Q1-2016 Investor Presentation - stc - Kuwait Telecom Company...*FY 2017, Q1 2017 and Q1 2018 numbers...

1 Investor Relations

Kuwait Telecommunications Company K.S.C.P

Investors Presentation

Q1 - 2018


Table of content

Key Milestones 4

Competitive Strengths 8

Shareholders' Structure 6

VIVA’s History in Brief 3

Vision and Values 5

Market Share 9

Population & Penetration 7

Financial Results 11

Stock Performance 15

Appendix – Balance Sheet & Income Statement 16

Financial Highlights 13


2007 Jun 2008 Sep 2008 Dec 2008 Dec 2014 Jun 2015

Emiri decree number 187/2007 was released regarding the license of the incorporation of Kuwait Telecommunications Company.

The incorporation contract and principal law of the company was adopted by the MOC and Fatwa and Legislation Dep., and documented at the Ministry of Justice

Public placement of VIVA shares which was 2.4x oversubscribed. distributed among c. 1 million Kuwaiti shareholders

Commercial Launch of VIVA Operations in Kuwait

VIVA Stock was listed on Kuwait Stock Exchange

VIVA’s Stock under KSE15 Index

*In Compliance with the Islamic Shariah rules and principles

VIVA’s History in Brief


Launches commercially

VIVA abolishes incoming calls fees and other operators follow

First Operator in the world to have all IP network

Expand retail network and launch joint promotions with retailers.

VIVA wins CommsMEA Best Telecom Finance Deal .

VIVA launches Elite Program for loyal, VIP and high value customers.

VIVA turns into profitability during the fourth year of operation.

VIVA Starts deployment of 4G LTE network

Best Telecom Company by Arabian Business.

Member of (ITU )

Leading Corporate for IR

Business Innovation in Risk Management

Partnership with Real Madrid.

Listing on KSE

Retained earnings turned to be positive.

Ranked 2nd in terms of revenue and subscriber market share

VIVA introduces high speed Mobile Broadband in Kuwait.

VIVA launches innovative prepaid offerings and acquire 500K customers in one year.

First to introduce Apple iPhone

Strategic partnership with Manchester United.

First to introduce newest HSPA+ (42.2 Mbps) Broadband network.

Complete nationwide 4G LTE Coverage and awarded Best LTE Deployment in the Middle East.

Number Portability and VIVA acquires majority of ported numbers between operators.

The first in Kuwait to introduce the all-new (VoLTE) technology.

VIVA Branches network reached a total of 70 across Kuwait.

First to introduce the LTE Advanced

2009 2011 2013 2015

2008 2010 2012 2014 2016

VIP Customer Service Award

"2017 Speedtest Award“

Excellence in Governance Award

Best Operator Network

5G Innovator of the Year Awards

2017

Key Milestones

Best Network Development Award at 5G MENA

2018


Our vision is to provide unique services and productsthat satisfy the aspirations of our clients andaccommodate their needs, which in turn will earn ustheir trust. This is through presenting our customerswith numerous telecommunications opportunities withthe goal of boosting our relationships with them andgiving them the best experience around the clock.

Our vision is embodied in a fundamental and detailedunderstanding of the Kuwait market and focusing on theneeds of customers in everything we say and do.

We have pledged to work to enrich the lives of ourcustomers through telecommunications, entertainmentand information, and data transfer services.

EnergeticOur passion is performance, innovation, and

delivering of superior quality. We are efficient, reliable, and highly responsive to

our clients’ needs.

TransparentWe are open, trustworthy and collaborative.

EngagingAll of our activities revolve around our

customers.

FulfillingWe offer a wide range of easy to understand products. Our actions create value, helping our customers lead more rewarding and

enjoyable lives

Our Values

Vision and Values


The Kuwaiti government holds 24%of VIVA through differentgovernmental entities.

Currently 2 out of 7 board membersare representing the Kuwaitigovernment bodies.

Kuwaiti Government 24%

Public Share holders consists ofcompanies, portfolios, funds andindividuals.

The public shareholders are mixbetween local, regional andinternational investors.

Independent Board member electedduring the AGM on 16th of May 2016.

Public Shareholders 24%

STC, the leading regional telecomoperator, won the bid for third mobilelicense in November 2007, and paid USD980 million for the license.

STC has a management agreement withVIVA.

STC increased its ownership percentagefrom 26% to 51.8% through a VTO at thebeginning of 2016.

Currently, 4 out of 7 board members arerepresentative of STC group.

Saudi Telecom 52%

Shareholders' Structure


Kuwait Population (Million Person) & Penetration Rate (%)

Kuwait population since 2010 is growing at the same level of 2.8% yearly and the growth is forecasted by IMF at 2.8% over thenext 5 years compared to almost 1% for the global population growth. This growth coupled with rising income levels will propelgrowth in consumer spending.Kuwait boasts the highest telecom penetration levels in the MENA region, which stood at the end of 2016 at 227% as reported by(ITU-D) and estimates by VIVA shows that the penetration rate in Kuwait declined to reach 200% at the end of Dec 2017.

Source of Population: IMFSource of Penetration rate : ITU

3.2 3.4 3.4 3.5 3.6 3.7 3.8 3.9 4.0 4.1 4.3 4.5

49% 56% 56%

92%

133%158% 157%

189%

218% 220% 227%200%

0%

50%

100%

150%

200%

250%

0.0

1.0

2.0

3.0

4.0

5.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Population & Penetration


Relationship with STC

Customer-Centric

Strategy

Strong Growth & Results

Successful Branding

Modern & Scalable Network

Extensive distribution

channels

VIVA follows a customer-centric strategy, whichentails focusing on the communication needs ofcustomers and providing differentiated service. Thisstrategy positions VIVA as the only telecom providerin Kuwait that targets enhancing customerexperience.

VIVA has a proven track record of successfullyproviding high-quality product and services to itscustomers.VIVA has grown rapidly since it commencedoperations in December 2008 acquiring 2.2 millioncustomers by the end of Dec 2017, whichrepresents a market share of 32%.

Since its launch in 2008, VIVA has built a valuable brand associated with excellence.VIVA is perceived as the “challenger” bringing healthy competition to the Kuwait telecommarket. VIVA’s entry prompted the incumbent players to make several tariff changes, focuson subscriber retention and introduce new services, thereby benefiting the consumer.

VIVA benefits from having a modern and efficientnetwork that is adaptable to emerging technologies.The Network backbone is modern and has beendesigned to facilitate scalability of new operationsand the future deployment of emerging technology.

STC (the largest telecom company in the region) will continue to be a major shareholder andVIVA will continue to benefit from being a member of the STC group.Through this relationship, VIVA has access to technical support, industry best practice forprovision of telecom services, as well as stronger purchasing power benefiting from jointprocurement and coordination of regional initiatives.

VIVA has an extensive, well-developed andincreasingly sophisticated direct and indirectdistribution network covering all parts of Kuwait.VIVA Inaugurates New Branches to its networkamounting to a total of 93 branches across Kuwait

Competitive Strengths


Total Subscriber Base in Kuwait (Mn)

Telecom Sector Revenues in Kuwait (KWD Mn)

4.55.2

5.9 6.417.6 7.7 7.7 7.2 7.3

0.8 1.1 1.6 2.2 2.4 2.5 2.4 2.3 2.30

5

10

2010 2011 2012 2013 2014 2015 2016 2017 Mar-2018

Total Subscirbers in kuwait (Mn) VIVA Subscribers (Mn)

Market Share

627 684 690 717 753 788 799 831

239

61 94 137 182 239 277 279 278

78 -

200

400

600

800

1,000

2010 2011 2012 2013 2014 2015 2016 2017 Q1-2018

Total Telecom Revenue in Kuwait (KWD Mn) VIVA's Revenue (KWD Mn)


VIVA34%

Zain56%

Ooredoo10%

VIVA32%

Zain47%

Ooredoo21%

VIVA32%

Zain40%

Ooredoo27%

VIVA32%

Zain38%

Ooredoo30%

Subscriber Market Share – Mar 2018

EBITDA Market Share – Q1 2018

*Ooredoo Kuwait Financial Results are consolidated with Fastelco Results.

Market Share vs. peer groupRevenue Market Share – Q1 2018

Net Profit Market Share – Q1 2018


Subscribers (Mn) Revenue (KD Mn) Net Profit (KD Mn)

In Quarter 1 2018, the company hasapplied IFRS 15 ‘Revenue fromContracts with Customers “and IFRS9 “Financial Instruments” which areeffective from 1st January 2018 andopted for full retrospective approach.

VIVA’s customers’ reached 2.32million by end of March 2018,increased by 2.2% as compared to thesubscriber base at the end of March2017.

Viva Recorded a remarkableperformance with revenues rising by13.9% to reach KD 77.6 million duringQ1-2018 compared to Q1-2017.

VIVA EBITDA reached KD 18 millionduring Q1-2018 with EBITDA Margin23.2% as compared to KD 17.6 millionand margin of 25.9% during Q1-2017.

VIVA had Marginal drop of -0.2% innet profit of KD 11.57 million duringQ1-2018 compared to a net profit ofKD 11.60 million reported during Q1-2017.

Financial ResultsKey Figures & Ratios Q1-2017 (Restated) Q1-2018 Change

Subscribers (Mn) 2.27 2.32 2.2%Revenue (KD Mn) 68.1 77.6 13.9%EBITDA 17.6 18.0 2.1%EBITDA Margin (%) 25.9% 23.2% -2.7pt.Net Profit (KD Mn) 11.60 11.57 -0.2%Net Profit Margin (%) 17% 14.9% -2.1pt.EPS (Fils) 23 23 -0.2%Equity (KD Mn) 125.7 153.4 22%BVPS (Fils) 251.6 307.3 22%

Mar-17 Mar-18

2.27 2.32

Q1-2017 Q1-2018

68.1 77.6

Q1-2017 Q1-2018

11.6 11.57


In Quarter 1 2018, the company has applied IFRS 15 ‘Revenue from Contracts with Customers “and IFRS 9“Financial Instruments” which are effective from 1st January 2018 and opted for full retrospective approach.The new standards has been adopted to bring consistencies in reporting financial information and to enhancecomparability of financial information of the Company with other entities.

The financial impact on equity as of 31 December 2017 is as follows:

Financial Results – IFRS 15 & 9 impact

IFRS 15 IFRS 9 Total KD’000 KD’000 KD’000

AssetsIntangible assets (49,086) - (49,086)Trade and other receivables (26,785) 18,246 (8,539)Contract assets 52,845 (5,609) 47,266Cash and cash equivalents - (7) (7)Total assets (23,026) 12,630 (10,396)

EquityRetained earnings (23,582) 12,630 (10,952)

LiabilitiesTrade and other payables 556 - 556

Total equity and liabilities (23,026) 12,630 (10,396)


Revenue (KD Million)

Net Profit (KD Million)CAPEX (KD Million)

EBITDA (KD Million)

Financial Highlights

17.1

39.2 37.833.5

6.3 0.97%

14% 14%12%

9%

1% 0%

5%

10%

15%

20%

25%

30%

0

15

30

45

2014 2015 2016 2017 Q1- 2017 Q1-2018

Capex (KWD Million) Capex to Sales Ratio

239277 279 288

68 78

0

100

200

300

400

2014 2015 2016 2017 Q1- 2017 Q1-2018

*FY 2017, Q1 2017 and Q1 2018 numbers are based on the IFRS 15 ‘Revenue from Contracts with Customers “and IFRS 9 “Financial Instruments” which are effective from 1st January 2018 and opted for full retrospective approach. .

112.6

131.0 131.9

71.117.6 18.0

47% 47% 47%

25% 26% 23%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.0

50.0

100.0

150.0

2014 2015 2016 2017 Q1- 2017 Q1-2018

EBITDA (KWD Million) EBITDA Margin (%)

40.4 43.0 39.8 42.8

11.6 11.6

0

10

20

30

40

50

2014 2015 2016 2017 Q1- 2017 Q1-2018


Total Assets (KD Million) Total Debt / Equity (KD Million)

Book Value Per Share (KD)Shareholders Equity (KD Million)

Financial Highlights

179

214

263 267 273 275

0

50

100

150

200

250

300

2013 2014 2015 2016 2017 Mar-2018

66

86 72

47

9 4

6.9

1.70.8 0.4

0.1 0.0 -

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

0

20

40

60

80

100

2013 2014 2015 2016 2017 Mar-2018

Total Debt (KWD Million) Debt to Equity Ratio (x)

10

50

93

133

157 153

0

20

40

60

80

100

120

140

160

180

2013 2014 2015 2016 2017 Mar-2018

0.019

0.100

0.186

0.266

0.314 0.307

-

0.050

0.100

0.150

0.200

0.250

0.300

0.350

2013 2014 2015 2016 2017 Mar-2018

*December 2017 and March 2018 numbers are based on the IFRS 15 ‘Revenue from Contracts with Customers “and IFRS 9 “Financial Instruments” which are effective from 1st January 2018 and opted for full retrospective approach. .


Rebased Index Since VIVA’s Listing Date 14 Dec 2014 – Stock Performance vs. KSE and Telecom weighted Indices

VIVA +46.2%

KSE Weighted Index -1.3%

Telecom Weighted Index -7.7%

Closing Price (KD) 0.950

Market Cap (KD Million) 474

PE (X) 11.9

PB (X) 3.09Data as of 29 March 2018

Stock Performance

60

80

100

120

140

160

180VIVA's Stock Price (KWD) KSE Weighted Index Telecom Weighted Index

Re

bas

ed 1

00

Ind

ex


Balance Sheet (2014 – Mar 2018) Income Statement (2014 – Q1 2018)

Appendix


Balance Sheet 2014 2015 2016 *2017 (restated) *March 2018KD Mn KD Mn KD Mn KD Mn

ASSETSProperty and equipment 113.1 125.4 137.7 145.0 139.8Intangible assets 36.3 50.6 47.5 - -Other non-current assets 0.7 - - - -Non-current assets 150.1 175.9 185.2 145.0 139.8Inventories 5.8 7.1 4.4 12.9 7.1Prepayments and other current assets 4.7 5.4 5.0 4.7 4.1Trade and other receivables 21.2 22.9 25.7 31.2 30.1Contracts assets - - - 47.2 53.2Cash and cash equivalents 32.3 51.8 47.2 32.2 40.8Current assets 63.9 87.2 82.2 128.2 135.2Total assets 214.0 263.1 267.4 273.2 275.0EQUITY AND LIABILITIESShare capital 49.9 49.9 49.9 49.9 49.9Statutory reserve 0.0 4.5 8.7 12.9 12.9Voluntary reserve - 4.5 8.7 12.9 12.9Retained earnings 0.0 33.9 65.4 81.0 77.6Total equity 49.9 92.9 132.7 156.9 153.4

Employees' end of service benefits 2.6 2.8 3.2 3.6 4.4Islamic financing facilities 51.6 31.4 11.6 - -Non-current liabilities 54.1 34.2 14.8 3.6 4.4Islamic financing facilities 34.0 41.0 35.5 9.0 4.5Trade and other payables 75.9 95.0 84.4 103.7 112.7Current liabilities 109.9 136.0 119.9 112.7 117.2Total liabilities 164.0 170.2 134.7 116.3 121.6Total equity and liabilities 214.0 263.1 267.4 273.2 275.0

Balance Sheet (2014 –Mar 2018)

*December 2017 and March 2018 numbers are based on the IFRS 15 ‘Revenue from Contracts with Customers “and IFRS 9 “Financial Instruments” which are effective from 1st January 2018 and opted for full retrospective approach. .


Income Statement 2014 2015 2016*2017

(Restated)*Q1-2017

(Restated) *Q1-2018KD Mn KD Mn KD Mn KD Mn KD Mn KD Mn

Revenue 239.0 276.9 279.1 287.7 68.1 77.6Operating expenses (126.3) (145.8) (147.0) (216.4) (50.5) (59.6)Depreciation and amortization (67.6) (82.2) (88.4) (25.9) (5.3) (6.1)Finance cost (2.2) (2.6) (1.6) (1.4) (0.4) (0.1)Other income / (expense) (1.8) (1.0) (0.1) 1.1 0.2 0.4Profit before contribution to KFAS, NLST, Zakat and Board of Directors’ remuneration 41.0 45.2 41.9 45.0 12.1 12.1

KFAS (0.0) (0.4) (0.4) (0.4) (0.1) (0.1)NLST (0.1) (1.2) (1.1) (1.2) (0.3) (0.3)Zakat (0.5) (0.5) (0.4) (0.5) (0.1) (0.1)Board of Directors’ remuneration (0.2) (0.2) (0.2) (0.2) - -Net Profit for the year 40.4 43.0 39.8 42.8 11.60 11.57

Basic and diluted earnings per share (fils) 81 86 80 86 23 23

Income Statement (2014–Q1 2018)

*FY 2017, Q1 2017 and Q1 2018 numbers are based on the IFRS 15 ‘Revenue from Contracts with Customers “and IFRS 9 “Financial Instruments” which are effective from 1st January 2018 and opted for full retrospective approach. .


Awarded best IR Corporate in Kuwait for the year 2016 and nominated to be best IR Corporate in Kuwait for the year 2017

Proud to Serve our Investors and the Investment Community.

First company in Kuwait to launch a mobile application for investor relations During December 2016.

Revamped Investor Relations website to keep the investment community updated with all IR publications, disclosures, stock performance, events, analyst Coverage, Fact sheet and financial indicators and much more….

Thanks for all the investors and analysts who voted for us in 2016 and 2017 (Extel) and we look forward for your support in the coming years.

VIVA IR


Thank youInvestor Relations Department:

E-mail: [email protected] : +965 5000 1911www.viva.com.kw

Q1-2016 Investor Presentation - stc - Kuwait Telecom Company...*FY 2017, Q1 2017 and Q1 2018 numbers...

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Transcript of Q1-2016 Investor Presentation - stc - Kuwait Telecom Company...*FY 2017, Q1 2017 and Q1 2018 numbers...