REG - OrascomTelecom Hldgs - OTH First Quarter 2012 Earrings Release
Cairo, May 14th, 2012: Orascom Telecom Holding (OTH) (Ticker: ORTE.CA, ORTEq.L, ORAT EY, OTLD LI), announces its first quarter 2012 consolidated results demonstrating a 15% YoY subscriber growth, a 1% YoY revenue growth and a 5% YoY increase in EBITDA.
· Total subscribers surpassed 82 million, an increase of 15% over the same period last year, after the exclusion of Alfa, Mobinil, koryolink and Powercom Ltd. subscribers for comparative purposes.
· Revenues reached US$ 899 million1, showing an organic* growth of 10% compared to 1Q 2011, as a result of strong organic GSM revenue growth of 10%.
· EBITDA reached US$ 433 million1, showing an organic growth of 10% compared to the same period last year, mainly driven by operational excellence and capital efficiency measures across the board, resulting in organic GSM EBITDA growth of 11%.
· Group EBITDA margin stood at 48.2%, an improvement of 1.7 p.p. compared to the same period last year. EBITDA margins for the major subsidiaries were: Djezzy 59.9%, Mobilink 42.2%, and banglalink 34.0%.
· Net Income before minority interest for the quarter stood at US$ 120 million, while profit from continuing operations improved by 83% compared to the same period last year, as a result of profitable growth coupled with operational excellence and capital efficiency strategies implemented during the last year. Net income attributable to equity holders for the period was US$ 116 million1.
· Net Debt2 as of March 31, 2012 stood at US$ 2,952 million1, a decrease of over 2% compared to 31 December 2011; with a Net Debt/EBITDA of 1.8x.
· Figures for 1Q 2011 have been restated to reflect the effect of the spun-off assets.
* Organic Growth for Revenue and EBITDA: Are non-IFRS financial measures that reflect changes in Revenue and EBITDA excluding foreign currency movements and other factors, such as business under liquidation, disposals, mergers and acquisitions. We believe investors should consider these measures as they are more indicative of our ongoing performance and management uses these measures to evaluate the Company's operational results and trends. (Please refer to Glossary for the definition of "organic growth".)
1. US$ financial figures in the Income Statement & Balance Sheet are according to the International Financial Reporting Standards (IFRS).
2. Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.
Ahmed Abou Doma, Chief Executive Officer, commented on the results:
"I am pleased to announce that Orascom Telecom has kicked off the year with impressive growth for 1Q 2012: We have grown our customer base by 15%, and EBITDA growth has surpassed revenue growth for the quarter, a testament to our commitment to drive profitable growth across our markets. Revenues are up by 1% YoY, while EBITDA has grown 5%. On an organic basis, our GSM businesses have increased GSM revenues and GSM EBITDA by 10% and 11% respectively. It is worth noting that currency devaluations in Algeria, Pakistan and Bangladesh had an adverse impact on $US growth results, while local currency indicators showed strong growth for the quarter.
In Algeria, profitable growth was driven by operational excellence initiatives, targeting cost efficiency and tapping into brand loyalty. Despite the wrongful ban on foreign currency transfers, which is impeding critical network maintenance and necessary expansion to our network, OTA's revenues increased 7% and EBITDA increased 8% in local currency terms. In April, OTH submitted a formal notice of arbitration against Algeria in respect of the unlawful actions taken by the government against OTA. Without prejudice to our legal rights and actions, OTH remains open to finding an amicable resolution to the dispute.
In Pakistan, we had an impressive growth with revenues up 10% and EBITDA up15% in local currency terms, boosted by cost control measures and value driven pricing, as well as a key focus on data and VAS.
In Bangladesh, subscribers increased 23% YoY, which translated into revenue growth of 19% for the quarter in local currency terms, proving that this underpenetrated market holds a huge potential upside for us.
Telecel Globe's subscriber base increased 35% compared to the previous year. EBITDA growth surpassed revenue growth for the quarter, with EBITDA increasing 29% YoY and revenues increasing 25% on an organic basis excluding the sale of Powercom Ltd. in Namibia in 2011.
In Canada, the subscriber base of WIND Mobile has exceeded 415 thousand, all the while maintaining stable ARPU levels compared to 1Q 2011."
Operational and Financial Performance
For the first quarter of 2012, Orascom Telecom added over 10 million customers to its subscriber base compared to the previous year, exceeding 82 million subscribers. For comparative purposes, the subscriber figure for 1Q 2011 has been adjusted to reflect the demerger of Mobinil, koryolink and Alfa, as well as the sale of Powercom Ltd. in Namibia.
In Algeria, Djezzy's subscribers increased 14%, as a result of strong customer acquisitions coupled with successful loyalty campaigns aimed at customer retention.
In Pakistan, despite heavy competition, subscriber acquisitions remained healthy for the quarter, due to Mobilink's focus on acquisition activities and promotions, as well as various retention initiatives, resulting in a 9% increase YoY.
In Bangladesh, subscribers grew by 23% compared to the first quarter last year, mostly driven by strong customer acquisitions following the reduction of the SIM Tax in June 2011.
Telecel Globe subscribers showed over 35% growth in its subscriber bases compared to the previous year. Customer retention and increased commercial activity in Burundi led to an increased share in the market. Meanwhile, successful rebranding in Zimbabwe aided in securing strong additions to the network.
In Canada, the customer base of WIND Mobile increased 53% in comparison to 1Q 2011.
Table 1: Total Subscribers1
1. For comparative purposes, the subscriber figures for March 2011 have been adjusted to reflect the demerger of Mobinil, koryolink and Alfa.
2. Including Zimbabwe; after excluding Powercom Ltd. (Namibia) subscribers in March 2011.
Total Consolidated Revenues increased by over 1% compared to the same period last year, due to significant fluctuations in local currency rates against the US$ in Algeria, Pakistan and Bangladesh, as well as the liquidation of the handset business "Ring", which partially offset the 3.5% growth in GSM revenues. Organic growth reached 10% YoY for consolidated revenues.
In Algeria, revenues increased 4% in US$ terms and 7% in local currency terms, as a result of strong customer acquisitions with a focus on high-value subscribers.
In Pakistan, revenues were negatively impacted by currency devaluation, which led to 4% revenue growth in US$ terms compared to 10% growth in local currency terms. The increase is a result of steady growth to the subscriber base, VAS and data uptake and higher administrative fees.
In Bangladesh, revenues increased 19% in local currency terms, but were adversely impacted by currency devaluation, leading to 3% growth in US$ terms. The increased subscriber base was boosted by the aggressive subscriber acquisition strategy for the quarter, in addition to a higher level of VAS and data adoption, which led to the revenue increase for 1Q 2012.
Telecel Globe revenues declined by 9% in comparison to 1Q 2011 as a result of the sale of the operation in Namibia. On a comparable basis, excluding the sale of Powercom Ltd. in Namibia, revenues grew organically by 25% YoY.
Table 2: Consolidated Revenues YoY
1. 2011 figures have been represented to reflect the completion of the demerger process.
2. As per IFRS rules, Telecel Globe figures have not been represented in 1Q 2011to reflect the disposal of Powercom Ltd. in 2Q 2011.
Table 3: Revenues (Local Currency)
In Algeria, ARPU for 1Q 2012 declined nearly 6% in US$ terms, corresponding to a 4% drop in local currency terms. The decrease is a result of ARPU dilution partly due to lower MOU as a result of extreme weather conditions.
In Pakistan, Mobilink's ARPU showed a decrease of 7% in US$ terms, while increasing 2% in local currency terms, mostly due to high uptake in VAS and data offerings.
In Bangladesh, ARPU declined 10% in US$ terms and less than 2% in local currency terms. Alongside the negative impact of currency devaluation, the strong growth of subscribers in rural and youth segments resulted in some ARPU dilution for the quarter.
In Canada, ARPU remained mostly stable for WIND Mobile in comparison to 1Q 2011.
Table 4: Blended Average Revenue Per User (ARPU)1
Table 5: Blended Average Revenue Per User (ARPU) (Local Currency)
1. After excluding Mobinil and koryolink subscribers from March 2011.
2. Global ARPU is calculated on a year to date basis, taking into account the weighted average subscribers for calculation.
Consolidated EBITDA for 1Q 2012 increased 5% in comparison to 1Q 2011, with an organic growth of 10% YoY, as a result of successful OPEX optimization in most operations. EBITDA growth surpassed revenue growth for the period as a result of implementing operational excellence initiatives across the board, leading to profitable growth.
In Algeria, EBITDA grew by 5% in US$ terms and 8% in local currency terms, mainly due to OPEX savings for the quarter, as well as solid revenue growth, despite the wrongful ban on foreign currency transfers.
In Pakistan, EBITDA showed an increase of 9% in US$ terms, while increasing 15% in local currency terms, as a result of the aforementioned currency devaluation. The increase is a result of improved cost control measures for cost of sales and tariff optimization.
In Bangladesh, EBITDA increased 13% in local currency terms, but was negatively impacted by currency devaluation, leading to a 2% decline in $US terms. The increase in local currency terms is attributable to higher revenues for the quarter coupled with operational excellence initiatives with a focus on network OPEX.
Telecel Globe's EBITDA showed an improvement of 46% YoY, however it is worth noting that excluding the effect of the sale of Powercom Ltd. in Namibia in 2011, EBITDA increased by 29% on an organic basis, surpassing revenue growth for 1Q 2012.
OT Holding's EBITDA declined YoY as a result of increased costs relating to consultancy and legal fees in relation to the Demerger, as well as the accrual of bonuses booked on a quarterly basis, as opposed to booked annually.
Table 6: Consolidated EBITDA1, 2 YoY
1. EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.
2. 1Q 2011 figures have been represented to reflect the completion of the demerger process.
3. As per IFRS rules, Telecel Globe figures have not been represented in 1Q 2011 to reflect the disposal of Powercom Ltd. in 2Q 2011.
4. Other Telecom Services Companies include C.A.T.
5. Other non operating companies include: Cortex, Euroasia, IWCPL, Moga, Oratel, Sawyer, OTV, OIIH, OIH, Globalive, OT Asia, OSCAR, OT ESOP, OT Sarl, TMGL, TIL, TIL SA.
Table 7: EBITDA (Local Currency)
The Consolidated EBITDA margin for the first quarter of 2012 stood at 48.2% showing a 1.7 p.p. increase compared to the same period last year.
In Algeria, the EBITDA margin for Djezzy showed relative stability, increasing 0.5 p.p. compared to the previous year, despite the limitations and restrictions imposed on the entity by the Algerian government.
In Pakistan, Mobilink's EBITDA margin improved by 1.9 p.p. in comparison to 1Q 2011, as a result of the OPEX savings introduced to boost operational excellence and capital efficiency.
In Bangladesh, banglalink's EBITDA margin decreased 1.7 p.p. as a result of higher SIM tax costs related to the aggressive subscriber acquisition for the quarter.
Telecel Globe's EBITDA margin increased by 10.6 p.p. YoY, mainly due to accelerated EBITDA growth for the quarter, as a result of OPEX savings.
Table 8: Consolidated EBITDA Margin
1. As per IFRS rules, Telecel Globe figures have not been represented in 1Q 2011 to reflect the disposal of Powercom Ltd. in 2Q 2011.
Total consolidated capital expenditures for 1Q 2012 showed a 3% decline YoY.
In Algeria, CAPEX remained low due to the ongoing ban on foreign currency transfers preventing the payment of essential suppliers, as well as the importing of equipment critical to network maintenance and necessary expansion.
In Pakistan, CAPEX decreased by 47% as a result of a slowdown in capacity roll-out for the network before proceeding with network modernization.
In Bangladesh, CAPEX grew by 123% in comparison to 1Q 2011 in order to accommodate its growing subscriber base.
CAPEX for Telecel Globe decreased by 75% compared to the previous year's aggressive 3G roll-out and network expansion investments.
Table 9: Capital Expenditure of OTH Subsidiaries1
1. CAPEX figures excluding license fees.
Net Income before minority interest for 1Q 2012 stood at US$ 120 million, declining 85% compared to the same period last year. The decrease is a result of the sale of OTH's entire shareholding in Orascom Tunisia Holding and Carthage Consortium through which OTH owned 50% of Orascom Telecom Tunisia ("OTT") for a total cash consideration of US$ 1.2 billion in 1Q 2011. Taking into consideration the 20% tax on capital gains in Tunisia and its associated investment cost, OTH recognized a gain of US$ 754 million on the transaction last year.
Profit from continuing operations improved by 83% compared to the same period last year, as a result of profitable growth coupled with operational excellence and capital efficiency strategies implemented during the last year.
EPS in the 3 months ended March 31, 2012 stood at US$ 0.11/GDR.
Table 10: Income Statement in IFRS/US$
1- Management Presentation developed from IFRS financials.
2- Mainly due to the appreciation of CAD against EGP, resulting in an unrealized fx gain related to the financial receivable from Globalive.
3- On 4 January 2011, OTH sold its entire shareholding in Orascom Tunisia Holding and Carthage Consortium through which OTH owned 50% of Orascom Telecom Tunisia ("OTT"). The figure also includes the effect of the spun-off assets.
4- Equates to Net Income after Minority Interest.
5- Based on a weighted average for the outstanding number of GDRs of 1,046,285,601 GDRs and 1,045,864,753 GDRs for 1Q 2012 and 1Q 2011 respectively.
Table 11: Balance Sheet in IFRS/US$
1- Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.
Table 12: Cash Flow Statement in IFRS/US$
Main Financial Events
Under the terms of the VimpelCom transaction, VimpelCom, Weather II and OTH agreed on a demerger plan (the Demerger") pursuant to which the Company's investments in certain telecom, media and technology assets (the "Spin-Off Assets"), which were not intended to form part of the VimpelCom business going forward, would be transferred to a new company, Orascom Telecom Media and Technology Holding S.A.E. ("OTMT"). The Demerger was performed in accordance with the guidelines of the Egyptian Financial Supervisory Authority and in particular decree no. 124 of 2010 and was completed in December 2011. The split of OTH shares by the way of the Demerger resulted in OTH shareholders holding the same percentage interest in OTMT as they held in the Company. The Demerger plan was initially approved in a shareholders meeting dated 14 April 2011 and subsequently on 23 October 2011. Approval from the Egyptian Financial Supervisory Authority was received in December 2011.
As a result of the Demerger, during November and December 2011, ownership of the following Spin-Off Assets was transferred from the Company to OTMT:
28.75% ownership stake in Mobinil for Telecommunications S.A.E.;
20.00% ownership stake in the Egyptian Company for Mobile Services;
75% ownership in CHEO Technology Joint Venture Company, together with all other assets and businesses located in North Korea;
95% ownership in Orabank NK;
100% directly and indirectly held ownership stake in Middle East and North Africa for Sea Cables;
51% ownership of Trans World Associate (Private) Limited (Pakistan);
100% ownership of Med Cable Limited (UK);
99.99% ownership stake in Intouch Communications Services S.A.E. (aka OT Ventures Internet portals and other ventures in Egypt including Link Development, ARPU+ and LINKonLine); and
1% ownership stake in ARPU for Telecommunications Services S.A.E.
The Demerger was performed based on the book value of the Spin-Off Assets, taking into consideration the terms and conditions of a separation agreement entered into between the relevant parties, which requires among others, OTH to reimburse OTMT for certain revenue items pertaining to the Spin-Off Assets. The effect of the Demerger was a reduction of total equity of US$ 1,610 million, including a reduction of US$ 433 million in share capital.
The Demerger was effected through a reduction in the issued capital of the Company. In particular, the nominal value of the Company's shares was reduced from L.E. 1 to L.E. 0.58.
As the Demerger took place before the balance sheet date, the Demerger, including the transfer of the Spin-Off Assets has already been reflected in the consolidated balance sheet as of 31 December 2011, whilst for income statement purposes, the results of operations relating to the Spin -Off Assets have been classified as "discontinued operations" in 2010 and 2011.
In January 2012, OTH received approvals from EFSA and EGX to resume trading of OTH ordinary shares, as well as the commenced trading on the newly-demerged company from OTH, OTMT.
Eligible holders of OTH GDSs on the GDR Record Date received GDSs representing ordinary shares of OTMT ("OTMT GDSs") pursuant to OTMT's new GDS program that had been created with the Bank of New York Mellon as depositary. The Depositary conducted a certification process for each OTH GDS holder to determine the eligibility of such holder to receive OTMT GDSs under relevant private placement exemptions and other applicable legal restrictions. OTH GDS holders who did not provide such certification to the Depositary did not receive OTMT GDSs. Instead, the underlying OTMT ordinary shares were sold and the proceeds (net of the depositary's fees and any applicable taxes and expenses) were distributed to them by the Depositary in accordance with the applicable GDS deposit agreement.
In November 2011, Orascom Telecom Holding S.A.E. ("OTH") announced that Khaled Bichara, Executive Chairman, submitted his resignation from his position as Executive Chairman and Board of Directors Member, effective by the end of December 2011.
In January 2012, the Board of Directors elected Mr. Jo Lunder to the position of Chairman replacing Mr. Khaled Bichara. The appointment was submitted in the next General Assembly for ratification. In his new capacity as Chairman of Orascom Telecom Holding, Mr. Lunder will focus on executing a strategy to increase cash flows through driving profitable growth, operational excellence and capital efficiency.
In March 2012, Orascom Telecom Holding S.A.E. ("OTH" or the "Company") announced that the Algerian Court of first instance handed down a judgment against OTH's subsidiary in Algeria, Orascom Telecom Algeria ("OTA"), and a member of OTA's senior executive team in connection with the so-called "Bank of Algeria" case. The judgment consists of fines of 99 billion Algerian Dinar (approximately USD 1.3 Billion) including a criminal sentence against a member of OTA's senior executive team. The judgment relates to a previously disclosed claim brought in 2010 by the Algerian authorities alleging breaches of foreign exchange regulations.
OTA maintains that OTA and its senior executive have acted in compliance with the law and OTA is taking the necessary steps to file an appeal. The lodging of the appeal will provisionally suspend the judgment. The management in Algeria has OTH's full support.
OTH is considering all of its options for possible further steps that it may take in connection with this matter.
In April 2012, Orascom Telecom Holding S.A.E. ("OTH" or the "Company") announced that it submitted a formal Notice of Arbitration against the People's Democratic Republic of Algeria ("Algeria") in respect of the unlawful actions taken since 2008 by the Algerian government against Orascom Telecom Algerie ("OTA").
In the Notice of Arbitration, OTH asserts that since 2008 its rights under the Agreement on the Promotion and Reciprocal Protection of Investments between Egypt and Algeria have been violated by actions taken by the Algerian government against OTA, including the recent court judgment against OTA and a member of its senior executive team imposing a total fine of 99 billion Algerian Dinar (approximately USD 1.3 billion) and a criminal sentence against a member of OTA's senior executive team.
This international investment treaty claim is brought under the arbitration rules of the United Nations Commission on International Trade Law. OTH is fully confident in the strength of its claim.
Without prejudice to its legal rights and actions, OTH continues to be open to finding an amicable resolution with the Algerian government that is mutually beneficial to both parties and would fully support any initiative by its majority shareholder, VimpelCom Ltd., to seek an amicable resolution with the Government.
Presence in Countries with Favourable Dynamics:
OTH serves a population of 415 million* with an average penetration of 52%
Population Figures from CIA Factbook (est. July 2012).
Mobile Penetration is based on March 31, 2012 subscriber figures & market share
Djezzy - Algeria
Financial Data Operational Data
During the first quarter of 2012, Orascom Telecom Algerie (OTA) continued to face various challenges due to unfair and arbitrary actions from a number of government authorities, including, and in particular, the Bank of Algeria's detrimental and unfounded decision issued in 2Q 2010, instructing the banks not to process any overseas foreign currency transfers by OTA. This is having devastating effects on OTA's network and reputation. For example, it is preventing the importation of goods which are necessary for maintenance purposes and for network capacity expansion. OTA is reaching its maximum capacity regarding data and commercial initiatives, which have recently been drastically reduced. This factor continues to exert significant pressure on the network, especially in terms of quality, capacity and expansion. This factor is also prejudicing international roaming agreements and jeopardizing the possibility of launching any new products which would ultimately require new technological platforms. Despite these major obstacles, OTA is seeking to serve its customers with the best possible network quality.
Despite the challenges described above, which are having an increasingly prejudicial effect as time goes by, OTA succeeded in managing a very challenging first quarter of 2012 in the face of extreme adverse conditions, closing with 17.7 million subscribers, maintaining its leadership position with a 57% market share, controlling the largest distribution across all 48 Wilayas and operating the largest network with 7,553 BTS by the end of the quarter.
In this context, usage based promotions were necessarily restricted by the network limitations which have resulted from the Bank of Algeria's injunction. OTA launched a promotion in 1Q 2012 focused on acquisition, without creating peaks on the normal network utilization; the promotion focused on Djezzy card acquisition by offering a 50% discount on the SIM price. The VAS activity distinguished itself on the marketplace through the launch of the "Verso" product, which consists on offering to the customer a secondary number within the same SIM. "Verso" is an example of a successful internal development without the need of any external support or new technological platform (importation prevented by the ban). OTA continued to promote existing products through very successful communication campaigns. Three major campaigns were launched during 1Q 2012 focusing on "Control Products" and "Leadership: 17 million customers and ISO certification". Two major brand-related initiatives continued to have major success in the country. The first one being "Hanout Maker", a 50 minutes weekly TV emotional program by which OTA helps one Algerian every week to refurbish his/her own business creating a living out of it. The second one is "Prodiges", a 100% web based initiative by which OTA helps to identify people with hidden potential in various fields ranging from music to sports or acting. These two programs are contributing to create a very strong emotional bond with OTA's customer base.
On the sales side, OTA continued to sell its mobile telecommunication services through indirect channels (distributors) and through the 87 owned "Djezzy" branded shops. The nine exclusive national distributors cover all the 48 Wilayas and are distributing OTA's products through 19,000 authorized points of sales ("POS"). During 1Q 2012, OTA continued to focus on expanding the network of POS selling postpaid from 87 (owned shops) in 1Q 2011 to over 5,000 in 1Q 2012 (through authorized POS) in order to increase postpaid gross adds. A Djezzy card acquisition incentive to the POS was launched on January 26th to March 31st which contributed to the Gross Adds figures of 1Q 2012.
Despite the extremely challenging conditions described above, the overall customer base increased by 14% to reach 17.7 million customers by the end of 1Q 2012 from 15.5 million customers by the end of 1Q 2011. OTA also managed to maintain churn at a competitive level (5.3% for the first three months of 2012) through increased efforts to counter the negative effects of the Bank of Algeria injunction and the continued enhancement of the "Imtyaz" loyalty program with a special focus on high value customers.
By carefully monitoring network capacity, OTA is avoiding launching usage stimulation initiatives that could eventually create peaks and network congestion. OTA's revenue evolution along 1Q 2012 followed a parallel trend to the actions undertaken by OTA to mitigate operational handicaps. Revenues for 1Q 2012 showed a positive increase of 7% over the same period of 2011, from DZD 32 billion to DZD 34 billion in line with the recovery trend seen in previous quarters. The EBITDA value (in DZD) increased by 8% and EBITDA margin by 0.5 p.p. compared to 2011. In Algeria, CAPEX remained low due to the ongoing ban on foreign currency transfers preventing the payment of essential suppliers, as well as the importing of equipment critical to network maintenance and necessary expansion.
Mobilink - Pakistan
Financial Data Operational Data
* Market share, as announced by the Pakistani Regulator is based on information disclosed by the other operators which use different subscriber recognition policies. Market share for March 2012 was not disclosed by the regulator prior to this release. The above figure relates to February 2012.
The cellular landscape has remained competitive during the first quarter of 2012 - a momentum continuing for the last few years. During 1Q 2012, all players initiated multiple marketing campaigns with heavy media spending and aggressive promotional activities built around the launch of new Voice, SMS and Value Added Services. The period also saw data campaigns coming into focus.
Mobilink continued to expand its 'Location Based Charging' offer to cover additional cities during 1Q 2012. In addition, an acquisition promotion was introduced, offering free minutes and SMS as bonus on daily usage to all new Mobilink customers.
As part of its efforts to provide the highest level of service to its customers, Mobilink improved its value proposition by upgrading data services in order to satisfy the needs of customers who demand higher speeds and usage. Several smartphones were launched, in partnership with Samsung, HTC and Blackberry under the umbrella of Mobilink's postpaid brand. A low price ranged handset in partnership with Nokia was also introduced for prepaid customers. At the same time, the company continued the tradition of introducing innovative services and applications for its valued customers. Mobilink also launched presence on social media, providing its customers with yet another medium for engagement.
Understanding the significance of cricket and its importance in Pakistan, Mobilink continued its successful collaboration with the Pakistani Cricket Team and remained the leading sponsor of its sporting events. During the Jazz Cup in Dubai and the Asia Cup in Dhaka, Mobilink customers were given attractive offers such as chances to win all-expense paid trip to Dubai, free minutes and SMS on international top-ups.
Mobilink proudly manages the largest GSM network in the country and has been keen on continuously investing in the expansion and the modernization of its infrastructure. The main objective behind such investment is to further improve the quality of the communication services offered to customers and provide them with a customer experience that exceeds their expectations. As a means of endorsing its leadership position in terms of network coverage and quality, Mobilink launched a comprehensive media campaign in January highlighting the quality of its network.
The combination of above mentioned initiatives, aggressive sales strategy and upgraded network has allowed Mobilink to show a healthy growth in both revenues and subscriber base. Mobilink increased its subscriber base by 9% compared to the previous year. Total revenues for 1Q 2012 showed an increase of 10% in PKR terms, while EBITDA growth exceeded revenue growth increasing 15% in PKR terms.
banglalink - Bangladesh
Financial Data Operational Data
* Market share, as announced by the Regulator in Bangladesh is based on information disclosed by the other operators which use different subscriber recognition policies.
banglalink has continued its growth momentum and has reached 24.7 million subscribers by the end of 1Q 2012. This achievement was made possible through aggressive acquisitions during the period, compared to the same period last year.
banglalink's revenue has grown to US$130 million in 1Q 2012, which is an increase of 3% YoY. In local currency terms , the 1Q 2012 revenue was BDT 10.7 billion with a 19% increase compared to the previous year. However, the growth was countered by the sharp exchange rate devaluation since 4Q 2011.
banglalink achieved an EBITDA of US$ 44 million in 1Q 2012, which is slightly lower than the previous year in US$ terms, while in local currency terms EBITDA increased 13% YoY. EBITDA margin stood at 34%. Capital expenditure in 1Q 2012 reached US$ 29 million, an increase of 123% over the same period last year.
In 1Q 2012, banglalink continued to launch attractive services and offers to the market. banglalink has launched a new attractive package with special FnF, loyalty programs, bonus on usage, reactivation promotions offering bonus on recharge and an attractive tariff, as well as limited tariff adjustments to some packages. In 1Q 2012, banglalink brought a unique travel information and advisory service to its customers called "travel line" to support the development of domestic tourism. banglalink also launched its "International Remittance" service in partnership with "Western Union" - the global leader in International money transfer network, which further strengthened our market leadership in MFS.
banglalink and 3 other operators (Citycell, GrameenPhone and Robi) had completed 2G license renewal negotiations. Under the guideline, banglalink has to pay approximately US$ 256 million for 15 years license. In addition, the Government has declared 3G license allocation through auction by this year.
BTRC has published the Interim Directives for the National Equipment Registry (NEIR) in order to reduce and eliminate illegal activities like stealing, high jacking and re-use of stolen mobile phones by directing the MNOs to ensure Registration of IMEI numbers of every mobile handset in the market and blocking of handsets containing illegal IMEI. AMTOB working committees comprising mobile operator members are highly involved in devising strategies to counter these guidelines for a positive impact business and industry.
Bangladesh Bank, the central bank of the country, has published the guideline for mobile financial services and approved all types of mobile based financial services, but they opted for a bank-led model wherein a Bank must take approval for such services before launch. banglalink, jointly with its banking partner, is expected to secure the approval for all financial services under this new guideline.
WIND Mobile- Canada
Globalive Wireless Management Corp. ("Company" or "GWMC"), operating its wireless business under the brand name WIND Mobile is a Canadian wireless operation jointly owned by AAL Holdings Corporation and Orascom Telecom Holdings. During 1Q 2012, WIND Mobile continued its "Value Plus" strategy execution adding primarily postpaid subscribers while carefully managing prepaid economics for both voice and mobile broadband customers. The company launched a number of high-end handsets including the Samsung Galaxy Nexus S. WIND Mobile continued to grow its distribution, ending the quarter with 481 total points of sale including 215 branded locations. The company continued expanding its network and improving its quality in existing networks.
In January 2010, Globalive Wireless Management Corp. ("WIND Mobile") was named as a respondent in an application by its competitor Public Mobile Inc. to the Federal Court of Canada for an order overturning the December 2009 Cabinet order which permitted WIND Mobile to launch its wireless operations. In that December 2009 order, the Cabinet had determined that WIND Mobile met the requirements of Canada's ownership and control rules and was, therefore, eligible to commence operations. On February 4, 2011, the Federal Court ruled that the Cabinet order contained two errors and should be quashed. WIND Mobile and the Canadian Government successfully appealed that decision at the Federal Court of Appeal, when a unanimous panel reversed the Federal Court and confirmed that WIND Mobile was eligible to operate. Though Public Mobile Inc. applied for leave to appeal this decision at the Supreme Court of Canada, this application was dismissed (with costs in favour of WIND Mobile) on April 26, 2012. The matter is closed.
On March 14, 2012, the Minister of Industry announced that the Canadian government has made key telecom decisions on foreign ownership restrictions and spectrum policy. He characterized these changes as leading to increased competition and lower prices for wireless services in Canada. Specifically, he announced:
- The Telecom Act will be amended to remove foreign investment restrictions for telecom companies that hold less than a 10% share of the total Canadian telecom market (i.e., all companies but Bell, Rogers and TELUS (the "Incumbents").
- Companies that are successful in growing their market share to greater than 10% organically (i.e., other than by way of merger or acquisitions) will continue to be exempt from the restrictions.
- The government will be applying 2X5MHz caps in the upcoming 700MHz auction.
- The 2500MHz auction will take place in early 2014.
- The government will improve and extend the existing policy on national roaming and tower sharing and will improve transparency and information sharing to facilitate agreements between companies.
WIND Mobile is assessing the 700 MHz spectrum auction rules and although clearly advantageous to wireless incumbents, there is a prime 2X5 MHz band available in certain regions that could be beneficial to WIND Mobile's long term strategy.
Table 13: Foreign Exchange Rates used in the Income Statement & Balance Sheet
1- Represents the average monthly exchange rate from the start of the year until the end of the period.
2- Represents the spot exchange rate at the end of the period.
3- Appreciation / (Depreciation) of USD vs. Local Currency.
Table 14: Ownership Structure & Consolidation Methods
1. Mobinil is a holding company which controls 51% of ECMS, the mobile operator. Mobinil is also the brand name used by ECMS.
2. Direct and Indirect stake through Moga Holding Ltd. and Oratel.
3. OT Ventures owns 100% of Sheba Telecom which operates under the trade name banglalink.
4. Direct and Indirect stake through International Telecommunications Consortium Limited (ITCL).
5. OIH owns 100% of Orascom Telecom Iraq which sold Iraqna in December 2007.
6. Holding company for OTH's Share in Globalive which has been accounted for under the equity method.
ARPU (Average Revenue per User):Average monthly recurrent revenue per customer (excluding visitors roaming revenue and connection fee). This includes airtime revenue (national and international), as well as, monthly subscription fee, SMS, GPRS & data revenue. Quarterly ARPU is calculated as an average of the last three months.
Capex: Tangible & Intangible fixed assets additions during the reporting period, includes work in progress, network, IT, and other tangible and intangible fixed assets additions but excludes license fees.
Churn: Disconnection rate. This is calculated as the number of disconnections during a month divided by the average customer base for that month.
Churn Rule: A subscriber is considered churned (removed from the subscriber base) if he exceeds the 90 days from the end of the validity period without recharging. It is worth noting that the validity period is a function of the scratch denomination. In cases where scratch cards have open validity, the subscriber is considered churned in case he has not made a single billable event in the last 90 days (i.e. outgoing or incoming call or sms, wap session…). Open cards validity is applied for OTA, Mobilink, Mobinil and banglalink so far. A koryolink customer is considered churn if he/she does not recharge within four months after the validity of the scratch card.
MOU (Minutes of Usage): Average airtime minutes per customer per month. This includes billable national & international outgoing traffic originated by subscribers (on-net, to land line & to other operators). Also, this includes incoming traffic to subscribers from land line or other operators.
OTH's Market Share Calculation Method: The market share is calculated through the data warehouse of OTH's subsidiaries. The number of SIM cards of competitors that appeared in the call detail record of each of OTH's subsidiaries is collected. This reflects the number of subscribers of the competition. However, OTH deducts the number of SIM cards that did not appear in the call detail records for the last 90 days to account for churn. The same is applied to OTH subsidiaries. This method is used to calculate the market shares of Djezzy and Mobinil only. In Pakistan and Bangladesh, Market share as announced by the Regulators is based on disclosed information by the other operators which may use different subscriber recognition policy.
Organic Growth forRevenue and EBITDA: Are non-IFRS financial measures that reflect changes in Revenue and EBITDA excluding foreign currency movements and other factors, such as business under liquidation, disposals, mergers and acquisitions. We believe investors should consider these measures as they are more indicative of our ongoing performance and management uses these measures to evaluate the Company's operational results and trends.
For more information:
Orascom Telecom Holding S.A.E.
Nile City Towers - South Tower - 27th Floor - Ramlet Beaulac
Tel: +202 2461 5050 / 51 Fax: +202 2461 5055 / 54
This presentation contains statements that could be construed as forward looking. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of the subscriber base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activity and situation relating to the company.
Such forward looking statements are no guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking statements as a result of various factors.
You are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation, which is not intended to reflect Orascom Telecom's business or acquisition strategy or the occurrence of unanticipated events.
This information is provided by RNS
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