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  1. 1. Inspiring InnovationsECONET WIRELESS ZIMBABWE LIMITEDAUDITED ABRIDGED FINANCIAL RESULTSfor the year ended 28 February 2013Thursday, 30 May 2013
  2. 2. Strategic and operational overviewDouglas MboweniChief Executive OfficerFinancial overviewRoy ChimanikireDeputy Finance DirectorOutlookDouglas MboweniChief Executive OfficerStrategic and operational overview
  3. 3. Strategic and operational overviewDouglas MboweniChief Executive Officer
  4. 4. Our VisionTo providetelecommunicationsto all the people ofZimbabwePioneeringPersonal Professional
  5. 5. Our Strategy• Effective and efficientbusiness processes• Robust risk management andbusiness continuity planning• Effective reporting and timelydecision makingCustomerFocusInnovation& HumanCapitalInternalBusinessPerspectiveDeliveringshareholdervalue• Leveraging our strong brand equity• High quality network performance• Broadening overlay services toprovide relevant solutions• Develop innovative productsand services• Performance management• Continuous training• Fulfilling “customer experience”expectations• Customer-centric culture• Enhancing shareholderreturns• Executing a well-balancedcapitalisation and debtmanagement strategy• Achieving cost efficiency
  6. 6. New licence• The licence period wasextended by 20 years• The renewal fee was set atUS$137.5 million• All operators will be requiredto pay the same licence fee onrenewal of their licencesOriginal licence:• The licence was issued for 15 yearsin July 1998 and was scheduled toexpire on the 9th July 2013• The licence stipulated a licencerenewal fee of US$100 millionOperating Licence Renewal20 More Years!
  7. 7. Value share analysis Subscriber growthSource: POTRAZSource: Management EstimatesAngolaZambiaTanzania65%80%60%Mozambique48%Zimbabwe97%Botswana152%Namibia109%South Africa119%Lesotho78%Swaziland67%Penetration - MobileZimbabwe Mobile Traffic Share: Aug 201216%9%Telecel NetOneEconetMarket PositionStrong Market Leadership75%0123456789Millions2010 2011 2012 2013Voice Data EcoCash
  8. 8. Executing our strategic goalsRevenue GrowthVoice Data Overlays• Focus on value share across allservice elements and retention ofkey customers• Focus on providing a competitive,high quality service• Sustainable pricing• Facilitating access to devices todrive data traffic growth usingour unique partnerships• Leveraging our investment infibre infrastructure to deliverexceptional quality and dataspeeds• Driving customer demandutilising our extensive networkcoverage• Developing service offerings thatcreate unique points ofdifferentiation and customerloyalty• Using overlays to sustain growth• Leveraging the mobile network tocreate relevant services in Health,Education, Energy, Agricultureand Financial Services
  9. 9. Executing our strategic goalsEnhancing Customer ExperienceDISTRIBUTIONBrandedShopsDealer & AgentFootprint Call-CentreCustomerSupport• Over 115 branded shops, includingcontainers to increase customercontact points• Over 3,000 agents countrywide• Continued rollout of Green Kiosks• Introduction of premier support teamfor high value customers• 24/7 Call-Centre launched inNovember• Increased number of servicerepresentatives• Investment in state-of-the-art systemsto improve the customerexperience across the board
  10. 10. Executing our strategic goalsEcoCash - Strategic Relevance• Creation of new revenue streams• Creating a cost effective andconvenient airtime distributionchannel• Creating a unique service offeringthat differentiates the companyfrom competitorsEcoCash Strategic RelevanceTo establish viable new revenue streams beyond voice, SMS and data,and drive profitable growthFrom your bank account to yourEcoCash wallet to DStv instantlyGet an instant automatic DStv reconnection
  11. 11. Executing our strategic goalsEcoCash - Exciting developmentsOver $1,2 billionworth of transactionssince launchOver 55 milliontransactionsprocessed sincelaunchThe fastest growingMMT service in theworld, after MPESA10 Banks nowintegrated toEcoCashHighlights• Continued high demand and increase insubscribers• Over 3,000 agents nationwide, 242%increase from FY2012• Exciting new features rolled out/planned• Bulk payments• “Debit-card” functionality• Bill payment facilities1.3Feb - 12Registered Customers (millions)62%2.1Feb - 13
  12. 12. Executing our strategic goalsSuccess of our Data offering97% of mobile datamarket sharesource: POTRAZ (August 2012)source: GSMAMobile internetusage is over 58%of total internetusage in Zimbabwesource: www.speedtest.netZimbabwe in Top 5African countrieswith the fastestdownload speedsMost extensive datacoverage of anymobile operator• Continued growth in the subscriberbase and volume of data delivered• Developed an extensive fibre gridwhich is an effective platform tolaunch new technologies• Fibre connectivity a major strategicadvantage2.152%Feb - 12Registered Customers (millions)3.2Feb - 13
  13. 13. • Deploying Green Kioskscountrywide to expand thedistribution footprint for Econet’sproducts and services• Creating employment andbusiness opportunities forstart-up SMEsGreen Kiosks• Deploying solar-poweredsolutions in rural areas toimprove network availabilityand quality of service• Deploying hybrid batterysolutionsSolar Base Station• New range of solar productslaunched• Continuous innovation of solarproducts to provide relevantsolutions• Keeping customers connected andresponding to community needs• Responding to lack of power inoff-grid locations• Customer retention, loyaltyenhancement and increased brandvisibility• Reduce carbon footprint• Power availability• Addressing power shortagesSolar ProductsExecuting our strategic goalsGoing green - Providing innovative solutionsTrials suggest that when off grid subscribers acquire mobile charging solutions, usage and the average revenue peruser (ARPU) increases by 10% to 14%. - GSM Association
  14. 14. Network InfrastructureThe widest voice and data network, and the best qualityMore people, More places, Connected!• Extensive coverage• 100% of the network is data capable through GPRS/EDGE/3G technologies• Focus on improving quality and increasing capacity to carry morevoice and data• Implementation of more effective tools to monitor network quality• Using rural coverage to drive EcoCash adoption
  15. 15. • Third fibre ring added in Harare• Over 2000km of fibre laid during theyear• Fibre rings completed in Victoria Falls,Rusape, Marondera and Mutareduring the year• Completion of long distance routes toall major towns in ZimbabweExecuting our strategic goalsConnecting Zimbabwe to the world
  16. 16. Strong Brand EquityInspiring brand promotions
  17. 17. Strong Brand EquityLatest Awards - First Class performanceEconet scoops Forbes - “Top 10 of Africa’s Most Innovative Companies Award”and “Customer Service Excellence Award.”Winner of several prestigious awards, which include:1st Position Overall Superbrand of the Year 2012, The Diamond Arrow Award for the bestbrand in telecommunications, Capacity Awards 2012, Zimra Tax Award, Frost & Sullivan,Customer Services Award, Corporate Social Responsibility and the ICT Achievers Award.Best Africanwholesale carrierCapacityAwards2012WINNER
  18. 18. Corporate Social ResponsibiltyMaking a difference in the lives of the less privileged• 70,000 vulnerablechildren havebenefited sinceinception from fullyfunded scholarships• Assisted in drillingboreholes,conducting mobileclinics andproviding financialsupport to UZCollege of HealthScience students• Currently 711academically gifted“Joshualites” arebenefitting fromthe programme• 16 “Joshualites” inIvy LeagueUniversities
  19. 19. Roy ChimanikireDeputy Finance Director
  20. 20. Group HighlightsIndustry-Leading Financial Performance
  21. 21. Sustained Revenue GrowthVoice and Data continue to drive growth• Delivery of strong revenue growthUnderpinned by subscriber uptake,usage growth and data growth.• Contribution mix of revenue streamsremains largely unchangedRevenue (US$m) Revenue Mix
  22. 22. Revenue GrowthSustained revenue growthRevenue Growth (US$m)• Voice still the main driver of growth• Voice growth driven by increase inusage and subscribersData Revenue Growth (US$m)• 3,8% of the revenue growth isattributable to non-voice revenuestreams• Data helped to maintain a robustARPU• Strong growth in data revenue
  23. 23. Strategic issues:• Network cost optimisation• Using EcoCash to reduce distributioncosts• Delivering on customer service andsupport elements in a cost effectivemanner• Delivering a high capacity transmissioninfrastructure using fibre• Human resource cost effectivenessthrough performance managementEffectively managing our costsCreating a stable growth platformOperating Costs (US$m)Key cost drivers:• Network costs• IT related costs• Marketing and sales costs• Customer service costs• License and USF costs• Staff costsOperating Costs Split (US$m)
  24. 24. EBITDA (US$m) Excl. Investment IncomeMaintaining our EBITDA MarginsDriving continued earnings growthEBITDA (%) Excl. Investment IncomeEBITDA (US$m) Excl. Investment Income • EBITDA growth of 10% afterexcluding prior year once off profiton disposal of investments.• Strong EBITDA relative to otherAfrican operatorsFeb-12 Feb-1327830510%
  25. 25. Depreciation and InterestInvesting in the businessInterest (US$m)• Increase in interest due to finalisationof new multi-lender facilities• Short-term vendor finance replacedwith longer-term multi-creditorfacilitiesDepreciation & Amortisation (%)• Increase in depreciation due to highcapitalisation in the last 4 years
  26. 26. Profit and TaxationProfit after tax (PAT) (US$m)• Decline in PAT%, largely due to theimpact of depreciation and interestcharges as a result of significantinvestment in the networkTaxation (US$m)• Strong compliance record• Increase in withholding tax due toservice payments to vendorsFeb-12 Feb-1373.4 65.0
  27. 27. Feb-11 Feb-12 Feb-13270216148Capital InvestmentInvesting in the future of the businessCAPEX (US$m) CAPEX/Revenue (%)• Improved the 3G footprint andgeographical coverage• Extensive coverage driving theadoption of Ecocash• Fibre transmission deployed to morebase stations to improve data andvoice quality and capacity• Total Capex over the last three yearsis US$634 million• Investment in infrastructure pillarsthat support product innovationand an improved customerexperience• Declining capex to revenue ratio aspenetration increasesFeb-11 Feb-12 Feb-1355%35%21%20%14%20%31%
  28. 28. Financing Our GrowthManaging Our Debt CommitmentsDebt Evolution (US$m) Debt To Equity (%)Net Debt (US$m) Net Debt to EBITDA
  29. 29. Regional comparisonsPeer group analysisEBITDA Margin (%) CAPEX to Revenue (%)• The CAPEX percentage isindicative of the stage ofgrowth of the business• Strong EBITDA Margincompared to other regionaloperators
  30. 30. Statement Of Financial Performance US$000’sFeb-13 Feb-12Revenue 694,844 611,116 14%EBITDA 305,344 290,894 5%Depreciation, amortisation & impairment (71,563) (46,497) -54%Operating profit 233,781 244,397 -4%Net finance costs (25,947) (8,097) -220%(2,931) 2,830 -204%Profit before tax 204,903 239,130 -14%Income tax expense (64,965) (73,389) 11%Profit after tax 139,938 165,741 -16%Non-controlling interests (345) (7) -4,829%Attributable profit 139,593 165,734 -16%EBITDA Margin 44% 48% -4%PAT Margin 20% 27% -7%Headline EPSVariance (%)Share of (loss)/profit in associate
  31. 31. Statement Of Financial Position US$000’sFeb-13 Feb-12 Variance (%)ASSETSProperty, plant & equipment 690,806 605,847 14%Other non-current assets 49,146 38,916 26%Current assets 275,158 167,664 64%TOTAL ASSETS 1,015,110 812,427 25%EQUITY & LIABILITIESShare capital 35,697 33,125 8%Other reserves 569 1,343 -58%Retained earnings 453,139 345,478 31%Minority Interest 3,478 2,847 22 %Total Equity 492,883 382,793 29%202,800 103,338 96%Other non-current liabilities 85,493 70,667 21%Other Current Liabilities 233,934 255,629 -8%Total Liabilities 522,227 429,634 22%TOTAL EQUITY & LIABILITIES 1,015,110 812,427 25%Long term interest bearing liabilities
  32. 32. Statement Of Cash Flows US$000’sCash generated from operations 216,177 315,327 -31%Tax paid (53,097) (36,465) -46%Net cash from operating activities 163,080 278,862 -42%Acquisition of property, plant and equipment (147,609) (216,014) 32%Cash and cash equivalents at acquisition of subsidiary 16,597 - -Other investing activities (19,354) 1,600 -1,310%Cash used in investing activities (150,366) (214,414) 30%Cash generated from financing activities (35,277) 1,654(Decrease)/Increase in cash & cash equivalents (22,563) 66,102Cash and cash equivalents at the beginning of year 100,793 34,691 191%Cash & cash equivalents at the end of the year 78,230 100,793 -22%Feb-13 Feb-12 Variance (%)-2,233%-134%
  33. 33. Outlook
  34. 34. Our Strategy for GrowthDefining our future
  35. 35. Shareholder ReturnsGrowing shareholder valueShare Price Performance (US$)Share Buybacks (US$m)• 71% CAGR in share price sincedollarisation• 84% YOY growth in share price
  36. 36. Creating Sustainable ValueEconomic contribution -US$598 million paid in varioustaxes, duties and leviesReturn to shareholders -US$74.0 million distributed toshareholders since dollarisation.Cumulative share buybacks ofUS$116.0 millionStakeholder Value PropositionCapitalInvestmentOver US$ 1 billioninvested inthe economyCapitalInvestmentOver US$ 1 billioninvested inthe economy
  37. 37. Conclusion
  38. 38. Disclaimer