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April 2010 1
Etisalat Group
Q4 2012 Results Presentation
Abu Dhabi, UAE
February 20th, 2013
April 2010 2
Emirates Telecommunications Corporation and its subsidiaries
(“Etisalat” or the “Company”) have prepared this presentation
(“Presentation”) in good faith, however, no warranty or representation,
express or implied is made as to the adequacy, correctness,
completeness or accuracy of any numbers, statements, opinions or
estimates, or other information contained in this Presentation.
The information contained in this Presentation is an overview, and
should not be considered as the giving of investment advice by the
Company or any of its shareholders, directors, officers, agents,
employees or advisers. Each party to whom this Presentation is made
available must make its own independent assessment of the Company
after making such investigations and taking such advice as may be
deemed necessary.
Where this Presentation contains summaries of documents, those
summaries should not be relied upon and the actual documentation
must be referred to for its full effect.
This Presentation includes certain “ forward-looking statements”. Such
forward looking statements are not guarantees of future performance
and involve risks of uncertainties. Actual results may differ materially
from these forward looking statements.
Disclaimer
April 2010 3
Business Overview
Ahmad Julfar
Chief Executive Officer
4
Etisalat Group: Solid operational performance
31.9 32.2 32.9
52% 49% 51%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
FY'10 FY'11 FY'12
Revenue EBITDA %
5.9
4.3 4.2
18% 13% 13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
FY'10 FY'11 FY'12CAPEX CAPEX/Revenue
95 117
139
FY'10 FY'11 FY'12
(1) Subscriber numbers calculated as aggregate number of GSM, CDMA, fixed, dialup, fixed broadband and WLL lines generating revenue during the last 90 days.
(2) Subscriber numbers reported in FY’10 and FY’11 have been adjusted to exclude XL Axiata operations due to the reclassification of XL Axiata investment as
“other investments available for sale” effective from September 1st , 2012.
Subscribers (1) (2)
Strong subscriber acquisition across the
footprint
Revenue & EBITDA %
Consistent revenue growth with healthy
margins
Capex & Intensity Ratio %
Capital expenditure focused on network
modernization
Y/Y
18%
Y/Y
2%
5
Clusters: Steady organic growth in revenue
and margins of international operations
FY 2012 UAE Egypt Africa (1) Asia(2) Associates(3)
Revenue (AED m) 22,746 5,075 2,775 1,564
YoY Growth
-1%
+13%
+9%
+11%
EBITDA (AED m) 13,456 2,004 712 180
EBITDA Margin 59% 39% 26% 11%
Net Profit 5,907 612 27 -131 1,262(4)
Net Profit Margin +26% +12% +1% -8%
(1) Africa cluster consists of Ivory Coast, Benin, Togo, Gabon, Niger, Central African Republic, Tanzania and Sudan operations
(2) Asia cluster consists Afghanistan, Sri Lanka, and India (only until end of February 2012) operations
(3) Associates include KSA, Pakistan, Nigeria , Thuraya and Indonesia (only until end of August 2012) operations
(4) Etisalat share of associate results after Federal Royalty
Highlights
• Solid operational performance across most of our markets during 2012
• Continued steady organic growth of revenue and operating margins across all international clusters
• On track to market stabilization in the UAE with margin expansion supported by effective cost
management and new service offerings
• Profitable growth continued with EBITDA margins expansion in Egypt, Africa and Asia clusters
April 2010 6
Financial Overview
Serkan Okandan
Chief Financial Officer
7
Etisalat Group: Top-line and operating profit
growth with strong margins
Q4’11 Q3’12 Q4’12 QoQ YoY
Aggregate Subs(1) (2) (m) 117 130 139 +6% +18%
Revenue (AED m) 8,231 8,008 8,479 +6% +3%
EBITDA (AED m) 4,218 4,221 4,279 +1% +1%
EBITDA Margin 51% 53% 50% -3pp -1pp
Net Profit (AED m) 704 2,213 854 -61% +21%
Net Profit Margin 9% 28% 10% -18pp +1pp
EPS (AED) 0.09 0.28 0.11 -61% +21%
Highlights
• Maintained solid subscriber growth momentum with double digit growth during the quarter
• Strong consolidated revenue growth fueled by the performance of the domestic operations
• Improved EBITDA level in absolute terms mainly through revenue growth and cost optimization measures
• Maintained high EBITDA margins despite changes in geographic and product mix
• Net profit was impacted by impairment charges booked in Q4’12; Adjusting for one off will increase net
profit to AED 2.5 billion. (1) Subscriber numbers calculated as aggregate number of GSM, CDMA, fixed, dialup, fixed broadband and WLL lines generating revenue during the last 90 days.
(2) Subscriber numbers reported in Q4’11 and Q3’12 have been adjusted to exclude XL Axiata operations due to the reclassification of XL Axiata investment as
“other investments available for sale” effective from September 1st , 2012.
Revenue (AED b) and YoY growth (%)
Sources of Revenue growth – Q4’12 vs Q4’11
8
Group Revenue: Growth across all markets
8.23 8.20 8.25 8.01 8.48
-4%
2% 4% 0%
3%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
Q4'11 Q1'12 Q2'12 Q3'12 Q4'12
Revenue YoY growth %
8,231
8,394 8,394 8,478 8,480 8,479
8,479 163 84 2 19 20
Q4'11 UAE Egypt Africa Asia Other Q4'12
Note: “Other revenues” consist of non-telecom revenues, management fees, etc.
Highlights
• Highest revenue level achieved over the past 8
consecutive quarters
• 3pp Y/Y increase in consolidated revenue
mainly driven by UAE
• Revenue performance in UAE contributed 60%
to group revenue growth
• Continued high growth momentum in
international operations mainly in Egypt,
Afghanistan and Sri Lanka
+3%
EBITDA (AED b) & EBITDA Margin
Sources of EBITDA growth – Q4’12 vs Q4’11
9
Group EBITDA: Continued EBITDA level
improvement with high margins
Highlights
• EBITDA level in absolute terms increased 1% Y/Y
• EBITDA margin declined Y/Y by 1 pt to 50%
impacted by change in revenue mix
• Highest positive EBITDA contribution from UAE
operations mainly through revenue growth and
effective cost management
• Sustained positive EBITDA contribution from Egypt
cluster due to margin expansion
• Negative contribution from Africa cluster mainly due
to higher network costs in Ivory Coast
• Asia cluster’s EBITDA benefited from the
deconsolidation of operations in India in Feb’12
4.22 4.09 4.26 4.22 4.28
51% 50% 52% 53% 50%
-15%
-5%
5%
15%
25%
35%
45%
55%
65%
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Q4'11 Q1'12 Q2'12 Q3'12 Q4'12
EBITDA EBITDA Margin
4,218 4,279
72 55 96 64
34
Q4'11 UAE Egypt Africa Asia Other Q4'12
Note: “Other EBITDA” consist of results from non-telecom operations, management fees, etc.
+2%
CAPEX (AED b) & CAPEX/revenue %
Operating cash flow1 AED (m)
10
Group CAPEX: Network investments
supporting better customer experience
1.31
0.93 0.85 0.91
1.47
16% 11% 10% 11%
17%
0%5%10%15%20%25%30%35%40%
0.000.200.400.600.801.001.201.401.60
Q4'11 Q1'12 Q2'12 Q3'12 Q4'12
Highlights
• Accelerated network deployment to fully
support network development and speed
upgrade
• Capital spending focused on substantially
improving customer experience by ensuring
capacity, enhancing coverage, deployment of
3G networks and expanding LTE rollout
• Strong operating cash flow of AED 2.2 billion
despite higher capital investments
(1) Operating cash flow defined as (EBITDA – CAPEX) in all subsidiaries with the exception of UAE and other in which Federal Royalty is also included in the
formula (i.e. EBITDA – CAPEX – Federal Royalty).
2,203
2,033 1,909 1,905 2,026 2,245
2,245
170 124 4
120 219
Q4'11 UAE Egypt Africa Asia Other Q4'12
11
Group Balance Sheet & Cash Flows: Strong
Liquidity and financial flexibility
Balance Sheet (AED m) Q4’11 Q4’12
Cash & Cash Equivalent 9,972 13,934
Total Assets 72,892 80,146
Total Debt 6,696 5,806
Net Cash 3,276 8,128
Total Equity 41,704 46,275
Net cash generated/
used (AED m) FY’11 FY’12
Operating 7,481 10,486
Investing (2,552) 111
Financing (5,387) (6,663)
Net change in cash (459) 3,934
Effect of FX rate changes 154 28
Ending cash balance 9,972 13,934
Highlights
• Maintained a healthy liquidity position with
sufficient cash reserves to cover total debt and
capital investments
• Liquidity improvement led by better operating
cash flow and proceeds from asset sale (i.e XL
Axiata
• Balance sheet was impacted by consolidation of
PTCL effective from December 31, 2012
• Better operating cash flow through improved
operating income and working capital
• Positive cash inflow from investment due to partial
sale of stake in XL Axita.
1,497 1,797 1,977 1,977 1,977
2,096
2,516 2,767 2,767
3,558
2008 2009 2010 2011 2012
final
interim
12
Group Dividends: Increased dividend yield
4.7% 5.7% 5.9% 6.1% 7.3% Dividend
Yield % (2)
41.5 48.8 62.2 81.2 82.1 Divi Payout
Ratio%
0.60 0.60 0.60 0.60 0.70
DPS
(AED)
Cash
Dividend
AEDm (1)
5,534
4,744 4,744 4,312
3,594
5.99 7.19 7.91 7.91 7.91 Outstanding
# of shares
bn
(1) Cash dividends pertains to the DPS for the outstanding number of share per fiscal year which may differ from the actual dividend paid
per year.
(2) Dividend yield for 2012 is based on share price as of August 15th 2012 and February 18th 2013
Federal Royalty (AEDm)
6,597 6,669
6,451
6,451
Old RoyaltyScheme
Impact on UAELicensed Ops
Impact on UAEnon Licensed &
Int'l Ops
New RoyaltyScheme
13
Royalty: Provisional amount provided in
year 2012
50% 49%
218
72
Highlights
• New Federal Royalty scheme was introduced
in the telecom sector in the UAE for the period
2012 to 2016.
• UAE: 15% royalty on licensed revenues
and 35% royalty on net profit
• Int’l: 35% royalty on net profit reduced
by the amount of foreign taxes
• Discussions with the Ministry of Finance is still
ongoing; the final outcome to be reflected in
2013 financials.
Effective Royalty % of Profit
14
UAE: Continuing Recovery in UAE
operations Quarterly Q4’11 (1) Q3’12 Q4’12 QoQ YoY
Subs(1) (m) 8.3 9.0 9.0 +0% +8%
Revenue (AED m) 5,688 5,465 5,851 +7% +3%
EBITDA (AED m) 3,325 3,291 3,398 +3% +2%
EBITDA Margin 58% 60% 58% -2pp +0pp
Net Profit 1,461 1,451 1,448 -6% -1%
Net Profit Margin 26% 27% 25% -2pp -1pp
CAPEX 419 305 530 +73% +27%
CAPEX/Revenue 7% 6% 9% +3pp +2pp
Highlights
• Growth in active subscriber base steered by eLife segment
• Revenue growth is driven by data and internet segments that fully compensated the decline in voice revenue
• Improvement in EBITDA level attributed to higher revenue and sharpened focus on operating expense
efficiency; sustained EBITDA margin at 58% despite the changes in revenue mix
• Net profit impacted due to higher royalty imposed by the new Federal Royalty scheme
• Higher capex spend focused on improving network quality and system automation
(1) Q4’11 financials are adjusted to exclude non telecom business.
(2) Subscriber numbers calculated as aggregate number of GSM, fixed, dialup, fixed broadband and eLife lines generating revenue during the last 90 days.
Mobile Subs (m) & ARPU(2) (AED)
Fixed Broadband(4) Subs (m)
Fixed Subs (m) & ARPL(3) (AED)
15
UAE: Subscriber(1) growth in high value
segments
1.17 1.11 1.10
116 111 107
0
50
100
150
200
250
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Q4'11 Q3'12 Q4'12
Fixed ARPL
0.75 0.79 0.81
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
Q4'11 Q3'12 Q4'12
eLife Subs – Double & Triple-Play (m)
0.35
0.48 0.51
0.00
0.10
0.20
0.30
0.40
0.50
0.60
Q4'11 Q3'12 Q4'12
(1) Subscriber numbers calculated as aggregate number of GSM, fixed, dialup, fixed broadband and eLife lines generating revenue during the last 90 days.
(2) Mobile ARPU calculated as total mobile voice, data and roaming revenues divided by the average mobile subscribers for the quarter.
(3) ARPL calculated as fixed line revenues divided by the average fixed subscribers for the quarter.
(4) Fixed broadband subscriber numbers calculated as total of residential DSL (Al-Shamil), corporate DSL (Business One) and E-Life subscribers.
+46%
+9%
0.94 1.23 1.11
5.40 5.82 5.96
146 129 136
0
20
40
60
80
100
120
140
160
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
Q4'11 Q3'12 Q4'12
Postpaid Prepaid Blended ARPU
16
Egypt: Steady revenue growth with strong
EBITDA margin Revenue (AED m) & EBITDA Margin
1,218 1,301 1,303
45% 37%
47%
-10%
10%
30%
50%
70%
90%
0
200
400
600
800
1,000
1,200
1,400
Q4'11 Q3'12 Q4'12
Revenue EBITDA %
CAPEX & CAPEX/Revenue ratio (%)
442
298
621
36%
23%
48%
0%
20%
40%
60%
80%
0
100
200
300
400
500
600
700
Q4'11 Q3'12 Q4'12
CAPEX CAPEX/Revenue
Highlights
• Double digit revenue growth in local currency
despite political unrest and competitive
environment
• Retained leadership position in terms of share
of market net adds
• Revenue growth driven by subscriber additions
and data segment that was supported by new
products launch
• Capex/revenue ratio at 48%, up 12pp YoY
mainly due to network expansion and capacity
upgrade
+7%
17
Asia: Sustained growth despite competitive
environment Afghanistan, Sri Lanka, and India(1)
Highlights
• Adjusting Q4’11 to exclude Indian operation, subscriber
base would have increased Y/Y by 18%
• Revenue growth Y/Y driven by good performance in
Afghanistan and Sri Lanka
• Improvement in EBITDA margin to 15%; Q/Q margin
negatively impacted by one off provision in Afghanistan
• Adjusting Q4’11 for Indian operations, Capex spend
increased by 17%
Revenue (AED m) / EBITDA Margin
377 408 396
-1%
19% 15%
-20%
0%
20%
40%
60%
80%
100%
0
50
100
150
200
250
300
350
400
450
Q4'11 Q3'12 Q4'12
Revenue EBITDA %
CAPEX & CAPEX/Revenue ratio (%)
Subscribers (m)
9.0 8.2 8.2
Q4'11 Q3'12 Q4'12
182
120 126 48%
29% 32%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
20
40
60
80
100
120
140
160
180
200
Q4'11 Q3'12 Q4'12
CAPEX CAPEX/Revenue
(1) Financial statements of Etisalat DB in India were deconsolidated effective from March 1st 2012.
-9%
+5%
21% (Normalized
for one-offs)
18
Pakistan: Consolidation & impairment
Financial implication due to assets impairment
P&L Impact (AED m)
Impairment Value (2,366)
Minority Interest 345
Net Impact Pre Royalty (2,021)
Royalty 705
Net Impact post Royalty (1,312)
Balance Sheet Impact
Investment (2,366)
Financial implication due to assets consolidation
Balance Sheet Impact (AED m)
Investment (7,097)
Goodwill 5,986
Other net assets 1,111
Net Impact on Total Asset 0
P&L Impact None
Key Highlights
• In 2006 Etisalat, through its majority owned
subsidiary Etisalat International Pakistan
(EIP), acquired 26% of PTCL for total
consideration of $2.6 billon.
• PTCL has been accounted for as an
associate due to certain control impediments
that was reassessed in 2012.
• Effective from Dec 31, 2012 Etisalat
changed the accounting treatment of PTCL
from an associate to subsidiary and
consolidated PTCL’s balance sheet
statement into the Group’s financials.
• In 2012 Etisalat impaired its investment in
Pakistan mainly due to:
o increase in the discount rates mainly
as a result of high inflation
o Down trend in real estate prices
o Currency devaluation
o Starting Jan 1st, 2013, PTCL’s P&L results
will also be consolidated
Highlights
• Strong Y/Y subscriber growth of 29% mainly driven by
growth in Ivory Coast, Benin, Togo and Tanzania
• Revenue growth flat with good performance in Benin
and Togo
• EBITDA margin negatively impacted due to network
rollout costs, 3% telecom tax on revenues in Ivory
Coast and one-off provisions in Niger, Togo and Benin
19
Africa: Strong customer acquisition Ivory Coast, Benin, Togo, Gabon, Niger, CAR(1), Tanzania, & Sudan
Revenue (AED m) / EBITDA Margin
707 689 709
32% 30%
19% 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
100
200
300
400
500
600
700
800
Q4'11 Q3'12 Q4'12
Revenue EBITDA %
CAPEX & CAPEX/Revenue ratio (%)
Subscribers (m)
9.4 11.3
12.2
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Q4'11 Q3'12 Q4'12
254
114
162
36%
17% 23%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
50
100
150
200
250
300
Q4'11 Q3'12 Q4'12
CAPEX CAPEX/Revenue
(1) CAR stands for Central African Republic
+0.3% +29%
(Normalized
for one-offs) 25%
20
Nigeria: Strong subscriber and revenue
growth
Highlights
• Steady growth in subscriber base driven by
innovative and unique offers
• Strong revenue growth accompanied with margin
improvement
• Q/Q margin impacted by higher network costs
due to network expansion
• Capex spends focused on network expansion
Revenue (AED m) / EBITDA Margin
616
774 809
2%
8% 6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
100
200
300
400
500
600
700
800
900
Q4'11 Q3'12 Q4'12
Revenue EBITDA %
CAPEX & CAPEX/Revenue ratio (%)
Subscribers (m)
10.8
14.6 14.9
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Q4'11 Q3'12 Q4'12
370 387 384
60% 50% 48%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
50
100
150
200
250
300
350
400
450
Q4'12 Q3'12 Q4'12
CAPEX CAPEX/Revenue
+38% +31%
Revenue (AED m) / EBITDA Margin
5,721 6,096
6,628
40% 36% 38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Q4'11 Q3'12 Q4'12Revenue EBITDA %
21
KSA-Mobily: Profitable growth with
quarterly dividend pay-out Highlights
• Mobily maintained its strong performance and
posted solid results during the quarter
• Dividend of AED 179 million received from Mobily
in November 2012
• On January 12th 2013, declared stock dividend
of 10%.
• On January 19th , declared dividend of SAR 1.15
per share representing AED 206 million for
Etisalat to be received March/April 2013
CAPEX & CAPEX/Revenue ratio (%)
715
1,167
1,649
12%
19% 25%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Q4'11 Q3'12 Q4'12
CAPEX CAPEX/Revenue
+16%
Financial Objective Actual 2012
22
2013 Outlook: Management’s guidance for
the year (1)
Revenue Growth %
EBITDA Margin%
Capex / Revenue Ratio
3 – 5 %
49% - 51%
14% - 16%
Outlook 2013
33 bn
51%
13%
(1) All figures represent consolidated numbers and exclude potential impact of consolidation of Pakistan operations
in 2013
April 2010 23
Q&A
April 2010 24
Etisalat Investor Relations
Email: [email protected]
Website: www.etisalat.com/html/ir
