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TNM Analyst Briefing - 7 April 2009


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Telekom Networks Malawi, Abridged results for the year ended 31 December 2008

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TNM Analyst Briefing - 7 April 2009

  1. 1. TNM Analyst Briefing Year end results for the period ending 31 December 2008
  2. 2. <ul><li>TNM’s brand “always with you” brand is clearly identified as Malawian and portrays best customer value and service availability. </li></ul><ul><li>TNM’s principal colour green, is fresh and synonymous with Malawi’s prosperity derived from agriculture and the environment. </li></ul><ul><li>TNM offers services and products designed to meet the needs and desires of its subscriber base in Malawi which is primarily divided into pre-paid and post-paid subscribers </li></ul>Our brand
  3. 3. TNM’s growth strategy <ul><li>Constantly improve and expand infrastructure and capacity; </li></ul><ul><li>Grow the depth and availability of telecommunications services; </li></ul><ul><li>Promote telecommunications accessibility to Malawians; and </li></ul><ul><li>Protect and promote customer loyalty </li></ul>
  4. 4. Key achievements <ul><li>Successful IPO on the Malawi Stock Exchange </li></ul><ul><li>Strong growth in subscribers </li></ul><ul><li>Refurbishment and upgrade of key infrastructure </li></ul><ul><li>Renewal of TNM Super-league sponsorship </li></ul><ul><li>105 new base stations constructed </li></ul><ul><li>Coverage extended to an additional 67 coverage areas </li></ul><ul><li>New product, platforms and services added </li></ul><ul><li>More focused corporate social responsibility </li></ul>
  5. 5. 2008 in context
  6. 6. Investment thesis <ul><li>&quot;Through continued improvement of service, growth in subscribers and expansion of its existing mobile network capacity from current core capacity of 1 million subscribers to 1.5 million subscribers by 31 December 2009, TNM offers investors potential for both capital and dividend growth.&quot; </li></ul>
  7. 7. Subscribers <ul><li>Subscriber numbers were marginally above prospectus forecasts to 627,000* subscribers at 31 December 2008, 88% above the previous year </li></ul><ul><li>Lower cost airtime, increased access and affordability </li></ul><ul><li>Market share remained static at 33% see overleaf </li></ul><ul><li>* Subscriber = customer that has generated a mobile revenue event in the previous 6 months </li></ul>
  8. 8. Market share TNM subscribers defined as customer with revenue generating event in previous 6 months
  9. 9. Actual vs forecast
  10. 10. Revenue, EBITDA & ARPU <ul><li>Revenue increased by 16% </li></ul><ul><li>Significant increase in prepaid customers + 88% offset by declines in average revenue per additional user and ARPU declined from US$10.3 in 2007 to US$7.3 in 2008 accordingly </li></ul><ul><li>EBITDA margin declined from 52% to 42% in 2007 and 2008 respectively </li></ul><ul><li>42% EBITDA margin is a respectable industry norm </li></ul>
  11. 11. Our people <ul><li>Staff complement grew by 33% from 260 in 2007 to 347 in 2008 </li></ul><ul><li>Staff development and training initiatives continue </li></ul><ul><li>Foreign consultants used as an opportunity to transfer skills </li></ul>
  12. 12. Products and services <ul><li>New SMS platform integrated </li></ul><ul><li>Missed call notification successfully launched </li></ul><ul><li>MMS and Voice Mail to be launched in early 2009 </li></ul><ul><li>Pilot for data MMS and voicemail commenced </li></ul><ul><li>TNM upgraded and also introduced a range of VAS platforms, namely: </li></ul><ul><li>Missed Call Notification Service Multi-Media Service </li></ul><ul><li>Personalized Ring Back Tones Short Message Service Centre </li></ul><ul><li>Over-The-Air Voice Mail Service </li></ul><ul><li>Wireless Access Protocol </li></ul>
  13. 13. Network <ul><li>Successfully completed major upgrades during 2008 </li></ul><ul><li>Constructed 105 new base stations in 2008 </li></ul><ul><li>New international satellite gateway installed </li></ul><ul><li>Successful migration to New Generation Equipment </li></ul><ul><li>A total of 105 new base stations were constructed during 2008, the majority of which covered areas in which TNM services were not previously offered. The remainder were used to add capacity in the high-density urban areas. </li></ul>
  14. 14. Corporate sales <ul><li>Increase in corporate account subscribers </li></ul><ul><li>Corporate account service levels remain high </li></ul><ul><li>Strong loyalty from the corporate sector </li></ul>
  15. 15. Distribution <ul><li>Distributors doubled from 11 to 22 </li></ul><ul><li>Outlets doubled from 5,000 to 10,000 </li></ul><ul><li>Flexible distribution and credit facilities to outlets </li></ul>
  16. 16. R & D <ul><li>Enhanced independent research into customer needs and trends </li></ul><ul><li>Expansion into Greenfield areas continues </li></ul>
  17. 17. CSR & environment <ul><li>Support for YONECO implemented in 2008 </li></ul><ul><li>TNM renewed support for the TNM Superleague </li></ul><ul><li>CSR policies are evolving as we grow </li></ul><ul><li>Environmental protection practices are being implemented </li></ul>
  18. 18. Competition <ul><li>Aggressive competition continues </li></ul><ul><li>Price wars were avoided, where possible, through product position </li></ul><ul><li>TNM’s strong Malawian brand continues to be a strategic asset </li></ul>
  19. 19. Regulation <ul><li>3 rd and 4 th and 5 th telecommunications licences due to come online in 2009 </li></ul><ul><li>New numbering format launched </li></ul><ul><li>Good relationship with MACRA </li></ul>
  20. 20. Prospects for 2009 <ul><li>Subscribers planned to double </li></ul><ul><li>Revenue base expansion from new subscribers is a key objective </li></ul><ul><li>BUT: Board is cautious about prospects:- </li></ul><ul><ul><li>Shortage of foreign exchange </li></ul></ul><ul><ul><li>Slow down in revenues </li></ul></ul><ul><ul><li>Price competition </li></ul></ul><ul><ul><li>Possible devaluation </li></ul></ul><ul><ul><li>3 rd and 4 th and 5 th operators coming </li></ul></ul>
  21. 21. Revised forecast <ul><li>Prospectus forecasts have been superseded </li></ul><ul><li>Revised earnings guidance now issued based on a range of EPS:- </li></ul><ul><li>Low range MK 0.16 per share </li></ul><ul><li>High range MK0.18 per share </li></ul><ul><li>For the period ended 31 December 2009 </li></ul>
  22. 22. Q & A <ul><li>Stakeholders are invited to register on TNM’s investor relations website and opt in to receive e-mail alerts on all corporate communications, regulatory announcements, annual reports, presentations, online charting, share prices and other investment related information </li></ul><ul><li> </li></ul><ul><li>TNM encourages feedback from its community at all times. </li></ul>
  23. 23. Thank you <ul><li>Always with you </li></ul>