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1 © Global Telecom Holding 2016 Investor Presentation November 2016
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November 2016
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Disclaimer
This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy shares in Global Telecom Holding (the
"Company"). Further, it does not constitute a recommendation by the Company or any other party to sell or buy shares in the Company or any other securities. This
presentation includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would",
"could" or "should" or, in each case, their negative or other variations or comparable terminology. All statements other than statements of historical facts included in
this presentation, including, without limitation, those regarding the Company’s strategic priorities and objectives and the anticipated benefits therefrom, exploration
of various funding options to refinance the shareholder loan, and prospects are forward-looking statements. By their nature, such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the actual results, financial condition, performance, liquidity, dividend policy or
achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies
and the environment in which the Company will operate in the future. Important factors that could cause the Company's actual results, performance or
achievements to differ materially from those in the forward-looking statements include, among others, the prices of the Company's products and services, the
actions of competitors, the availability of credit, governmental regulation of the telecommunications industry in countries in which the Company operates, the effects
of political uncertainty and economic conditions in the relevant areas in the world, the impact of foreign currency rates, taxation and unforeseen litigation. Forward-
looking statements should, therefore, be construed in light of such factors and undue reliance should not be placed on forward-looking statements. These forward-
looking statements speak only as of the date of this presentation. The Company expressly disclaims any obligation or undertaking (except as required by applicable
law or regulatory obligation including under the rules of the Egyptian Exchange and the UK Listing Rules and the Disclosure and Transparency Rules of the
Financial Conduct Authority), to release publicly any updates or revisions to any forward-looking statement, whether as a result of new information, future events or
otherwise.
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GTH – a leading mobile operator in attractive emerging markets
Pakistan
37%
Algeria
42%
Bangladesh
21%
Algeria
43%
Pakistan
37%
Bangladesh
20%
1 Population figures are provided by CIA – The World Factbook2 Based on consolidated mobile customers as at September 2016; excluding Zimbabwe as signed for sale3 Operating free cash flow defined as underlying EBITDA – Capex (excluding licenses)4 % contribution calculated excluding HQ costs and other adjustments
Pakistan
Population 196m
Mobile Penetration 65%
# of customers 51.0m
Bangladesh
Population 160m
Mobile Penetration 82%
# of customers 29.0m
Zimbabwe
Population 14m
# of customers 2.0m
(signed for sale)
Algeria
Population 39m
Mobile Penetration 116%
# of customers 15.9m
409 million population coverage1
95.9 million mobile customers (excluding Zimbabwe)2
409 million population coverage1
95.9 million mobile customers (excluding Zimbabwe)2
Pakistan
41%Algeria
37%
Bangladesh
22%
USD 2.2 billion
USD 1.0 billion
Service Revenue 9M16
EBITDA 9M16
OpFCF 9M16
USD 0.7 billion
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Strategy
Delivering
on strategy
Pe
rform
an
ce T
ran
sform
atio
n
Ne
w R
ev
en
u S
trea
ms
$
$$
$
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Significant upside in terms of mobile penetration & data usage
Notes
1. Mobile penetration is for the market based on SIM cards number as of 31 December 2015. Sources: Analysys Mason Research, Pakistan Telecommunications Authority, Bangladesh Telecommunications Authority (2014)2. Based on Company estimates, where mobile data penetration–data subscribers (3 months) divided by active total subscribers (3 months) as of 31 December 2015 and Data Usage calculate on active subscribers in the last 3 months as
of September 2016
421
345
254
Pakistan Algeria Bangladesh
65%
116%
82%
Pakistan Algeria Bangladesh
48%
40%
50%
Pakistan Algeria Bangladesh
Western Europe
Avg: 131%
Western Europe
Avg: 77%
Western Europe
Avg: 2,501 MB/User
Mobile Data Penetration2 (%) Data Usage2 (MB / User)Mobile Penetration1 (%)
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Leading mobile operator with diversified footprint in
attractive emerging markets
1 Market share as provided by regulator
37.8%
28.4%
14.7%
19.3%Mobilink &
Warid
Telenor
Ufone
Zong
Market
share
• GTH holds the number 1 market
position in Pakistan
• Combination with Warid to further
strengthen market position and create
best in class network
Pakistan
Market
share1
• Djezzy is the market leader in Algeria
• Transformation program is ongoing;
however, the market remains
challenging with aggressive price
competition.
Algeria
Market
share
• Banglalink holds the number two
market position
• Strong lead in NPS due to strengthened
network and attractive data offers
• Merger of Robi - Airtel has been
approved
Bangladesh
43.0%
30.0%
27.0%
Djezzy
Ooredoo
ATM
42.6%
24.3%
21.3%
8.0%
3.8%
Grameenphone
Banglalink
Robi
Airtel
Other
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3Q16 financial highlights
Service revenue(USD million)
760
361 45.8
- 0.3% organic1 YoY
+ 7% reported YoY
95.9
Mobile customers(million)
Underlying EBITDA(USD million)
Underlying EBITDA margin (%)
+ 11.5 million YoY²
1 Revenue organic growth are non-GAAP financial measures that exclude the effect of foreign currency translation and certain items such as liquidations and disposals
² Customers number includes Warid customers
+ 0.3% organic1 YoY
- 2.4% reported YoY- 5.0 p.p. YoY
• Service revenue was organically stable YoY due to:► Double-digit growth in Pakistan
► Solid performance in Bangladesh
► Weak performance in Algeria
• Mobile data revenue strong organic growth of 61%
YoY
• Underlying EBITDA was organically stable as a result
of:
► Strong performance in Pakistan and Bangladesh
► Offset by a decline in Algeria
• Continued strong underling EBITDA margin of 46% and
reported EBITDA margin of 43%
• Continued customer growth of 14%, with 11.5 million
customers added YoY due to strong performance in
Pakistan and the consolidation of Warid
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PKR BILLION, UNLESS STATED OTHERWISE
24.5 28.1 28.4
3Q15 2Q16 3Q16
+47.5% YoY
+16.2% YoY organic
35.2 40.6
10.310.4
3Q15 3Q16
+45.1% YoY
+15.5% YoY organic
10.6 12.0
15.4
41.0% 40.2% 40.0%
3Q15 2Q16 3Q16
+44.8% YoY
+24.5% YoY organic
6.7
7.6
25.7%15.9%
3Q15 3Q16
+13.9% YoY
+7.1% YoY organic
EBITDA and
EBITDA margin
Capex excl. licenses and
LTM capex/revenue
Mobile service revenue Mobile customers (million)
Warid contribution, pro-forma for Q3 2015 and Q2 2016, including intercompany transactions with Mobilink
Organic YoY change represents standalone performance of Mobilink1Q3 2016 EBITDA negatively impacted by one-offs of transformation/integration costs of PKR 770 million; Q3 2015 EBITDA positively impacted by one-offs of PKR 666 million
8.88.4 7.7
36.151.0
1.91.6
2.2
13.2
1.5 0.5
7.1
3Q16 Pakistan: continued double digit growth, integration on track
• Mobilink and Warid integration is well on track:
► Merger petition filed with Islamabad High Court early
October, legal merger expected in Q1 2017
► On-net products between Mobilink and Warid launched
► Cross 3G and 4G/LTE network offering and distribution
consolidation well on track
► First synergies of ~PKR 500 million (~USD 5 million) for 9M
2016 from site sharing and marketing costs optimization
• Double digit revenue growth, supported by all
revenue streams, resulting in revenue market share
gain
• Mobile data revenue organic growth of 71% YoY;
MFS revenue growth of 42% YoY
• Underlying EBITDA margin1 of merged entity,
excluding integration costs, of 42%;
LTM Q3 2016 OCF margin of 27%
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3Q16 Algeria: continued pressure on results
DZD BILLION, UNLESS STATED OTHERWISE
33.127.2 28.9
3Q15 2Q16 3Q16
-12.7% YoY
16.9 15.9
3Q15 3Q16
-5.8% YoY
18.3
14.0 14.9
54.8% 51.1% 51.3%
3Q15 2Q16 3Q16
-18.9% YoY
-11.1% YoY (Underlying)1
3.44.3
14.8% 16.3%
3Q15 3Q16
+28.3% YoY
EBITDA and
EBITDA margin
Capex excl. licenses and
LTM capex/revenue
Mobile customers (million)
Mobile service revenue
1 Q3 2016 EBITDA negatively impacted by one-offs of transformation costs of DZD 1.4 billion2 Regions or provinces
• Regulatory environment continuous to improve:
Djezzy’s Significant Market Player status lifted
• Commercial overhaul, actions taken:
► 4G/LTE launch with objective to operate the leading
network in the country (expected coverage of 20 wilayas2 by
YE2016) to win back high-value customers
► Data-centric pricing with simple offers launched in late
October
• Service revenue continued to decrease YoY due to
sub-optimal commercial decisions taken in early 2016
• Continued strong data revenue growth of 73% YoY
• EBITDA margin continued to be above 50%, as a result
of Performance Transformation program, LTM Q3
2016 OCF margin of 39%
• Gross dividends of USD 128 million, 48% of FY2015
net income, distributed in Q3 2016
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3Q16 Bangladesh: continued strong EBITDA margin
BDT BILLION, UNLESS STATED OTHERWISE
11.8 11.9 12.0
3Q15 2Q16 3Q16
+2.0% YoY
32.3 29.0
3Q15 3Q16
-10.4% YoY
5.3 5.4 5.7
44.7% 43.7% 46.7%
3Q15 2Q16 3Q16
+7.1% YoY
3.8
1.725.3%
18.3%
3Q15 3Q16
-54.4%
EBITDA and
EBITDA margin
Capex excl. licenses and
LTM capex/revenue
Mobile customers (million)
Service revenue • Service revenue increased 2% YoY notwithstanding:
► Aggressive price competition
► Additional supplementary duties introduced in H1 2016
► Customers disconnections and market slowdown due to SIM
re-verification (now completed)
► Gap in 3G network coverage versus market leader
• Sustained strong growth in date revenue of 45% YoY
• Excluding the SIM re-verification impact of 3.8 million
SIM blocking, the customer base in 3Q16 would have
increased by 1% YoY
• Strong EBITDA margin of 47%, benefiting from
revenue increase and Performance Transformation
• 3G coverage reached 54% of population; Banglalink
continues to expand the network coverage
• LTM Q3 2016 OCF margin of 29%
1 Q3 2015 EBITDA negatively impacted by one-offs of SIM tax provision of BDT 156 million
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Debt by entity
1 Underlying EBITDA excludes PT costs in 2016 and sim verification costs in 2015
* Including Warid
As at 30 September 2016
Net debt /
underlying1 LTM EBITDA
1.4x* 2.0x*
Gross debt /
underlying1 LTM EBITDA
1.8 Excl. Warid 3Q16
1.9 Excl. Warid 3Q15
8.0%*
Weighted average
interest rate
Outstanding external debt (USD million)
Type of debt
Entity Currency Loans Bonds Other Total
GTH Finance BV USD - 1,200 - 1,200
Pakistan* PKR&USD 678 51 48 777
Banglalink USD - 300 6 306
Algeria DZD 456 - - 456
Total principal amount 1,134 1,551 54 2,739
1.2 Excl. Warid 3Q16
1.5 Excl. Warid 3Q15
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Balanced maturity profile
As at 30 September 2016
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Net debt evolution
As at 30 September 2016
ND: Net debt∆ WC: Change in working capital
1,715
440 2,155 341
124 70 19 163 19 1,961
ND June 30th
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Warid ND Pro-forma ND
June 30th 16
EBITDA Δ WC Net Interest Taxes Capex Forex and
Others
ND
September
30th 16
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3Q16 income statement
• Increased due to Interest over PMCL options redemption liability
• Improved mainly due to unrealized FOREX gain on tax provision
• During Q3 2015 Pakistan started its network modernization project which resulted in accelerated depreciation
• Higher income tax expense in Q3 2016 as tax losses utilized in Q3 2016 could not fully offset the taxable profits in Pakistan (PMCL)
• Mainly related to change in fair value of embedded derivatives in financial liability contracts of Bangladesh
• More support have been provided in the operations, like network swap in Pakistan, network modernization, 2G/3G and 4G/LTE in Algeria etc.
USD millions 3Q16 3Q15 Change
Service revenue 760.2 710.3 7.0%
Other revenue 27.6 19.4 42.3%
Total Revenue 787.9 729.7 7.9%
Total expense (446.9) (387.1) 15.4%
EBITDA 340.9 342.6 (0.5%)
Depreciation and amortization of property and equipment (146.8) (209.1) (29.8%)
Gains/(losses) on sold property, equipment, intangibles,
goodwill and scrapping1.0 (3.8) (126%)
Impairment loss from assets (0.6) (2.8) (78.6%)
Technical services expense (25.4) (4.1) 146%
Other Operating Gain/Loss 7.8 (0.1) n.m
Operating Profit 176.9 122.5 44.4%
Financial Expense (83.6) (65.9) 26.9%
Financial Income 2.3 1.6 43.8%
Foreign Exchange Gain (Loss) 3.9 (16.3) n.m
Profit/(loss) Before Tax 99.5 41.9 138%
Income Tax (54.9) (28.4) 93.3%
Profit/(loss) for the Period 44.6 13.5 230%
Attributable to:
Equity Holders of the Parent 8.6 (32.1) n.m
Earnings Per Share (USD) 0.002 (0.01) n.m
Minority Interest 36.0 45.6 (21.1%)
Net Income 44.6 13.5 230%
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Foreign Exchange Rates Applied to the Financial Statements
Average rates Closing rates
3Q16 3Q15 YoY 3Q16 3Q15 YoY
Egyptian pound 8.8748 7.8213 13.5% 8.8819 7.8232 13.5%
Algerian Dinar 109.7710 102.9344 6.6% 109.6170 106.2060 3.2%
Pakistan Rupee 104.6713 102.8501 1.8% 104.4550 104.4600 0.0%
Bangladeshi Taka 78.3216 77.7756 0.7% 78.3750 77.7750 0.8%
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New revenue opportunities in Pakistan
Owning and winning in the High Value and
the B2B segments:
• Leading position in high-value
and postpaid customers
• Serve corporates with full enterprise
solution and M2M
Digital & MFS leader:
• Mobilink the fastest growing MFS player
in the market
► Mobilink MFS revenue 2.7% of total
► 2.5 million Mobilink MFS customers
• Providing Warid customers with
access to our full range of MFS services
including Mobicash
• Expanded MFS portfolio including:
► Money transfer
► Bill and loan payments
► Mobicash ATM Card
► Corporate solutions, etc.
+
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Identified cost synergies of merger Mobilink & Warid
- total run-rate of USD 115 mln1
1 After tax, NPV from synergies after integration costs2 Assumes legal merger completed
More than USD 500 million NPV from synergies1, 90% expected by third year post-closing
EPS accretive from the third year post-closing2
More than USD 500 million NPV from synergies1, 90% expected by third year post-closing
EPS accretive from the third year post-closing2
• Integrated customer service
• Efficient channel and distribution model
• Site decommissioning
• Common IT platforms
• Scale impact
• Optimized organizational structure
Synergies run rate
(USD million)
115
OPEX c. 75%
c. 25%Capex
Market facing
& customer
operations
Market facing
& customer
operations
Network & ITNetwork & IT
SG&ASG&A
-
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Transaction structure
Step 1 – share acquisition Step 2 – legal merger
51.9%
GTH
Warid Telecom
VimpelCom
Closed on July 1, 2016Closed on July 1, 2016
PMCL
Mobilink
Dhabi Group
shareholders
~85%
~15%
100%
51.9%
GTH
VimpelCom
Legal merger expected in 1Q17Legal merger expected in 1Q17
PMCL
Mobilink
Dhabi Group
shareholders
~85%
~15%
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GTH accounting implications – Mobilink and Warid transaction
Upon closing of the share acquisition
• The acquisition of Warid will be accounted for as a business combination under IFRS
• The fair value of Warid’s assets and liabilities will be taken over into the GTH consolidated balance
sheet as of the date of closing
• The difference between the fair valued net asset of Warid taken up in the GTH consolidated balance
sheet and the fair value of consideration paid for Warid (including contingent consideration) will
result in goodwill
► Goodwill is not amortized but an annual impairment test is performed
► Contingent consideration (i.e. tower earn-out) will be recorded as a liability at fair value on the closing date
with any subsequent value changes recorded directly in the consolidated income statement
• The put option granted to the seller will be accounted for as a liability on the GTH consolidated
balance sheet at the net present value of the future expected cash outflow to buy out the minority
shares in Mobilink
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Further information
Investor Relations
Ola Tayel
Cairo Registered Office Amsterdam Head Office
2005C Nile City Towers - Northern Tower Gustav Mahlerlaan 314
Cornish El Nile Ramlet Beaulac 1082 ME Amsterdam
Cairo 11221, Egypt The Netherlands
Tel: +202 2461 5120 E: [email protected]
Visit our website
www.gtelecom.com
