Telenor Pakistan Tcm28 35232

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Telenor Pakistan Tcm28 35232

  1. 1. Investor’s Presentation Telenor Pakistan 2008 Peter Kuncewicz – CFO of Telenor Pakistan
  2. 2. Pakistan’s Economic Landscape
  3. 3. Pakistan - A brief look at economics and politics • Population of 165 million • Per capita income increasing • High inflation rate • Prevailing political tension • Security situation fairly stable
  4. 4. Key Facts • World’s 6th most populous nation • Population of 165 million • Approx. 100 mn < 30 yrs • Median age approx. 20.1 yrs • On current trajectory, Pakistan likely to be 4th largest country by 2050
  5. 5. Economic overview • GDP : US$ 145 billion • GDP growth : 7.0% (FY07) FY03-07 avg. : 7.0% • Per-capita GNP : US$ 925 PPP basis : US$ 2,591 2007-est • Growth in p.capita: 13% FY07/06 FY03-07 avg. : 12%+
  6. 6. Key Facts • 6th largest EM (ex-China & India) • 4th largest EM in Asia (ex-China & India) Pakistan: EM – All* EM – Asia* Rank 6 4 Share 4.3% 11.9% *ex-China & India
  7. 7. Key Facts • One of only 10 economies of world with: • GDP > US$100bn AND • POP > 100 million
  8. 8. -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% FY51 FY53 FY55 FY57 FY59 FY61 FY63 FY65 FY67 FY69 FY71 FY73 Pakistan’s LT growth FY75 FY77 FY79 FY81 FY83 FY85 FY87 FY89 FY91 FY93 FY95 FY97 FY99 FY01 FY03 FY05 FY07
  9. 9. Pakistan’s LT growth 12.00% 8.00% 10 yr MA 10.00% 7.00% 8.00% 6.00% 6.00% 5.00% 4.00% 4.00% 2.00% 3.00% 0.00% 2.00% FY51 FY53 FY55 FY57 FY59 FY61 FY63 FY65 FY67 FY69 FY71 FY73 FY75 FY77 FY79 FY81 FY83 FY85 FY87 FY89 FY91 FY93 FY95 FY97 FY99 FY01 FY03 FY05 FY07 -2.00% 1.00% -4.00% 0.00%
  10. 10. Key Economic Indicators 2006 2007 2008 2009 Real GDP growth 6.9 6.4 3.6 4.4 Nominal GDP (US$ bn) 126.8 145.4 156.5 160.2 Consumer Price Inflation* 9.4 11.7 21.5* 7.1 Exchange Rate Rs : US$* 60.9 61.2 71.9* 67.8 GDP per head (US$) 809 886 936 941 Source: Country Report Pakistan by Economist Intellignce Unit, London * As of July 2008
  11. 11. Currently… • Pakistan’s economy in rough patch • Facing severe headwinds/challenges – Global commodity prices – Weakening fiscal situation – Policy path uncertain • Resilience from reform paying off • Politics a potential wild card
  12. 12. In Sum … To conclude: • Pakistan is experiencing a strong pay-off from reforms • Robust growth & investment are leading to rising incomes − & spending • Challenges remain … • … but underlying longer term business opportunities remain compelling
  13. 13. Five criteria identified before entering Pakistan.. • High growth potential • Forward looking telecom policy • Investment friendly climate • Good regulatory execution • Acceptable political and economic situation
  14. 14. Initial assumptions vs actual development.. Initial business Actual 2007 case 2007 SIM penetration 11% 48% Telenor subs (mill) 2.9 14.6 ARPU (PKR) 663 269 Capex (PKR bn) 13 41
  15. 15. 3 years of building network and distribution Network Distribution • 5,500 sites and 55% coverage • 125,000 scratch card agents • Largest Edge network in Pakistan • 110,000 easy load top-up points • 60,000 SIM distribution agents 6,300 160 No of sites, EoY No of agents, EoY (thousands) 132 4,700 2,000 50 200 5 2005 2006 2007 2008E 2005 2006 2007 2008E
  16. 16. 3 years of tremendous growth Market share Telenor subscribers (mill) > 20 60% 18.1 50% 14.6 40% Mobilink 10.7 30% Telenor 6.7 20% Ufone Warid 10% 3.2 Zong 1.9 0.8 Instaphone 0% 1H05 2H05 1H06 2H06 1H07 2H07 1H08 2H08E H105 H205 H106 H206 H107 H207 H108 H208E
  17. 17. Market statistics Q108 Q108 Mobilink Ufone Zong Instaphone Telenor Warid Subcribers base (000) 31,774 17,198 2,142 271 16,702 14,395 Revenue (in million) 21,215 7,987 618 65 12,099 6,542 ARPU (based on PTA closing subs) 226 160 100 72 242 158 Market ARPU Trend 300 250 200 150 100 50 - Q207 Q307 Q407 Q108 Mobilink Ufone Zong Instaphone Telenor Warid • Revenue figures are from PTA quarterly report • ARPU figures are calculated using revenue and subscriber numbers as per PTA report
  18. 18. Stable ARPU and improving margins ARPU (PKR) Revenues (PKR bn) and EBITDA % 287 19% 279 27 16% 25 0.27 268 262 253 248 4% 0.07 22 20 -17% 191 -0.13 17 -40% 15 -0.33 12 -0.53 8 -0.73 7 4 2 -0.93 2 0.5 -121% -1.13 H105 H205 H106 H206 H107 H207 H108 -3 H105 H205 H106 H206 H107 H207 H108 -1.33
  19. 19. Some areas of price hike "Processed Steel prices" increase since March 2007 "Minimum wage" increase Jan-March, 2008 PKR 90 PKR 85 PKR 6,000 PKR 60 PKR 3,000 PKR 3,000 PKR 3,000 PKR 40 (100% Increase) (100% Increase) March 2007 Jan.08 Mar.08 June 2008 March 2007 Jan-08 Mar.08 Jun.08 Source: Ministry of Labor and Manpower Pakistan Source: Pakistan Steel Mills "Diesel Prices" increase Jan-March, 2008 "Concrete Prices" increase since March 2007 PKR 65 PKR 27,500 PKR 23,000 PKR 21,000 PKR 18,000 PKR 39 PKR 33 PKR 33 (56% Increase) (100% Increase) March 2007 Jan.08 Mar.08 June 2008 Mar.07 Jan 2008 March 2008 Jun.08 Source: Construction Industry Source: Ministry of Petroleum (Per Litter Price) Note; %age represents month on month increase
  20. 20. Operating expenses driven by site costs • Fibre backbone to reduce Opex split traffic costs 100% 100% • Site related costs driven by number of sites and increased energy costs • SAC driven by subscriber growth • General marketing costs increasing
  21. 21. Capex driven by increased traffic Capex split 2007 • Around 50% of capex related to sites. Outlook Other stable Subscribers • Scale effects expected in transmission and core network • Subscriber driven capex Sites Core will increase slightly Transmission
  22. 22. 3G coming up • 6 blocks of 5MHz available • 3 operators to be allocated 3G spectrum • Uncertainty regarding timeline and conditions
  23. 23. Maintaining competitive edge • Maintain innovator position • Leverage on brand, distribution, and quality network • Enrich customer experience • Operational efficiencies to secure long term profitability • Exploit broadband opportunities
  24. 24. Telenor Pakistan Outlook 2010-2011 • SIM penetration above 70% • Market share above 25% • EBITDA in mid thirties • Capex/sales below 25%
  25. 25. Summary • Still strong growth potential • Tough competition but solid market position • High quality network and distribution • 2G capex peak in 2007 • Manageable surroundings

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