View
1
Download
0
Category
Preview:
Citation preview
Grameenphone Ltd.
October, 2018
This is the footer text.
1
Disclaimer
The following presentation is being made only to, and is only directed at, persons to whom
such presentation may lawfully be communicated (’relevant persons’). Any person who is not
a relevant person should not act or rely on this presentation or any of its contents.
Information in the following presentation relating to the price at which relevant investments
have been bought or sold in the past or the yield on such investments cannot be relied upon
as a guide to the future performance of such investments.
This presentation does not constitute an offering of securities or otherwise constitute an
invitation or inducement to any person to underwrite, subscribe for or otherwise acquire
securities in Grameenphone Ltd. The release, publication or distribution of this presentation
in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions
into which this presentation is released, published or distributed should inform themselves
about, and observe, such restrictions.
3
Mobile market
leader in a
fast-growing
economy
BANGLADESH AT A GLANCE
Sources: WorldBank, CIA Factbook
• GNI per capita of USD 1,330
• Largely a cash based economy
• Main sectors: Service, manufacturing and agriculture
• Stable inflation and currency performance
• Population of 168m, growing by >1% per year
• Young population, 47% below 25 years
• Expanding middle class
Age distribution Real GDP growth (Avg. of last 10 years)
28%
19%
40%
7% 6%
0-14 yrs 15-24 yrs 25-54 yrs 55-64 yrs >64 yrs
5.0%5.2%
5.9% 6.0%6.2%
Nigeria Kenya Sri Lanka Vietnam Bangladesh
Economics Demographics
4
5
Commercial operation of
HBTL (Hutchison Bangladesh
Telecom Ltd.) with AMPS
technology
1996
1997
3 major GSM players
currently named GP,
Banglalink and Robi came
into operation
1998
Mobile-Mobile
service launch 1999
Prepaid service
launch
2002
• 1mn subscriber
• Formation of Bangladesh
Telecommunication
Regulatory commission
2004
Launch of state owned
operator Teletalk as the
5th player
2005
• Introduction of SIM tax
• Launch of Warid Telecom as the
6th player
• Banglalink re-launch after
Orascom’s acquisition
24 YEARS OF MOBILE TELECOM SERVICES
• New interconnection
regime (ICX, IGW & IIG)
• Launch of separate
Broadband Wireless
Access (Wimax)
operation
2008
2009
• 90%+ population coverage
• 50 Mn subscribers
Entry of Airtel
Bangladesh by
acquiring Warid
Telecom
2010
2011
Renewal of 2G
spectrum for 15
years
2013
• 100 mn
subscribers
• 3G cellular
mobile phone
services
2016
Merger of Robi
and Airtel
SIM re-registration through
NID & Biometric
Verification System
1993
Launch of brand
name Citycell by
PBTL (restructured
HBTL)
2018 Launch of 4G
services
AN ATTRACTIVE AND GROWING MOBILE MARKET
DOMINATED BY PREPAID
• 156 million subscribers, of which 98% prepaid
• Multi-SIM market with around 55% real mobile penetration*
• 36% internet penetration*, rapidly increasing
• ARPU of around USD 2
• Scale benefit drives healthy margin for top 3 players
• Continuously developing regulatory landscape
6
Industry Subscribers (Mn)
*Based on estimation
**Subscriber adjustment due to bio-metric verification during 2016
120
134 126
145 156
2014 2015 2016** 2017 Sep'2018
GRAMEENPHONE IS THE UNDISPUTED MARKET LEADER,
WITH SOLID FINANCIAL PERFORMANCE
7
Revenues (BDT Bn) and EBITDA margin (%)*** Total revenue market shares*
• 7% revenue CAGR and 12% EBITDA CAGR in 4 years
• Growing EBITDA margin with efficiency improvements
• 14% operating cash flow CAGR with margin improvement
• 71.4 million subscribers and #1 brand in Bangladesh
• Largest network: 14,140 2G and 13,619 3G sites
• Widest distribution: More than 373k points of sales
*Source: Company Website
**Airtel merged wih Robi from Q4'2016
*** EBITDA before other items
53% 53% 51% 53% 53% 54%
22% 22% 23% 22% 19% 18%
25% 25% 26% 24% 28% 28%
2013% 2014 2015 2016 2017 1H 2018
Grameenphone Banglalink Robi
GRAMEENPHONE IS THE UNDISPUTED MARKET LEADER WITH
SOLID FINANCIAL PERFORMANCE
97 103 105
115
128
51% 53% 53%
55%
59%
45%
50%
55%
60%
65%
70%
75%
80%
0
20
40
60
80
100
120
140
2013 2014 2015 2016 2017
Revenue EBITDA Margin
3Q2018: STRONG BUSINESS PERFORMANCE DRIVEN BY
VOICE AND DATA
8
*Normalized for accounting practice changes
**As per IAS 18
*88Normalized for IAS 18, Q3’18 reversal and Q3’17 one-off items
Revenue (BDT Bn) and Growth (YoY)
33.2
32.2
31.2
32.6
34.3
12.8%
8.0%
2.0% 0.5%
3.40%
-2.0%
3.0%
8.0%
13.0%
18.0%
23.0%
28.0%
29.5
30.5
31.5
32.5
33.5
34.5
Q3'17 Q4'17 Q1'18 Q2'18 Q3'18
EBITDA* (BDT Bn) and Margin**
19.5
19.0
18.0
19.6
21.2
58.7% 58.8% 57.6% 60.6% 61.9%
30.0%
80.0%
130.0%
180.0%
230.0%
16.0
17.0
18.0
19.0
20.0
21.0
Q3'17 Q4'17 Q1'18 Q2'18 Q3'18
NPAT (BDT Bn) and Margin
7.0
6.0 6.4
10.8
8.9
21.0% 18.5% 20.4%
33.1% 26.20%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Q3'17 Q4'17 Q1'18 Q2'18 Q3'18
• 6.1% normalized total revenue growth*
• 9.6% voice revenue growth
• Normalized EBITDA growth of 7.2% and
margin improvement of 2.2 pp***
• One-off reversal of excess provision
• Normalized NPAT margin of 25.7%*
Q3 2018
Reached 3.8 Mn
4G users*
4745 4G sites
rollout*
44% 4G devices
with 4G SIM*
36.3 Mn overall data
subscribers 3G volume growth
after 4G conversion
*As of 30 September 2018
New Number Series 013
BAU
• Planned rollout completion,
modernization and capacity
enhancement to maintain network
superiority
• Continued drive on quality subscriber
acquisition
• Optimization of voice offers and
usage stimulation with new data
value proposition
• Focus on organizational efficiency
initiatives
• Regulatory engagement for upcoming
developments
Priorities for 2018
12
Significant
Growth
Opportunities
VOICE SEGMENT REMAINS IMPORTANT AND STILL OFFERS
ATTRACTIVE GROWTH OPPORTUNITIES
13
• Real mobile penetration currently at approx. 55%,
expected to increase
• Affordability of marginal subscriber improving
• Leverage expanded network and distribution footprint
• Improving price perception and simplicity in offers
• Strengthen position in B2B, postpaid and youth
segment
Voice AMPU and APPM (BDT)
168 168
194 203
0.77
0.68
0.59 0.56
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
0
50
100
150
200
250
2014 2015 2016 2017
Voice AMPU APPM (BDT)
INCREASING DATA USAGE WILL BE THE PRIMARY
REVENUE GROWTH DRIVER GOING FORWARD
14
Data users and revenue contribution Average data usage (MB per month)
• 19.5% total data revenue growth in first 9 months of 2018
• Support from 3G/4G network coverage expansion
• Proliferation of affordable smartphones will be key
• Usage driven by video streaming and social media
• 72% of monthly active data users use facebook • Flagship ‘Digital Bangladesh’ vision of Government to act
as an enabler
126
284
488
651
947
2014 2015 2016 2017 9M 2018
21%
28%
42%
48% 50.90%
5%
8%
12%
17% 18.80%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0%
10%
20%
30%
40%
50%
60%
2014 2015 2016 2017 9M 2018
STRATEGIC PRIORITIES
GROWTH
EFFICIENCY
SIMPLIFICATION
Business Environment Management
Winning Team
Responsible Business Conduct
INVESTING IN NETWORKS TO CAPTURE DATA GROWTH
• 13,619** no of 3G sites is covering 94.5%** of population
• 3745+ 4G sites rolled out in the first nine months of 2018
• Network modernization ongoing to consolidate superior
position
• Strong end-to-end fiber backhaul across the country
• Expansion of indoor coverage to address rapid
urbanization and vertical city expansion
• Constrained fixed broadband market
16
*Source: Company website (Q2 end 2018)
** End of Q3 2018
12719
3000
9429
6100
3G 4G
93%
72%
3G Population Coverage
GP Robi BL
3G/4G sites & Pop. coverage per operator*
17
Physical
Distribution has
been a Major
Strength
…WHILE PHYSICAL DISTRIBUTION REMAINS THE CORE,
DIGITAL DISTRIBUTION IS SHAPING UP
• Convenience is driving recharge through digital
channel
• Most digital interaction starts from physical location
• Bridging the digital and physical world with GP
Express stores i.e. integration of e-commerce platform
• Digitization of tools and processes to ensure
empowerment and efficiency of channel
18
Recharge through digital channels (% of sales)
0.1% 0.5%
8.2%
10.4% 11.7%
2013 2014 2015 2016 2017
18
SIMPLIFICATION JOURNEY IS A STRATEGIC PRIORITY FOR
VALUE CREATION
Customer processes
simplification & digitalization
• Continue with the journey embarked 3 years back
• Simplify and digitize new processes identified by the structured approach under process council
Simplest for B2B
• Enterprise self-service with reporting, execution and complaint management module
• Self-service for all possible after sales activities in phases
Self-service transformation
• Focus on USSD, IVR and social media self service uptake
• Enriched features of MyGP with cross channel promotion, contextual product offering, digitized loyalty program etc.
Robust IT services
• Minimize IT system defects and critical system outages
• Improvement scope in infrastructure, process, application, architecture and security
12% 6% 1%
12%
-40%
-18%
63%
A TRACK RECORD OF CONTROLLED OPEX DESPITE GROWTH AND
SIGNIFICANT NETWORK EXPANSION
20
Item wise Opex growth of 2017 (YoY) Opex (BDT Bn) and Margin
• Continued simplification of IS/IT platforms
• Efficiency in network operations and market spending
• Organizational restructuring
• 2013-2017:1.5% opex growth against 7% revenue growth,
8% base stations growth and 9% sub-base growth
• Opex margin reduced from 41% to 33%
• 3.4% opex growth in 2017 with further margin
improvement
*Rev. & Sub.
driven
Rent &
Energy Personnel Market
Spend O & M **Regulatory ***Others
*Revenue sharing with BTRC is included
** Regulatory cost involves revenue share, WPPF, spectrum charges and license fees
***Main component is consultancy. Includes one-off items for 2017
39.7 38.8 38.3
40.8 42.2
4 1 % 3 8 % 3 6 %
3 5 % 3 3 %
2013 2014 2015 2016 2017
COMMITMENT TO FURTHER EFFICIENCY
21
Technology Market Personnel Support
• New operating model for network management activities
• IT & network service contract re-negotiation and scope rationalization
• Rent reduction through contract negotiation with service provider
• Elimination of hard copy subscriber acquisition form with electronic version
• Optimization of channel incentives
• Increased sales through digital channels
• Optimized shift in digital media for market spending
• Optimization of support
and overhead costs
• Control over
discretionary costs
• Effect realization of
headcount efficiency
• Further exercise
ongoing for Head
Quarter staff
22
MANAGING RISKS IN THE BUSINESS ENVIRONMENT
While there are substantial challenges in the business environment, Grameenphone has more than 20 years
of experience in successfully managing regulatory and policy risks
Government’s Vision of
‘Digital Bangladesh’ Regulatory Developments Business Environment Management
• Realization of Digital Bangladesh
remains a political priority and
expected to enable growth in the
telecom industry
• Recognition of Telecom and ICT
sectors as enablers of economic
and socioeconomic development
• Numerous initiatives undertaken for
enabling local ecosystem for
software and IT services e.g. e-
government, public-private
partnerships
• Formulation of new regulations and
revision of existing ones through public
as well as industry consultation
• Nascent regulations regarding digital
services, but so far have been
conducive to continued growth i.e. e-
commerce policy
• Bangladesh Labour Act is under
review; anticipation of further clarity for
service sector employees
• Establishment as a trusted partner of
the Government as well as a service
provider, value creator and innovator
contributing towards Digital
Bangladesh vision
• Aspiration to strengthen
sustainability initiatives and role in
empowering society
• Considerable priority towards
managing regulatory and policy risks
by the company
• Collaboration with local and
international stakeholders
23
DEVELOPING REGULATORY LANDSCAPE
• BTRC audit commenced on 3 Aug’2016 and received a summary of the draft audit observations on 11 Dec'17
• After submission of feedback on 18 Jan’18, a tri-party meeting was held on 18 Feb’18 regarding clarification
• Received the final audit report on 26 Aug’18. GP submitted its response in two phases – on 6th and 19th Sep’18 BTRC Audit
Tariff Circuit on
Data
Tower Co. Licensing Guideline
• Licensing guideline was published on 1 Apr’18 where MNOs will not be eligible to participate
• 4 selected firms have deposited the application fees along with bank guarantee in the 3rd week of Sept’18
• Company formation allowed till 20 Oct’18 for awarding license
• BTRC is in the process of issuing license
• BTRC intends to introduce floor and ceiling price for data. On 9th Oct’18, in a consultation meeting, BTRC has
asked operators to submit their views/inputs
• GP supports this notion and submitted its proposals on 18th Oct
• We expect some consultation at BTRC
Mobile Number Portability Services
(MNPS)
• BTRC revised tariff circuit in order to introduce single floor price for all MNOs effective from 14 Aug’18
• Revised floor and ceiling rate are BDT 0.45/Min and BDT 2/Min respectively
• No pricing differentiation allowed for on-net and off-net calls in any customer offer
• All operators have launched MNP services on 1 Oct’18
24
CONTINGENCIES
Sl. Items
Refer to Annual
Report 2017 and
3Q2018 Financial
Statements for details.
(https://www.grameenphone.
com/about/investor-
relations/ir-financial-report)
1 Information system audit by BTRC
2 SIM tax on replacement SIMs (2007 – 2011)
3 SIM tax on replacement SIMs (2012 – 2015)
4 Claim for VAT based on C&AG audit
5 VAT rebate on 2G license renewal fee
6 Interest on SIM Tax (2006 – 2007)
7 Interest for delayed payment of Guaranteed Annual Rent to
Bangladesh Railway
HEALTHY SHAREHOLDER RETURN
27
Total Shareholder Return** Payout Ratio and Dividend Yield*
• Dividend policy states at least 50% dividend payout of NPAT; last three years average payout was 101%
• Total shareholder return of 200% from 2013
• Outperformed local market index (DSEX) by 162 percentage points
*Considered closing price of prior trading session of record date
**Including dividend reinvestment and end period of 30 August 2018
220%
170%
120%
70%
20%
-30%
320%
270% 129%
109% 96%
105% 101% 98%
7.5%
4.9% 4.7% 5.9%
4.8%
3.2%
20 13 20 14 20 15 20 16 20 17 20 18 (Inter im )
CONTRIBUTION TO THE BANGLADESH ECONOMY
27
• 69.1 Bn (70.4% or revenues) contributed to exchequer in the form of taxes, VAT, duties, spectrum
assignment, neutrality, network coverage, capacity enhancement and license fees.
15.2
19.3 21.1
14.5
30.1
2014 2015 2016 2017 9M 2018
58.9
51.1
58.6 61.8
69.1
2014 2015 2016 2017 9M 2018
Investment BDT Bn Contribution to National Exchequer BDT Bn
17.1 4G license
fees
*In consideration of the local regulations, Grameenphone Ltd. does not provide any forward looking statements.
Summary*
New Number Series 013
BAU
Strong market leader in an attractive growth market
Investing to maintain superior network and service position
Growth and operating efficiencies to drive future profitability
Q&A
27
Thank you
Recommended