Annual Investor Night Grameenphone Ltd. The Westin Dhaka, 12 November 2012

Transcription

1 Annual Investor Night 2012 Grameenphone Ltd. The Westin Dhaka, 12 November 2012

2 Program Summary Item Topic/Description Time 01 Introduction by Head of IR Program Outline & Objective 02 CEO presentation The Country, the industry & Grameenphone 7:00 pm to 07:05 pm 7:05 pm to 07:20 pm 03 CMO presentation Capturing the next phase of growth 07:20 pm to 07:35 pm 04 CTO presentation A quality & cost efficient network built for the future 05 CFO Presentation Managing long-term profitability & maximizing shareholders return 07:35 pm to 07:50 pm 07:50 pm to 08:05 pm 06 Q&A Home & Overseas participants 08:05 pm to 08:35 pm 07 Dinner Home participants 08:35 pm to 09:35 pm

3 Tore Johnsen Chief Executive Officer, Grameenphone Ltd.

4 Macroeconomic factors affecting telecom industry Rapid development with favorable conditions GDP of $110 Bn & consistently growing over 6% Driven by private consumption of 75% Population of 160 mn with median age of 23 Highest density of 1,015 person/ Sq KM Per capita income of $ 735 with 5 yr CAGR of 11.5% Stabilizing currency with declining inflation is likely to protect investment value Lower food prices drove headline inflation down to 7.22% Local currency appreciation of 2.03% against USD Remittance growth of 10% in FY Higher export growth against import Credit disbursement from multilateral partners

5 The industry today Growth opportunities continue despite regulatory strife Real SIM penetration of 35% Internet penetration of 7% Low ARPU rural segment; next growth market Regulatory uncertainty In a competitive environment Citycell, 1.7% Teletalk, 1.4% Top 3 having 90% market share Intensified competition on acquisition Bonus offers and heavy subsidy NW Quality & Coverage as a differentiator Customer experience becoming increasingly important Banglalink, 27.2% Robi, 21.1% Airtel, 7.0% GP, 41.6% BTRC: As of Sep 12

6 The regulatory landscape SIM Registration Guideline 3G Guideline 2G renewal VAT rebate BTRC Audit The Revised Telecom Act Act Replacement SIM tax VAS Guideline

7 Grameenphone is built upon. Network Strength Distribution Network Rural Focus Widespread coverage Highly efficient Robust & future ready Far stretched network Skilled field force Cost efficient Village Phone NGO partnership Rural NW coverage

8 Grameenhone s recent business performance Acquisition drives continuing Capturing fair share of market growth Improved visibility with 360 communication Startup offer & price perception % % 43.7% 42.7% 41.6% Regional focus Q3'12 Sub Base (in Mn) Sub Mkt Share Voice still dominates with an increasingly growing data segment Multiple SIM effect on top line Pressure on price from competition Promising trend of internet and data Retention and churn back 66,232 1,643 1, ,117 1, , % 31% 7.8% 3.4% 3.4% 4.6% 69,273 1,848 1, ,526 3,251 YTD Sep'11 Traffic & Sub Internet & data SMS & MMS Intercon Other YTD Sep'12 Revenue development (in BDT Mn)

9 Strategic priorities going forward Strengthening market leadership Capturing data growth Gaining efficiency Customer Centricity Cost and capital structure efficiency Concerted efforts with regulators

10 Allan Bonke Chief Marketing Officer, Grameenphone Ltd.

11 Market overview Penetration and future potential 250% Mobile Growth & Penetration (Sep) 70% 200% 150% 100% 50% 0% (Sep) Year to Year Growth (%) Mobile Penetration Level 60% 50% 40% 30% 20% 10% 0% Market growth slowing down as we reach financially constrained segment. But a linear growth is observed last couple of years and expect that to continue till SIM penetration reached 58% Q3 12. Considering multi-sim phenomenon actual penetration is estimated to be 35%. Internet penetration has reached only 7%. But he country has observed mobile internet users has doubled year on year is last 3 years. Considering HHI and poverty level, market is addressable till 60% actual penetration. Youth and Rural will be the two key segments to address. Industry SIM sales forecasted to reach 138 million by end of 2015 reaching actual penetration of 55%.

12 Revenue trend Moderate growth and some learning Revenue in BDT Bn Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 BDT in Bn Intensified competition slowed down our top line growth in We had similar slower growth in period but we bounced back in later years. Intensified competition has slowed down our top line growth and also causing us to lose share. We have lost subscriber market share due to lesser new in take than required level. Macro economic situation played into the favor of competition with lower tariff and aggressive promotions. Visibility impacts on our brand affinity and price perception increasingly as competition heats up.

13 Grameenphone Brand Differentiators

14 Immediate focus Price Perception, Promotions and Visibility Ensure presence through nationwide visibility Build trust through better price perception More engagement through promotions

15 Long term focus Internet for the masses Building the feature-phone base Building up of internet awareness Easy & simple price plan Leverage Retail & Distribution channel to promote internet Preparing for the smart-phone game Easy upgrade from feature phone to smartphone Ensure seamless internet experience on smartphones Anchored in & followed up regularly by Telenor Asia Management in coordination with other Telenor Group units Internet Generation 2012 Internet activation through Retail & Distribution Channel Highly affordable micropacks Launched the biggest ever internet awareness campaign for students (class 8 12) Our distribution & retail channel has been engaged to promote internet packages & build up internet awareness Key Successes of Grameenphone Launched 2 highly affordable micro-packs: Minipack 1 MB at BDT 2.5 Minipack 3 MB at BDT 9

16 Long term focus Customer centricity Establish Net Promoter Score (NPS) a simple but effective way to measure customer centricity. GP s approach to NPS: Closed Feedback Loop Description:- Highlight both behavioral and functional improvement area through NPS, analyzing the root causes, implement solution and feedback customers

17 Long term focus Change organization culture From an Incumbent to mindset as a Challenger!

18 Tanveer Mohammad Chief Technology Officer, Grameenphone Ltd.

19 Technology focus areas Quality network for our customers Efficiency to ensure profitability Transform & evolve for future readiness 19

20 Best in class network for our customers 89.10% Land & 99.16% Population coverage Robust network platforms to serve voice, data & wide range of value added services 20

21 Fastest network expansion across the country was the key 7970 sites 8 Switching stations 40 Mn Robust core & service platform

22 High capacity, reliable and robust transmission network was built up 2738 Km highway fiber 2010 Km railway fiber 8450 MW links IP core & backhaul Transmission backbone

23 Quality has been the positioning factor of Grameenphone network Coverage strength % Good Coverage H1, Other operators Focus to strengthen rural footprint Source: Internal network benchmarking H1-2012, Appx Km DT & calls

24 Best in class quality network built by the people 7 Regional O&M & 17 sub centers 24x7 Operations World class Service Operations Center Local & global vendor support Network Network quality quality built by built the by people the people 24

25 Network availability over 99.5% around the year despite power crisis Average network availability over 99.5% despite extreme power crisis Power crisis reaches peak during summer Continuous monitoring of base station, and faster time to restore is the key Network Availability Network Availability % Jan Feb Mar Apr May Jun Jul Aug Sep 25

26 Lowest call drop rate to ensure uninterrupted calls across the country Grameenphone network is planned and maintained to ensure minimum call drops in the network. Less than 0.5% from internal benchmarking drive tests in most of the places 26 Source: Internal network benchmarking H1-2012, Appx Km DT & calls

27 27 Continuous improvement & optimization is crucial to maintain the leverage

28 Network expansion & improvement in parallel Q1 Q2 Q3 Q4 Quality, 30% Capacity, 70% 28

29 Continuous Efficiency to improve productivity & profitability 29

30 Prevalent myth in the industry Cost Quality Grameenphone decided to play differently 30

31 Network swap to achieve efficiency Modernized network by swapping all base stations and entire core with Huawei equipments on Dec 2012 Network swap 40% less energy & footprint Modernized access, core and packet to make network 3G & future ready Reduce energy footprint Catered equipment reaching end of life Drive efficiency in investment & operations ~50% savings Improved Reliability & better customer experience Pre swap baseline Up to * From opex projections up to Dec 2012

32 32 Capex efficiency by building lighter & greener sites

33 Continuous focus on operational efficiency enabling better profitability (Q1&2) Leased lines, 3% Others, 2% License, 10% Rent, 11% Energy cost/bts/month 47% Manning, 19% Energy, 19% O&M, 18% Service, 18% 33

34 Structured transformation is the key to achieving efficiency in operation Series of cost saving initiatives in every part of operation is helping to gain efficiency Opex/BTS/ Month Th BDT Opex saving Mn BDT NW Capex/Rev %

35 and then the results become visible Network Capex/revenue Opex/BTS/Month % NW CapEx (Mn USD)* NW CapEx/Rev (%) Opex/BTS/Month (Th BDT) 35

36 Technology advancement to secure the future lead 36

37 3G & All IP in focus for future readiness Voice & Data network is 3G ready. Access base stations are capable to be loaded with 3G cards. Transmission to be strengthened accordingly All IP & Technology evolution for Reduced cost of ownership Launch new services Faster time to market 37

38 Key take away Maintain & retain Quality network to ensure the best for our customers Efficiency to ensure profitability. Drive new cost saving initiatives and focus on innovation to achieve further efficiency level Transform & evolve for future readiness with all IP and 3G 38

39 Fridtjof Rusten Chief Financial Officer, Grameenphone Ltd.

40 Managing long-term profitability A holistic approach encompassing Opex, Capex, Working Capital & Process Efficiency Opex Excellence Long-term focus addressing necessary modifications/ changes in business models Combining global knowledge and local management know-how Working Capital Efficiency Business Process Efficiency Capex Optimization Embedding efficiency as a culture through implementing customer centric processes

41 Systemic approach towards cost -efficiency Cost benchmarking through globally reputed consultant AT Kearney & combining internal evaluation on core operations The learning & synergies at the Telenor Group level are being levered through comparative analysis, regional projects and shared service centers delivering Opex savings to be reinvested in the market without significant toll on the margins Robust Opex management process using the beyond budgeting concept to cope with the dynamic business environment has been & will continue to be the DNA of GP s Financial Management Model

42 Solid Impact of cost efficiency activities % YTD Q311 People Macro impact Business Growth Regulatory Cost Efficiency YTD Q312 Positive Negative Amounts in BDT Billion Opex savings generated from the structured programs are being reinvested in business despite the pressure from marcro-enonomic factors and increased regulatory cost under the new 2G licensing agreement. The company managed to save ~8% of the of the addressable Opex base over the last four quarters.

43 Towards a balanced capital structure Re-leverage the company through incremental borrowing without affecting the Risk profile of the company Reduce the cost of Capital of GP Ensure sufficient liquidity to accommodate the strategic priorities of the company Attain a more Balanced Capital Structure Pay minimum 50 % of the net profit after tax depending on the financial health and capital requirement of the company Special dividend like Interim Dividend subject to business performance and cash availability Maximize the return to shareholders

44 Ambitions on delivering value to stake-holders Revenue Market Share Retain leadership Revenue Growth EBITDA Margin Sustain at high single digit Around current level subject to further market investment requirement Non regulatory CAPEX Debt Mostly at the present level Improve gearing in line with plan

45 Disclaimer This presentation includes very high level guidance on the future." These may include, without limitation, statements relating to our future business development and economic performance, future earnings and cash flow, our business strategy, regulatory changes, future policy of the Bangladeshi Government relating to the telecommunications industry in Bangladesh, our competitive position and the effects of competition, and the amount and nature of our capital expenditures and capital commitments. These guidance represents our current views with respect to future events and are not a guarantee of future performance. You are cautioned not to rely on these very high level guiding statements. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement. We have obtained certain market data, industry forecasts and data used in this presentation from market research, publicly available information, including governmental publications, and industry publications. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of the information is not guaranteed. While we believe these industry forecasts and market data are reliable, we have not independently verified this information, and we make no representation as to the accuracy of this information. Because the market data included in this presentation is derived from multiple sources, you should not assume that it has been compiled on a consistent basis. You should exercise caution when comparing market data from different sources or across different time periods. We make no representation that such market data is accurate or complete or that it has been compiled or presented on a consistent basis. Slide 45