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Strategicandopera.onaloverview
DouglasMboweniChiefExecu5veOfficer
Financialoverview
RoyChimanikireFinanceDirector
Outlook
DouglasMboweniChiefExecu5veOfficer
StrategicandOpera.onalOverviewDouglasMboweniChiefExecu5veOfficer
Strategic Overview
1.KEYSTATISTICSWehaveachievedsomekeymilestones
2.OURBUSINESSISINTRANSITIONResiliencethroughinnova.on
3.OPERATINGENVIRONMENTResilienceinaVola.le,Uncertain,ComplexandAmbiguousenvironment
Total Telco Revenues and Traffic
4.OPERATINGENVIRONMENTEconomicHeadwinds
GovernmentRevenues(US$bn)
5.INDUSTRYOVERVIEWRegulatoryheadwinds
6.INDUSTRYTRENDSStableMarketShare
VoiceTrafficMarketShare Mobiletrafficevolu.onminutes(m) RevenueShare
• Econetremainsthelargestoperatorintermsoftrafficandtrafficsharecon5nuestogrow• Econetrevenueshareremainsstrongandstable
Source:POTRAZReports
7.BUSINESSFOCUSAREASCustomercentricitydrivinginnova.on
CUSTOMER
8.MARKETPRESENCE&DISTRIBUTIONFOOTPRINTIncreasedcustomertouchpoints
26,000agents+countrywide.
250+brandedshops,includingcontainerstoincreasecustomercontactpoints.
35,000+individualssellingair5merecharge
cardsna5onwide
Inaddi5on,wehaveover1,100greenkioskscountrywide.
9.OURSTRATEGYFORGROWTHAcceleratedeploymentandscalingofinnova.ons
• Premierpaymentplaaorm• Loandisbursementsand
seclements• Increaseremicances• Introducenewmobile
insuranceservices• PayrollServices
• Affordablesmartphones• BroadbandtotheHome• Increaseddatausage
throughaffordableandinnova.veapplica.ons
• Onlineselling&buying• Digitalmediacontent• PayTv• Onlineeduca.on
1.MOBILEFINANCIALSERVICES 2.BROADBAND 3.MEDIA&E-COMMERCE
GROW BUILDGROW
Opera.onalHighlights
9.CUSTOMERGROWTHSustainedsubscribergrowthandstrongmarketshare
SubscriberGrowth
Comments• Con5nuedBroadbandandmobilemoneygrowth• Productdiversifica5on
ValueShareQ42015
10.ECOCASHSustainedgrowth
Numberofagents(thousands)
• EcoCashisfastbecomingthepremiermobilepaymentsystemascustomersembracetheconvenienceandefficiencyoftheservice
• Interna5onalremiManceshelpingbringcashintosystem• Opportuni5esinnewusecases• Cashlesspaymentsisana5onalagenda,EcoCashhasbecomemorepervasiveinZimbabweasaonestopshopforallfinancialservices–moneytransfers,remiMances,dailypayments,savingsandinsurance• EcoCashleadsthewayinbalancingfinancialtransac5onsandmoneydistribu5onthrougha‘sharedeconomy’model
Customers(millions) Transac.onValue(US$b)
11.BROADBANDStronggrowthinthelast3years
Customers(millions)
• Mobilebroadbandusershavemorethandoubledinthelast3years• Con5nuedgrowththroughnewdemandcreatedbynewformsofdatause• Fasterconnec5vity• Mone5sa5onofcontentservices(Ownai,Kwese,RuzivoandEcoschool)
BroadbandRevenueGrowth(m)
42
72
103
110
FinancialOverviewRoyChimanikireFinanceDirector
1.FinancialHighlightsSustainingvalue
TotalRevenue(US$m)
EBITDA(US$m)
746641
Feb.15 Feb.16
286
238
Feb.15 Feb.16
DataRevenue(US$m)
CAPEX(US$m)
103113
Feb.15 Feb.16
125
83
Feb.15 Feb.16
Subscribers(m)
7387
Feb.15 Feb.16
9.1910.02
Feb.15 Feb.16
MobileFinancialServices(US$m)
2.RevenueHighlightsDiversifica.onthroughinnova.on
• Impactofthe35%reduc5onintariffsimplemented1stJanuary2015• Non-voiceCAGR30.4%• SMSrevenueincreasedrivenbyreposi5onedcustomervalueproposi5on• ARPUdeclinedfrom$8.15to$6.84,largelyduetothedeclineinvoicerevenues
RevenueMovement(US$m)
746
641-15.9%
1.3% 1.1% 1.9%
-2.5%
Feb.15 Voice Data SMS MobileFinancialServices
Other Feb.16
%Decline%Growth
2a.DataRevenueCustomers&Usagedrivinggrowth
DataRevenue(US$m) DataSubscribers(m) DataTraffic
21
33
56 5224
39
4760
45
73
103113
Feb.13 Feb.14 Feb.15 Feb.16
H1 H2
CAGR36.2%
CAGR62.8%
• AMrac5vebundlepricingdrivingdatatraffic• IncreasedFibre-to-the-home(FTTH),LTEandEconetWi-Fi
Zonesofferingincreasedspeedandseamlessconnec5vitytobroadbandcustomers
• The launch of sub-US$ 50 smart devices further drivingdatausagegrowth
DataContribu.on
113m
18%ofRevenue
3.18
4.305.30
7.12
Feb.13 Feb.14 Feb.15 Feb.16
CAGR30.8%
2b.EcoCashRevenueFocusonfinancialinclusion
EcoCashSubscribers
3.1
5.3
7.35.7
Feb.13 Feb.14 Feb.15 Feb.16
EcoCashRevenue(US$m)
8
33
61
73
Feb.13 Feb.14 Feb.15 Feb.16
CAGR107%
Transac.onValue(US$b)
0.7
3.1
5.5
6.6
Feb.13 Feb.14 Feb.15 Feb.16
• CashshortagesdrivingEcoCashgrowth.• Averagetransac5onvaluenowat$25(PY$26)• 48%growthinnumberofEcoCashAgentsfrom
17.9k to 26.5k to support the growth insubscribers
• Mobile payments account for 88% na5onalpayments volume Source: 2016 Monetary Policy Statement;POTRAZQ42016SectorReport
• 98% ofmobilemoney value transacted on theEcoCashplakormSource:POTRAZQ42016SectorReport
EcoCashContribu.on
73m
11%ofRevenue
2.1
3.2
4.2
5.8
Feb.13 Feb.14 Feb.15 Feb.16
CAGR40.3%
CAGR111.3%
EcoCashGPMargin(%)
7%
38% 39% 40%
Feb-13 Feb-14 Feb-15 Feb-16
3.TotalCostsCostmanagementinatoughenvironment
TotalCosts(US$m)
• Con5nuouscostop5misa5on,resultedinreducedopera5ngcosts
• Retrenchmentcostof$7.5millionincurredinH2• Pressureoncostsduetoopera5ngenvironment:
- IncreaseinUSFfrom0.5%to1.5%- Costofalterna5vepower/energyofaboutUS$7millionannuallyinaddi5ontocapexcostofaboutUS$55million,
todate,onalterna5vepowersolu5ons
CostReduc.on(US$m)
476
420
Directcosts6.1%
Indirectcosts5.7%
Feb.15 Directcosts Indirectcosts Feb.16
186216
250212
206220
226
208392
436476
420
Feb.13 Feb.14 Feb.15 Feb.16
H1 H2
*Prioryearinbrackets
4.ProfitabilitySustainingprofitabilityinatoughenvironment
EBITDA(US$m) EBITDAMargin(%)
38% 37%
Feb.15 Feb.16
• EBITDAdeclinedueto:-Depressedrevenueperformanceduetopricereduc5ons-Increasedcontribu5onfromlowermarginproducts
• Costsavingsreducedthenega5veimpactofrevenuedecline
PAT(US$m)
155
122
131
116
286
238
Feb.15 Feb.16
H1 H2
50
24
20
16
70
40
Feb.15 Feb.16
H1 H2
5.CapitalInvestmentInves.ngforthefuture
CAPEX(US$m)
148 144125
83
138
21%19%
17%
13%
0%
5%
10%
15%
20%
25%
-
50
100
150
200
250
300
Feb.13 Feb.14 Feb.15 Feb.16
PPE Opera5nglicencerenewal *Capexintensity
Deprecia.on(US$m)
72
98
126137
10%
13%
17%
21%
-3%
2%
7%
12%
17%
22%
-
20
40
60
80
100
120
140
160
180
Feb.13 Feb.14 Feb.15 Feb.16Deprecia5on Deprecia5on/Revenue
• Decliningcapexintensityduetotherobustinvestmentmadeinpreviousyears• Investmentfocusison:
-Investmentin4G/LTEandnetworkmordenisa5ontodeliverfasterbrowsingspeeds-Con5nuedinvestmenttoincreasenetworkcapacity,coverageandquality
• Rela5velymodestincreaseindeprecia5onchargeconsistentwithreducedCapexspend• Deprecia5onishighduetoheavycapexposthyperinfla5on
6.BorrowingsDecliningdebttoequityra.os
DebttoEquity%DebtEvolu.on(US$m)
242
207
Feb.15 Feb.16
36%
31%
Feb.15 Feb.16
NetFinanceCost(US$m)
3633
Feb.15 Feb.16
7.ConclusionKeypriori.es
Increasestakeholder
value
Decreasecosts
Increaseand
diversifyrevenues
• Con.nuedfocusoncostop.misa.oncri.caltomaintainandgrowprofitsaswellassustainmargins
• Strongbalancesheettosupportnewproducts
• Focusonimprovingnetworkqualityandincreasingdatacapacitytosupportnewrevenuestreams
• Sustainingandimprovingfreecashflow
CostOp.misa.on
FinancialPosi.on
CAPEX
Cash
• Maintainingrevenueinatoughopera.ngmarket• GrowingMFSandDatarevenues• Focusonproductandrevenuediversifica.on
Revenue
Outlook
13.OUTLOOKTransi.oningtoquad-play
VOICE&TEXT BROADBAND MFSMEDIA&
E-COMMERCE
Declining voice revenue to be supported by • Micro segmentation and roll out
of appropriate incentives and packages
• Smart tariffing strategy driven by data analytics and customer insights
Acceleration of 4G /LTE coverage • Affordable smartphones
Bundles for specific Over The Top (OTT) services • Broadband into the home • Drive usage through affordable apps
Enhance the significance of MFS as an alternative to cash payments • The growth of the informal market-
80%+ of local transactions in cash • International remittances and
partnerships
• Onlineselling&buying• Digitalmediacontent• PayTv• Onlineeduca.on
COMPETE GROW GROW BUILD
RESILIENCETHROUGHROBUSTINFRASTRUCTURE,INNOVATION&COSTOPTIMISATION
Appendices
US$ 000's Feb-16 Feb-15 Variance (%) Revenue 640,989 746,183 -14% EBITDA 238,420 285,645 -17% Depreciation, amortisation & impairment (136,556) (126,289) -8% Operating profit 101,864 159,356 -36% Net finance costs (33,403) (36,011) 7% Profit before tax 68,461 123,345 -44% Income tax expense (28,261) (53,136) 47% Profit after tax 40,200 70,209 -43% Non-controlling interests 163 49 -233% Attributable profit 40,363 70,258 -43% EBITDA Margin 37% 38% -1% PAT Margin 6% 9% -3%
StatementofFinancialPerformance
MEDIA&E-COMMERCE
US$ 000's Feb-16 Feb-15 Variance (%) ASSETS Property, plant & equipment 834,870 883,188 -5% Other non-current assets 121,273 129,967 -7% Current assets 240,761 243,337 -1% TOTAL ASSETS 1,196,904 1,256,492 -5% EQUITY & LIABILITIES Share capital 40,764 40,764 0% Other reserves 2,546 5,894 -57% Retained earnings 614,225 614,112 0% Minority interest 4,362 4,525 -4% Total Equity 661,897 665,295 -1% Long term interest-bearing liabilities 112,343 165,758 -32% Deferred taxation 112,221 120,458 -7% Other non-current liabilities 3,487 3,690 -6% Current liabilities 306,956 301,291 2% Total Liabilities 535,007 591,197 -10% TOTAL EQUITY & LIABILITIES 1,196,904 1,256,492 -5%
StatementofFinancialPosi.on
MEDIA&E-COMMERCEUS$000's Feb-16 Feb-15 Variance (%)
Cash generated from operations 244,681 226,962 8% Tax paid (25,566) (51,421) 50% Net cash from operating activities 219,115 175,541 25% Acquisition of property, plant and equipment & Intangibles (82,848) (125,387) 34% Other investing activities (8,985) (17,729) 49% Cash used in investing activities (91,833) (143,116) 36% Cash used in financing activities (122,806) (8,517) -1342% (Decrease)/Increase in cash & cash equivalents 4,476 23,908 -81% Cash and cash equivalents at the beginning of year 95,239 71,331 34% Cash & cash equivalents at the end of the year 99,715 95,239 5%
StatementofCashFlows
Disclaimer
Neither the Company nor any of its respective subsidiaries, advisors or representatives shall haveany liability whatsoever for any loss howsoever arising from any use of this presentation or itscontents or otherwise arising in connection with this presentation.
Opinions and forward looking statements expressed represent those of the Company at the time.Undue reliance should not be placed on such statements and opinions, as these can vary with timeresulting in company results, plans and objectives differing materially from those expressed in thisdocument.
Absent independent verification, no representation or warranty express or implied is made as toand no reliance should be placed on the fairness, accuracy, completeness or correctness of theinformation or opinions contained herein.
The Company shall not be liable for any claims arising from any reliance on this document topurchase or subscribe for any securities or entering into any contracts or commitment whatsoever.
THANKYOU