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Investor Presentation November 2014
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Page 1: Investor Presentation November 2014 - Global Telecomgtelecom.com/.../10157/68845/Investor+Presentation+-+November+… · Investor Presentation November 2014. ... Warid Mobilink. ...

Investor Presentation November 2014

Page 2: Investor Presentation November 2014 - Global Telecomgtelecom.com/.../10157/68845/Investor+Presentation+-+November+… · Investor Presentation November 2014. ... Warid Mobilink. ...

Investor Presentation © Global Telecom Holding S.A.E. 2014

This presentation contains forward-looking statements about Global Telecom Holding (“GTH”). Suchstatements are not historical facts and include expressions about confidence and strategies ofmanagement and expectations of management about new and existing programs, technology and marketconditions. Although GTH believes its expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties. These statements may not beregarded as a representation that anticipated events will occur or that expected objectives will beachieved. The forward-looking statements in this presentation are only valid until the date of thisdocument and GTH does not undertake to update any forward-looking statement to reflect events orcircumstances after the date hereof or to reflect the occurrence of unanticipated events.

This presentation is not an offer to sell securities or the solicitation of an offer to buy securities, nor shallthere be any offer or sale of securities in any jurisdiction in which such offer or sale would be unlawfulprior to registration or qualification under the securities laws of such jurisdiction.

2

Disclaimer

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GTH serves a population of approximately 415 million

1. Figures from CIA Factbook

Geographical Presence1

3

ALGERIA Population: 38.8 millionGDP Growth: 3.1%GDP/Capita PPP: USD7,500Pop. Under 15 years: 28%

ZIMBABWEPopulation: 13.8 millionGDP Growth: 3.2%GDP/Capita PPP: USD600Pop. Under 15 years: 38%

PAKISTANPopulation: 196.2 millionGDP Growth: 3.6%GDP/Capita PPP: USD3,100Pop. Under 15 years: 33%

BANGLADESHPopulation: 166.3 millionGDP Growth: 6.1%GDP/Capita PPP: USD2,100Pop. Under 15 years: 32%

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Algeria: Algeria: Djezzy remains a profitable market leader with significant mobile data potential and low penetration of broadband technologies

Pakistan: Mobilink leads the market and has great potential for revenue growth through mobile data, MFS and VAS

Bangladesh:Bangladesh:banglalink is a leading operator with strong focus on increasing value share in a rapidly large and growing market with relatively low penetration level

Market Position

4

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68

Algeria Bangladesh Pakistan

53%

75%

85%

Pakistan Bangladesh Algeria

3%

33%

37%

Algeria Pakistan Bangladesh

Notes1. Mobile penetration is for the market, based on sim cards number2. Based on Company estimates June’14, where mobile data penetration = data users (number of sims with data subscribed tariff plans) / mobile customers

Mobile Data Penetration2 (%) Data Usage2 (MB / User)Mobile Penetration1 (%)

Western Europe

Avg: 133%

Western Europe

Avg: 66%

Source: Company Data, WCISi

Significant upside in terms of mobile penetration & data usage

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Attractive markets

1. CIA Factbook2. Market share as provided by the regulator as of May 31, 2014

Algeria Pakistan Bangladesh

Population1: 38.8 million

GDP/capita1: USD 7,500

Penetration: 85%

Market shares2

49%

27%

23% Djezzy

Mobilis

Ooredoo

Population1: 196.2 million

GDP/capita1: USD 3,100

Penetration: 53%

28%

26%18%

19%

9%Mobilink

Telenor

Ufone

Zong

Warid

Population1: 166.3 million

GDP/capita1: USD 2,100

Penetration2: 71%

Market shares2

25%

42%

21%

12% Banglalink

Grameenphone

Robi

Other (3)

Market shares2

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Investor Presentation © Global Telecom Holding S.A.E. 2014

LETTERONE TELENOR

OJSCVIMPELCOM

KYIVSTAR

GTHFREE FLOAT

WIND ITALY GTH

56.2% (Economic) 33.0% (E) 10.8% (E)

100.0% 100.0% 100.0% 51.9%

47.9% (Voting) 43.0% (V) 9.2% (V)

48.1%

VIMPELCOM FREE FLOAT

Shareholder Structure

7

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Average mobile penetration(%)

Mobile customers(million)

EBITDA margin(%)

Revenue(USD million)

EBITDA(USD million)

Population covered(million)

415

Market leadership in fast growing emerging markets

74 91.6+4 million YoY

356 42.9-4.5 p.p. YoY

830-14% organic YoY-5% organic YoY

as at 3Q14

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Launch of 3G services driving customer growth

34.136.7 36.0 35.9 33.5 34.5 34.4

16.6 16.8 17.0 17.6 17.6 17.5 18.2

1Q13 2Q13 3Q13 4Q14 1Q14 2Q14 3Q14

27.0 28.526.7 25.7 26.0 26.3

24.2

36.3

37.1 37.4 37.638.2

38.8 38.7

1Q13 2Q13 3Q13 4Q14 1Q14 2Q14 3Q14

9.3

10.110.0 10.0

10.210.9 11.0

25.9

27.128.1

28.829.4 29.8

30.2

1Q13 2Q13 3Q13 4Q14 1Q14 2Q14 3Q14

• Mobile customer base grew 7% YoYto 18.2 million

• Stabilized its market-leading position in 3Q14, following the launch of 3G services

• Mobile customer base grew 4% YoYto 38.7 million

• Focus on subscriber engagement with aggressive bundle offers

• Mobile customer base grew 8% YoYto 30.2 million

• Supported by 3G services, attractive tariff plans and other service offerings

In LC billions, if not stated otherwise

Bangladesh

Revenue and Customers

Algeria

Revenue and Customers

Pakistan

Revenue and Customers

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Bangladesh

EBITDA & EBITDA Margin

Launch of 3G services driving customer growth

Algeria

EBITDA & EBITDA Margin

Pakistan

EBITDA & EBITDA Margin

20.2 22.021.0 21.0

19.0 18.8 18.1

59.2% 60.1%57.2% 58.3% 57.6%

54.5%52.5%

1Q13 2Q13 3Q13 4Q14 1Q14 2Q14 3Q14

11.512.3

11.5

9.610.0 10.2

8.5

42.3% 43.0% 43.1%

37.2%39.5% 38.9%

34.9%

1Q13 2Q13 3Q13 4Q14 1Q14 2Q14 3Q14

3.83.7 3.6

3.4

4.04.2

4.4

41.3%

37.2% 36.3%33.7%

37.4% 38.2%39.7%

1Q13 2Q13 3Q13 4Q14 1Q14 2Q14 3Q14

• EBITDA decreased 13% YoY

• Negatively impacted by higher network cost due to the 3G rollout and slight increase in HR cost

• EBITDA decreased 30% YoY

• Negatively impacted by lower service revenue YoY, alongside higher customer associated cost, network and HR costs

• EBITDA increased 20% YoY

• Driven by the growth in revenue, and lower customer acquisition costs, partially offset by higher network costs

In LC billions, if not stated otherwise

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Algeria

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Algeria: Competitive situation and market trends

Macro Environment:

• Government, trade and agricultural sectors account for over

60% of GDP

• 28% of the population is under 15 years old

Mobile:

• 85% penetration

• 3 market players

• 3G launched

GDP trend2 (%)

1 Source: Market share as provided by the regulator as of November 30, 20132 Source: World Bank as of November 20143 OCF = EBITDA minus CAPEX

2.42.6

3.3

2.7

3.3

2010 2011 2012 2013 2014E

DZD billions LTM 3Q’14

Mobile Customers (millions) 18.2

Revenues 138.3

EBITDA 76.9

EBITDA Margin 55.6%

CAPEX 31.3

CAPEX / Revenue 22.7%

Operating Cash Flow3 45.5

Mobile Market Share1 (on revenue), %

23 22 22

21 23 25

56 55 53

2011 2012 2013

Djezzy

Ooredoo

Mobilis

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Algeria: Focus on commercial 3G launch

• Smartphone and dongle promotions with data bonus

• Routers promotion for B2B

• Postpaid pack promotion with voice & data bonus

• Handset migration promotion

• 3G services currently in 14 main provinces, including Algiers and main cities

• EoY14: 19 provinces coverage

• Facebook zero

• Djezzy store

• Djezzy App

• Be Djezzy

• Opera Mini

• Lifestyle (Facebook, Twitter, WhatsApp)

• M2M

Data & handsetspromotion

Successful3G launch

New special 3Gvalue added services

2Q14 3Q14

Data revenue

x4 times

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Pakistan

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Pakistan: Competitive situation and market trends

Macro Environment:

• 34% of the population under 15 years old

• Government working on achieving political stability and

economic reform

• Power shortfalls persist

Mobile:

• 53% penetration

• 5 market players

• 3G launched

GDP trend2 (%)

1. Source: Company’s estimations2. Source: World Bank as of November 20143. OCF = EBITDA minus CAPEX

3.6 3.7 3.8 3.7 3.7

2010 2011 2012 2013 2014E

PKR billions LTM 3Q’14

Mobile Customers (millions) 38.7

Revenues 102.2

EBITDA 38.2

EBITDA Margin 37.4%

CAPEX 65.6

CAPEX / Revenue 64.2%

Operating Cash Flow (27.3)

Mobile market share1 (on revenue), %

19 20 19

14 10 10

12 15 17

25 25 25

30 30 29

2011 2012 2013

Ufone

Zong

Telenor

Warid

Mobilink

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Pakistan: Improving network and increased usage

• Notifications with unsubscription information

• Daily usage report

• Self service menu for managing subscription

• Transparency complaints reduced by 80% YTD’14

• 2G coverage/capacity rollout on track

• 3G rollout progressing according to plan

• Launch of off-peak offers

• 4% QoQ traffic increase

• Network modernization is on track to be finalized by the end of 2014

• Channel engagement campaigns to incentivize retailers

• > 42,000 agents

• Presence on ATL to increase brand awareness

Transparency in valueadded services

Improved network andincreased usage

MFS promotion is in focus, +30% QoQ

3Q13 4Q13 1Q14 2Q14 3Q14

MOU development

Fastest growing 3G service

1 million 3G customers within 90 days of commercial launch

Fastest growing 3G service

1 million 3G customers within 90 days of commercial launch

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Bangladesh

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Bangladesh: Competitive situation and market trends

Macro Environment:

• The world’s highest population density

• 33% of the population under 15 years old

Mobile:

• 71% penetration

• 3 main players in the market

• 3G launched

GDP trend2 (%)

1 Source: Company’s estimates2 Source: World Bank as of November 2014

6.16.5

6.1 6.05.4

2010 2011 2012 2013 2014E

BDT billions LTM 3Q’14

Mobile Customers (millions) 30.2

Revenues 42.1

EBITDA 15.9

EBITDA Margin 37.8%

CAPEX 19.5

CAPEX / Revenue 46.3

Operating Cash Flow (3.6)

Mobile market share1 (on revenue), %

4 3 4

19 21 22

43 42 42

7 7 7

28 27 25

2011 2012 2013

banglalink

Other

Airtel

GrameenPhone

Robi

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Bangladesh: Successful turnaround and 3G roll out in 3Q14

-13% -14% -15% -15%

10%8% 8%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Mobile service revenue growth YoY(%)

25.9

27.1

28.1

28.829.4

29.830.2

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Customer base (millions)

The fastest 3GSmartphone

promotion

MFS

growth opportunities

• LG G3 smartphone:► option to pay in

installments► 3GB for free

• High growth potential as smartphone penetration currently only 4%

• Ticketing

• Payments

• Remittance

• Mobile money transfer

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Appendix

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Debt by Currency

Gross & Net Debt (USD Millions)

Debt by EntityDebt by Entity (USD Millions)

GTH 4,721

Pakistan 358

Bangladesh 455

Algeria 46

Others 26

Total 5,606

21

Debt Profile

85%

15%

USD

Local

84%

6%

8%

1% 0%

GTH

Pakistan

Bangladesh

Algeria

Others

5,606

2,864 2,742

5,184

2,8382,346

Gross Debt Cash Net Debt

3Q14 4Q13

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Footnotes:1. Management presentation developed from

IFRS financials2. Incremental impairment of assets held for

sale relating to CAR and Burundi’s expectedsale

3. Equates to net income after minority interest

22

Income StatementUSD thousands 3Q14 3Q13 Change 9M14 9M13 Change

Revenue 830,015 860,822 -4% 2,523,997 2,613,823 -3%

Other Income 10,705 6,791 28,950 10,160

Total Expense (484,533) (459,940) (1,412,507) (1,364,931)

EBITDA1 356,187 407,674 -13% 1,140,440 1,259,052 -9%

Depreciation and Amortization (155,522) (159,115) (503,965) (502,878)

Impairment of Non-Current Assets (9,388) (7,841) (11,164) (8,976)

Gain (Loss) on Disposal of Non-Current Assets

(2,473) (458) (1,719) (1,456)

Impairment of Assets Held for Sale2 (36,255) 8,900 (58,684) (47,278)

Operating Income 152,549 249,160 -39% 564,908 698,464 -19%

Financial Expense (181,592) (126,856) (463,212) (374,523)

Financial Income 1,929 10,684 17,150 31,528

Foreign Exchange Gain (Loss) (32,881) 12,738 (122,506) (246,384)

Share of Loss from Associates 0 (35,405) - (100,456)

Profit Before Tax (59,995) 110,321 n.m. (3,660) 8,629 n.m.

Income Tax (94,317) (59,530) (280,907) (184,175)

Profit from Continuing Operations

(154,312) 50,791 n.m. (284,567) (175,546) n.m.

(12) 0 (12) -

Profit for the Period (154,324) 50,791 n.m. (284,579) (175,546) n.m.

Attributable to:

Equity Holders of the Parent3 (158,307) 46,104 n.m. (297,736) (190,275) n.m.

Earnings Per Share (USD/GDR) (0.15) 0.05 n.m. (0.27) (0.17) n.m.

Minority Interest 3,983 4,686 13,157 14,729

Net Income (154,324) 50,791 n.m. (284,579) (175,546) n.m.

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Footnotes:1. The equity caption in 2013 balance sheet has been

adjusted to reflect the impact of post balance sheetevents, a one-off charge of USD 2 billion, as per theShare Purchase Agreement signed by VimpelCom andGTH with FNI, which oblige GTH upon completion todiscontinue legal dispute with respect to the taxreceivable and account for the fines imposed by theAlgerian treasury

2. Net Debt is calculated as a sum of short term debt, longterm debt, less cash and cash equivalents

23

Balance Sheet

USD thousands30 Sept. 2014

31 December20131

Assets

Property and Equipment (net) 2,275,946 2,043,998

Intangible Assets 1,620,553 1,425,596

Other Non-Current Assets 135,473 88,190

Total Non-Current Assets 4,031,972 3,557,784

Cash and Cash Equivalents 2,864,189 2,838,448

Trade Receivables 228,572 225,641

Assets Held for Sale 117,863 170,380

Other Current Assets 462,916 646,539

Total Current Assets 3,673,540 3,881,008

Total Assets 7,705,512 7,438,792

Equity Attributable to Equity Holders of the Company (1,384,699) (1,114,848)

Minority Share 47,672 38,344

Total Equity (1,337,027) (1,076,504)

Liabilities

Long Term Debt 5,305,540 150,904

Other Non-Current Liabilities 539,690 392,461

Total Non-Current Liabilities 5,845,230 543,365

Short Term Debt 300,018 5,033,197

Trade Payables 862,963 814,668

Other Current Liabilities 2,034,328 2,124,066

Total Current Liabilities 3,197,309 7,971,931

Total Liabilities 9,042,539 8,515,296

Total Liabilities and Shareholder’s Equity 7,705,512 7,438,792

Net Debt2 2,741,369 2,345,653

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Cash Flow StatementUSD thousands

30 Sept.2014

30 Sept. 2013

Cash Flows from Operating Activities

Profit (Loss) for the Period (284,581) (175,546)

Depreciation, Amortization and Impairment of Non-Current Assets

515,129 511,854

Income Tax Expense 280,779 184,175

Net Financial Charges 568,353 589,379

Share of Loss (Profit) of Associates - 100,456

Impairment of Financial Assets 58,684 47,278

Other 24,652 (54,400)

Changes in Assets Carried as Working Capital (208,689) (80,787)

Changes in Other Liabilities Carried as Working Capital

94,290 65,518

Income Tax Paid (192,071) (184,021)

Interest Expense Paid (50,484) (83,908)

Net Cash Generated by Operating Activities 806,062 919,998

Cash Flows from Investing Activities

Cash Outflow for Investments in Property and Equipment, Intangible Assets, and Financial Assets and Consolidated Subsidiaries

(956,393) (338,675)

Proceeds from Disposal of Property and Equipment, Subsidiaries and Financial Assets

23,082 14,052

Dividends and Interest Received 8,444 7,973

Net Cash Used in Investing Activities (924,867) (316,650)

Cash Flows from Financing Activities

Proceeds from loans, banks' facilities and bonds 1,673,294 779,998

Payments for loans, banks' facilities and bonds (1,359,682) (965,982)

Net Payments from financial liabilities (1,782) (1,747)

Net Change in Cash Collateral 347 30,887

Net Cash generated by Financing Activities 312,177 113,156

Net Increase in Cash and Cash Equivalents 193,372 716,504

Cash included in Assets Held for Sale (4,257) (21,630)

Effect of Exchange Rate Changes on Cash and Cash Equivalents

(163,362) (88,737)

Cash and Cash Equivalents at the Beginning of the Period

2,838,432 2,025,844

Cash and Cash Equivalents at the End of the Period

2,864,185 2,631,981

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For your inquiries, please contact:

Ola TayelInvestor Relations Manager

E: [email protected]: +202 2461 5120F: +202 2461 5055/54W: www.gtelecom.com

25

Contacts


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