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Dialog Axiata PLCSri Lanka's Premier Connectivity Provider
Q2 2017
an axiata company
2
Dialog Group Performance
Dialog Axiata Company Performance
Subsidiary Performance
3
Dialog Group Performance Highlights – Q2 2017 Strong 2nd Quarter Performance on the back of Aggressive Revenue and Cost Initiatives
Solid Growth in Q2 backed by Strong Recovery in Core Revenue Streams and Aggressive Cost Initiatives• Q2 2017 Group Revenue at Rs23.0Bn, grew 4% QoQ• Q2 2017 Group EBITDA at Rs8.1Bn, grew 13% QoQ• Q2 2017 Group PAT grew significantly by 52% QoQ to reach Rs2.3Bn
Notwithstanding YTD Revenue and EBITDA improvement, NPAT Impacted by Higher Finance Cost and Depreciation• 1H 2017 Group Revenue at Rs45.2Bn, grew 7% YTD• 1H 2017 Group EBITDA at Rs15.4Bn, increased by 9% YTD; Group EBITDA Margin improved to 34%• 1H 2017 Group PAT declined 21% YTD to reach Rs3.9Bn
Majority of Investments Focused Towards Expanding Data Network including Internet Data Centre (IDC)• 1H 2017 Capex of Rs9.5Bn – up 34% YTD; Capex Intensity at 21%
All Business Units Continued to Consolidate Performance Amidst Aggressive Competitive Environment• Dialog Mobile continued to grow Subscriber Market Share and Data adoption – Data Growth of 12% QoQ and 44% YTD• Dialog Broadband Networks (DBN) – Second consecutive quarter of positive PAT (Rs568Mn for 1H 2017)• Dialog Television (DTV) – EBITDA growth of 70% in Q2 2017 with Net Loss declining QoQ
Aggressive Subscriber Growth • Mobile subscriber base of over 12.4Mn – up 1% QoQ and 13% YTD• TV subscriber base of over 910k – up 5% QoQ and 22% YTD
Dialog Continued to be in the Forefront of New Technology Adoption• Commercial launch of South Asia’s first 4.5G TDD LTE network• First successful trial of next-generation, Massive MIMO (Multiple-Input Multiple-Output) Technology;
Capable of delivering speeds up to 1 Gbps
4
Group Financial SummaryStrong Q2 Performance Amidst External Challenges
Rs Mn 2Q 17 QoQ 1H 2017 YTD
Revenue 23,012 4% 45,177 7%
EBITDA 8,130 13% 15,351 9%
PAT 2,346 52% 3,893 -21%
PAT (Norm)1 2,607 44% 4,418 -15%
EBITDA Margin 35.3% 2.8pp 34.0% 0.6pp
PAT Margin 10.2% 3.2pp 8.6% -3.1pp
ROIC 13.5% 1.6pp 13.5% -2.7pp
QoQ : All Key Performance Indicators improved on a QoQ basis; Uplift in Revenue and efficientcost management driving QoQ performance, further benefited by lower unrealised forex losses
YTD : Revenue and EBITDA Improved by 7% and 9% respectively while PAT impacted byincrease in depreciation, net finance cost and unrealised forex losses
1 Normalised for non-cash translational foreign exchange losses
5
Group Revenue Up by 4% QoQ led by Strong Recovery in Core Revenue Streams;Data Growth of 12% QoQ while Drop in Termination Curtailed to 2%
23,012 22,165 21,065
45,177 42,222
Q2 17 Q1 17 Q2 16 1H 17 1H 16
Increase in Consumption Taxes continued to moderated revenue growth across Mobile, Fixed, Broadband and PayTelevision Businesses
✓ Mobile Data continued its upward trend, recording a growth of 12% QoQ and 44% YTD driven by increasedSmartphone penetration and improved coverage
✓ Mobile Voice recovered to 2% QoQ albeit declined 1% YTD✓ Drop in International Termination Revenue curtailed to 2% QoQ through partnerships with key International
Retail Operators✓ 4G LTE coverage Expansion driving Fixed Home Broadband Revenue growth of 7% QoQ and 62% YTD✓ Television Revenue grew 1% QoQ on the back of strong growth in Pre-paid subscribers and stabilising ARPUs
(Rs Mn) +9%
+4%
Strong Recovery of Core Revenue Streams Amidst Constrained Consumer Spending
+7%
6
8,130 7,221 7,057
15,35114,076
35.3%32.6% 33.5% 34.0% 33.3%
25.0%
35.0%
45.0%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Q2 17 Q1 17 Q2 16 1H 17 1H 16
EBITDA EBITDA Margin
+15%
+13%
PAT Improved by 52% QoQ while YTD Decline led by Higher Depreciation and Finance Cost
2,346
1,546 2,287
3,893
4,958
10.2%7.0%
10.9%8.6%
11.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
-
600
1,200
1,800
2,400
3,000
3,600
4,200
4,800
Q2 17 Q1 17 Q2 16 1H 17 1H 16
PAT PAT Margin
+3%
+52%
Q2 17
Rs14,882MnTotal Cost
3.5%
As % of revenue
25.4%
14.2%
12.7%
7.3%
1.6%
64.7%
Bad Debt
Overheads
Staff Cost
Network Cost
Sales & Marketing
Direct Expenses
Q1 17
Rs14,944Mn
As % of revenue
26.6%
15.2%
13.5%
8.4%
0.7%
3.0%
67.4%
Q2 16
Rs14,007Mn
As % of revenue
27.7%
13.8%
11.9%
7.5%
2.5%
3.1%
66.5%
YoY
-0.1%
13%
17%
6%
-31%
6%
25%
QoQ
-1%
-3%
-2%
-9%
21%
-0.4%
133%
Q2 Profitability Growth Delivered on Solid Revenue Growth and Cost Efficiencies;EBITDA Margin Improved 2.8pp QoQ
(Rs Mn)
Total Cost as a % of Revenue Improved by 2.8pp QoQ on the back of Aggressive Cost Initiatives with Realised Cost Savings of Rs1.3Bn in 1H 2017
+9%(Rs Mn)
-21%
YTD 17
Rs29,825Mn
As % of revenue
26.0%
14.7%
13.1%
7.8%
1.1%
3.3%
66.0%
YTD
-4%
15%
17%
8%
-30%
6%
35%
Strong EBITDA Growth and Improved EBITDA Margins
7
Dialog Contributed Rs19.1Bn to Government Revenue in 1H 2017, Up 13% YTD
Dialog Group remitted a total of Rs19.1Bn to GoSL during the six months ended 30th June 2017. Totalremittances included direct taxes and levies as well as consumption taxes collected on behalf of the GoSL
Payments to GoSL – Up 13%
In Rs Mn 1H 2017 1H 2016 %
Direct Taxes, Fees & Levies 5,674 6,453 -12.1
Consumption Taxes collected on behalf of GoSL 13,412 10,464 65.4
Telco Levy 7,001 6,578 6.4
VAT 3,640 1,832 98.7
Total 19,086 16,918 12.8
8
Focused Capex Investments to Support Rapid Growth in Mobile Broadband andHome Broadband Revenues. Capex Intensity for 1H 2017 at 21%
*Capex excluding CPE (Customer Premises Equipment) investments, capex for spectrum acquisition and license renewal
5,534 3,994 4,148
9,528
7,091
-
2,00 0
4,00 0
6,00 0
8,00 0
10,0 00
12,0 00
Q2 17 Q1 17 Q2 16 1H 17 1H 16
24% 18% 14% 21% 17%
Capex Investment Focused towards Coverage Expansion for 4G and Fixed LTE
1H 17 Capex of Rs9.5Bn directed mainly towards investments in High-Speed Broadband infrastructureconsisting of capacity upgrades and LTE focused coverage expansion
Investment in Data Infrastructure includes:• 3G Capacity and Coverage Expansion• 4G capacity upgrades and coverage expansion
+33%
+39%
CapexIntensity
(Rs Mn)
280
1,429 1,697 1,709
4,257
1%6% 8%
4%
10%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
(200)
300
800
1,300
1,800
2,300
2,800
3,300
3,800
4,300
Q2 17 Q1 17 Q2 16 1H 1 7 1H 1 6
OFCF As % of revenue
Q2 17 Q1 17 Q2 16 1H 17 1H 16
Positive OFCF with Strong Operating Cashflows and Focused Capex
-84%
-80%
(Rs Mn)
+34% -60%
9
Group Net Debt to EBITDA Maintained Below 1.0x with Improved Profitability andWorking Capital Management
(Rs Mn)
Group continued to maintain a strong balance sheet, with Net Debt to EBITDA maintained at below 1.0x
Demonstrates the Group’s financial strength and capacity to drive business growth via timely and aggressive investments
30 Jun 17 31 Mar 17 30 Jun 16
Gross Debt 33,402 33,041 31,850
Net Debt 28,887 28,919 28,197
Cash and Cash Equivalents 4,515 4,123 3,653
Gross Debt / Equity (x) 0.61 0.59 0.64
Gross Debt/ EBITDA (x) 1.09 1.14 1.13
Net Debt/ EBITDA (x) 0.94 1.00 1.00
10
Dialog Group Performance
Dialog Axiata Company Performance
Subsidiary Performance
11
9,770 10,103 10,572 11,008 11,158
1,187 1,209 1,253 1,260 1,271
Q2 16 Q3 16 Q4 16 Q1 17 Q2 170
2,0 00
4,0 00
6,0 00
8,0 00
10, 000
12, 000
Postpaid Subs Prepaid Subs
19,036 18,333 17,667
37,370 35,639
15, 000
20, 000
25, 000
30, 000
35, 000
Q2 17 Q1 17 Q2 16 1H 17 1H 16
(Rs Mn)
+8%
+4%
Revenue Grew 4% QoQ Driven by Data up 12% and Voice up 2%
QoQ Profitability Improved on the back of Revenue Growth and Cost Initiatives
+5%
Dialog Axiata PLC (Company)Dialog Continues to Capture Market Share Despite Aggressive Competitive Environment;Data Driving Recovery in QoQ ARPUs
Aggressive Subscriber Acquisition led to the Growth in Subscribers
11,31310,957* 11,825 12,268 12,429
Total subs growth +1% QoQ; +13% YTDPostpaid subs growth +1% QoQ; +7% YTDPrepaid subs growth +1% QoQ; +14% YTD
Data ARPU1 Driving ARPU Growth Supported by 4G Conversion and Coverage Expansion
*Restated
392 406 393 375 383
132
133 128 123
120
0%4%
-3% -5%
2%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
-
50
100
150
200
250
300
350
400
450
Q2 16 Q3 16 Q4 16 Q1 17 Q2 17
Blended ARPU Blended MOU Blended ARPU Growth
Q2 17 QoQ 1H 17 YTD
EBITDA 6,454 13% 12,188 +0.1%
PAT 2,345 35% 4,083 -24%
EBITDA Margin % 33.9% +2.6pp 32.6% -1.6pp
PAT Margin % 12.3% +2.8pp 10.9% -4.1pp
12
Dialog Group Performance
Dialog Axiata Company Performance
Subsidiary Performance
Condensed Version Slide 14
13
Dialog TelevisionSignificant Improvement in QoQ EBITDA and PAT Amidst Affordability Pressure andAggressive Competition
1,517 1,498 1,563
3,015 3,140
1,0 00
1,5 00
2,0 00
2,5 00
3,0 00
Q2 17 Q1 17 Q2 16 1H 17 1H 16
(Rs Mn)
-3% | norm1 +4%
+1%
TV Revenues Grew QoQ and YTD Despite Unfavorable Macro Conditions
QoQ EBITDA Expanded on the back of Growth in Revenue and Aggressive Cost Initiatives
DTV Revenue improved 1% QoQ led by significant growth inPre-paid subscribers while YTD revenue dropped 4% as aresult of change in accounting for Prepaid CPE sales;Normalised Revenue grew 4% YTD
DTV Rebound initiatives gaining traction with QoQ EBITDAimproving by 70% leading to a decline in Net Loss by 30% QoQ
DTV EBITDA contracted 18% YTD on the back of Rupeedepreciation affecting Content and Transponder cost434 428 431 426 427
314 363 408 440 484
Q2 16 Q3 16 Q4 16 Q1 17 Q2 17
Post paid Pre Paid
Prepaid Subscriber Base Continued to Register Strong Growth of 10% QoQ and 54% YTD
Total subs growth +5% QoQ; +22% YTDPostpaid subs growth +0% QoQ; -2% YTD
Prepaid subs growth +10% QoQ; +54% YTD
839791748
867 911(in ‘000s)
-4% | norm1 +4%
1 Normalsied for prepaid CPE
Q2 17 QoQ 1H 17 YTD
EBITDA 110 70% 174 -18%
PAT -217 30% -528 >-100%
EBITDA Margin % 7.2% +2.9pp 5.8% -1.0pp
PAT Margin % -14.3% +6.4pp -17.5% -10.3pp
(Rs Mn)
14
3,028 2,9122,260
5,940
4,355
1,0 00
1,5 00
2,0 00
2,5 00
3,0 00
3,5 00
4,0 00
4,5 00
5,0 00
5,5 00
6,0 00
Q2 17 Q1 17 Q2 16 1H 17 1H 16
Dialog Broadband Networks – Fixed BusinessRevenue Growth Underpinned by Home Broadband (HBB) on the back of Network CoverageEnhancements
(Rs Mn)+34%
+4%
Fixed Revenue Improvement Driven by HBB
Second Consecutive Quarter of Positive PAT on the back of Strong Revenue Growth
Strong growth in HBB Revenue driving QoQ and YTD Revenue improvement
QoQ and YTD EBITDA improvement driven by strong growth in Revenue
On the back of healthy EBITDA performance, DBN recorded its second consecutive quarter ofpositive PAT. Net profit of Rs568Mn for 1H 2017
+36% Q2 17 QoQ 1H 17 YTD
EBITDA 1,651 10% 3,151 77%
PAT 331 40% 568 >100%
EBITDA Margin % 54.5% +3.0pp 53.0% +12.1pp
PAT Margin % 10.9% +2.8pp 9.6% +10.5pp
(Rs Mn)
15
Thank You
Hosted Version – Slide 17