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Investing for the future

ECONET WIRELESS ZIMBABWE LIMITED


UNAUDITED ABRIDGED FINANCIAL RESULTS
for the half year ended 31 August 2013

Tuesday 29 October 2013

Strategic and operational overview Douglas Mboweni Chief Executive Officer Financial overview Roy Chimanikire Group Chief Finance Officer Outlook Douglas Mboweni Chief Executive Officer

Strategic and operational overview Douglas Mboweni Chief Executive Officer

Operational Highlights

Significant Events
Operating Licence renewed for another 20 years Launch of 4G (LTE) World class call centre technology implemented Launched exciting and innovative products and services that include:
EcoCash Save EcoFarmer

Key Focus Areas


Focus on EcoCash and data to drive revenue growth Focus on customer centricity Compelling customer value propositions Forward looking investment strategy Preservation of Shareholder Value

Our Strategy for Growth


Defining our future

Global Revenue Trends


From minutes to bytes Market research
100%

Percent of Global Revenue

Broadband SMS/MMS

50%

Voice

0% 2013 2017
Source: Infonetics Research, 2G,3G,4G Mobile Services and Subscribers: Voice, SMS, MMS and Boradband Biannual Market Size and forecasts, June 2013

The contribution of voice revenues to mobile operators is expected to decline. Data (broadband) is expected to grow exponentially Overlays are also expected to make a significant contribution

Executing our strategic goals


Sustained Revenue Growth

Voice

Data

Overlays

Driving superior customer experience Uniquely tailored solutions to suit all customer segments Continued network investment Corporate solutions Exciting promotions

Improving smartphone penetration to drive data usage through financing packages Reliable high speed internet with the widest coverage Robust infrastructure unparalleled by any other operator Launch of LTE ahead of some European markets

Using overlays to sustain growth Continued development of service offerings that create unique points of differentiation and customer loyalty Leveraging the mobile network to create relevant services in different economic sectors such as Financial Services and Agriculture (e.g EcoFarmer, EcoCash Save).

Leading the pack

Market Position

Value share analysis


Zimbabwe Mobile Value Share: Aug 2013 Econet Telecel NetOne

Subscriber growth
Millions

Penetration - Mobile
Tanzania 55% 74% Angola Zambia 86%

14% 12%
Namibia 118%

97% Zimbabwe Botswana 151% Swaziland 67%

43% Mozambique

74%
South Africa 135%

Lesotho 63%

Source: Management Estimates

Source: GSMA Inteilligence September 2013

Maintained value share and increased revenues Continued focus on high quality and providing a world class service

Strong growth in subscribers across all key product segments Subscriber CAGR:
Voice Data 19% 43%

Market penetration goals achieved for voice services Data and EcoCash penetration present opportunities for growth

EcoCash year on year subscriber growth rate - 76%

Executing our strategic goals


Success of our Data offering

Data
Econet launches the first 4G service in Zimbabwe
source: www.itnews.com

First to launch device finance schemes

Zimbabwe in the Top 5 African countries with the fastest download speeds
source: www.speedtest.net

Over 60% growth in usage per subscriber

Customers (millions)
Y-O-Y growth of 52%

Continued growth in the subscriber base and volume of data delivered Fibre connectivity remains a major
3.8

4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0


Aug - 12 Feb - 13 Aug - 13

strategic advantage Exciting data bundles launched Competitive pricing, superior speeds and unparalleled coverage

3.2 2.5

Executing our strategic goals


EcoCash - Exciting developments

Over $2 billion worth of transactions since launch

Over 100 million transactions processed since launch

Over 3 million people have transacted on EcoCash since launch

14 Banks now integrated to EcoCash

Customers (millions)
3.0 2.5 2.0 1.5 1.0 0.5 0.0

Transactions (millions)

Y-O-Y growth of 76%

3.0 2.1 1.7

Aug - 12

Feb - 13

Aug - 13

Continued high demand and increase in subscribers Over 7,000 agents nationwide System upgraded to cater for higher volumes and transaction capacity per second increased by 20 times

Exponential increase in number and value of transactions:


Over $1.2 billion worth of transactions in the last 6 months Over 50 million transactions in the last 6 months

Further growth expected as new features are introduced

Innovation

Changing the Financial Services Landscape

Mobile Phone penetration significantly exceeds the percentage of the population with bank accounts. 72% of SME business owners save mainly at home and through informal mechanisms
Source: World Bank funded survey, May 2013

EcoCash Save is a unique mobile phone enabled bank account with the following features: No application forms required Can be opened instantly from the mobile phone No minimum balance required No proof of income No bank charges Funds earn interest Save as little as a dollar a day

Innovation

Our future is secure


4G (LTE) Smart Bundles EcoFarmer Econet Solar

Leading the innovation path. Driving a superior customer experience LTE launched in Victoria Falls, Bulawayo and Harare Up to ten times faster than 3G.

Unique and exciting packages are available Value for money - With the bigger bundles customers enjoy more data.

Providing timely weather information to farmers Access to agricultural technical assistance via mobile phones Access to crop insurance Networking farming communities Providing market linkages and easy payment for produce through EcoCash

Deploying Green Kiosks countrywide to expand the distribution footprint for Econets products and services Creating employment and business opportunities for start-up SMEs Driving towards a greener future Harnessing renewable energy Creating a safe environment for the future Empowering marginalised communities for future prosperity

Customer focus

Dedication to service excellence


Call Center Customer Service Charter

Doubled capacity to handle SMS, email and website enquiries Doubled number of call centre agents Launched Avaya Aura contact centre management system - a first of this technology in Africa

Customer focus reinforced through business wide training sessions Improved experience through self-care options such as SMS and interactive voice response system Customer care processes revamped in line with global standards through:
Process mapping Improved client service governance models

Network Infrastructure

The widest voice and data network, and the best quality More people, More places, Connected!

4G LTE COVERAGE 4G LTE COVERAGE

Launch of LTE Continued improvement in coverage Geographical coverage now exceeds 80% Sufficient capacity to handle the 22% increase in subscribers and the over 60% increase in data usage per subscriber

Over 4 500km of fibre laid in Zimbabwe Robust infrastructure and effective resource planning to cater for future growth Now connected to 4 undersea cables: SEACOM, SAT 3, EASSY and WACS

Strong customer value propositions


Delivering value to customers

Extensive product catalogue


First to market with new products Exciting products and services The most extensive product catalogue in the market

Dynamic discounting
Providing value to customers based on calling patterns Effective use of network resources by stimulating traffic to use idle capacity

Value for money


Exciting offers to suit different needs and circumstances

Roy Chimanikire Group Chief Finance Officer

Group Highlights

Industry-Leading Financial Performance

22%

8%

EcoCash Revenue (US$ m)

Data Revenue (US$ m)


20.7
61%

33.4

63.1

36%

85.5

Sustained Revenue Growth

New revenue streams driving revenue growth

Revenue (US$m)

Revenue Mix
7%

Note: August 2012 figures in brackets

US$1.2 billion EBITDA generated since dollarisation Access to capital through debt structures played a key role in delivering growth Subscriber uptake of 577% since dollarisation and market share acquisition were the main drivers

Voice remains a significant contributor to revenue Data contribution is increasing and is expected to exceed 10% of overall revenue US$13 million contribution to revenue from EcoCash

Revenue Growth

Sustained revenue growth and stable ARPU

Revenue Growth (US$m)

Data Revenue Growth (US$m)

2.6%

2.1%

3.2%

2.9%

377

2.6% growth in voice related revenue streams 3.2% of the growth is attributable to new lines of business Other revenue largely comprises device sales and bottling company revenues ARPU sustained at about US$ 8

Growth in data resulted from: Improved access to data capable devices Customer segmentation and continued improvement in data speeds, coverage and capacity

Costs in Focus

Creating a stable growth platform

Operating Cost (US$m)

Operating Costs Analysis (US$m)

187

205

211

Aug-12

HY Feb-13

Aug-13

Aug-12

Aug-13

Key cost drivers: Network costs IT related costs Marketing and sales costs Customer service costs Licence and USF costs Staff costs EcoCash agent commissions

Investment in new revenue streams resulted in additional recruitment New products required more marketing support Efficiencies achieved in general administration costs

Maintaining our EBITDA Margins


Driving continued earnings growth
EBITDA Margins EBITDA Analysis
CAGR 13%

45%

43%

44% 114.9 131.2

152.8

165.3

Aug-12

HY Feb-13

Aug-13

Aug-10

Aug-11

Aug-12

Aug-13

Strong EBITDA performance sustained relative to peer group

Consistent EBITDA growth

Earnings

Stable earnings
PAT (US$m) Basic EPS (US cents)

78

62

71

4.6

4.4

4.5

Aug-12

HY Feb-13

Aug-13

Aug-12

HY Feb-13

Aug-13

PAT increased compared to immediately preceding half year period

EPS increase driven by earnings growth

Capital Investment

Investing in the future of the business

CAPEX (US$m)

CAPEX/Revenue (%)

33%

1.2%

63

84

85

19% Aug-12

24%

23%

Aug-12

HY Feb-13

Aug-13

HY Feb-13

Aug-13

Improved 3G footprint and geographical coverage Extensive coverage driving the adoption of Ecocash Investment in infrastructure pillars that support product innovation and an improved customer experience Fibre backhaul improved

Capex/revenue ratio affected by Capex planning cycles at each reporting date

Financing Our Growth

Debt Evolution (US$m)

Debt To Equity (%)

244

232

Aug-12

Aug-13

Depreciation & Amortisation (%)

Net finance costs (US$m)

10% Aug-12

11%

12%
9.7

16.3

17.3

HY Feb-13

Aug-13

Aug-12

HY Feb-13

Aug-13

Comparison with Regional Operators


Company Bharti Airtel Econet Wireless Zimbabwe Etisalat Maroc Telecom Millicom Zain Mobinil MTN Group Orascom Holding Safaricom Sonatel Telecom Egypt Telkom SA Vodacom Group Average Median Total Debt/ Equity 125% 54% 12% 39% 144% 46% 353% 35% 301% 25% 8% 2% 37% 68% 89% 43% EV / EBITDA 7.4x 3.8x 8.0x 6.5x 7.1x 6.9x 6.8x 6.2x 3.6x 7.6x 5.3x 5.3x 2.3x 6.1x 5.9x 6.3x EV / Revenue 2.3x 1.7x 2.6x 3.5x 2.5x 3.0x 2.0x 2.6x 1.8x 2.9x 2.8x 1.7x 0.5x 2.2x 2.3x 2.4x P/E 59.3x 6.7x 13.5x 11.9x 35.8x 12.4x n/a 16.3x n/a 20.5x 13.6x 8.4x 31.0x 13.2x 20.2x 13.5x EBITDA Margin 31% 44% 32% 54% 35% 43% 30% 42% 50% 39% 54% 32% 22% 36% 39% 38%

Source: Bloomberg - Based on performance for last twelve months

EBITDA margin remains higher than regional operator average Leverage ratio is below regional operator average P/E ratio is the lower than other regional operators

In Conclusion...

Revenue Costs Margins Licence Capex Debt

Revenue from new overlay services becoming more significant. Investing to create new revenue streams.

Stable margins in the mainstream telecoms business. Investment in new lines of business reduced overall margin.

Operating licence fee paid.

Emphasis on service quality while keeping up to date with global trends. Investing in new areas of growth. Leveraging debt to create sustainable value whilst managing cash commitments.

Outlook

Operating Licence Renewal


20 More Years!

Original Licence:
The licence was issued for 15 years in July 1998 and was scheduled to expire on the 9th July 2013 The licence stipulated a licence renewal fee of US$100 million

New Licence
The licence period was extended by 20 years The renewal fee was set at US$137.5 million All operators will be required to pay the same licence fee on renewal of their licences Econet has fully paid for its licence

Stakeholder Value Proposition


Creating Sustainable Value

Employment creation - estimated direct and indirect employment by Econet is more than 20,000 jobs Cutting edge innovation - Products such as Buddie Zone, EcoCash, EcoFarmer, Econet Solar etc.
Capital Investment Over US$ 1 billion invested in the economy

Economic contribution -US$815 million paid in various taxes, duties and levies

Financial inclusion Providing access to financial services for the majority of the population that was previously unbanked.

Infrastructure development - improving communications technology, internet connectivity.

Over US$190 million returned to shareholders since dollarisation through cash dividends and share buybacks.

Conclusion

We will continue to invest in innovative technologies that enrich lives and create a platform for sustainable revenue growth and shareholder value enhancement.

Appendices
Abridged financial statements

Statement of Comprehensive Income US$000s


Aug-13 Revenue EBITDA Depreciation, amortisation & impairment Operating profit Net finance costs Share of profit/(loss) in associate Profit before tax Income tax expense Profit after tax Non-controlling interests Attributable profit EBITDA Margin PAT Margin 376,558 165,254 (45,746) 119,508 (17,269) 3,835 106,074 (35,506) 70,568 (61) 70,507 44% 19% Aug-12 339,469 152,796 (32,541) 120,256 (9,685) 1,708 112,279 (34,261) 78,017 (76) 77,941 45% 23% Variance (%) 11% 8% -41% -1% -78% 125% -6% -4% -10% 20% -10% -1% -4%

Statement Of Financial Position US$000s


Aug-13
ASSETS Property, plant & equipment Other non-current assets Current assets TOTAL ASSETS EQUITY & LIABILITIES Share capital & Share Premium Other reserves Retained earnings Minority Interest Total Equity Deferred taxation Long term interest-bearing liabilities Current liabilities Total Liabilities TOTAL EQUITY & LIABILITIES

Feb-13
706,389 33,563 275,158 1,015,110

Variance (%)
22% 43% -19% 12%

862,960 48,098 224,086 1,135,144

36,984 2,441 524,544 3,870 567,839 118,824 158,040 290,441 567,305 1,135,144

35,697 569 453,139 3,478 492,883 85,493 202,800 233,934 522,227 1,015,110

4% 329% 16% 11% 15% 39% -22% 24% 9% 12%

Statement Of Cash Flows US$000s

Aug-13
Cash generated from operations Tax paid Net cash from operating activities Acquisition of property, plant and equipment Other investing activities Cash used in investing activities Cash generated from financing activities (Decrease)/Increase in cash & cash equivalents Cash and cash equivalents at the beginning of year Cash and cash equivalents at acquisition of subsidiary Cash & cash equivalents at the end of the year

Aug-12 152,243 (28,584) 123,659 (63,123) (15,628) (78,751) (37,576) 7,332 100,793

Variance (%) 59% 20% 77% -225% 91% -163% -35% -422% -22%

242,007 (22,987) 219,020 (205,286) (1,467) (206,753) (50,557) (38,290) 78,230

39,940

108,125

-63%

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