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Dialog Axiata PLC

Sri Lanka's Premier Connectivity Provider

Q2 2017

an axiata company
Dialog Group Performance

Dialog Axiata Company Performance

Subsidiary Performance

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Dialog Group Performance Highlights – Q2 2017
Strong 2nd Quarter Performance on the back of Aggressive Revenue and Cost Initiatives

Solid Growth in Q2 backed by Strong Recovery in Core Revenue Streams and Aggressive Cost Initiatives
• Q2 2017 Group Revenue at Rs23.0Bn, grew 4% QoQ
• Q2 2017 Group EBITDA at Rs8.1Bn, grew 13% QoQ
• Q2 2017 Group PAT grew significantly by 52% QoQ to reach Rs2.3Bn

Notwithstanding YTD Revenue and EBITDA improvement, NPAT Impacted by Higher Finance Cost and Depreciation
• 1H 2017 Group Revenue at Rs45.2Bn, grew 7% YTD
• 1H 2017 Group EBITDA at Rs15.4Bn, increased by 9% YTD; Group EBITDA Margin improved to 34%
• 1H 2017 Group PAT declined 21% YTD to reach Rs3.9Bn

Majority of Investments Focused Towards Expanding Data Network including Internet Data Centre (IDC)
• 1H 2017 Capex of Rs9.5Bn – up 34% YTD; Capex Intensity at 21%

All Business Units Continued to Consolidate Performance Amidst Aggressive Competitive Environment
• Dialog Mobile continued to grow Subscriber Market Share and Data adoption – Data Growth of 12% QoQ and 44% YTD
• Dialog Broadband Networks (DBN) – Second consecutive quarter of positive PAT (Rs568Mn for 1H 2017)
• Dialog Television (DTV) – EBITDA growth of 70% in Q2 2017 with Net Loss declining QoQ

Aggressive Subscriber Growth


• Mobile subscriber base of over 12.4Mn – up 1% QoQ and 13% YTD
• TV subscriber base of over 910k – up 5% QoQ and 22% YTD

Dialog Continued to be in the Forefront of New Technology Adoption


• Commercial launch of South Asia’s first 4.5G TDD LTE network
• First successful trial of next-generation, Massive MIMO (Multiple-Input Multiple-Output) Technology;
Capable of delivering speeds up to 1 Gbps

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Group Financial Summary
Strong Q2 Performance Amidst External Challenges

Rs Mn 2Q 17 QoQ 1H 2017 YTD


Revenue 23,012 4% 45,177 7%
EBITDA 8,130 13% 15,351 9%
PAT 2,346 52% 3,893 -21%
PAT (Norm)1 2,607 44% 4,418 -15%

EBITDA Margin 35.3% 2.8pp 34.0% 0.6pp


PAT Margin 10.2% 3.2pp 8.6% -3.1pp
ROIC 13.5% 1.6pp 13.5% -2.7pp

QoQ : All Key Performance Indicators improved on a QoQ basis; Uplift in Revenue and efficient
cost management driving QoQ performance, further benefited by lower unrealised forex losses

YTD : Revenue and EBITDA Improved by 7% and 9% respectively while PAT impacted by
increase in depreciation, net finance cost and unrealised forex losses

1 Normalised for non-cash translational foreign exchange losses


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Group Revenue Up by 4% QoQ led by Strong Recovery in Core Revenue Streams;
Data Growth of 12% QoQ while Drop in Termination Curtailed to 2%

Strong Recovery of Core Revenue Streams Amidst Constrained


Consumer Spending
+9% +7%

(Rs Mn) +4%


45,177
42,222

23,012 22,165 21,065

Q2 17 Q1 17 Q2 16 1H 17 1H 16

Increase in Consumption Taxes continued to moderated revenue growth across Mobile, Fixed, Broadband and Pay
Television Businesses

 Mobile Data continued its upward trend, recording a growth of 12% QoQ and 44% YTD driven by increased
Smartphone penetration and improved coverage
 Mobile Voice recovered to 2% QoQ albeit declined 1% YTD
 Drop in International Termination Revenue curtailed to 2% QoQ through partnerships with key International
Retail Operators
 4G LTE coverage Expansion driving Fixed Home Broadband Revenue growth of 7% QoQ and 62% YTD
 Television Revenue grew 1% QoQ on the back of strong growth in Pre-paid subscribers and stabilising ARPUs

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Q2 Profitability Growth Delivered on Solid Revenue Growth and Cost Efficiencies;
EBITDA Margin Improved 2.8pp QoQ

Strong EBITDA Growth and Improved EBITDA PAT Improved by 52% QoQ while YTD Decline
Margins led by Higher Depreciation and Finance Cost
(Rs Mn) (Rs Mn)
+15% +9% +3% -21%

+13% +52%
18,000

15,351 4,958
16,000
14,076 4,800
30.0%

14,000
45.0%
4,200
3,893 25.0%

12,000
3,600

8,130
20.0%

10,000

7,221 7,057
3,000

2,346 2,287
8,000 15.0%

1,546
2,400

35.0%

6,000
1,800

35.3%
10.0%

4,000

32.6% 33.5% 34.0% 33.3% 1,200

10.9% 11.7%
2,000
10.2% 8.6%
5.0%

7.0%
600

0 25.0% - 0.0%

Q2 17 Q1 17 Q2 16 1H 17 1H 16 Q2 17 Q1 17 Q2 16 1H 17 1H 16
EBITDA EBITDA Margin PAT PAT Margin

Total Cost as a % of Revenue Improved by 2.8pp QoQ on the back of Aggressive Cost Initiatives
with Realised Cost Savings of Rs1.3Bn in 1H 2017
Q2 17 As % of Q1 17 As % of Q2 16 As % of YTD 17 As % of QoQ YoY YTD
revenue revenue revenue revenue
Total Cost Rs14,882Mn 64.7% Rs14,944Mn 67.4% Rs14,007Mn 66.5% Rs29,825Mn 66.0% -0.4% 6% 6%

Direct Expenses 25.4% 26.6% 27.7% 26.0% -1% -0.1% -4%

Sales & Marketing 14.2% 15.2% 13.8% 14.7% -3% 13% 15%

Network Cost 12.7% 13.5% 11.9% 13.1% -2% 17% 17%

Staff Cost 7.3% 8.4% 7.5% 7.8% -9% 6% 8%

Overheads 3.5% 3.0% 3.1% 3.3% 21% 25% 35%

Bad Debt 1.6% 0.7% 2.5% 1.1% 133% -31% -30%

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Dialog Contributed Rs19.1Bn to Government Revenue in 1H 2017, Up 13% YTD

Dialog Group remitted a total of Rs19.1Bn to GoSL during the six months ended 30th June 2017. Total
remittances included direct taxes and levies as well as consumption taxes collected on behalf of the GoSL

Payments to GoSL – Up 13%


In Rs Mn 1H 2017 1H 2016 %
Direct Taxes, Fees & Levies 5,674 6,453 -12.1

Consumption Taxes collected on behalf of GoSL 13,412 10,464 28.2

Telco Levy 7,001 6,578 6.4

VAT 3,640 1,832 98.7

Total 19,086 16,918 12.8

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Focused Capex Investments to Support Rapid Growth in Mobile Broadband and
Home Broadband Revenues. Capex Intensity for 1H 2017 at 21%

Capex Investment Focused towards Coverage Positive OFCF with Strong Operating
Expansion for 4G and Fixed LTE Cashflows and Focused Capex

(Rs Mn)
(Rs Mn)
+33% +34% -84% -60%

12,0 00

+39% -80%
10,0 00
9,528 4,257
4,300 20%

8,00 0
7,091 3,800
18%

16%

5,534
3,300

14%

2,800

4,148
6,00 0

3,994 1,697 1,709


12%

1,429
2,300

10%

1,800
4,00 0

8%

Capex
1,300

280 8% 10% 6%

2,00 0

24% 18% 14% 21% 17% 800

1% 6% 4%

Intensity
4%
300
2%

- Q2 17 Q1 17 Q2 16 1H 1 7 1H 1 6

(200) 0%

Q2 17 Q1 17 Q2 16 1H 17 1H 16 Q2 17 Q1 17 Q2 16 1H 17 1H 16
OFCF As % of revenue

1H 17 Capex of Rs9.5Bn directed mainly towards investments in High-Speed Broadband


infrastructure consisting of capacity upgrades and LTE focused coverage expansion

Investment in Data Infrastructure includes:


• 3G Capacity and Coverage Expansion
• 4G capacity upgrades and coverage expansion

*Capex excluding CPE (Customer Premises Equipment) investments, capex for spectrum acquisition and license renewal
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Group Net Debt to EBITDA Maintained Below 1.0x with Improved Profitability and
Working Capital Management

30 Jun 17 31 Mar 17 30 Jun 16


(Rs Mn)

Gross Debt 33,402 33,041 31,850

Net Debt 28,887 28,919 28,197

Cash and Cash Equivalents 4,515 4,123 3,653

Gross Debt / Equity (x) 0.61 0.59 0.64

Gross Debt/ EBITDA (x) 1.09 1.14 1.13

Net Debt/ EBITDA (x) 0.94 1.00 1.00

Group continued to maintain a strong balance sheet, with Net Debt to EBITDA maintained at below
1.0x

Demonstrates the Group’s financial strength and capacity to drive business growth via timely and
aggressive investments

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Dialog Group Performance

Dialog Axiata Company Performance

Subsidiary Performance

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Dialog Axiata PLC (Company)
Dialog Continues to Capture Market Share Despite Aggressive Competitive Environment;
Data Driving Recovery in QoQ ARPUs
Revenue Grew 4% QoQ Driven by Data up Data ARPU1 Driving ARPU Growth Supported by
12% and Voice up 2% 4G Conversion and Coverage Expansion
(Rs Mn)

+8% +5%
450 10%

392 406 393 383


+4% 400 375 8%

37,370 35,639
350
6%

35, 000
300

250
4% 2%
4%

30, 000

200
0% 2%

133 128 123 0%


25, 000 150

19,036 100 132 -2%

20, 000

18,333 17,667 50 -3% -5% 120 -4%

15, 000
- -6%

Q2 17 Q1 17 Q2 16 1H 17 1H 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17
Blended ARPU Blended MOU Blended ARPU Growth

Aggressive Subscriber Acquisition led to QoQ Profitability Improved on the back of


the Growth in Subscribers Revenue Growth and Cost Initiatives
Total subs growth +1% QoQ; +13% YTD
Postpaid subs growth +1% QoQ; +7% YTD
Prepaid subs growth +1% QoQ; +14% YTD Q2 17 QoQ 1H 17 YTD
10,957* 11,825 12,268 12,429
11,313 6,454 13% 12,188 +0.1%
EBITDA
1,253 1,260 1,271 12, 000

1,187 1,209 10, 000

PAT 2,345 35% 4,083 -24%


8,0 00

10,572 11,008 11,158 EBITDA Margin % 33.9% +2.6pp 32.6% -1.6pp


6,0 00

9,770 10,103 4,0 00

2,0 00

0
PAT Margin % 12.3% +2.8pp 10.9% -4.1pp
Q2 16 Q3 16 Q4 16 Q1 17 Q2 17
Postpaid Subs Prepaid Subs

*Restated 11
Dialog Group Performance

Dialog Axiata Company Performance

Subsidiary Performance

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Dialog Television
Significant Improvement in QoQ EBITDA and PAT Amidst Affordability Pressure and
Aggressive Competition

TV Revenues Grew QoQ and YTD Despite QoQ EBITDA Expanded on the back of Growth
Unfavorable Macro Conditions in Revenue and Aggressive Cost Initiatives
(Rs Mn)
(Rs Mn) Q2 17 QoQ 1H 17 YTD
-3% | norm1 +4% -4% | norm1 +4%

3,0 00
+1% EBITDA 110 70% 174 -18%
3,015 3,140
2,5 00

PAT -217 30% -528 >-100%


EBITDA Margin % 7.2% +2.9pp 5.8% -1.0pp
2,0 00

1,517 1,498 1,563


1,5 00

1,0 00
PAT Margin % -14.3% +6.4pp -17.5% -10.3pp
Q2 17 Q1 17 Q2 16 1H 17 1H 16

Prepaid Subscriber Base Continued to Register


Strong Growth of 10% QoQ and 54% YTD DTV Revenue improved 1% QoQ led by significant growth in
Pre-paid subscribers while YTD revenue dropped 4% as a
Total subs growth +5% QoQ; +22% YTD result of change in accounting for Prepaid CPE sales;
Postpaid subs growth +0% QoQ; -2% YTD
Prepaid subs growth +10% QoQ; +54% YTD Normalised Revenue grew 4% YTD
(in ‘000s)
867 911
791 839 DTV Rebound initiatives gaining traction with QoQ EBITDA
748
440 484
improving by 70% leading to a decline in Net Loss by 30% QoQ
314 363 408

DTV EBITDA contracted 18% YTD on the back of Rupee


434 428 431 426 427
depreciation affecting Content and Transponder cost
Q2 16 Q3 16 Q4 16 Q1 17 Q2 17
Post paid Pre Paid

1 Normalsied for prepaid CPE 13


Dialog Broadband Networks – Fixed Business
Revenue Growth Underpinned by Home Broadband (HBB) on the back of Network Coverage
Enhancements

Fixed Revenue Improvement Driven by Second Consecutive Quarter of Positive PAT


HBB on the back of Strong Revenue Growth

(Rs Mn) (Rs Mn)


+34% +36% Q2 17 QoQ 1H 17 YTD
+4% 1,651 10% 3,151 77%
EBITDA
6,0 00
5,940
PAT 331 40% 568 >100%
5,5 00

5,0 00

4,5 00
4,355
4,0 00

3,028 2,912
3,5 00

3,0 00
2,260 EBITDA Margin % 54.5% +3.0pp 53.0% +12.1pp
2,5 00

2,0 00

1,5 00

1,0 00
PAT Margin % 10.9% +2.8pp 9.6% +10.5pp
Q2 17 Q1 17 Q2 16 1H 17 1H 16

Strong growth in HBB Revenue driving QoQ and YTD Revenue improvement

QoQ and YTD EBITDA improvement driven by strong growth in Revenue

On the back of healthy EBITDA performance, DBN recorded its second consecutive quarter of
positive PAT. Net profit of Rs568Mn for 1H 2017

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Thank You

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