telenor pakistan by nazish

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									Investor’s Presentation

2008

Telenor Pakistan
Peter Kuncewicz – CFO of Telenor Pakistan

Pakistan’s Economic Landscape

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

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

Economic overview

• GDP • GDP growth

: :

US$ 145 billion 7.0% (FY07) 7.0% US$ 925 US$ 2,591 13% 12%+ 2007-est

FY03-07 avg. : • Per-capita GNP PPP basis : :

• Growth in p.capita: FY03-07 avg. :

FY07/06

Key Facts

•

6th largest EM (ex-China & India)
•

4th largest EM in Asia (ex-China & India) EM – All* 6 4.3% EM – Asia* 4 11.9%

Pakistan:
Rank Share
*ex-China & India

Key Facts

•

One of only 10 economies of world with:
• •

GDP > US$100bn AND POP > 100 million

10.00%

12.00%

Pakistan’s LT growth

-4.00% 0.00% 2.00% 4.00% 6.00% 8.00% 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%

Pakistan’s LT growth

12.00%

10 yr MA

8.00%

10.00%

7.00%

8.00%

6.00%

6.00%

5.00%

4.00%

4.00%

2.00%

3.00%

0.00% 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%

-2.00%

1.00%

-4.00%

0.00%

Key Economic Indicators
2006 Real GDP growth Nominal GDP (US$ bn) Consumer Price Inflation* Exchange Rate Rs : US$* GDP per head (US$) 6.9 126.8 9.4 60.9 809 2007 6.4 145.4 11.7 61.2 886 2008 3.6 156.5 21.5* 71.9* 936 2009 4.4 160.2 7.1 67.8 941

Source: Country Report Pakistan by Economist Intellignce Unit, London * As of July 2008

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

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

Five criteria identified before entering Pakistan..

• High growth potential • Forward looking telecom policy • Investment friendly climate • Good regulatory execution • Acceptable political and economic situation

Initial assumptions vs actual development..

Initial business case 2007 SIM penetration Telenor subs (mill) ARPU (PKR) Capex (PKR bn) 11% 2.9 663 13

Actual 2007 48% 14.6 269 41

3 years of building network and distribution
Network
• • 5,500 sites and 55% coverage Largest Edge network in Pakistan • • •
6,300

Distribution
125,000 scratch card agents 110,000 easy load top-up points 60,000 SIM distribution agents
160

No of sites, EoY
4,700

No of agents, EoY (thousands)
132

2,000

50

200 2005 2006 2007 2008E

5 2005 2006 2007 2008E

3 years of tremendous growth
Market share Telenor subscribers (mill)

> 20
60%

18.1
50%

14.6
40%

Mobilink

10.7
30%

Telenor
20%

Ufone Warid

6.7 3.2 1.9 0.8 H105 H205 H106 H206 H107 H207 H108 H208E

10%

Zong
0% 1H05 2H05 1H06 2H06 1H07 2H07 1H08
Instaphone

2H08E

Market statistics Q108
Q108 Subcribers base (000) Revenue (in million) ARPU (based on PTA closing subs) Mobilink 31,774 21,215 226 Ufone 17,198 7,987 160 Zong 2,142 618 100 Instaphone 271 65 72 Telenor 16,702 12,099 242 Warid 14,395 6,542 158

Market ARPU Trend
300 250 200 150 100 50 Q207 Mobilink
• •

Q307 Ufone Zong

Q407 Instaphone Telenor

Q108 Warid

Revenue figures are from PTA quarterly report ARPU figures are calculated using revenue and subscriber numbers as per PTA report

Stable ARPU and improving margins

ARPU (PKR)

Revenues (PKR bn) and EBITDA %

287 253 191

268

279

262

27

16% 4%

19%

25

0.27 0.07 -0.13

248
22 17 12 -40% -17%

20 15

-0.33 -0.53

8
7 2
H105 H205 H106 H206 H107 H207 H108

-0.73 -0.93 -1.13

4 0.5
H105

2
-121% H205 H106 H206 H107 H207 H108

-3

-1.33

Some areas of price hike
"Processed Steel prices" increase since March 2007

"Minimum wage" increase Jan-March, 2008
PKR 90

PKR 6,000
PKR 60

PKR 85

PKR 3,000

PKR 3,000
(100% Increase)

PKR 3,000

PKR 40

(100% Increase)

March 2007

Jan-08

Mar.08

Jun.08

March 2007

Jan.08

Mar.08

June 2008

Source: Ministry of Labor and Manpower Pakistan

Source: Pakistan Steel Mills

"Concrete Prices" increase since March 2007
PKR 27,500 PKR 21,000 PKR 18,000 PKR 23,000

"Diesel Prices" increase Jan-March, 2008 PKR 65

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

Operating expenses driven by site costs
• Fibre backbone to reduce traffic costs • Site related costs driven by number of sites and increased energy costs • SAC driven by subscriber growth • General marketing costs increasing
Opex split
100% 100%

Capex driven by increased traffic
Capex split 2007
Other Subscribers

• Around 50% of capex related to sites. Outlook stable • Scale effects expected in transmission and core network • Subscriber driven capex will increase slightly

Sites Core

Transmission

3G coming up
• 6 blocks of 5MHz available • 3 operators to be allocated 3G spectrum • Uncertainty regarding timeline and conditions

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

Telenor Pakistan Outlook 2010-2011

• • • •

SIM penetration above 70% Market share above 25% EBITDA in mid thirties Capex/sales below 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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