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PTCL Overview

Q1-2014

24th April, 2014

Overview: Growing market with substantial untapped value

Pakistan

Country Overview:

Population: 192M

– Growing @ 2% p.a

– 65% below 29 years age

– 36% Urban

GDP Per Capita: USD1,309

GDP Growth: 4%

Market Overview:

Penetration

– Mobile 73.5%

– Broadband <2%

5 Mobile operators,

14 Broadband players,

15 LDI Operators,

4 Backhaul providers

Mobile Subs (Mn)

Broadband Subs (Mn)

+8%

2013 2012

440 409

2011

367

2010

344

Source: PTA, Economic Survey of Pakistan

CAGR

3.32.7

2.11.5

+31%

2014 2013 2012 2011

133.7127.7120.2108.9

2014

+7%

2013 2012 2011

Telecom Revenue (PKR Bn)

439.5409.2367.3

+9%

2013 2012 2011

3

PTCL Group: Strongly positioned across platforms & segments

95

54

96

19

Fixed Telephony

Mobile GSM

Fixed Broadband

Wireless Broadband

Multi-Brand Strategy

Telecom Market Shares (%) (Jun-13)

1/11

1/6

3/5

1/5

4

5

PTCL Group

Financial Performance

PTCL Group: Continued Revenue Growth

The Group maintained its revenue

growth and total value share mainly

due to :

– Steady revenue growth in

data

– Stable ARPUs & Subscriber

base in fixed line voice

– Stability of settlement rates in

international incoming traffic

– Value preservation and

customer growth despite stiff

competition

2013

29.9%

2012

28.9%

2011

28.8%

Q1 Revenue (PKR B)

3332

2826

+9%

2014

6

PTCL Group Operating Performance (Q1): Strong indicators

• Consistent growth in EBITDA and Profitability

• Improving margins as result of improved cost efficiency

• Revenue growth & cost control resulting in improved EPS

EBITDA (PKR Bn)

Net profit (PKR Bn)

EPS (Rs)

21%

36% 36% 34% 28%

22%

0.85

0.65

0.470.41

+107%

2014 2013 2012 2011

4.4

3.3

2.42.1

+111%

2014 2013 2012 2011

11.3

9.68.8

12.3

2012 2013 2014

+41%

37353434

2011

7

QT

MT

8

Consolidated Profit and Loss Account

Quarter Ended Mar 31 2014A 2013A

Rs m Rs m Rs m %

Revenue 33,375 32,145 1,230 4

Cost of services (20,411) (20,727) 316 2

Gross profit 12,965 11,418 1,546 14

G&A expenses (4,790) (4,276) (514) (12)

Selling expenses (2,254) (1,962) (292) (15)

Operating profit 5,920 5,180 740 14

Other income 1,283 1,212 70 6

Finance costs (390) (1,070) 680 64

Profit before tax 6,813 5,323 1,490 28

Tax (2,461) (1,991) (470) (24)

Net profit 4,352 3,332 1,020 31

EPS (Rs) 0.85 0.65 0.20

Variance

9

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PTCL

Financial Performance

Fixed Line: Transformation from ‘Voice to Multi-Play’

Broadband Market Share Evolution (%)

PTCL Voice Subs YoY Change (%)

2013

36%

64%

53%

47% 29% 40%

71%

2008

60%

PTCL

Others

Network Transformation & rehabilitation

Bundled services to create stickiness for voice subs

Strategy

Data: Leading in a rapidly growing market

Voice : Subscriber growth regained

Results

-3-3-4

5

2013 2012 2014 2011

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Fixed Line Transformation Strategy: Robust growth in retail revenues

Data Subs (Mn)

Voice Subs (Mn)

Aggressive Subs Acquisition

Stability in Subscriber Base

10

15

22

6

Q1 Revenue PKR B

4.9

International

2014

21.1

2013

19.4

5.2

2012

13.4

2.0

2011

13.3

1.8

Domestic 11.6 11.4 14.3

16.2

2.1

1.4

1.00.7

2012 2011 2013 2014

2.82.72.82.8

2011 2012 2013 2014

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PTCL Financial Performance (Q1): Strong indicators

• Consistent growth in EBITDA and Profitability

• Improving margins as result of improved cost efficiency

• Revenue growth & cost control resulting in improved EPS

EBITDA (PKR Bn)

Net profit (PKR Bn)

EPS (Rs)

21%

36% 36% 34% 28%

22%

0.66

0.57

0.27

0.19

2012 2011 2013

+247%

2014

3.42.9

1.40.9

+254%

2014 2011 2013 2012

7.66.9

4.33.4

+122%

2014 2013 2012

36362926

2011

13

QT

MT

14

Profit and Loss Account

Quarter Ended Mar 31 2014A 2013A

Rs m Rs m Rs m %

Revenue 21,113 19,379 1,734 9

Cost of services (13,533) (12,760) (773) (6)

Gross profit 7,580 6,619 961 15

G&A expenses (2,492) (2,117) (375) (18)

Selling expenses (762) (697) (65) (9)

Operating profit 4,326 3,805 521 14

Other income 1,091 933 159 17

Finance costs (162) (190) 28 15

Profit before tax 5,255 4,547 708 16

Tax (1,892) (1,631) (261) (16)

Net profit 3,363 2,916 447 15

EPS (Rs) 0.66 0.57 0.09

Variance

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Mobile: Well positioned for 3G opportunity

• Focused campaigns towards

increasing Data Users & Usage in

anticipation of 3G Launch

• Opportunity to build ‘Sustainable

Competitive Advantage’

through fixed/mobile bundles

• Sustained subscribers growth

despite aggressive pricing

moves from the industry

• Highest smart phone penetration

in the industry

• Stiff competition and taxes

leading to ARPU decline

24.923.821.419.2

+9%

213229236242

2012 2011 2010

-4%

2013

Subs (Mn)

ARPU (Rs./Month)

23.524.923.821.4

+10%

2014 2013 2012 2011

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Challenges Ahead

3G New License

Roll out

International Clearing House

Regulatory Environment

Won 3G license – 5 MHz

Roll out of 3G licenses

Stabilized Accounting Settlement Rate

19.5% Sales Tax imposed on:

International incoming voicing revenue

Data Revenue (In Two Provinces)

Tax Regime

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PTCL Group: Market leadership

Fixed & Wireless broadband

Mobile & fixed telephony

IPTV

Corporate solutions

Carrier & wholesale services

3 Data centers

Most Diversified Product Portfolio

Largest Infrastructure

Extensive Customer Reach

+30 M

Subs

22 K

Km Fiber

Long haul

+11,000 Towers /Cellular Sites

3 international submarine cables: 85% of national capacity

5 Satellite Earth Stations

80% Population

coverage

+200,000 Retail outlets

+550 “One Stop Shops”

+7,000 Point-of-Presence in fixed network

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Future Positioning: Reach & Scope Expansion

Financial Strength

Unique Products

Targeted Fiber Deployment; 3G Rollout

New services: ICT, OTT & Digital Services

Backhaul services to other Telcos

Further enhancing margins through fixed/Mobile Integration

Offer converged products; Truly differentiated from competition

Strengthen leadership through market consolidation

COMMANDING ALL SCREENS….

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PTCL Group successfully riding the ‘Data Wave’ 1

Improving profitability & margins 2

Strong liquidity & improving cash generation 3

Well positioned for 3G 4

Some regulatory challenges 5

Market consolidation opportunities ahead 6

Key Take Aways…

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شکریہ ُشکرا

Thank You

Thank You

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