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Dialog Group Performance
Dialog Axiata Company Performance
Subsidiary Performance
Colombo Trust Finance PLC – Acquisition Update
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Dialog Group Performance Highlights – Q3 2017 Dialog Consolidates Performance with Strong 3rd Quarter Results
Solid Growth in Q3 backed by Strong Recovery in Core Revenue Streams and Cost Initiatives• Q3 2017 Group Revenue at Rs24.2Bn, grew 5% QoQ. 11% YoY• Q3 2017 Group EBITDA at Rs9.4Bn, grew 16% QoQ, 22% YoY• Q3 2017 Group PAT grew significantly by 59% QoQ to reach Rs3.7Bn, up 31% YoY
YTD Revenue and EBITDA improved Significantly while NPAT Impacted by Higher Non Operating Cost• YTD 2017 Group Revenue at Rs69.4Bn, grew 8% YTD• YTD 2017 Group EBITDA at Rs24.8Bn, up 14% YTD; Group EBITDA Margin improved to 36%• YTD 2017 Group PAT declined 2% YTD to reach Rs7.6Bn
Majority of Investments Focused Towards Expanding Data Network including Internet Data Centre (IDC)• YTD 2017 Capex of Rs17.1Bn – up 34% YTD; Capex Intensity at 25%
All Business Units Continued to Consolidate Performance Amidst Aggressive Competitive Environment• Dialog Mobile continued to grow underpinned by Data adoption – Data Growth of 11% QoQ and 42% YTD• Dialog Broadband Networks (DBN) – Third consecutive quarter of positive PAT (Rs1.2Bn for YTD 2017)• Dialog Television (DTV) – Aggressive cost initiatives driving EBITDA growth of 84% in Q3 2017 with Net Loss declining QoQ
Aggressive Subscriber Growth • Mobile subscriber base of 12.7Mn – up 2% QoQ and 12% YTD• TV subscriber base of over 926k – up 2% QoQ and 17% YTD
Completed the Acquisition of 80.34% of the shares in Colombo Trust Finance PLC with a View toExpand into Micro Lending and Savings. Mandatory offer closed on 2nd November 2017
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Group Financial SummaryStrong Q3 Performance Amidst External Challenges; YTD Revenue and EBITDA Growth of8% and 14% Respectively while YTD PAT Impacted by Higher Non Operating Cost
All Key Performance Indicators improved on a QoQ and YoY basis; Strong recovery in Core Revenue streams and Efficient Cost Management driving QoQ and YoY performance.
However, YTD PAT continued to be impacted by increase in depreciation, net finance cost and non cash translational foreign exchange losses
1 Normalised for non-cash translational foreign exchange losses
Rs Mn 3Q 17 QoQ YoY YTD 2017 YTD
Revenue 24,218 5% 11% 69,395 8%
EBITDA 9,400 16% 22% 24,751 14%
PAT 3,721 59% 31% 7,614 -2%
PAT (Norm)1 3,632 39% 28% 8,049 0%
EBITDA Margin 38.8% 3.5pp 3.3pp 35.7% 1.6pp
PAT Margin 15.4% 5.2pp 2.3pp 11.0% -1.2pp
ROIC 15.0% 1.6pp -1.5pp 15.0% -1.5pp
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Group Revenue Continued its Growth Trajectory, Recording a Growth of 5% QoQ, 11% YoY and 8% YTD
24,218 23,012 21,748
69,395 63,970
Q3 17 Q2 17 Q3 16 YTD 17 YTD 16
• Mobile Data continued its upward trend, recording a growth of 11% QoQ, 39% YoY and 42% YTD driven byincreased Smartphone penetration and improved coverage
• Mobile Voice grew 1% QoQ and remained flat YoY albeit declined 1% YTD
• International Revenue up 11% QoQ on the back growth in Hubbing Revenue while drop in termination revenuestabilised through partnerships with key International Retail Operators
• Aggressive customer reconnection driving Fixed Home Broadband Revenue growth of 6% QoQ, 48% YoY and 57%YTD
• Television Revenue growth challenged due to declining postpaid ARPU amidst affordability pressure
(Rs Mn) +11%
+5%
Strong Recovery of Core Revenue Streams Driving Overall Revenue Growth
+8%
6
9,400 8,130 7,714
24,75121,790
38.8% 35.3% 35.5% 35.7% 34.1%25.0%
35.0%
45.0%
55.0%
65.0%
0
5,000
10,000
15,000
20,000
Q3 17 Q2 17 Q3 16 YTD 17 YTD 16
EBITDA EBITDA Margin
+22%
+16%
QoQ PAT Growth Backed by EBITDA while PAT Margin Stood at 15.4% in Q3, up 5.2pp QoQ
3,721 2,347 2,832
7,614 7,790
15.4%10.2% 13.0% 11.0% 12.2%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
-
600
1,200
1,800
2,400
3,000
3,600
4,200
4,800
5,400
6,000
6,600
7,200
7,800
Q3 17 Q2 17 Q3 16 YTD 17 YTD 16PAT PAT Margin
+31%
+59%
Q3 17
Rs14,818MnTotal Cost
1.4%
As % of revenue
25.1%
12.7%
12.7%
8.5%
0.8%
61.2%
Bad Debt
Overheads
Staff Cost
Network Cost
Sales & Marketing
Direct Expenses
Q2 17
Rs14,882Mn
As % of revenue
25.4%
14.2%
12.7%
7.3%
1.6%
3.5%
64.7%
Q3 16
Rs14,036Mn
As % of revenue
26.1%
14.8%
12.8%
8.1%
0.2%
2.5%
64.5%
YoY
7%
-4%
11%
16%
-39%
5.6%
278%
QoQ
4%
-6%
5%
21%
-58%
-0.5%
-48%
Q3 Profitability Growth Delivered on Strong Recovery in Core Revenues and CostInitiatives; EBITDA Margin Improved 3.5pp QoQ
(Rs Mn)
Total Cost to Revenue Ratio Improved by 3.5pp QoQ Driven by Cost Improvements; Realised Cost Savings of Rs2.5Bn YTD
+14%(Rs Mn)
-2%
YTD 17
Rs44,644Mn
As % of revenue
25.7%
14.0%
13.0%
8.0%
1.0%
2.6%
64.3%
YTD
0%
8%
15%
11%
-11%
5.8%
10%
Strong EBITDA Growth and Improved EBITDA Margins
7
6,608 6,535 5,651
17,136 12,742
-
2,00 0
4,00 0
6,00 0
8,00 0
10,0 00
12,0 00
14,0 00
16,0 00
18,0 00
Q3 17 Q2 17 Q3 16 YTD 17 YTD 16
27% 28% 26% 25% 20%
1,393
280 465
3,102
4,724
6%
1% 2%
4%7%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Q3 17 Q2 17 Q3 16 YTD 17 YTD 16
OFCF As % of revenue
Focused Capex Investments to Support Rapid Growth in DataYTD 2017 Capex Intensity at 25%
* Capex excluding CPE (Customer Premises Equipment) investments
+17%
+1%
CapexIntensity
(Rs Mn)
Q3 17 Q2 17 Q3 16 YTD 17 YTD16
Positive OFCF with Strong Operating Cashflows and Efficient Working Capital Management
>+100%
>+100%
(Rs Mn)
+34%
-34%
Capex Investments Directed Towards Expanding Data Network; 4G and Fixed LTE Coverage Reached 40% and 52%
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Group’s Net Debt to EBITDA Remained Healthy Below 0.9x with ImprovedProfitability and Working Capital Management
(Rs Mn)
Group continued to maintain a structurally strong balance sheet, with Net Debt to EBITDA maintained at below 0.9x
Demonstrates the Group’s financial strength and capacity to drive business growth via timely and aggressive investments
30 Sep 17 30 Jun 17 30 Sep 16
Gross Debt 33,220 33,402 31,916
Net Debt 29,471 28,887 26,845
Cash and Cash Equivalents 3,751 4,515 5,072
Gross Debt / Equity (x) 0.57 0.61 0.61
Gross Debt/ EBITDA (x) 1.01 1.09 1.10
Net Debt/ EBITDA (x) 0.89 0.94 0.92
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Dialog Group Performance
Dialog Axiata Company Performance
Subsidiary Performance
Colombo Trust Finance PLC – Acquisition Update
10
10,103 10,572 11,008 11,158 11,350
1,209 1,253 1,260 1,271 1,314
Q3 16 Q4 16 Q1 17 Q2 17 Q3 170
2,0 00
4,0 00
6,0 00
8,0 00
10, 000
12, 000
Postpaid Subs Prepaid Subs
20,055 19,036 18,306
57,425 53,944
15, 000
20, 000
25, 000
30, 000
35, 000
40, 000
45, 000
50, 000
55, 000
60, 000
Q3 17 Q2 17 Q3 16 YTD 17 YTD 16
(Rs Mn)+10%
+5%
Revenue Growth Driven by Data, Voice and International Revenues
QoQ Profitability Improved on the back of Revenue Growth and Cost Improvements
+6%
Dialog Axiata PLC (Company)Dialog Continues to Capture Market Share; Data and Recovery in Core Revenues DivingQoQ ARPUs
Aggressive Subscriber Acquisition led to the Growth in Subscribers
11,82511,313 12,268 12,429 12,664
Total subs growth +2% QoQ; +12% YTDPostpaid subs growth +3% QoQ; +9% YTDPrepaid subs growth +2% QoQ; +12% YTD
Data Driving ARPU Growth Supported by 4G Conversion and Coverage Expansion
406 393 375 383 398
133
128 123
120 122
4%
-3%-5%
2%4%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
-
50
100
150
200
250
300
350
400
450
Q3 16 Q4 16 Q1 17 Q2 17 Q3 17Blended ARPU Blended MOU Blended ARPU Growth
Q3 17 QoQ YoY YTD 17 YTD
EBITDA 7,369 14% 10% 19,557 4%
PAT 3,315 41% 9% 7,399 -12%
EBITDA Margin % 36.7% +2.8pp +0.3pp 34.1% -0.9pp
PAT Margin % 16.5% +4.2pp -0.1pp 12.9% -2.7pp
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Dialog Group Performance
Dialog Axiata Company Performance
Subsidiary Performance
Colombo Trust Finance PLC – Acquisition Update
12
Q3 17 QoQ YoY YTD 17 YTD
EBITDA 202 84% >+100% 377 22%
PAT -106 51% 11% -634 -83%
EBITDA Margin % 12.5% +5.3pp +5.8pp 8.1% +1.4pp
PAT Margin % -6.5% +7.8pp +1.7pp -13.7% -6.1pp
Dialog TelevisionSignificant Improvement in QoQ EBITDA and PAT Driven by Aggressive Cost Initiatives
1,615 1,517 1,437
4,631 4,577
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
Q3 17 Q2 17 Q3 16 YTD 17 YTD 16
(Rs Mn)
+12%
+6%
TV Revenue Growth Continued to be Challenged with Drop in Postpaid Subscribers and ARPUs; Subscription
Revenue Stable QoQ Amidst Affordability Pressure
DTV Rebound Initiatives Continued to Gain Traction with QoQ EBITDA Improving by 84% Leading to a Decline in Net
Loss by 51% QoQ
428 431 426 427 421
363 408 440 484 505
Q3 16 Q4 16 Q1 17 Q2 17 Q3 17
Post paid Pre Paid
Prepaid Subscriber Base Continued to Register Strong Growth of 4% QoQ and 39% YTD
Total subs growth +2% QoQ; +17% YTDPostpaid subs growth -1% QoQ; -2% YTD
Prepaid subs growth +4% QoQ; +39% YTD
867839791911 926
(in ‘000s)
+1%
(Rs Mn)
13
3,158 3,0282,406
9,098
6,761
1,0 00
2,0 00
3,0 00
4,0 00
5,0 00
6,0 00
7,0 00
8,0 00
9,0 00
10, 000
Q3 17 Q2 17 Q3 16 YTD 17 YTD 16
Dialog Broadband Networks – Fixed BusinessRevenue Growth Underpinned by Home Broadband (HBB) on the back of Network CoverageEnhancement and Aggressive Customer Reconnection Drives
(Rs Mn) +31%
+4%
Strong Growth in HBB Revenue Driving QoQ and YTD Revenue improvement
Third Consecutive Quarter of Positive PAT on the back of Strong Revenue Growth
Prepaid offering for Fixed HBB launched inJuly 2017 to expand affordability and toreach a wide spectrum of Sri LankanHouseholds
+35%
(Rs Mn) Q3 17 QoQ YoY YTD 17 YTD
EBITDA 1,921 16% 96% 5,072 84%
PAT 640 93% >+100% 1,208 >+100%
EBITDA Margin % 60.8% +6.3pp +20.1pp 55.7% +14.9pp
PAT Margin % 20.3% +9.3pp +21.2pp 13.3% +14.2pp
14
Dialog Group Performance
Dialog Axiata Company Performance
Subsidiary Performance
Colombo Trust Finance PLC – Acquisition Update
15
Colombo Trust Finance PLC (CTF) – Acquisition Update
The acquisition of 80.34% of the shares in Colombo Trust Finance PLC by Dialog Axiata PLC was completed on the 12th ofSeptember 2017. Accordingly the assets and liabilities of CTF have been reflected in the consolidated balance sheet ofthe Dialog Group
CTF Operational Update
Impact on Q3 2017
Financial Statements
of Dialog Group
Acquisition
Transaction Update
▪ Rs550Mn capital infusion due based on CBSL minimum capital requirementguidelines
▪ Digital Bank is expected to be operational by Q2 2018
▪ CTF will not have a material impact on the earnings, gearing and Net asset of DialogGroup
▪ Goodwill arising from the acquisition amounted to Rs710Mn is classified underintangible assets
▪ Acquisition related transaction cost of Rs25.3Mn recognised▪ P&L consolidation will be reflected from Q4 2017 onwards
▪ Mandatory offer for the remaining 19.66% of shares were made, and the offer wasclosed on 2nd November 2017
▪ Shareholders holding 8.6Mn shares have accepted the mandatory offer which willincrease Dialog’s stake to 98.87%; Subject to the approval of the transfer of sharesbeing obtained from SEC
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