CFA Institute Research Challenge · MAIN SECTOR INDICATORS 116 108 110 102 2012 2013 2014 2015 UAE Telecommunications Sector - Fixed Telephony Services ARPU (AED) 1.96 2.08 2.09 2.24

CFA Institute Research Challengehosted by CFA Society UAE – Local Challenge

S P Jain School of Global Management (Team A)

Emirates Integrated Telecommunications Company (DU)

All figures in AED unless otherwise noted

SP Jain School of Global Management

8.9%

EV/EBITDA

DCF HOLD

6.53 AED

8.8%

Sustained Market Share

Regulated Duopoly

Reliable Network Coverage

Infrastructure Investment

Limited Churn Rate

Drag On ARPU in Mobile Segment

Royalty Structure

Market

Capitalization:

27.4 Bn

Price as on

8th March:

6 AED

Price as on

23rd March:

6 AED

I N V E S T M E N T T H E S I S

4.5

5

5.5

6

6.5

7

7.5

Jan '16 Apr '16 July '16 Nov '16 Feb '17

Stock Price

Target Price: 6.53

One Year Target

Business Overview

Industry & Competitors

Financial Analysis ValuationRiskAnalysis

InvestmentThesis Appendices

BUSINESS OVERVIEW

F O U N D E D

2005

E M P L O Y E E S

2000 (approximately)

R E V E N U E

12.73 BLN (AED)

N E T I N C O M E

1.74 BLN (AED)

F O O T P R I N T

U.A.E.

C E O

OSMAN SULTAN

K E Y I N F O R M AT I O N

Source: Company filings

Business Overview


Financial Analysis

Valuation RiskAnalysis


C O M PA N Y P R O F I L E


UAE Government Via Emirates Investment

Authority (EIA)39.5%

Dubai Holding Via Emirates

International Telecommunication

(EIT)19.5%

Public20.92%

ShareholdingPattern

Abu Dhabi Government via Mubadala 20.08%

Business Overview


Financial Analysis



C O M PA N Y M I L E S TO N E S


2005 Company formed as EITC

2007

Rebranded as du.

Launched Mobile

Services2009

Launched Internet Services

with 24Mbps

2017

Partnered with

Virgin Mobile

2008 Added 1.8M subscribers in one year

2011 Over 5M subscriber base

Business Overview


Financial Analysis



INDUSTRY & COMPETITORS

P O R T E R ’ S F I V E F O R C E S

0

1

2

3

4

5Threat of New Entrants

Power of Suppliers

Power of BuyersThreat of Substitutes

Rivalry

UAE Telecommunications Sector - Porter's Five Forces

Source: Team Research

Regulated and capital intensive

Competitive prices & diversified product offerings

Intense rivalry

Offers substitutes (landline + cable tv + data services)

Not able to forward integrate

Business Overview


Financial Analysis



30

25 24 23

45

33 32 32

24

19

12

17

2012 2013 2014 2015

UAE Worldwide Rankings

NRI IDI GCI

Source: TRASource: TRA

2015 UAE GCC Rankings

G C C & WO R L D W I D E R A N K I N G S

NRI

1ST

IDI

3RD

GCI

2ND

Network Readiness Index

ICT Development Index

Global Competitive

Index

Business Overview


Financial Analysis



VA LU E A D D E D TA X

2 0 1 8 5 %

U N I T E D A R A B E M I R AT E S

Business Overview


Financial Analysis



M A I N S EC TO R I N D I C ATO R S

73%

8%

19%

UAE Telecommunications Sector Revenue Break-Up

Mobile Services Fixed Telephony Services Internet Services

AED 31.9 BLN (-0.9%)

AED 5.9 BLN (+28.0%)

AED 23.2 BLN (-6.0%)

AED 2.7 BLN (-3.2%)

Source: TRA

Business Overview


Financial Analysis




Source: TRA

136 124 126 112

2012 2013 2014 2015

UAE Telecommunications Sector - Mobile Services ARPU (AED)

13.78 16.06 16.82 17.94

2012 2013 2014 2015

UAE Telecommunications Sector - Mobile Services Subscribers (Millions)

73%

8%

19%



Mobile Services Market Saturating

Business Overview


Financial Analysis




116

108 110

102

2012 2013 2014 2015

UAE Telecommunications Sector - Fixed Telephony Services ARPU (AED)

1.96

2.08 2.09

2.24

2012 2013 2014 2015

UAE Telecommunications Sector - Fixed Telephony Services Subscribers (Millions)

73%

8%

19%



Fixed Line Services Market Declining

Source: TRA

Business Overview


Financial Analysis




345 357 354 416

2012 2013 2014 2015

UAE Telecommunications Sector - Internet Services ARPU (AED)

0.96 1.04 1.09 1.23

2012 2013 2014 2015

UAE Telecommunications Sector - Internet Services Subscribers (Millions)

73%

8%

19%



Internet Services Market Growing

Source: TRA

Business Overview


Financial Analysis





Internet Services Market Growing

Mobile Services Market Saturating

Fixed Line Services Market Declining

Business Overview


Financial Analysis



52%

ETISALAT

3%others

45%

DU

U N I T E D A R A B E M I R AT E S

Source: Company filings, TRA

C O M P E T I T I O N

71% of new postpaid subscribers

75% of International traffic

62% of new total connections

29% of new postpaid subscribers

25% of International traffic

38% of new total connections

Business Overview


Financial Analysis



C O M P E T I T I O N

Business Overview


Financial Analysis



GCC UAE QATAR KUWAIT BAHRAIN KSA OMAN

Company Du Etisalat Qatar Telecom Zain Batelco Mobily Oredoo

CAPEX 1.5 4.9 (3.3x)

7.5(5.0x)

0.4(0.3x)

0.7(0.5x)

5.5(3.7x)

0.6(0.4x)

Revenue 12.73 28.8 (2.3x)

32.8(2.6x)

3.9(0.3x)

3.6(0.3x)

12.3(1.0x)

2.4(0.2x)

EBITDA 5.4 16.3 (3.0x)

13.5(2.5x)

1.9(0.4x)

1.3(0.2x)

3.9(0.7x)

1.3(0.2x)

EBITDA % 42% 57% 41% 50% 38% 32% 55%

In equivalent AED BLN 2016 figures. * Etisalat numbers are for 2015 since 2016 are not available.


FINANCIAL ANALYSIS

9.84

10.80

12.24 12.3412.73

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

2012 2013 2014 2015 2016

Total Revenue

340

360

380

400

420

440

460

480

0

20

40

60

80

100

120

140

160

2012 2013 2014 2015

ARPU Trends

Mobile Landline Call select TV Broadband

Mobile revenues under pressure

Gradual shift towards Non mobile revenue

YOY Growth of 3.16% In FY16

S T E A DY R E V E N U E

Business Overview


Financial Analysis



72%

21%

6%

1%

Revenue Break Up 2016

Mobile

7.618.37

9.18 8.99 9.12

0.00

2.00

4.00

6.00

8.00

10.00

2012 2013 2014 2015 2016

Mobile Revenue

103

9896

94

859095

100105

2012 2013 2014 2015

Mobile ARPU

Mobile

Growth in Subscriber base 11.95%

Growth in Revenue 1.47%

M O B I L E R E V E N U E

Business Overview


Financial Analysis



Mobile

Growth in Revenue 4.42%

F I X E D L I N E R E V E N U E

72%

21%

6%

1%

Revenue Break Up 2016

Fixed Line

1.62 1.68

2.252.55 2.67

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2012 2013 2014 2015 2016

Fixed Line Revenue

300

350

400

450

500

0

50

100

150

2012 2013 2014 2015

FIxed Line ARPU

Landline Call select TV Broadband

Business Overview


Financial Analysis



72%

21%

6%

1%Revenue Break Up 2016

0.44

0.58

0.660.63

0.77

0.17 0.18 0.16 0.16 0.17

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

2012 2013 2014 2015 2016

Wholesale And Broadcasting Revenue

W H O L E S A L E A N D B R O A D C A S T I N G R E V E N U E

Growth in Whole Sale Revenue 4.46%

Growth in Broadcasting Revenue 3.16%

Business Overview


Financial Analysis



3.04

3.79 3.87

4.81

3.45

1.72 1.56 1.7 1.7 1.58

0.68

2.3

1.411.96

1.5

0.00

1.00

2.00

3.00

4.00

5.00

6.00

2012 2013 2014 2015 2016

Operational cash flow / Capex

Operational cash flow Capex Dividend Payout

0.29

0.56 0.57 0.57 0.56

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

2012 2013 2014 2015 2016

Debt Equity

28.6% 28.2%30.4% 31.3%

30.1%

8.6%9.5%

13.0%

15.6%16.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

2012 2013 2014 2015 2016

EBIT Margin | Royalty

EBIT Margin Royalty as % of revenue

Royalty taking away more than half the EBIT margin

Healthy operational cash flow and Royalty coverage

Steady debt equity

Adequate gearing and flexibility to borrow

C A S H F LOW | R OYA LT Y | D E BT

Business Overview


Financial Analysis



9.8410.80

12.24 12.34 12.73 12.59 12.83 13.26 13.68 14.11

2.81 3.043.72 3.86 3.84 4.01 3.95 3.99 4.01 4.02

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F

Revenue & EBIT

REV EBIT

DU Pont 2012 2013 2014 2015 2016

ROE 26% 27% 28% 25% 22%

Net Margin 20% 18% 17% 16% 14%

Asset Utilisation 0.71 0.72 0.72 0.69 0.70

Gearing 1.85 2.04 2.26 2.29 2.32

Stable margins

Saturating revenues

CAGR 2.3%

F I N ANC I AL A N ALYS I S | E X P EC TAT I O NS

Business Overview


Financial Analysis



VALUATION

VA LUAT I O N

Discounted Cash Flow Method

• Fair Value : 6.81 AED

• Weightage : 80%

Market Multiples

• Fair Value : 5.42 AED

• Weightage: 20%

PRICE TARGET : 6.53 AEDUpside : 8.87%

HOLD

Rating

Market Return +/- 5%

Business Overview


Financial Analysis




Population Growth Teledensity

Market Share

DU Subscriber Base ARPU

Revenue

UAE Subscriber Base

FY 2017 Data

Population 9.4 Mln

Market share 45.62%

DU subscriber base 9.15 Mln

Mobile ARPU 85

R E V E N U E D R I V E R S

Business Overview


Financial Analysis



R E V E N U E D R I V E R S

91559723

1028810813

11357

0

2000

4000

6000

8000

10000

12000

2017 2018 2019 2020 2021

Mobile subscribers for DU (in '000)

8579

7469

65

0

10

20

30

40

50

60

70

80

90

2017 2018 2019 2020 2021

Monthly ARPU

F F F F F F F F F F

Business Overview


Financial Analysis



D I S C O U N T E D F R E E C A S H F LOW M E T H O D

Terminalgrowth rate

1.75%WACC 7.35%

Cost of Equity 9.96%

Cost of Debt 2.72%

Target Price by

FCFF

6.81

Business Overview


Financial Analysis



WAC C

Cost of Equity 9.96%

Cost of Debt 2.72%

Effective Interest Rate

3.8% Risk Free Rate

8.67%

0.71 Volatility Weighted Beta

Risk Premium

Cost Of Capital:7.35%

Business Overview


Financial Analysis



M U LT I P L E S M E T H O D

EV/EBITDA multiple 4.51

EBITDA per share 1.20

Target Price by

Multiples

5.42

0.00

5.00

10.00

15.00

20.00

Price 15X 12X 9X 6X 3X

Price/EBTDA Bands

Business Overview


Financial Analysis



I N V E S T M E N T E F F I C I E N C Y

Mean 0.07%Standard Deviation 1.02%Skewness 0.86

Excess Kurtosis 4.34

0

20

40

60

80

-3.80% -2.12% -0.45% 1.23% 2.91% More

Fre

qu

en

cy

Returns

Returns - Distribution

Frequency

Sharpe Ratio Index 2.558824

Sharpe Ratio Du 0.86375

Sharpe Ratio Etisalat 1.08

Daily Annualized

VAR Index (95%) -1.81% -28.63%

VAR Du (95%) -2.31% -36.59%

VAR Etisalat (95%) -2.18% -34.47%

Business Overview


Financial Analysis



RISKANALYSIS

R I S K P R O F I L E

• Deregulation of VOIP Call

• Introduction of Third Player

Regulatory

• Increasing Operating Cost

• Shifting Customer Preferences

Operational• Oil Prices

• Global Pressures of Protectionism

Macroeconomic

Business Overview


Financial Analysis



S E N S I T I V I T Y A N A LYS I S

Mobile ARPU Price Potential

Down by 10% 6.2 3.27%

Down by 5% 6.36 6.07%

Down by 2% 6.47 7.75%

BASE CASE 6.53 8.87%

Up by 2% 6.6 10.00%

Up by 5% 6.7 11.68%

Up by 10% 6.87 14.48%

Growth rate

AED 6.53 0.00% 1.00% 1.75% 4.00% 5.10%

WACC

3% 12.79 18.42 28.54 -32.20 -14.52

5% 7.74 9.30 11.10 32.73 -310.97

7.35% 5.32 5.93 6.53 9.96 14.14

8% 4.90 5.40 5.88 8.39 11.04

9% 4.37 4.75 5.10 6.77 8.28

10% 3.96 4.24 4.51 5.68 6.66

Market Share

Growth Rate

AED 6.53 0.00% 1.00% 1.75% 4.00% 5.00%

43.00% 5.15 5.75 6.34 9.68 13.23

44.00% 5.21 5.82 6.41 9.79 13.37

45.62% 5.32 5.93 6.53 9.96 13.6

46.00% 5.34 5.96 6.56 10 13.65

47.00% 5.4 6.03 6.64 10.11 13.79

Business Overview


Financial Analysis



R I S K M AT R I X

Macro Economic

Regulatory

Operational

Shifting Customer

Preferences

Rising Operational Cost

PR

OB

AB

IL

IT

Y

Hig

hM

od

erat

eOpening up VoIP

callsNew Player in the

Market

Low

Insignificant Moderate Severe

I M P A C T

A steep fall in oil prices

Business Overview


Financial Analysis



8.9%

EV/EBITDA

DCF HOLD

6.53 AED

8.8%

I N V E S T M E N T T H E S I S

4.5

5

5.5

6

6.5

7

7.5

Jan '16 Apr '16 July '16 Nov '16 Feb '17

Stock Price

Target Price: 6.53

One Year Target

Business Overview


Financial Analysis ValuationRiskAnalysis


Market

Capitalization:

27.4 Bn

Price as on

8th March:

6 AED

Price as on

23rd March:

6 AED

Q&AYashodhan. Anna. Salman. Paras. Aakash.

THANK YOU!

APPENDICES

A P P E N D I X : R AT I N G K E Y

A P P E N D I X : K E Y F I N A N C I A L S

A P P E N D I X : F I N A N C I A L S : K E Y R AT I O S

A P P E N D I X : F I N A N C I A L S : K E Y R AT I O S

A P P E N D I X : VA LUAT I O N

9155 9723 10288 10813 11357

8579 74 69 65

0

20

40

60

80

100

0

2000

4000

6000

8000

10000

12000

2017 2018 2019 2020 2021

Mobile

Mobile Subscribers Mobile ARPU

364 379 394 410 426

233231

229

227

224

218220222224226228230232234

320

340

360

380

400

420

440

2017 2018 2019 2020 2021

Fixed Line

Fixed line Subscribers Fixed Line ARPI

220 240 261 285 310

510 538 568602

638

0

100

200

300

400

500

600

700

0

50

100

150

200

250

300

350

2017 2018 2019 2020 2021

Broad Band

Broad Band Subscribers Broad Band ARPU

176 189 203 218 235

82 86 90 95100

0

20

40

60

80

100

120

0

50

100

150

200

250

2017 2018 2019 2020 2021

TV

T V Subscribers TV ARPU

S EG M E N T A N A LYS I S

A P P E N D I X : F I N A N C I A L S : R E V E N U E P R OJ EC T I O N S

A P P E N D I X : A R P U S TAT I S C A L A N A LYS I S

A P P E N D I X : F I N A N C I A L S : BA L A N C E S H E E T A S S E T S

A P P E N D I X : F I N A N C I A L S : BA L A N C E S H E E T L I A B I L I T I E S

A P P E N D I X : F I N A N C I A L S : BA L A N C E S H E E T S H A R E H O L D E R S EQ U I T Y

A P P E N D I X : F I N A N C I A L S : I N C O M E S TAT E M E N T

A P P E N D I X : F I N A N C I A L S : R OYA LT Y C A L C U L AT I O N

A P P E N D I X : C A P E X S C H E D U L E

A P P E N D I X : LOA N S C H E D U L E

A P P E N D I X : M AC R O EC O N O M I C O U T LO O K

A P P E N D I X : M AC R O EC O N O M I C O U T LO O K

A P P E N D I X : P O R T E R ’ S F I V E F O R C E S

5 Forces Degree Rationale

Rivalry High • Duopoly of Etisalat and Du• Easy number portability

Threat of New Entrants Low • Capital Intensive• Regulated telecom license

Power of Buyers Moderate • Only two options, Etisalat and Du• Since rivalry is high, prices for mobile services are competitive• Wide variety of products and services offers

Threat of Substitutes Low • Both operators offer landline, cable TV, and data services

Power of Suppliers Low • Low product differentiation, high bargaining power• Low price elasticity due to low buyer switching cost• Inability to forward integrate


A P P E N D I X : UA E T E L EC O M M U N I C AT I O N S S EC TO R

A P P E N D I X : D U O U T R E AC H

Company License Mobile Fixed Line Internet Broadcasting Satellite

Al Yah Satellite Services Company 2010 ✔️ ✔️ ✔️

Star Satellite Communications 2010 ✔️ ✔️ ✔️ ✔️

Al-Maisan Satellite Communications 2011 ✔️

Media Zone Intaj FZ LLC 2011 ✔️

Thuraya 2013 ✔️ ✔️

Inmarsat 2015 ✔️

A P P E N D I X : UA E N E W L I C E N S E S

Source: TRA

A P P E N D I X : UA E M O B I L E S E R V I C E S

23.54 26.18 28.70 31.49

5.16 7.05

9.25 11.15 28.70

33.23 37.95

42.64

2012 2013 2014 2015

UAE Telecommunications Sector - Mobile Traffic (Bln of Minutes)

Total Mobile Traffic (Bln of minutes) International Mobile Traffic 2,723

43

2,373

33

2,039

20

1,515

6

SMS Traffic (Mln) MMS Traffic (Mln)

UAE Telecommunications Sector

2012 2013 2014 2015

43%

2%

25%

48%

23%

30%

5%14%

4% 6%

Outgoing Calls Incoming Calls

UAE Telecommunications Sector - 2015 Most Popular Destination

Bangladesh India Pakistan Egypt Nepal

168%

193% 199%210%

2012 2013 2014 2015

UAE Telecommunications Sector Mobile Services Penetration Rate

35%

1%3%

61%

Breakdown of Mobile Voice Traffic

International Minutes Outbound Roaming

Mobile to Fixed Mobile to Mobile

12.06 13.95 14.35 15.14

1.72 2.11 2.47

2.80 13.78 16.06 16.82

17.94

2012 2013 2014 2015

UAE Telecommunications Sector - Mobile Subscriptions (Mln)

Prepaid Subscribers Postpaid Subscribers

Source: TRA

A P P E N D I X : UA E F I X E D L I N E S E R V I C E S

3.53

3.41

2.96

3.38

2012 2013 2014 2015

Total Fixed Line Traffic (Billions of Minutes)

450

396

349 343

2012 2013 2014 2015

International Fixed Line Traffic (Millions of Minutes)

15%

75%

10%

Breakdown of Total Voice Traffic (Minutes %)

Fixed to Fixed Fixed to Mobile International

1.10 1.20 1.21 1.22

0.86 0.88 0.89 1.01

1.96 2.08 2.09

2.24

2012 2013 2014 2015

UAE Telecomunnications Sector - Fixed Line Subscriptions (Millions)

Residential Fixed Lines Business Fixed Lines

Source: TRA

A P P E N D I X : UA E I N T E R N E T S E R V I C E S

847 925 969 1066

108 117 121168955

1042 10901234

2012 2013 2014 2015

UAE Telecommunications Sector -Broadband Subscribers by Service

(Thousands)

Residential Business

679841 964

1101

272198

122129951

1039 10861230

2012 2013 2014 2015

UAE Telecommunications Sector - Internet Subscriptions by Technology

Fiber Copper Total

32% 24% 23% 16%

36% 39% 31%23%

32% 37% 46%61%

2012 2013 2014 2015

UAE Telecommunications Sector -Broadband Subscription Shares by

Package

Standalone Internet Double Pay Triple Pay

4.00% 8%2.90% 4%9% 5%

84.10% 83%

Residential Business

Distribution of Broadband Subscribers by Internet Speed

Below 1 Mbps 1 Mbps 2-4 Mbps Above 4 Mbps

Source: TRA

A P P E N D I X : D U S WOT

0

5

10

15

20Total Strengths

Total Weaknesses

Total Opportunities

Total Threats

DU SWOT

Threats DU

Market Saturation 25

Declining ARPU 25

Substitute Products 5

Entry Barriers 5

Regulations 5

New Competitors 20

Pricing 20

Average Threats 15

Opportunities DU

Vertical Integration 20

International Expansion 25

Market Growth 15

Product Offerings Expansion 20

Untapped Market 25

New Technologies 25

Competition Complacency 5

Average Opportunities 19

Weaknesses Du Etisalat

Profitability 15 5

Market Share 15 10

Management 5 5

Cost Structure 15 10

Product Offerings 10 15

Infrastructure 15 10

Brand Name 15 5

Average Weaknesses 13 9

Strengths Du Etisalat

Technology 20 25

Connectivity 15 25

Economies of Scale 15 20

Customer Service 20 20

Sales Team 15 20

Management Team 25 25

Value for Money 30 20

Average Strengths 20 22


A P P E N D I X : S WOT

0

5

10

15

20

25

30Technology

Connectivity

Economies of Scale

Customer ServiceSales Team

Management Team

Value for Money

Strengths

Du Etisalat

0

5

10

15Profitability

Market Share

Management

Cost StructureProduct

Offerings

Infrastructure

Brand Name

Weaknesses

Du Etisalat

0

5

10

15

20

25Vertical Integration

InternationalExpansion

Market Growth

Product OfferingsExpansion

Untapped Market

New Technologies

CompetitionComplacency

Opportunities

0

5

10

15

20

25Market Saturation

Declining ARPU

Substitute Products

Entry BarriersRegulations

New Competitors

Pricing

Threats


A P P E N D I X : BA S K E T O F G O O D S C O M PA R I S I O N

Du Postpaid Plans

Monthly Charge

Activation (One Time)

DataFlexible Minutes

Contract Others

150 125 6 GB 30024

months

300 125 18 GB 60024

months300 minutes call 1

preferred numbers free

450 125 25 GB 120024



1000 125100 GB

250024



Etisalat Postpaid Plans

Monthly Charge Data Minutes Contract

500 25 GB 2000 local 12 months

500 25 GB 750 flexi 13 months

1000 100 GB 2000 local 14 months

1000 100 GB 1000 flexi 15 months

Du Prepaid Plans (Pay As You Go)

Monthly Charge Flexi Minutes Data

25 35 N/A

50 75 N/A

100 150 500 MB

100 100 1 GB

150 150 2 GB

200 300 3 GB

Etisalat Prepaid Plans (Monthly Combo Pack)

Monthly Charge Flexi Minutes Data

Small 60 100 MB

100 100 1 GB

150 150 2 GB

200 300 3 GB

Du (iPhone 7 32GB - Flexible Mins)

Contract Monthly MonthlyMonthly Data Total Cost

Comparable iPhoneApple

Duration Payments Minutes Plan Cost

24 260 300 6GB 6,240 150 2,640 2,599

24 410 600 18GB 9,840 300 2,640

24 560 1200 25GB 13,440 450 2,640

12 370 300 6GB 4,440 150 2,640

12 520 600 18GB 6,240 300 2,640

12 670 1200 25GB 8,040 450 2,640

Etisalat (iPhone 7 32GB - Flexible Mins)

Contract Monthly MonthlyMonthly Data

Total Comparable iPhoneApple

Duration Payments Minutes Cost Plan Cost

24 265 500 6GB 6,360 150 2,760 2,599

24 265 200 6GB 6,360 150 2,760

18 400 1000 12GB 7,200 250 2,700

18 400 300 12GB 7,200 250 2,700

18 650 750 25GB 11,700 500 2,700

18 650 2000 25GB 11,700 500 2,700

These are only a representative of the mobile product offerings of Du and Etisalat.


A P P E N D I X : UA E S TO R E C OV E R AG E

DU Etisalat

Store per SQM No of stores Store per SQM No of stores

UAE 153 60 102 90

Dubai 142 29 48% 98 42 47%

Abu Dhabi 49 20 33% 49 20 22%

Sharjah 47 5 8% 14 17 19%

Ajmaan 130 2 3% 29 9 10%

Fujaira 1,166 1 2% 1,166 1 1%

Ras Al Khaiman 1,684 1 2% 1,684 1 1%

Umm Al Quwain 389 2 3% - - -


A P P E N D I X : V I R G I N M O B I L E E N T RY S T R AT EGY

GCC # of Operators VM Entry VM Operates as

Qatar* 2 2010 MVNO

Saudi Arabia 3 2014 B-Brand

Oman 2 2009 MVNO

UAE 2 2017 B-Brand

*Virgin Mobile operated in Qatar for only one year.

Brand: Virgin MobileTarget Market: Youth

Brand: Friendi MobileTarget Market: Expatriates


VM – Virgin Mobile

GCC Qatar Kuwait Bahrain Saudi Arabia Oman

CompanyQatar

TelecomVodafone

QatarZain Ooredoo Viva Batelco Zain STC Mobily Zain Omante Ooredoo

Fiscal 2016 2015/2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2015

CAPEX 7.51 0.4 0.4 N/A 1.2 0.7 0.2 9.4 5.5 0.0 1.6 0.6

Revenue 32.83 2.1 3.9 2.4 3,365.5 3.6 0.6 50.8 12.3 0.0 5.0 2.4

EBITDA 13.50 0.4 1.9 0.6 1,592.3 1.3 0.2 17.6 3.9 0.0 2.5 1.3

EBITDA Margin

41% 21% 50% 26% 47% 37% 38% 35% 32% 26% 51% 55%

A P P E N D I X : G C C C O M PA R I S O N


A P P E N D I X : M A N AG E M E N T T E A M

A P P E N D I X : B OA R D O F D I R EC TO R S

A P P E N D I X : C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

CFA Institute Research Challenge

Disclosures:

Ownership and material conflicts of interestThe author(s), or a member of their household, of this report does not hold a financial interest in the securities of this company. The author(s), or a member of their household, ofthis report does not know of the existence of any conflicts of interest that might bias the content or publication of this report.

Receipt of compensationCompensation of the author(s) of this report is not based on investment banking revenue. Position as an officer or a director The author(s), or a member of their household, does notserve as an officer, director, or advisory board member of the subject company.

Market makingThe author(s) does not act as a market maker in the subject company’s securities.

DisclaimerThe information set forth herein has been obtained or derived from sources generally available to the public and believed by the author(s) to be reliable, but the author(s) does notmake any representation or warranty, express or implied, as to its accuracy or completeness. The information is not intended to be used as the basis of any investment decisions byany person or entity. This information does not constitute investment advice, nor is it an offer or a solicitation of an offer to buy or sell any security. This report should not beconsidered to be a recommendation by any individual affiliated with CFA Society UAE, CFA Institute, or the CFA Institute Research Challenge with regard to this company’s stock.

Documents

CFA Institute Research Challenge · MAIN SECTOR INDICATORS 116 108 110 102 2012 2013 2014 2015 UAE Telecommunications Sector - Fixed Telephony Services ARPU (AED) 1.96 2.08 2.09 2.24