1
Etisalat Group
10th Annual EFG Hermes One on One Conference 2014
March 10th – 11th , 2014 - Dubai
Etisalat Group
ADX Conference
18th – 19th March 2014, New York
Agenda
2
1. Etisalat at a Glance
2. Financial Review
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.
3
Disclaimer
1. Etisalat at a Glance
Etisalat Snapshot
5
148 million Aggregate Subscribers(1)
10.6 USD billion Revenue
60% Owned by Emirates Investment Authority(2)
1.5 USD billion Dividend
15 Countries in Operation
5.1 USD billion EBITDA
680 million People Under Licence
1.9 USD billion Net Profit
Aa3/AA-/A+ High Investment Grade Rating
16 %
Capex Intensity
1.7 USD billion Capex
26 USD billion Market Capitalisation
Note: Based on 2013 actual financials and operating metrics. (1) Aggregate subscribers including subsidiaries and associates. (2) 100% owned by Federal Government of the United Arab Emirates.
24 28
17 19
2012 2013
Aggregate Consolidated
58 67
33 39
2012 2013
Aspiring to be the most admired emerging markets telecom group
139 148
2012 2013
Subscriber (m)
Revenue (AED bn)
EBITDA (AED bn)
Robust EBITDA growth resulting in one of the best EBITDA margins in the telecom sector
Further cost efficiency and optimization can support margin levels
9 million net new customers joined Etisalat Group increasing our subscriber base to 148 million
Continued subscriber acquisition expected mainly in Africa and Asia, as voice opportunities still exist
Strong revenue growth experienced in our markets supported by quality network, innovative products and attractive promotions
Reinforced market leadership in the UAE
Launched m-commerce services in nine new operations to reach eleven countries
16%
18%
16%
12%
Consolidated
Growth Y/Y % Aggregate
Growth Y/Y %
7%
6
Investing in state of the art technologies while focusing on shareholders return
CapEx (AED bn)
EPS & DPS (AED) / DY (%)
Increased returns to shareholders
Dividends payout ratio exceeding 78%
One of the highest dividends yield in the region
Network quality a key differentiator for profitable growth
Continued major strategic investments for future growth ― expanded LTE and Fiber networks in UAE and Saudi Arabia ― Acquired and deployed 3G networks in Asia and Africa
Best network quality in the UAE, Egypt, Nigeria and other markets
0.85 0.90
0.7 0.7
2012 2013
EPS DPS
8
13
4
6
2012 2013
Aggregate Consolidated
7.3% 5.8%
59%
52%
Consolidated
Growth Y/Y % Aggregate
Growth Y/Y %
Dividend
Yield % 7
Mobily KSA
27.5%
Etisalat UAE
100%
Etisalat Misr
(Egypt) 66%
Etisalat Lanka 100%
Etisalat Afghanistan
100%
PTCL Pakistan 23%(1)
Moov Togo 95%
Moov Gabon 90%
Telecel Niger 100%
Acell CAR
100%
Moov Cote
d’Ivoire 85%
Canar Sudan 89%
Etisalat Nigeria 40%
Zantel Tanzania
65%
Etisalat Benin 100%
Atlantique Telecom 100%
Ufone 100%
Fixed line Associates
8
Africa Cluster Asia Cluster
Overview of Etisalat’s Portfolio
Etisalat Group
Thuraya (UAE) 28%
(1) Effective 31-Dec-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.
Fully Integrated
Key Company Highlights
9
Experienced
Management Team with
Long Track Record in the
Sector
Leading Telecom
Operator With Third
Largest Market Cap
among Middle East &
Africa Telcos Diversified Operator
with Exposure to
Attractive and High
Growth Markets Across
Africa and Asia
Strong FCF Profile
with Consistent
History of
Returning Capital to
Shareholders
Highly Rated Telco
(Aa3/AA-/A+) with Low
Leverage and Strong UAE
Government
Support
1
3
4
5
2
$92bn
$36bn
$29bn
$33bn
$32bn
$26bn
$23bn
$19bn
$19bn
$17bn
SABIC
QNB
Al Rajhi
STC
Industries Qatar
Etisalat
Kingdom
Mobily
NBAD
FGB
Top 15 Telecom Companies in Middle East and Africa(1) Top 10 GCC Companies(1)
10
$36bn
$33bn
$26bn
$19bn
$19bn
$17bn
$12bn
$11bn
$11bn
$11bn
$10bn
$7bn
$4bn
$4bn
$3bn
MTN
STC
Etilsalat
Mobily
Bharti
Vodacom
Ooredoo
Turkcell
Turk Telecom
Maroc Telecom
Zain
Du
Telecom Egypt
Orascom
Wataniya
Leading Middle East & Africa Telecom Operator and One of the Largest Companies in the GCC Region
Source: Bloomberg Data as at 06-March-2014
(1) Ranking by Market Cap
1
Etisalat Lanka, Sri Lanka Licence type Mobile
Number of
operators
Mobile, 5
Etisalat position 3rd
Diversified Telecom Operator with an Attractive MEA and Asian Footprint
11
Aggregate Subscribers:
148 million
Covered Population:
680 million
Operating Countries:
15
Consolidated 2013 Revenue:
AED 39 billion
Consolidated 2013 EBITDA:
AED 19 billion
Etisalat, UAE
Licence type Mobile, Fixed and internet
Number of operators
2
Etisalat position 1st
Thuraya, UAE
Licence type Satellite telecommunication
Network coverage
140 countries
Etisalat Misr, Egypt Licence type Mobile & Internet Number of operators Mobile, 3
Etisalat position 3rd
Etihad Etisalat (Mobily), Saudi Arabia Licence type Mobile & Internet
Number of operators
Mobile, 3
Etisalat position 2nd
EMTS, Etisalat Nigeria Licence type Mobile
Number of operators Mobile, 4
Etisalat position 4th
Atlantique Telecom, Moov – West Africa Licence type Mobile
Number of operators 2-6 per country
Etisalat position Top 3
Zantel, Tanzania Licence type Mobile & Internet
Number of operators
Mobile 6, Fixed 2
Etisalat position 4th (Mobile)
Canar, Sudan Licence type Fixed
Number of operators Fixed, 2
Etisalat position 2nd
Etisalat, Afghanistan Licence type Mobile
Number of
operators
Mobile, 4
Etisalat position 3rd
PTCL, Pakistan Licence type Mobile, Fixed and
Internet Number of
operators
Mobile 5, Fixed 11
Etisalat position 3rd (Mobile), 1st (Fixed)
Note: Etisalat market positions per WCIS
Consolidated 2013 Net Profit:
AED 7 billion
2
Strong Financial Profile and Consistent Track Record of Shareholder Remuneration
12
Strong Cash
Flow
Generation,
Consistent
Reinvestment
and Robust
Balance Sheet
Operating Cash Flows (AED bn) Capex / Revenue (%) Net Cash Position (AED bn)
Consistent
History of
Attractive
Shareholder
Returns
Dividend Payout Ratio Total Dividends and Dividend Per Share
3.6
4.3 4.7 4.7
5.5 5.5
2008 2009 2010 2011 2012 2013
Total Dividends (AED bn) Cash Dividend (AED / Share)
0.6 0.6 0.6 0.6 0.7
3
7.5
10.5
13.0
2011 2012 2013
13% 13%
16%
2011 2012 2013
3.3
8.1
9.6
2011 2012 2013
41.5% 48.8%
62.2%
81.2% 82.1% 78.2%
2008 2009 2010 2011 2012 2013
0.7
AA AA- A+ A A- BBB+ BBB BBB-
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
4.0x
Gro
ss
De
bt
/ E
BIT
DA
Highest Rated Telco outside Asia with Strong Balance Sheet and Lowest Leverage Among Peers
13
EMEA Telco Ratings and Total Debt / EBITDA Etisalat’s Credit Rating and Metrics
A+/Stable/-- Notching Down from
Sovereign
AA-/Negative Watch/A-1+ +1 Notch
Aa3/Stable/-- Notching Down from
Sovereign
Credit Rating Sovereign Support
Consistently Cash
Positive Balance Sheet
Net Cash / EBITDA
Source: Company filings, Bloomberg
4
0.21x
0.48x 0.51x
2011 2012 2013
Saleh Al Abdooli Chief Executive Officer Etisalat UAE Appointed CEO of Etisalat UAE
in April 2012
Prior to this appointment, he was CEO of Etisalat Misr
Experienced Management Team
14
Ahmad Abdulkarim Julfar Chief Executive Officer Etisalat Group Appointed Group CEO in
August 2011
Prior to this appointment, was Group COO
Serkan Okandan Chief Financial Officer Etisalat Group Joined Etisalat in January
2012 as Group CFO
Prior to this appointment, was Group CFO of Turkcell
Dr. Daniel Ritz, PhD Chief Strategy Officer Etisalat Group Appointed Group CSO in
February 2012
Prior to this appointment, was CSO at Swisscom Group
Rainer Rathgeber Chief Commercial Officer Etisalat Group Appointed Group CCO in
January 2013
Prior to joining Etisalat, was SVP of Marketing in Europe of the OTE Group
Saeed Al Hamli Chief Executive Officer Etisalat Misr Appointed CEO of Etisalat Misr
in April 2012
Prior to this appointment, was CEO of Etisalat Afghanistan
5
Hatem Bamatraf Chief Technology Officer Etisalat Group Appointed CTO in September
2013
Prior to this appointment, was Executive VP of Enterprise Business at Du
Essa Al Haddad Chief Regional Officer/Africa Etisalat Group Appointed CRO, Africa, of the
Etisalat Group in January 2013
Prior to this appointment, was CCO of EG
Khalid Al Kaf Managing Director and Chief Executive Officer Etihad Etisalat (Mobily) Appointed CEO and MD of
Mobily in July 2005
Prior to this role, worked for over 19 years with Etisalat in various capacities
s
With a Coherent Vision, Mission & Strategy
15
To be the leading and most admired emerging markets telecom group
Vis
ion
M
issio
n • Provide best in class total customer experience for retail and business
• Deliver attractive returns to shareholders while investing in the company’s long term future
• Support economic development and job creation through ICT & socially responsible behavior
Attractive and Well-Balanced
Portfolio
Own and manage controlling stakes in well positioned operators in
target markets and ensure successful integration of
new acquisition, balancing growth and returns
Differentiated Service Offering
Provide differentiated,
innovative telecom service, media and
entertainment offerings – leveraging broadband
Infrastructure and network of partnerships whilst defending core
business (voice
Superior Customer Experience
Serve customers pro-
actively and consistently, with a common set of
brand values based on in-depth customer
understanding and trusted relationships
Operational
Excellence and Efficiency
Manage with a strong focus on efficiency and
effectiveness in all operational and
support processes at Group and in OpCos
“One Company”
Operate consistently across portfolio
with a common set of processes and systems
leveraging Etisalat Group scale economies
Str
ate
gic
Pil
lars
16
Our OpCo portfolio: Further growth potential in several sizeable markets
CA
R A
fgh
an
ista
n
Sri
La
nk
a
27%
CD
I
Su
da
n (
fixed
)
8%
Tan
zan
ia
16%
Pakis
tan
(fi
xed
)
85%
UAE (fixed) Pakistan (mobile)
20% 16%
Ben
in
Ga
bo
n
Nig
er
To
go
Egypt (mobile)
29%
UAE (mobile)
64%
Nigeria (mobile)
11%
67%
KSA (mobile)
38%
Etisalat OpCo value share (%)
Market Value vs. Etisalat OpCo \value share (market in USD billion, OpCo value share in %) (2013)*
Note: Market share in certain markets are based on estimates as not all market players release end of year results
17
Update on Maroc Telecom transaction
Etisalat and Vivendi have signed the SPA for the acquisition of Vivendi’s 53% stake in Maroc Telecom on 4 November 2013
Etisalat to pay MAD 92.6 per share, payable in Euro 3.9 bn at Closing
6.2 x 2013 EV/EBITDA
Etisalat to also pay cash for Vivendi’s share of the 2012 dividends Euro 0.3 bn which will be kept in the target company at closing
Transaction conditional upon (i) executing SHA with the Kingdom of Morocco and (ii) securing competition and regulatory approvals in the Kingdom of Morocco and certain other jurisdictions in Maroc Telecom’s footprint
Closing expected before end of May 2014
January 17th
Etisalat submitted non binding offer
April 24th
Etisalat submitted binding offer
May 28th
Shareholders approval for financing
July 23rd
Vivendi grants Etisalat
exclusivity
May 2014
Expected closing
Nov4th
Etisalat and Vivendi
sign SPA
Overview of Maroc Telecom
18
Maroc Telecom was founded in 1998
Shareholder structure: Vivendi 53%, Kingdom of Morocco 30%, Free Float 17%
The leading telecom operator in all segments in Morocco and owns controlling stakes in four sub-Saharan incumbents (Mali, Mauritania, Gabon, Burkina Faso) covering a population of over 70 million
Highly profitable and cash generative operation with little debt
Incumbent with fixed and mobile – also IPTC and broadband
34.7m mobile subscribers, USD 8.5/month mobile ARPU, 1.6mn fixed-line subscribers, 837k broadband
subscribers in Morocco
€2.5bn 2013 revenues, € 1.4bn 2013 EBITDA - 57% EBITDA margin
Dual listed on Euronext Paris and Casablanca stock exchange
Strong local management with significant telecom operating experience
Strategic rationale
19
Additional pillar for Etisalat in Africa together with UAE, Egypt, KSA, Nigeria and Pakistan
Would create a leading French speaking West African cluster – potential to be the #1 regional operator (46m
subscribers covering a population of c.132m people in 10 Francophone countries)
Contributes additional experienced operational management with in-depth knowledge of the African market
and with particular experience of turning around incumbents
Ability to consolidate by acquiring majority control
Leading market positions with #1 and #2 positions in all markets
Minimum overlap with Etisalat’s exiting portfolio – Exception of Gabon
Significantly enhances Etisalat financial and operational profile and immediately accretive at Etisalat level
Opportunity for Etisalat to bring value e.g. reduced capex costs, mobile data expertise and digital services
Additional values through synergy potential and economies of scale in a number of areas
Priorities in 2014
Deliver on 2014 financial outlook
Reinforce market leadership in the UAE and Pakistan
Be the operator of choice across all market segments in the core markets
Tap into the ICT potential in our prime markets
Increase value share in the high value customers and enterprise segments
Continue to invest in network quality for future growth and differentiation
Grow m-commerce and services digital revenue streams
Complete acquisition of 53% stake in Maroc Telecom
Improve synergy value across the footprint (Procurement, wholesale, Roaming, Customer Experience)
1
2
3
4
5
6
7
8
9
20
2. Financial Review
Etisalat Group
22
Q4’12 Q3’13 Q4’13 QoQ
Growth YoY
Growth FY’12 FY’13
YoY Growth
Subs (m) (1) (2) 139 144 148 +3% +7% 139 148 +7%
Revenue (AED m) 8,479 9,594 9,774 +2% +15% 32,946 38,853 +18%
EBITDA (AED m) 4,279 4,617 4,372 -5% 2% 16,855 18,901 +12%
EBITDA Margin 50% 48% 45% -3pp -6pp 51% 49% -3pp
Net Profit 854 1,825 1,453 -20% +70% 6,742 7,078 +5%
Net Profit Margin 10% 19% 15% -4pp +5pp 20% 18% -2pp
EPS (AED) 0.11 0.23 0.18 -20% +70% 0.85 0.90 +5%
Strong Y/Y subscriber growth across most operations
Solid revenue growth driven by strong performance in the domestic market and consolidation of operations in Pakistan
EBITDA margin declined Y/Y mainly due to higher proportion of low margin handsets and higher interconnection costs
Despite higher depreciation charges, taxes and lower finance income, net profit improved due to higher share of results and lower impairment and other losses
(1) Subscriber numbers calculated as aggregate number of GSM, CDMA, fixed, fixed broadband and WLL lines generating revenue during the last 90 days.
Highlights
Domestic vs. Int’l
32,946
38,853 2,017
(333)
4,705
(499)
FY'12 UAE Egypt Asia Africa Other FY'13
18
Group Revenue
23
Note: “Other revenues” consist of non-telecom revenues, management fees, etc.
In FY’13, consolidated revenues grew by 18% Y/Y attributed to strong performance of the UAE operations and Asia Cluster
Revenues from international operations grew by 47% and contributed 36% of consolidated revenues for FY’13.
— Revenue growth in Egypt impacted by currency devaluation
— Revenue growth in Asia Cluster benefited from the consolidation of operations in Pakistan
— Revenue growth in Africa Cluster is flat impacted by currency devaluation in Sudan and competitive pressure in Ivory Coast
Highlights
Revenue (AED m) and YoY growth (%) Sources of Revenue growth – FY’13 vs FY’12 (AED m)
Revenue by Cluster (FY’13)
UAE 64%
Int’l 36%
Others <1%
International
8,479 9,594 9,774
32,946
38,853
3%
20% 15%
2%
18%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
Revenue YoY growth %
Pakistan 34%
Egypt 34%
Afgh. 8%
AT 16%
Others 2%
Group EBITDA
24
In 2013, consolidated EBITDA grew to AED 18.9 bn representing Y/Y growth of 12%
EBITDA margin declined by 2 points to 49% mainly due to higher cost of sales and interconnection costs and diluted impact of consolidation of operations in Pakistan
EBITDA of consolidated international operations increased Y/Y by 41%, resulting in 22% contribution to Group EBITDA
— Egypt impacted by currency devaluation and higher operating costs
— Asia Cluster benefited from the consolidation of Pakistan
— Africa Cluster impacted by higher cost of sales, network costs, operating expense and currency devaluation
4,279 4,617 4,372
16,855 18,901
50% 48%
45% 51% 49%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
EBITDA EBITDA Margin
16,855
18,901
(388)
1,737
(176)
281
FY'12 UAE Egypt Asia Africa Other FY'13
592
Note: “Other EBITDA” consist of results from non-telecom operations, management fees, etc.
Highlights
EBITDA (AED m) & EBITDA Margin Sources of EBITDA growth – FY’13 vs FY’12 (AED m)
EBITDA by Cluster (FY’13)
Domestic vs. Int’l International
Egypt 40%
Pakistan 41%
AT 12%
Others
6%
UAE 74%
Inter- National
22%
Others 4%
Group CAPEX
25
1,470 1,269 2,148
4,164
6,334
17% 13%
22%
13%
16%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
CAPEX CAPEX/Revenue
CAPEX (AED m) & CAPEX/Revenue Ratio (%)
In 2013 Consolidated Capex increased Y/Y by 52% resulting in a Capex/Revenue ratio of 16%. This increase was mainly due to international operations
Consolidated Capex was impacted by consolidation of operations in Pakistan and acquisition of Universal Mobile License in Benin. Adjusting for these, Capex/Revenue ratio would have been 12%
Capital investment in the UAE focused on leadership in network coverage and ensuring best quality mobile and fixed networks
Capital investment in international operations grew by 94% Y/Y and represented 67% of total capex in 2013:
− Lower capex spend in Egypt
− Asia Cluster impacted by consolidation of Pakistan operations representing 28% of Group consolidated capex
− Substantial increase in Africa Cluster due to acceleration in network deployment in Ivory coast and Benin
Highlights
CAPEX by Cluster (FY’13)
Domestic vs. Int’l International
Afgh
. 4%
Inter- National
67%
UAE 32%
Others <1%
Pakistan 33%
Egypt 29%
AT 28%
Others 10%
Repayment Schedule (AED m) Net cash position (AED m) FY’12 FY’13
Operating 10,486 12,974
Investing (225) (4,854)
Financing (6,327) (6,585)
Net change in cash 3,934 1,535
Effect of FX rate changes 28 (19)
Ending cash balance 13,934 15,450
Borrowings by Operation FY’13 (AED m)
1,782 1,635
736 579
464 351 324
Egypt AT Afgh. EIP Pakistan Tanzania Sri Lanka
Group Balance Sheet & Cash Flows
26
Balance Sheet (AED m) Dec’12 Dec’13
Cash & Cash Equivalent 13,934 15,450
Total Assets 84,606 85,716
Total Debt 5,806 5,872
Net Cash 8,128 9,579
Total Equity 49,913 49,593
(1) Atlantique Telecom Countries are Benin, Central African Republic, Cote d’Ivoire, Gabon, Niger, Togo.
(2) Advances from non controlling interest from minority shareholders of Etisalat Pakistan International.
(1) (2)
1,405
1,112
3,355
FY'14 FY'15 FY'16 & Beyond
Group Dividends: Proposed dividends for 2013 of AED 70 fils per share
27
Dividend Payout Ratio (%) Dividend Yield (1)
Dividends Per Share (AED) Cash Dividends (AED m)
1,977 1,977 2,767
2,767 3,558
2,767
2011 2012 2013
Interim Final
5,535 5,535
4,744
6.1%
7.3%
5.8%
2011 2012 2013
0.60
0.70 0.70
2011 2012 2013
81.2% 82.1% 78.2%
2011 2012 2013
(1) Dividend yield is based on share price as of August 15th 2013 and March 3rd 2014
Proposed dividends are subject to the shareholders approval on the AGM scheduled on March 26th, 2014
Final dividends payment will commence on April 13th, 2014
14.0
19.0
32.9
Domestic Regulated Revenues
Non-Telecom and Int’l revenues
Total Revenues FY’12
2.9
6.4
Royalty FY’12 Foreign taxes
0.0
Royalty on Int’l net
profits @ 35%
0.9
Royalty on domestic net
profits @ 35%
2.7
Royalty on regulated domestic
revenues @ 15%
Federal Royalty Computation FY 2012 & FY 2013
19.0
19.9
38.9
Domestic Regulated Revenues
Non-Telecom and Int’l revenues
Total Revenues FY’13
6.1
3.0
Royalty FY’13 Foreign taxes
0.1
Royalty on Int’l net
profits @ 35%
0.9
Royalty on domestic net
profits @ 35%
2.3
Royalty on regulated domestic
revenues @ 15%
Ro
ya
lty F
Y’1
3 (A
ED
bn
) R
oya
lty F
Y’1
2 (A
ED
bn
)
29
Country by Country Financial Review
UAE: Operational excellence driven by focus on execution
30
Q4’12 Q3’13 Q4’13 QoQ
Growth YoY
Growth FY’12 FY’13
YoY Growth
Subs(1) (m) 9.0 10.2 10.4 +2% +16% 9.0 10.4 +16%
Revenue (AED m) 5,851 6,165 6,288 +2% +7% 22,747 24,763 +9%
EBITDA (AED m) 3,398 3,578 3,361 -6% -1% 13,456 14,047 +4%
EBITDA Margin 58% 58% 53% -5pp -5pp 59% 57% -1pp
Net Profit 1,448 1,575 1,461 -7% +1% 5,907 6,094 +3%
Net Profit Margin 25% 26% 23% -2pp -2pp 26% 25% -1pp
CAPEX 530 404 508 +26% -4% 1,795 2,014 +12%
CAPEX/Revenue 9% 7% 8% +1pp -1pp 8% 8% -pp
Solid double digit Y/Y growth in subscribers driven by mobile and eLife
segments
Strong Y/Y revenue growth driven by higher data, e-life, and mobile market-
share winback
EBITDA margin was impacted by higher cost of sales; international
interconnection, device costs, and channel commissions
Net profit improvement Y/Y despite higher depreciation and lower interest
income;
Capex/Revenue ratio is stable at 8% - focus on capacity enhancement,
network expansion, and 4G rollout
(1) Subscriber numbers calculated as aggregate number of GSM, fixed, fixed broadband and eLife lines generating revenue during the last 90 days.
Highlights Macro and Market Snapshot (2013)
Population (m) 9.4
GDP per Capita($) 45,745
GDP Growth (%) 4.1
Penetration Rate (%) M 191; F 25
ARPU ($) 31.0
Number of Players 2
Etisalat Position 1
Source: IMF, TeleGeography Reports, BMI, WCIS
1.11 1.25 1.31
5.96 7.01 7.14
136 124 122
Q4'12 Q3'13 Q4'13
Postpaid Prepaid Blended ARPU
UAE: Subscriber Growth in High Value Segments
31
1.10 1.06 1.04
107 108
133
Q4'12 Q3'13 Q4'13
Fixed ARPL
(1) Mobile ARPU (“Average Revenue Per User”) calculated as total mobile voice, data and roaming revenues divided by the average mobile subscribers. (2) ARPL (“Average Revenue Per Line”) calculated as fixed line revenues divided by the average fixed subscribers. (3) Fixed broadband subscriber numbers calculated as total of residential DSL (Al-Shamil), corporate DSL (Business One) and E-Life subscribers.
Mobile Subs (m) & ARPU(1) (AED)
Fixed Broadband(3) Subs (m)
Fixed Subs (m) & ARPL(2) (AED)
eLife Subs – Double & Triple-Play (m)
0.51 0.65 0.67
341 363 372
Q4'12 Q3'13 Q4'13
E-Life (2P & 3P) ARPL
0.81 0.89 0.90
429 458 464
Q4'12 Q3'13 Q4'13
Fixed BB ARPL
53.8% 46.2%
UAE: The Leading Telecom Operator
32
Mobile Market Share (%)
Subscribers
Fixed Market Share(1) (%)
Revenue Subscribers Revenue
FY’13 EBITDA Margin (%) Q4’13 ARPU (AED)
Mobile Fixed
Total:15.7m Total: AED 20.4 bn Total:2.0m Total: AED10.2bn
Source: Latest company filings (1) Fixed line subscribers include Etisalat fixed broadband and eLife double and triple play subscribers.
83.8%
16.2%
57.0%
39.7% 122
106
1
133
1
NA
86.0%
14.0%
63.7% 36.3%
Egypt: Maintained growth in local currency despite challenging macro environment
33
Maintained subscriber growth despite economic slowdown
Double digit revenue growth Y/Y in local currency due to an increase in the post-paid customer base, data segment and handset sales;
Growth in reporting currency impacted by currency devaluation
EBITDA margin impacted by higher proportion of low margin handset sales, higher network costs and marketing expenses and one-off provision for disputes on interconnection rates
― Adjusting for this item, EBITDA in 2013 would have been 36%.
Capital spending focused on network expansion and reached 26% of revenue in 2013.
Highlights
Total Market Subscribers (1) (m)
Macro and Market Snapshot (2013)
Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
83
97 97
17%
24% 24%
FY'11 FY'12 FY'13
Subscribers Market Share %
Population (m) 83.0
GDP per Capita($) 3,134
GDP Growth (%) 1.9
Penetration Rate (%) 118
ARPU ($) 5.1
Number of Players (Mobile) 3
Etisalat Position 3
(1) Subscribers and market share data as per statistic published by the Ministry of Information and Technology
1,303 1,115 1,335
5,075 4,742
47%
37%
30%
39%
34%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
Revenue EBITDA %
621
362 479
1,174 1,229
48% 32% 36%
23% 26%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
CAPEX CAPEX/Revenue
Source: IMF, TeleGeography Reports, BMI, WCIS
38% 36%
34.1
35.8
36.3
FY'11 FY'12 FY'13
Asia: Steady margin improvements Afghanistan, Pakistan(1) and Sri Lanka
34
Slow down in Subscriber acquisition
In 2013 Asia cluster benefited from the consolidation of operations in
Pakistan with revenue growth for the year increasing three-fold to AED 6.3
billion. Excluding Pakistan:
— Revenue growth Y/Y in 2013 would have been negative 4%
— EBITDA margin would have been 15%
Higher Capex mainly due to operations in Pakistan
Highlights
Subscribers (m)
Macro and Market Snapshot (2013)
Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
(1) Consolidation of Pakistan operations effective 1 Jan 2013.
Afghanistan Pakistan Sri Lanka
Population (m) 30.6 184.0 21.3
GDP per Capita ($) 770 1,223 3,140
GDP Growth (%) 7.5 3.6 6.4
Penetration Rate (%) 72 M 73 / F 3 113
ARPU ($) 5.0 2.2 2.4
Number of Players (Mobile) 4 5 5
Etisalat Position 3 F1/M3 3
396
1,569 1,407 1,564
6,269
15%
27% 31%
11%
31%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
Revenue EBITDA %
126 298
714 566
1,801
32%
19%
51%
36%
29%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
CAPEX CAPEX/Revenue
Source: IMF, TeleGeography Reports, BMI, WCIS
25.1
27.6
28.2
FY'11 FY'12 FY'13
Pakistan: Top-line expansion and cost efficiencies
35
Y/Y growth in subscribers base driven by mobile and EVO segments
Single digit revenue growth in local currency mainly driven by increase in data revenues and international clearing house (ICH) operations
― Revenue growth in 2013 was negatively impacted by newly introduced Government sales tax on international incoming traffic
Margin impacted by GST and higher network and marketing expenses
In 2013, Capex spending increased Y/Y by 27% mainly due to spectrum acquisition for EVO, resulting in a capital intensity ratio of 29%
3G/4G licenses auction expected mid April 2014
Highlights
Subscribers (m)
Macro and Market Snapshot (2013)
Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
Population (m) 184.0
GDP per Capita ($) 1,223
GDP Growth (%) 3.6
Penetration Rate (%) M 73 / F 3
ARPU ($) 2.2
Number of Players (Mobile/ Fixed) M 5 / F 15
Etisalat Position Fixed 1 / Mobile 3
1,281 1,200
1,057
4,653 4,761
42% 37% 39%
28%
35%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
Revenue EBITDA %
315
189
559
1,094
1,392
25%
16%
53%
24% 29%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
CAPEX CAPEX/Revenue
Source: IMF, TeleGeography Reports, BMI, WCIS
9.4
12.2 11.9
FY'11 FY'12 FY'13
Africa: Investing in 2G & 3G networks Ivory Coast, Benin, Togo, Gabon, Niger, CAR(1), Tanzania, & Sudan
36
Subscriber growth impacted by SIM registration in Tanzania. However, maintained strong subscriber acquisition in Benin, Togo and Gabon.
Revenue growth Y/Y is flat impacted by operations in Ivory Coast & currency devaluation in Sudan
In 2013 EBITDA margin declined Y/Y by 7 points due to non-recurring items/provision in Atlantique.
― Adjusting for these items, EBITDA margin would have been 22%
Significant increase in capital investment due to acquisition of Universal Mobile License in Benin and acceleration of network deployment in Benin and Ivory Coast.
― Adjusting Capex for the Universal Mobile license acquisition in Benin, Capex / revenue would have been 31%
Highlights
Subscribers (m)
Macro and Market Snapshot (2013)
Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
(1) CAR stands for Central African Republic. (2) Atlantique Telecom Countries are Benin, Central African Republic, Cote d’Ivoire, Gabon, Niger, Togo.
(3) Fixed line market data. Source: IMF, TeleGeography Reports, BMI, WCIS
Atlantique Telecom Countries(2)
Tanzania
Sudan (3)
Population (m) 62.5 50.0 34.0
GDP per Capita ($) 3,299 679 1,450
GDP Growth (%) 5.7 7.2 1.4
Penetration Rate (%) 65 54 1
ARPU ($) 6.0 4.4 4.8
Number of Players Between 2 and 7 5 2(3)
Etisalat Position In the top 3 in each country 4 1(3)
709 699 706
2,775 2,793
19% 18%
10%
26%
19%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
Revenue EBITDA %
162 184
429 485
1,240
23% 26%
61%
17%
44%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
CAPEX CAPEX/Revenue
22% 23%
31%
10.8
14.9
17.0
FY'11 FY'12 FY'13
Nigeria: Network quality driving customer and revenue growth
37
Subscriber base grew Y/Y by 14% driven by new products
Double digit revenue growth of 16% despite MTR cut, driven by subscriber acquisition and data segment
Lower EBITDA margin Y/Y as a result of higher network costs supporting network expansion and higher marketing expenses
― EBITDA margin in 2013 impacted by non recurring items during Q3’13; Adjusting for these items, EBITDA margin would have been 4%
Capital spending in 2013 focused on network quality and coverage expansion
Highlights
Subscribers (m)
Macro and Market Snapshot (2013)
Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
Population (m) 173.6
GDP per Capita ($) 1,567
GDP Growth (%) 6.7
Penetration Rate (%) 72
ARPU ($) 6.9
Number of Players 4
Etisalat Position 4
Source: IMF, TeleGeography Reports, BMI, WCIS
809 822 935
2,957
3,341
6%
(9%)
4%
6%
1%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
Revenue EBITDA %
384 378 536
1,533 1,487
48% 46%
57% 52%
45%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
CAPEX CAPEX/Revenue
2%
4%
38
6,660 6,343 7,103
23,255 24,838
38% 37% 36%
36% 37%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
Revenue EBITDA %
955 1,114 1,435
2,571
5,319
14% 18%
20%
11%
21%
Q4'12 Q3'13 Q4'13 FY'12 FY'13
CAPEX CAPEX/Revenue
Saudi Arabia: Profitable Growth with Increasing Dividend Pay-out
Mobily maintained its strong performance and posted solid results in 2013
— Revenues grew Y/Y by 7% with EBITDA margin increasing by 1 point to 37%
— Data revenues represents 28% of total revenues for FY2013 and is expected to exceed 32% in 2014
Capex spending focused on ensuring leadership in 3G and LTE
― 4G network coverage is 80% of population compared to 3g of 96%
Dividend of AED 994 million received from Mobily for FY 2013 in addition to 10% stock dividends related to Q4’12
Highlights
Mobily Dividends Paid
Macro and Market Snapshot
Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)
Population (m) 29.0
GDP per Capita ($) 25,848
GDP Growth (%) 3.8
Penetration Rate (%) 180
ARPU ($) 18.3
Number of Players (Mobile) 3
Mobily Position 2
3.25
4.15
4.80
FY'11 FY'12 FY'13
DPS (SAR)
Source: IMF, TeleGeography Reports, WCIS
803
600
Total dividends to Etisalat (AEDm)
994
2013 Actual Against Guidance (1) : Delivered on financial guidance
39
Revenue Growth %
EBITDA Margin%
CAPEX / Revenue Ratio
17% - 18%
49% - 50%
15% - 17%
18%
49%
16%
(1) All figures represent consolidated numbers and include impact of consolidation of Pakistan operations in 2013
Financial Objective Guidance 2013 Actual FY 2013
2014 Outlook (1) : Management’s Guidance
40
Revenue Growth %
EBITDA Margin%
CAPEX / Revenue Ratio
2% - 3%
47% - 49%
16% - 19%
Financial Objective Outlook 2014
(1) All figures represent consolidated numbers and does not include any impact from a potential M&A transaction during 2014. (2) Capex / Revenue Ratio guidance does not include potential acquisition of 3G/4G licenses in Pakistan.