Analyst Briefing Presentation.jan 2006

8/22/2019 Analyst Briefing Presentation.jan 2006

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ECONET WIRELESS HOLDNGS LIMITED

Half-Year Results

For The Period Ended

31 December, 2005

18 January, 2006


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Financial Performance

Historical Results

Krison Chirairo- Finance Director


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OPERATING ENVIRONMENT

Y-O-Y inflation rose from 132.70% in December2004 to 585.8% by the end of December 2005.

Foreign currency shortages and continueddepreciation of the Zimbabwe dollar.

Shortage of basic commodities, fuel and powercuts.

Continued pressure on disposable income due tohigh inflation.

Rising interest rates but with negative real returns.


4/31

100% 100% 84.3% 100% 35%

EconetWireless

(Pvt) Ltd

Data

Control

(Ecoweb)

TPS FDM

(YourFone)

Gulfsat

Maghreb

EWC

Holdings

(Pvt.) Ltd

Group Structure

23,4%

Econet Wireless Holdings

KINGDOM

FINANCIALHOLDINGS LIMITED

100%

Note: Kingdom Financial Holdings Ltd results

have not been included.


5/31

KEY PERFORMANCE INDICATORS

Indicator June 2005 Dec 2005 Dec 2004 change

Subscribers 258,268

Turnover (Z$m) 678,995

EBITDA Margin 54%

Overheads as % of turnover 32%

PBIT margin 51%

Attributable earnings as % of turnover 47%

Basic EPS (Z$) 2,097.09

Net cash generated from operations(Z$m) 306,237

Capex 136,964

Debt Equity Ratio 0%

412,197

1,425,054

56%

29%

54%

42%

4,058.25

770,347

146,904

0%

244,435

236,565

53%

34%

53%

43%

658.97

132,015

65,504

0%

69%

502%

6%

15%

2%

(2%)

516%

484%

124%

0%


6/31

INCOME STATEMENT

ZW$ Millions June 2005 Dec - 2005 2004 change

Revenue 678,995

Cost of sales & operating expenses (309,739)

1,425,054

(760,001)

236,565

(113,218)

502%

571%

EBITDA 369,256

Depreciation and amortisation (8,844)

Net finance income 45,591

797,264

(30,250)

101,808

124,490

(4,287)

17,332

540%

606%

487%

Profit before taxation 467,218

Taxation (149,547)

869,529

(263,876)

146,903

(45,672)

492%

478%

Profit after taxation 317,671

Minority interest (55)

605,653

(706)

101,231

(70)

498%

909%

Attributable earnings 317,616 604,947 101,161 498%


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REVENUE GROWTH

Revenue has grown by

502%.

Network upgrade resulted in

release of over 156,000 newLibertie lines.

Increased usage across all

packages.

Tariff increase awarded inOctober 2005 though below

July 2005 tariff.

200 237

679

1,425

0

200

400

600

800

1,000

1,200

1,400

1,600

2004

Jun

2004

Dec

2005

Jun

2005

Dec

Revenue


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EWZ

94%

TPS

1%

FDM

1%

3%

REVENUE CONTRIBUTION

By Company

Dec - 2005$1,4 trillion

EWZ

92%

FDM

4%

DataControl

3%

TPS

1%

Dec- 2004$237 billion

Data

Control


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61%

8%9%

20%

REVENUE ANALYSIS

Dec-2005$1.4 trillion

8%

73%

10%

9%

Dec - 2004$237 billion

InterconnectionLocal

airtime

Other

International

Local

airtime

Other

Interconnection

International


10/31

2 1331 124

100

797

369

52%

50%

53%

34%

54%56%

52%

0

100

200

300

400

500

600

700

800

900

2002 Jun 2003 Jun 2003 Dec 2004 Jun 2004 Dec 2005 Jun 2005 Dec

Billions

0%

10%

20%

30%

40%

50%

60%

EBIDTA Margin

EBITDA GROWTH


11/31

104 147

869

467

76 101

605

318

0

200

400

600

800

2004 Jun 2004 Dec 2005 Jun 2005 Dec

Billio

ns

PBT PAT

PROFIT GROWTH

491%

499%


12/31

BALANCE SHEET

388%

148%

676%

388%

235%

632%

(47%)

351,495

191,775

159,720

351,495

201,574

141,714

8,207

1,716,081

476,391

1,239,690

1,716,081

674,270

1,037,431

4,380

TOTAL ASSETS 577,422

Non current assets 267,706

Current assets 309,716

TOTAL EQUITY AND LIABILITIES 577,422

Total Equity 333,642

Current Liabilities 239,377

Non Current Liabilities 4,403

Dec - 2004 changeDec - 2005ZW$ Millions Jun-2005


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CASHFLOW STATEMENT

ZW$ Millions Jun

2005

Dec

2005

Dec

2004

Change

Cash flow from operating activities 381,604

Net finance income 45,591

Taxation paid (73,497)

Dividend paid (47,461)

904,242

101,808

(163,602)

(72,101)

133,172

17,332

(5,729)

(13,703)

579%

487%

2,999%

426%

Net cash flow from operating activities 306,237 770,347 131,072 488%

Cash flow from investing activities (136,964)

Cash flow from financing activities (33,267)

(138,033)

(192,217)

(65,504)

(26,497)

111%

625%

Net increase in cash and cash equivalent 136,006 440,097 39,071 1,026%Cash and cash equivalent at year beginning 43,347 179,353 43,347 314%

Cash and cash equivalent at period end 179,353 619,450 82,419 652%


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OPERATIONAL PERFORMANCE

Douglas Mboweni

CEO Econet Wireless (Pvt) Ltd


15/31

KeyOperational

Priorities

Jan06-Jun06

Grow an active & viablesubscriber base

and sustain economic Tari ff sin real terms

Innovativeproducts

based on Current and

new infrastructure

Cost efficiency +

Staffproductivity &

retention

Network Hardware &

Software Upgrades and expansion

OPERATIONAL PRIORITIES


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RADIO NETWORK

RADIO NETWORK

3

BASE STATION CONTROLLERS

BASE STATION CONTROLLERS

2 THREESWITCHES &

VAS PLAT.

1

Upgrade of

critical switch

hardware andsoftware.

Continue with

implementation

and

commissioning

of Base stations

Implementation

of GSM 1800

Implementation

of 2.5G & 3Gfunctionality

Key focus is on

Network quality

and subscriber

uptake.

NETWORK DEVELOPMENT


17/31

Some key developments: (JulyDec 2005)

36 New base stations deployed throughout the country

with 14 new areas introduced

Software upgrades were done such that the network isnow operating on Ericssons new Software Release 10.

A new SMSC was commissioned with a capacity of over50 messages per second

A complete Radio Network Improvement (RNI) wasperformed resulting in a grade of service (GOS) of lessthat 5% and a dropped calls rate of less than 2% acrossthe network.


18/31

NETWORK COVERAGE

New geographical coverage:

Zvishavane, Shurugwi, Mt

Darwin, Mvurwi, Macheke,

Banket, Rutenga, Mvuma,

Shangani, & Mazowe,

Chirundu, Kariba Harbour,

Nyazura, & Esigodini

Towers and shelters have been

erected in nearly all small

towns, holiday resorts, growth

points, business centers and

border posts

Tower steel material in stores

for more towers yet to be

constructed

Site acquisition and preparation

work continues


19/31

MARKET SHARES

Mobi le Network s

Econet

56%Net*One

25%

Telecel

19%

Source of Compet i t ion Figures:

Market Intel l igence

Al l Network s

Econet

38%

Net*One

17%

Telecel

13%

Tel*One

32%


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THE ECONET PRODUCTS

1

2

3

4

5


21/31

1. Introduction of Electronic Value Distribution (EVD)

Over 200 Outlets countrywide

2. Introduction of airtime sales and bill payment in all

Kingdom Bank branches

3. Continued to promote electronic top-up of airtime

via the E-tranzact platform

4. Distribution of airtime through the Zimpost branch

network which has over 350 outlets

5. Launched Airtime transfer via SMS

All initiatives designed to offer customer

convenience and cost savings

Key Marketing Innovation: JulyDec 2005


22/31

PAYPHONES

Payphone Growth

-

1,000

2,000

3,000

4,000

5,000

6,000

Jan-05

Feb-

05

Mar

-05

Apr-0

5

May

-05

Jun-05

Jul-0

5

Aug-05

Sep-05

Oct-05

Nov-05

Dec-05

Month

Pay

phones.

Additons

Cumulative


23/31

SUBSCRIBER GROWTH

Subscribers increased

by 69% with anaddition of 167,762new lines since 31December 2004.

Total subscribers nowat 412,197 (244,435 at31 Dec 2004)

Re-launch of Libertieadded over 156,000new lines.

The business focuswill be on new Libertiein the second half.

59,821

170,

480

193,80

9

352,37

6

64,45973

,955

38,915

114,25

2

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

2003

Dec

2004

Dec

2005

Jun

2005

Dec

Contract Prepaid

69%


24/31

Average MOU per Subscriber

124

9890

120

8994

189

166169169

161

188

0

20

40

60

80

100

120

140

160

180

200

2003Dec

2004Dec

2004Jun

2004Dec

2005Jun

2005Dec

Outgoing Incoming


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TOTAL USAGE IN MINUTES

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

Mar-

05

Apr-

05

May-

05

Jun-

05

Jul-

05

Aug-

05

Sep-

05

Oct-

05

Nov-

05

Dec-

05

Outgoing Minutes Incoming Minutes


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INCOMING MINUTES

-

10,000,00020,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

Mar-

05

Apr-

05

May-

05

Jun-

05

Jul-

05

Aug-

05

Sep-

05

Oct-

05

Nov-

05

Dec-

05

Total Incoming Econet to Econet

National International


27/31

Moved to Cost based tariff structure (COSITU) in

October 2005.

COSITU Benefits

Cost Based Model captures all cost elements and

allows the business to charge economic tariffs

Easier to establish rapport with the Regulator, withthe use of COSITU.

The Future

Agreed with Regulator to review tariffs every

quarter Operators are allowed to review tariffs whenever

there is a significant shift in the cost structure

Operators required to be cost-efficient to avoid

over-pricing

TARIFFS


28/31

1. The company has moved to a Performance bonus

based on company profitability and cost efficiency.This replaces the traditional thirteenth cheque

which had no bearing on profitability.

2. The company has a staff training and development

programme named Grow and Glow. Retention ofskilled staff is a key business priority.

3. The business continues to deal with the HIV/AIDS

challenge by promoting an employee wellnessprogramme L ive to Loveaimed at:

a) Awareness

b) Prevention and

c) Treatment.

STAFF PRODUCTIVITY AND RETENTION


29/31

1. Econet launched Econet in the Community programme

in September 2004 with the target being the less

privileged in the society. A number of organisations

such as Jairos Jiri continue benefited from the

programme.

2. Econet supports the education and upkeep of more

than 25,000 orphans through Capernaum Trust.

3. The Company has launched the Joshua NkomoScholarship Fund which will take care of University

tuition fees and stipend for the top 5 students from

each of the 10 provinces in Zimbabwe.


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THANK YOU


31/31

Questions

&

Answers

Documents

Analyst Briefing Presentation.jan 2006