m (Sep 16) 9.5m (Sep 16) 4.6m (Sep 16) 0.23m (Sep 16) 0.014m (Sep 16)
Coverage 54.74% N/A N/A N/A N/A
Shareholders MTN (85%)
Larrycom
Company Ltd
(15%)
MTC Sudatel (26%)
Private (74%)
Government
(26%)
Private (74%)
Etisalat (40%)
Private (60%)
Sudan – market players
19
Sudan – management structure
CEO
MalikMelamu
CFOAli
Amir
GM:HR
NasreldinBabiker
CTO
NabilBaalbaki
CIO
Ahmed MukhtarMustafa
GM: CS
Abdalla ElfadiAli Fayet
GM: CEX
WardiMohammod
Wardi
GM: BRM
DanielUdochi
CMO
Acting
GM: S&D
Open
20
Sudan – licence
Granted in October 2004
Effective commercial launching date 4 April 2005
20 years renewable thereafter from commercial launching date
Period
Fees
Spectrum /
technologies
Coverage
150 million Euro
900MHz band 9.6 MHz
1800MHz band 10 MHz
2100MHz band 15 MHz
60% of population of applicable town
21
Sudan – operational performance
*Constant currency ('organic') information**In ZAR terms***Excluding hyperinflation
Progress in tough conditions
Subscribers decreased 13.0% to 7.7 million
Revenue increased by 15.7%*
• Data revenue increased 78.3%* and contributes 27.7% to
total revenue as a result of increased data users
EBITDA margin down 1.9 pp
Capex up 62.9% to R549 million
• Added 44 co-located 3G sites
692 811 938
738830
1 4301 641
938
Dec 14*** Dec 15*** Jun 16***
Revenue SDG (million)
H2
H1
481 337549
911
482
1 392
819
549
Dec 14*** Dec 15*** Jun 16***
Capex ZAR (million)
H2
H1
33.8%** 35.0%** 35.4%** EBITDA margin
Launched Sep 2005 Market share 33.8% Population 37.6m Market size 2016 30.3m Penetration 69% Shareholding 85%
22
Sudan – coverage
June 2016
% land 16.6%
% population 54.7%
Total number of sites 2 038
3G population coverage 33.6%
23
Customer experience
Regulatory demands
Aggressive competition
OTT’s
Exchange rates and availability of hard currency
Sudan – looking forward
Mobile Money and EBU
Data and smartphone penetration
Youth brand and affordability perception
Opportunities Challenges
MTN Yemen
25
Yemen – country overview
Population 27.1m Market share 42.8% Penetration 46%
Economics
GDP per capita $1 096
Inflation 30%
Exchange rate US$ = 320 YER
Demographics
Language Arabic, English
Religion Islam
26
31 32 35
37
15
20
25
30
35
40
2010 2011 2012 2013 2014
* Due to the current security situation in the country 2015 & 2016 figures were not reported by the World Bank
Yemen – country overview
Fully fledged military conflict since 2015
• Unrest has resulted in:
- Yemen’s GDP contraction of 28% in 2015
- Lack of skilled specialised resources
- Destruction of country’s infrastructure
• Recovery for the country and economy anticipated in
medium term
Gross domestic product (GDP)* (US$bn)
27
41%
42%
43%
44%
45%
46%
47%
Dec 2014 Dec 2015 Jun 2016
Market share Penetration
Yemen – market overview
• Coalition countries (Gulf states) committed to financing
the rebuilding of the country.
• MBB licence expected to be granted end 2017/beginning
2018
• Yemen Mobile enjoying monopoly over MBB service –
providing fast data service at low rates
• Price war with Sabafon – impacting ARPU and effective
tariff
• Operating licence renewed until December 2017
Market share vs Penetration
28
MTN Sabafon Yemen Mobile Hits Unitel “Y”Public Tele-
communication Corporation
Launch date July 2000 February 2001
(15yr GSM
licence)
November 2004 December 2007
(expected)
1982
Fixed line license
Subscribers 5.3m (Sep 16) 2.4 m 4 m 0.8 m 1.2 m
Coverage Geographical –
73%
Population – 88%
*Geographical –
57%
Population – 71%
*Geographical –
54%
Population – 74%
*Geographical –
36%
Population – 59%
*Geographical –
62%
Population – 78%
Shareholders MTN 83% All-Ahmar Group, Batelco, HayelSaeed Group, Ifan Foreign Investment
Company, CCC
Government and
public shares
Saudi/Kuwaiti/
Syrian/Local
investors
Government
owned
* Estimate
Yemen – market players
29
Yemen – management structure
CEO
RaedAhmad
Deputy CEO / Corp Affairs
Ali Abdul WarethHashem
BRM SM
AhmedAbdulkader
CFOAbdullahMadari
CMOMalek
El Koussa
GM HR
MohammadNasher
GM S,D & CRD
Houssam
Saad
CTO
TamerAbdul
Dayem
CIO
MahmoudKhorbotly
30
Yemen – licence
29 months extension to the current license to Dec 2017 by which time a renewal of the original license
for another 15 years will be negotiated Period
Fees
Spectrum /
technologies
Coverage
US$36.4m was paid for the extension
The full 15 year license renewal amount has still to be negotiated
900 MHZ
1800 MHZ
71% of population
31
Yemen – operational performance
*Constant currency ('organic') information**In ZAR terms***Excluding hyperinflation
A challenging environment impacted growth
Subscribers flat at 5.3m
Revenue decreased 3.7%*
• Offset by 10.9%* increase in data revenue, contributing
16.6% to total revenue
EBITDA margin decreased 0.9 pp
Capex at R77 million
1 844 1 633 1 905
1 8471 738
3 6913 371
1 905
Dec 14*** Dec 15*** Jun 16***
Revenue ZAR (million)
H2
H1
15687 77
158
47
314
134
77
Dec 14*** Dec 15*** Jun 16***
Capex ZAR (million)
H2
H1
52.0%** 39.3%** 35.4%** EBITDA margin
Launched Jul 2000 Market share 42.8% Population 27.1m Market size 2016 12.5m Penetration 46% Shareholding 83%
32
Yemen – coverage
June 2016
% land 57.1%
% population 70.7%
Total number of sites 1 414
3G population coverage 0%
33
Civil war impact on operations
Lack of independent regulatory body
Delayed MBB license
Possibility of loss of revenue from Southern cities -
license renewed with Northern government
Possibility of launch of fourth GSM operator in the North
and one in the South
Yemen – looking forward
Fast growing MBB business
MFS – digital, Mobile Money
Coverage superiority, especially in rural and untapped
areas
Opportunities Challenges
MTN Afghanistan
35
Afghanistan – country overview
Population 33.5m Market share 37.8% Penetration 52%
Economics
GDP per capita $624
Inflation 6%
Exchange rate US$ = 65.95 AFN
Demographics
Language Pashtu, Dari
Religion Islam
36
17.9
20.5 20.3 20.119.2
16
18
20
22
2011 2012 2013 2014 2015
Afghanistan – country overview
Challenging operating environment
• Impact of unrest resulted in:
- Migration of high- and middle-class
- Loss of skilled resources
- High poverty and unemployment rate
- Negative output gap
- Currency depreciation
• Increased levels of site downtime due to halted/burnt sites
• 2016 growth to remain sluggish
Gross domestic product (GDP)(US$bn)
37
0%
10%
20%
30%
40%
50%
60%
Dec 2014 Dec 2015 Jun 2016
Market share Penetration
Afghanistan – market overview
• New telecom tax – 10%
• Fifth operator commenced its operations destroying value
in the market
• Irrational competitor behaviour
• Improved network availability
Market share vs Penetration
38
MTN Roshan AWWC SALAM Etisalat
Launch date 2006 2003 2002 2013 2007
Subscribers 6.5m (Sep 16) 5.9m 3.2m 1.0m 5.7m
Coverage 78% 69% 58% 27% 65%
Shareholders MTN AKFED (major)
MTI
MCT
20% Ministry of
Communications
Ehsan bayat
Afgan Telecom
(Government)
Etisalat UAE
Afghanistan – market players
39
Afghanistan – management structure
CEO
Hassan Ibrahim Jaber
ChiefInfo System
FareedTayar
GM: HR
AlexD’Souza
Chief Mkt. Officer
Raul Ernesto Velasco
Chief Tech Officer
RaadKannan
GM: Sales & Distribution
MohamamdKamil Alizad
GM: Cust Relations
Mohammad Aamir Masood
CFO
MariusVan Wyk
GM: CorpServices
HidayatullahZahid
GM: EBU & MM
Tarek Soliman
Senior Manager
BRM
Vacant
40
Afghanistan – licence
The 3G licence obtained on Jun 20, 2012 for a term of (15) years against a one time non refundable
fee of US$ 25 million
The GSM licence acquired on October 15, 2005 for a one-time non-refundable fee of US$ 40.1 million
for the period of 15 years
The licence will be renewable subject to compliance with the applicable law and regulation
Period
Fees
Spectrum fee payable for (900, 1800 and 2100MHz) US$ 536,000 annually
Annual Admin Fee is 15 million Afs Revenue sharing fee 2% spectrum and 2.5% TDF contribution
paying to the government quarterly
One time registration of BTS 900(332100 US$) and BTS 1800 (96150 US$)
Extending of MW link (2943399 Afs) and annual freq fee (42291321 Afs) for MW licenses; extending
Vsat licenses (42434 afs) Annual Freq Fee for VSAT (181860 afs)
Spectrum /
technologies
Coverage
6.8 Mhz GSM 900
10 Mhz GSM 1800
10 Mhz 3G
78% of population
41
Afghanistan – operational performance
*Constant currency ('organic') information**In ZAR terms***Excluding hyperinflation
Performance impacted by challenging environment
Subscribers flat at 6.5m
Revenue decreased 17.9%*
• Offset by 66.7%* increase in data revenue, contributing
7.6% to total revenue
EBITDA margin decreased 9.9 pp
Capex of R187 million
• 120 co-located 3G sites added
1 311 1 340 1 204
1 383 1 484
2 694 2 824
1 204
Dec 14*** Dec 15*** Jun 16***
Revenue ZAR (million)
H2
H1
112298 187
163
170275
468
187
Dec 14*** Dec 15*** Jun 16***
Capex ZAR (million)
H2
H1
30.5%** 32.3%** 22.4%** EBITDA margin
Launched Jul 2006 Market share 37.8% Population 33.2m Market size 2016 17.6m Penetration 52% Shareholding 100%
42
Afghanistan – coverage
June 2016
% land 42.8%
% population 78.0%
Total number of sites 1 241
3G population coverage 38%
43
General security
Lack of skilled resources
Irrational competitor behaviour
Increase in government taxes
Impact of OTT
Afghanistan – looking forward
Drive data revenue – data devices and data bundling
MFS – Mobile Money & Digital
Expanding 3G coverage and enhancing 3G service
(quality and speed)
Opportunities Challenges
MTN Cyprus
45
Cyprus – country overview
Population 0.8m Market share 38.9% Penetration 109%
Economics
GDP per capita $27 377
Inflation -0.7%
Exchange rate US$ = 0.92 EURO
Demographics
Language Greek, English, Turkish
Religion Christian Orthodox, Islam, Maronite
46
19 776 19 504
18 119 17 614 17 660
16 000
17 000
18 000
19 000
20 000
2011 2012 2013 2014 2015
Cyprus – country overview
Cyprus, a member of the EU, is in recovery mode
• Impact of financial crisis resulted in:
- Negative GDP growth for 3 years
- Increasing unemployment
- First bail measures in Europe
• Ongoing discussions between Greek Cypriot and Turkish
Cypriot on reunification of the island
Gross domestic product (GDP) (EURm)
47
0%
20%
40%
60%
80%
100%
120%
Dec 2014 Dec 2015 Jun 2016
Market share Penetration
Cyprus – market overview
• Recent spectrum auction for three blocks of 800/2600
MHz – MTN and CYTA acquired; one block still
unallocated
• Telecoms under pressure – regulators, OTT’s, saturation
• CYTA aggressive network investment plan
• Cablenet – MVNO with CYTA
• Primetel looking for investors – expected to continue
aggressive tactics in the market
Market share vs Penetration
48
MTNCytamobile – Vodafone,
PrimeTelCyTA, PrimeTel, Cablenet
(fixed line)
Launch date 2004 Cyta: 1988
PrimeTel: 2011
CyTa: 1961
PrimeTel: 2003
Cablenet: 2003
Subscribers 407k (Sep 16) 563k (Sep 16) 252k (Dec 15)
Coverage Almost 100% Almost 100% Almost 100%
Shareholders MTN 100% Cyta: Vodafone
Government
PrimeTel: 36.7% Manglis
(Holdings), 31.1%
Celltech
CyTa: State-owned
PrimeTel: 36.7% Manglis
(Holdings), 31.1%
Celltech
Cablenet: 51% Go Malta,
49% C.N. Shiacolas
Cyprus – market players
49
Cyprus – management structure
CEO
Philip van Dalsen
CFO
StoyankaStylianaki
CCO
ThanosChronopoulos
CTIO
CosmasAdam
Bus. SalesDirector
AndreasNeocleous
Commercial & Legal SM
EvridikiPapadopolou
Bus. Risk & Audit SM
Ariana Pantazi
Head of HR
Maria Sergiou
50
900MHz, 1800MHz and 2100MHz
Cyprus – licence
2003
20 years, renewablePeriod
Fees
Spectrum /
technologies
Coverage
22.9 million Euros
900MHz, 1800MHz and 2100MHz
GSM UMTS 4G
Technological neutrality applies
GSM
- 50% 01.12.2005
- 75% 01.12.2007
UMTS
- 60% 01.12.2013
- 70% 31.10.2015
51
800MHz and 2600MHz
Cyprus – licence
05 September 2016 – 05 September 2028 Period
Fees
Spectrum /
technologies
Coverage
6 million Euros
LTE
50% 31.12.2018
75% 31.12.2020
52
Cyprus – operational performance
*Constant currency ('organic') information**In ZAR terms***Excluding hyperinflation
Operational growth despite a challenging environment
Subscribers increased by 5.5%
Revenue increased 4.6%*
• Supported by 109.5%* increase in data revenue,
contributing 32.5% to total revenue
EBITDA margin increased 4.4 pp
Capex of R60 million685 657
880
824 837
1 509 1 494
880
Dec 14*** Dec 15*** Jun 16***
Revenue ZAR (million)
H2
H1
72 80 60
190108
262
188
60
Dec 14*** Dec 15*** Jun 16***
Capex ZAR (million)
H2
H1
28.0%** 27.5%** 31.9%** EBITDA margin
Launched Jun 2003 Market share 38.9% Population 0.8m Market size 2016 1m Penetration 109% Shareholding 100%
53
2G
Cyprus – coverage
June 2016
% land 97.8%
% population 99.4%
Total number of 2G sites 579
54
3G
Cyprus – coverage
June 2016
% land 72.3%
% population 90.0%
Total number of 3G sites 468
55
4G
Cyprus – coverage
June 2016
% land 17.2%
% population 59.3%
Total number of 4G sites 206
56
MTR European regulatory pressures
Roaming rates to be abolished in 2017
Competition is expected to intensify in 2017 – CYTA,
PrimeTel and Cablenet
Cyprus – looking forward
Increase broadband base via cross selling:
Fixed broadband
Mobile home broadband
TV offering launch
EBU/ICT
Opportunities Challenges
Looking ahead
58
1. Regional synergies
2. Business development
3. Organic growth
4. Cash upstreaming
5. Business continuity (including recovery of halted sites in Afghanistan)
6. High-value customers
7. Network experience
8. Data revenue growth and smartphone penetration
9. Digital revenue growth: Middle East Internet Holdings (MEIH) and Iran Internet Group (IIG)
VP priorities for the region
Questions
thank you
61
Disclaimer
The information contained in this document has not been verified independently. No representation or
warranty express or implied is made as to and no reliance should be placed on the fairness, accuracy,
completeness or correctness of the information or opinions contained herein. Opinions and forward looking
statements expressed represent those of the Company at the time. Undue reliance should not be placed on
such statements and opinions because by nature, they are subjective to known and unknown risk and
uncertainties and can be affected by other factors that could cause actual results and Company plans and
objectives to differ materially from those expressed or implied in the forward looking statements.
Neither the Company nor any of its respective affiliates, advisors or representatives shall have any liability
whatsoever (based on negligence or otherwise) for any loss howsoever arising from any use of this
presentation or its contents or otherwise arising in connection with this presentation and do not undertake
to publicly update or revise any of its opinions or forward looking statements whether to reflect new
information or future events or circumstances otherwise.
This presentation does not constitute an offer or invitation to purchase or subscribe for any securities and
no part of it shall form the basis of or be relied upon in connection with any contract or commitment
whatsoever.
MENA Investor Day
MTN Irancell COO presentation
AGENDA
1 Overview
2 MTN Irancell
3 Licences and coverage
4 Looking ahead
64
Country overview – macroeconomic indicators
Area 1 648 195 km2
Capital Tehran
No. of provinces 31
Languages Persian (Farsi)
Literacy rate 93%
Population 80.6 million
Major cities
Tehran 8.846 m
Mashhad 2.749 m
Isfahan 1.945 m
Tabriz 1.549 m
Shiraz 1.461 m
Median age 28 years
GDP (PPP): Per capita $12 833
GDP (nominal): Per capita $5 306
GDP annual growth rate 0.6%
Exchange rate 1 US$ = 30 527 IRR
Inflation rate 8%
Mobile penetration 127%
65
Geopolitical overview
Political environment
• International economic sanctions lifted in early 2016
• Presidential Elections to be held in early 2017
• Political stability and security
• Multicultural country comprising several ethnic and
linguistic groups
Regulatory environment
• 3G/4G Licences issued in 2014, TD-LTE in 2015
• MVNO Regulations Issued
• Mobile number portability commercially launched in
2016 Q3
• National Roaming in place
Economic environment
• Tehran is the country's capital and largest city as well as
its leading economic center
• Inflation rate decreased to 8.3% in September (11.6% last
year)
• LC as per market rate depreciated by 3.1% against USD
and depreciated 3.2% against Euro
• Rapid technology changing in telecommunication industry
• Growth projection in line with the lifting of sanctions and
return to global markets
• Diversified economy, increase level of international
agreements and foreign investments
• Improvements in the level of social responsibility of the
private sector and more care and respect for the
environmental challenges
• Fourth biggest reserves of oil in the world, Iran is a
potential bonanza for oil companies, 2.9 million barrels a
day in 2015
• The second largest proved gas reserves in the world and
the third in natural gas production
66
MTN Irancell MCI Rightel
Shareholding MTN 49%
IEDC 51%
TCI Holding 90%
Stock Exchange 10%
Social Security
Organization 100%
Launch date Oct 2006 1993 2010
Subscribers 48 m 52 m 3 m
Suppliers Huawei
Ericsson
Nokia
Nokia
Huawei
Ericsson
Huawei
Coverage (mobile) 86% 96% N/A
Market share 46.42% 50.35% 3.23%
Market overview
67
• Second-largest country in the Middle East and the 18th-largest in the world.
• The world's 17th-most-populous country, population is projected to stabilize above 105 million by 2050
• The only country with both a Caspian Sea and an Indian Ocean coastline
• Over five million tourists visited Iran in the fiscal year of 2014–2015
• Large youthful population – Median age 28 years.
• Highly fragmented businesses
• Mobile broadband license for 3G, LTE and TD-LTE
• Mobile SIM penetration over 127%
• High smartphones and devices penetration
• Good education system and availability of skills
• Shift to data with drop of traditional voice and SMS business
• High usage of OTTs platforms
• Newly licensed FCPs will aim to provide triple / quad play services in 2017
• Limited FTTx services
• IPTV licenses approved, services to be launched next year
• Removal of sanctions – an opportunity to expand existing business and explore new investments
Market dynamics
68
Operational performance – 30 June 2016
*Constant currency ('organic') information **In ZAR terms***Excluding hyperinflation
Revenue growth of 8.7%* supported by increased data revenue growth
Subscriber growth of 2.0% to 47.3 million
• Attractive segmented offerings, data bundles and
improved network experience
Strong data revenue
• Data revenue increased 65.3%*, contributing 40.6% to
total revenue despite regulatory pressure on data tariffs
• Smartphones increased 25.8% to 25.8 million
• Digital revenue contributed 32.6% to data revenue due to
strong growth in local lifestyle content based usage
• Outgoing voice revenue negatively impacted by the
continuous substitution of data services
EBITDA down 2.4pp
• Mainly due to increased transmission costs associated
with the data network expansion, as well as marketing
costs related to 3G and LTE campaigns
3G and LTE networks expansion
• Added 1,783 co-located 3G sites and 851 LTE sites
27 260 31 038 33 739
29 46632 281
56 72663 319
33 739
Dec 14*** Dec 15*** Jun 16***
Revenue IRR (billion)
(100%)
H2
H1
8911 854 2 313
2 221
2 326
3 112
4 180
2 313
Dec 14*** Dec 15*** Jun 16***
Capex ZAR (million)
(49%)
H2
H1
42.8%** 41.5%** 37.7%** EBITDA margin *
Launched Oct 2006 Market share 46.4% Population 80.6m Market size 2016 101m Penetration 126% Shareholding 49%
* Including revenue share of 28.1%
69
Licence conditions
Granted Nov 2005
Effective July 2006
15 years
Renewable 2 periods of 5 years
Protection period: not to issue any new license for 2 years from the effective date
Period
GSM license Initial fee €300m
Each contractual year 28.1% of revenue (min of 80% of B.P revenue)
Universal service fee – 3% of revenue
Regulation fee – 0.25% revenue
Numbering fees
3G & 4G license initial fee $113m
TDLTE license initial fee $13m
Fees
900 MHz | 3500 – 3600 MHz | 2100 MHz | 2600 MHz | 1800 MHzSpectrum
Voice & SMS: Prepaid tariffs can be +20% premium to the base tariffs that are determined by the CRA
Data: Tariffs cap is determined and announced by CRA to all operators.Tariffs
Year 1 – 50% of population Year 10 – 79.5% of population Year 15 – 84.7% of population
– 248 towns – all provincial cities
– 1 589km of road – 9 089 km of roadCoverage
70
Spectrum update
• On 24 August 2014, mobile broadband license for 3G and
higher was awarded to MTN Irancell.
• On 23 August 2015, TD-LTE license was awarded to
MTN Irancell which allowed the company to convert its
existing WiMAX to TD-LTE technology
Spectrum allocated to MTN Irancell
Type of operating licence
Frequency band
(MHz)
GSM 900 - 1800
TD-LTE 3 500 – 3 600
3G / LTE licence 2 100 – 2 600
WIMAX 3 500 – 3 600
71
Coverage
2G
3G
4G
Population coverage: 86%
Rollout: 1 199 cities
Road coverage: 33 718 Km
Population coverage: 44%
Rollout: 568 cities including capitals of all provinces
Population coverage: 23%
Rollout: 228 cities including capitals of all provinces
72
Dependency on government organisations for national
and international bandwidth
Coverage gap vs. competition including indoor
Access to new site locations specially in big cities
Good margins getting affected by the cost increase
OTT impact
Highly fragmented telecom licenses
Talent war
Commercial analysis
Looking ahead
Leading mobile data service provider
Anticipated GDP growth next years
Leverage MNP to attract HVCs
MVNO to target special segments
FTTx to bundle digital services
Fast data growth in line with smartphone penetration
Established distribution channels
Business opportunities in adjacent sector
(E-Commerce IoT, NFC,…)
MTN Group footprint and International experience
Established business to be able to leverage the removal
of sanctions
Change in life style getting momentum
Overall culture diversity
Low cost operational structure
Local shareholders support
Improved customer experience
Opportunities Threats
Questions
MENA Investor Day
MTN Irancell CFO presentation
AGENDA
1 Key performance matrix
2 Revenue
3 Expenditure
4 Income Statement
5 Balance Sheet
76* Including revenue share of 28.1%
Key performance matrix (IRR b)
27 26131 038 33 739
June 2014 June 2015 June 2016
Revenue
15 39518 581
21 023
June 2014 June 2015 June 2016
Expenditure
12 117
12 45812 717
June 2014 June 2015 June 2016
EBITDA
4 400
8 295
13 710
June 2014 June 2015 June 2016
Data and Digital revenue
16%
28%
41%
June 2014 June 2015 June 2016
Data & Digital as % to revenue
44%
40%
38%
June 2014 June 2015 June 2016
EBITDA margin
13.9% 8.7%
2.8%2.1%
11.6%
12.9%
20.7% 13.1%
88.5%
65.3%
-4.0%
-2.4%
77
Revenue analysis
Data & Digital revenue up 65.3% due to
• Up 65.3% due to aggressive 3G and LTE roll out and an
increase in smartphones and data users
Airtime revenue
• Decline in MOU as a result of increase usage of voice
over OTT applications and highly competitive pricing in
the market
Interconnect revenue
• Interconnect revenue declined by 17.9% due to reduction
in incoming minutes
SMS revenue
• Decreased by 28% due to increased usage of OTT
applications
8 295
13 620
4 753
3 835
534
13 710
12 986
3 901
2 749
394
Data & Digital Airtime Interconnect SMS Other
June 2015 June 2016
78
8 815
3 455
2 022
777
9 509
2 908
2 2902 034
Revenue share Interconnect Network Transmission
June 2015 June 2016
Expenditure
Revenue share and regulatory fees
• Increased 8% in line with revenue growth
Interconnect
• Decreased by 16% due to an increase in on-net traffic
Network costs
• Increased by 13% due to an increase in the new sites and
technology changes
Transmission cost
• Increased by 162% as a result of capacity needed to
support data growth
79
948657
426 466
1 0151 048862
687 599
1 087
Commisions& discounts
VAS & Digital Marketing Staff costs Other
June 2015 June 2016
Expenditure
Commission and discounts
• Increased by 11% aligned to commission related revenue
increases and an increase in device sales
Digital costs
• Increased by 31% aligned to the increase in digital
revenue, taking into account the change in the nature of
the content
• Content costs are mainly revenue sharing agreements
with content providers
Marketing
• Increased by 61%, driven by price increase as well as
increased media advertising to promote 3G/LTE and
maintain our market presence
Staff Costs
• Increased by 28% due to increases in salaries as well as
number of staff
• Minimum salary increases are prescribed by law and
implemented in April each year
80
IRR bn H1 2016 H1 2015 Var H1 2014 FY 2015 FY 2014
Revenue 33 739 31 038 8.7% 27 261 63 319 56 727
EBITDA 12 717 12 458 2.1% 12 117 26 200 24 298
EBITDA margin % 37.7% 40.1% (2.4%) 44.4% 41.4% 42.8%
EBITDA margin % excl RS & RF 65.9% 68.5% (2.6%) 70.8% 69.3% 69.7%
Depreciation 4 068 2 997 35.8% 2 158 6 565 4 850
Amortisation 896 787 13.8% 545 1 669 1 120
Profit from operations 7 753 8 674 (10.6%) 9 415 17 965 18 328
Finance cost (2 044) (2 007) 1.9% (1 459) (3 186) (3 733)
Profit before tax 9 797 10 680 (8.3%) 10 873 21 151 22 060
Income tax expense 1 800 2 298 (21.6%) 2 392 4 121 4 580
Profit after tax 7 997 8 383 (4.6%) 8 481 17 030 17 480
PAT% 23.7% 27.0% (3.3%) 31.1% 26.9% 30.8%
Capex as a % of revenue 27.6% 28.1% (0.5%) 13.5% 30.5% 30.7%
Income statement
81
IRR bn H1 2016 H1 2015 H1 2014
Non-current assets 55 821 44 370 33 199
PPE 46 534 35 780 23 499
Intangible assets 6 173 6 288 3 155
Other 3 115 2 301 6 545
Current assets 64 795 55 865 44 764
Bank & restricted cash 48 225 37 322 30 491
Other 16 570 18 543 14 273
Total assets 120 617 100 234 77 962
Capital and reserves 35 812 19 168 13 786
Liabilities 84 805 81 067 64 176
Borrowings 14 214 12 994 11 113
Taxation 4 907 5 905 5 499
Other 65 684 62 168 47 564
Equity and liabilities 120 617 100 234 77 962
Balance sheet
Questions
MENA Investor Day
MTN Irancell CMO presentation
AGENDA
1 Competitive landscape
2 Market share
3 Digital
4 Data
5 Distribution
6 Commissions
85* Exchange rate; 3,500 IRR/USD
Competitive landscape
Q1 2016 Q2 2016 Q3 2016
• 800 MB free internet for new subs
• Handset on Installment
• Free SMS on recharge
• Go to My.mci.ir and get your gift
• Handset on installment
• Free SIM campaign (One SIM for every Iranian)
• Use 5 min voice, get 55 min free in same call during Ramadan
• Increase credit limit for post-paid customers
• Hamrahi’ lucky draw ~$300k monthly prize money
• Voice subscription offers – ERM ~$0.004 vs. $0.02 headline
• Student special (free combo bundle on recharge)
• Price competition on roaming in 30 countries
• Free voice, SMS, and 1GB data for new subs
• 18 years old offer: free SIM + free SMS / Voice / Data
• Infinity offer
• Deka offer
• Price competition on data: lower price per GB (6Gb for $5.6) new off peak data bundles
• Free voice, SMS, and 1GB data for new Subs
• Deka offer
• Infinity monthly offers: price ranges from $17 to $74 (~ 97% discount on headline )
• Initial voice package for new prepaid users (on-net+off-net)
• Special offer for insured users
• Special combo (1K mins, SMS, MB data) for primary and double for gift SIM: $3.3
• Find your amazing offer on *4444#
• Targeted STC (Talk x Get y)
• Loyalty points program
• Refill >$1.4, get 1GB data valid for 7 days
• Invite non-MTN Irancell subs to join MTN Irancell and get 500MB free data
• Segmented refill campaigns on select days of the week
• New long term data bundles
• Tiered bundle for new customers 1K mins, SMS and MB of data for Ramadan and 0.5Koffer after Ramadan
• Special combo (1K mins, SMS, MB data) for postpaid: (~96% discount on headline)
• 500Mb + 500Mb off peak bundle for new subs
• Refill > $1.4, get 1GB free off peak data bundle
• New structure for WOW recharge
• Dynamic Combo bundle (~ 75% discount on headline)
86Source: MTNIrancell Interconnect data
Market share
45.92% 46.31% 46.65% 46.42%
51.37% 50.66% 50.34% 50.35%
2.39% 2.72% 2.72% 2.94%0.32% 0.31% 0.30% 0.30%
Q2 2015 Q3 2015 Q4 2015 Q2 2016
Irancell MCI RighTel Taliya & others
• MTN Irancell gained market share in Q4 2015 through
aggressive voice offers (the Amazing Offers campaign)
• RighTel market share growth in Q2 2016 driven by
aggressive price offers across voice, SMS and data
- Anticipating higher churn for RighTel in coming months
• Increase in MCI market share in Q2 2016 on the back of
their $300k monthly prize draw
• MTN Irancell remains focused on value management;
retention of valuable customers is priority as SIM
penetration approaches 130%
• 42% value share and NPS at 23%, up 18 points since
December 2015
• MNP expected to boost MTN Irancell mid to high value
customer share once awareness improves and processes
simplified
Market share
Value share
42.0% 41.9% 41.7% 42.2%
58.0% 58.1% 58.3% 57.8%
Q2 2015 Q3 2015 Q4 2015 Q2 2016
MTNIrancell MCI
87* Digital subscribers are RGS30
Digital
19.5
20.7 20.7 20.7
18.5
19.0
19.5
20.0
20.5
21.0
Q2 2015 Q4 2015 Q2 2016 Q3 2016
• Digital subscriber is almost flat in Q3 2016 vs. Q2
• RBT, Vitrin (MTN Play), and SDP services remain key
drivers
• Revenues up 43% in H1 2016 vs. same period last year
• Anticipating stable performance in the remainder of the
year
• New opportunities being pursued: DoB, API charging and
Platform as a Service, and IPTV/ VoD
• Strong adoption of App based selfcare (>1.2m users).
This doubles as a sales channel and customer contact
interface
Subscribers (million)*
Digital Revenue (m, LC)
2 000 000
3 000 000
4 000 000
5 000 000
Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016
88ARPU [data users] per technology for Q2 2016 was calculated based on Jun 2016 report
Data – data users, MB/user and smartphones
24 (92%)
18 (69%)
~3 (10%)
2G 3G LTE
Strong growth driven by
• Smart coverage; rollout and modernisation
• Adoption of smartphones; including 4G handsets and
devices – over 50% penetration
• Provision of 4G devices by MTN Irancell and in
partnership with OEMs
• Increasing awareness of mobile broadband with activation
campaigns focused on phone set up and bundle
recommendation
• Analytics that improves segmentation, targeting, and
selection of communication channels
• Variety of bundles to suit different segments
• Bundle personalisation service (Boom/ Boom+)
4G / 3G conversion remain key opportunities
• 3G usage is ~9 times more than 2G; and ARPU ~2 times
more
• 4G usage is ~3 times more than 3G usage and ARPU
about ~1.5 times more
Data users (Q3 2016- 26 million unique customers)
Smartphone vs non-smartphone data ARPU (USD)*
Smartphone Non smartphone
3.3
6.8
8.8
2G 3G LTE
Smartphone Non smartphone
89
Smartphone strategy
On the supply side…
• Dealing with OEMs to bring in 4G capable devices –
a la Samsung, Huawei
• Importing MTN branded phones – first 5k brought in to
test the market
• Working with device resellers (dealers) to offer MTN
Irancell SIMs with their smartphones
• Importation of 4G devices
On the demand side…
• Instalment models and potential partners to finance deals
• Multiple sales channels being used to improve proposition
discovery
• Targeting customers within 3G/ 4G coverage with legacy
devices using appropriate messages to stimulate
conversion to smartphones/ 3G / 4G devices
Smartphone Penetration – 2016
50.4%
52.2%
56.4%
Q1 Q2 Q3
90
Point of sales Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Distributor 25 25 26 28 28 30 30
Dealers 14 520 14 732 15 248 15 382 15 721 14 299 14 511
Bank 26 27 27 28 28 30 30
ATMs in bank sites 35 900 36 352 36 702 38 100 40 156 41 325 42 732
POS device 2 896 935 3 306 303 3 668 965 4 000 500 4 207 135 4 626 825 4 673 503
MTNI store (Irancell) 10 10 11 11 11 11 12
MTNI store (distributor) 34 35 35 35 42 42 41
MTNI Connect - - 154 173 173 187
Total 2 947 450 3 357 484 3 721 014 4 054 238 4 263 294 4 682 735 4 731 046
Distribution channel
One of the key sales strategies is development digital sales channel including
• USSD sales
• E-Shop sales
• Tele sales
• Mobile app sales
• IVR sales
91
Sales channels, commissions & discounts
Commissions & discounts 2015 2016
Effective discount rate on voucher
& Echarge3.2% 3.3%
Commission & discount on SIM (LC’ IRR) 15 888 19 189
Discount rate on device 9.4% 10.0%
20
30
40
50
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Physical Echarge Logical
Airtime sales channel (%)
Questions
MENA Investor Day
MTN Irancell CTO presentation
AGENDA
1 Overview
2 Network performance
3 Coverage
4 Managed services
95
Building a superior data network
Overview - operating environment
Highlights
Key priorities
Challenges
10 362 On-air 2G Sites in 3 242Cities
7 102 On-air 3G-2100 Sites in 1 336 Cities
4 014 On-air LTE-1800 Sites in 314 Cities
1 605 On-air LTE-TDD Sites in 70 Cities
Data usage 1100 TB per day
Continuous improvement in customer experience
New sites rollout
Improve indoor coverage
Fibre Deployment
Migration of data traffic from 2G to 3G and 4G
Transmission quality, capacity and cost
Sites acquisition
Limited fibre footprint and challenges in getting ROW
96
2015 and 2016 capex spend
9%
65%
13%
3%
10%
Core & IP Modernisation 2G, 3G, LTE New site TDD Fibre
CPU / program
2016 budget
(US$m)
NWG 577
BSS – Radio 439
NSS – Core 34
Support 13
Transmission (IP, fibre,…) 91
ITS 111
Other 21
Total capex 709
2016 rollout
• 2G roll out – YTD new sites 344 added
(Total sites 10 351)
• 3G roll out – YTD new sites 2120 added
(Total sites 6 714)
• LTE roll out – YTD new sites 1 467 added
(Total sites 3 354)
• WiMAX roll out – 943 sites rolled out
• TDD-LTE roll out – 1 406 sites rolled out
Network investment(2015 and H 2016)
97
Quality indicators (availability, quality, coverage)
Throughput 145 Gbps – peak hour
-26%
-14% -17%
15%19% 22%
15% 15%
7%
23%
-26%
-17%-22%
2%
10% 10%5%
13%
17%
23%
Q22103
Q42013
Q22014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
User data speed & traffic distribution
• 2G
- 109 Kbps
- Taking 6 % of mobile data traffic
• 3G
- 1.9 Mbps
- Taking 60% of mobile data traffic
• LTE
- FD: 9.7Mbps
- TD: 19.1 Mbps
- Taking 34% of mobile data traffic
NPS
MTN advantage / disadvantage vs. best competitor with user share > 5%
Data throughput graph
0% -4% -5% -13% -8% -12% -10% -2% +9% 0%
0
20
40
60
80
100
120
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
Jan2016
Feb2016
Mar2016
Apr2016
May2016
Jun2016
Jul2016
Aug2016
Sept2016
Oct2016
3G_DL_THR 4G_DL_THR 2G_DL_THR
98
Network performance – quality indicators
Network availability graph
Dropped call rate
Plan progress
2G Planned # 11 162 93%
On-air # 10 362
3G Planned # 9 855 72%
On-air # 7 102
4G Planned # 5 911 68%
On-air # 4 014
TDD Panned # 2 865 56%
On-air # 1 605
97
98
99
100
Jan2016
Feb2016
Mar2016
Apr2016
May2016
Jun2016
Jul2016
Aug2016
Sept2016
Oct2016
3G_CELL_AVAIL 4G_CELL_AVAIL 2G_TCHA
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Jan2016
Feb2016
Mar2016
Apr2016
May2016
Jun2016
Jul2016
Aug2016
Sept2016
Oct2016
3G_DCR 4G_DCR 2G_DCR
99
MPR score
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
MTN Irancell MCI/TCI RighTel
Network quality Price and special offersBranding and advertising Value added servicesGetting service & help BillingAccessibility Feeling valued & wowedDevices / handsets Commnunication
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
MTN Irancell MCI/TCI RighTel
Network quality Price and special offersBranding and advertising Value added servicesGetting service & help BillingAccessibility Feeling valued & wowedDevices / handsets Commnunication
Promoters Detractors and passives
Increased
promotion
for MTN
Irancell
Network
this
quarter
100
2G coverage map
No. of sites 10 362
No. of cities / villages 3 242
101
3G coverage map
No. of sites 7 102
No. of cities / villages 1 336
102
4G coverage map
No. of sites 4 014
No. of cities / villages 314
103
Managed services
MTN Irancell SVMS process supervision
• Hourly follow up of down cells/sites and network
availability
• Weekly analysis on the root cause of availability
degradation
• Deep investigation on quality of actions performed by MS
on field
• Thorough audit & stabilisation of critical sites by on site
investigation on problematic sites with low performance
• Scheduling and checking regularly preventive
maintenance performed by MS
• Pre and post check health check of planned changes
done on the network
• Accurate TT follow up
• Quarterly SLA and penalty calculation and immediate
deduction from their monthly payment
• In-house strong processes and close follow up
• Competent team handling the daily follow up and full
visibility on main KPI
• Close management follow up and regular evaluation of
performance through different forums
(War room, MS performance)
MTN Irancell Operation Management (Regional and Central)
Network Performance Back Office
Field Manintenance
Change Management
Vendor VendorInfrastructure
Upgrade
* Core* Ran (2,3,4G)* TD-LTE* TX* IPBB* WiMax*M2M
*Billing and chargingSystem* RAN (2,3,4G)* NetworkOptimization* VAS
* RAN (2G,3G,4G)* Networkoptimization
* RAN (2G,3G,4G)* TX
* Link upgrade* MW expansion* Point to Multipoint
Front Office SLA Supervision
Vendor Vendor
Questions
thank you
106
Disclaimer
The information contained in this document has not been verified independently. No representation or
warranty express or implied is made as to and no reliance should be placed on the fairness, accuracy,
completeness or correctness of the information or opinions contained herein. Opinions and forward looking
statements expressed represent those of the Company at the time. Undue reliance should not be placed on
such statements and opinions because by nature, they are subjective to known and unknown risk and
uncertainties and can be affected by other factors that could cause actual results and Company plans and
objectives to differ materially from those expressed or implied in the forward looking statements.
Neither the Company nor any of its respective affiliates, advisors or representatives shall have any liability
whatsoever (based on negligence or otherwise) for any loss howsoever arising from any use of this
presentation or its contents or otherwise arising in connection with this presentation and do not undertake
to publicly update or revise any of its opinions or forward looking statements whether to reflect new
information or future events or circumstances otherwise.
This presentation does not constitute an offer or invitation to purchase or subscribe for any securities and
no part of it shall form the basis of or be relied upon in connection with any contract or commitment
whatsoever.
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