FOR YEAR FOR YEAR ENDED ENDED 31 DECEMBER 2017 31 DECEMBER 2017 - PowerPoint PPT Presentation

ANNU ANNUAL RESUL AL RESULTS TS PRESENT PRESENTATION TION FOR YEAR FOR YEAR ENDED ENDED 31 DECEMBER 2017 31 DECEMBER 2017

GOVERNANCE – POST THE RE-CAPITALIZATION Executive Directors Jose Dos Santos Robert Pasley Tyrone Soondarjee Chief Executive Officer Chief Strategy Officer Chief Financial Officer Non-Executive Directors Kuben Pillay Laurence Nestadt Joe Mthimunye Chris Seabrooke Independent Chairman Deputy Chairman Independent Director Non-Executive Directors - Shareholder Nominees Brett Levy Mark Levy Herman Kotzé Nominated by: Nominated by: Blue Label Nominated by: Net1 Blue Label Telecoms Telecoms

TOP MANAGEMENT STRUCTURE STRENGTHENED Jose Dos Santos Chief Executive Officer Surie Ramasary Michelle Beetar Tyrone Soondarjee Chief Customer Experience Officer Chief Executive: Content Chief Financial Officer Björn Flormann Nihmal Marrie Graham Mackinnon Chief Executive: Wholesale Chief Digital Officer Chief Legal Officer Business Joshua Moela Douglas Craigie Stevenson Juliet Mhango Managing Executive for Chief Operations Officer Chief HR Officer Government Relations Sherhaad Kajee Dana Bakker Chief Property & Procurement Robert Pasley Chief Technical Officer Chief Strategy Officer Officer Key new appointments were made to strengthen top management team (CFO, CDO, COO, CHRO)

HIGHLIGHTS – 2017 KEY PERFORMANCE INDICATORS +12% YOY +7% YOY Service Revenue Revenue R13.2 billion R15.7 billion +151% YOY +29% YOY EBITDA EBITDA Margin R7.8 billion 50% +660% 8% of revenue Net profit after tax Capital Expenditure R4.1 billion R1.2 billion

POSITIVE RESULTS Su Summary ry of f reported fin financia ial l in information R’bln 2017 2016 % Change Service revenue 13.1 11.7 12 Non-service revenue 2.6 2.9 11 Total revenue 15.7 14.6 7 8.1 7.4 10 Gross margin Gross margin % 52% 51% 1 EBITDA 7.8 3.1 >100 EBITDA margin % 50% 21% 29 Net profit after tax 4.1 0.5 >100

UNPACKING OUR SUBSCRIBERS OTHER KEY PERFORMANCE IN INDICATORS Million 2017 2016 % Change Total active subscribers 16.3 15.3 6 MVNO subscriber base 1.5 1.4 8 Total active data subscribers 12.6 12.5 1 Data revenue ( R’bln ) 5.2 4.0 30 Capital expenditure ( R’bln ) 1.2 2.3 47 Network Investment Rand 2017 2016 % Change Total ARPU 73 76 4 Prepaid 56 58 3 Contract 209 196 7 Increase in smartphone users YOY 21 Smartphones on our network (million) 9.2 7.6

PRODUCTS & SERVICES AT A GLANCE DATA • Data revenue increased by by 29% whilst data usage has increased by 90% YOY; • Data revenue now makes up 40% of service revenue compared to 34% a year ago; and • The effective price of data per MB has decreased by more than 36% YOY. VOICE • Voice revenue decreased by 4% YOY in line with the effective price of voice per minute decreasing by 4% YOY; and • Voice traffic carried by other means such as WhatsApp Calling and other VoIP services. WHOLESALE • Wholesale revenue increased by R315 million (or 79%) to R717 million YOY driven by the growth in the customer base; and • Customer data usage in this area generated the bulk of the revenue growth. FTTH • Competitive products and pricing; and • Exceptional organic growth aided by acquisitions going forward.

black THE FUTURE OF ENTERTAINMNET NOW. • Market Disruptor - First to market, on demand, multi media interactive entertainment platform • Accessible on any network across multiple devices • Offering Movies, Series, Music, Sport, Games, Live TV and so much more (Local & International) • Flexible pricing from as little as R5 a day – Subscribe for a week, weekend or month • Simple payment options – first to introduce payment via Prepaid Airtime, in addition to cards and vouchers

FIBRE TO THE HOME • Launched C-Fibre in 2016 with open access FNOs – Vumatel, FrogFoot and Mitsol • In 2017 we launched C-Fibre on Openserve, Metrofibre and Octotel on open access Fibre Networks • Cell C offers unlimited, unrestricted, unshaped symmetrical and asymmetrical fibre packages • C-Fibre subscribers benefit from value added services that include a FREE Wi-Fi Router, FREE installation, FREE connection, personalised device set-up and 1GB LTE mobile data p/m for 12 months. • In Q2 2018, Cell C will launch a triple play offer that will include mobile, fibre and entertainment through the black platform C-Fibre 2017 2016 Base growth % Revenue growth % New connections 13 958 1 795 >100 >100

FIN FINANCIAL RES ANCIAL RESUL ULTS TS

STRENGTHENED BALANCE SHEET R’bln Dec 2017 Dec 2016 % Change Network assets 8.6 8.7 1.1 Intangible assets 1.3 0.8 63 Trade receivables and other assets 4.9 4.2 16 Deferred tax 4.0 1.9 >100 Total assets 18.9 15.7 20 Loans and borrowings (6.8) (17.3) 61 Other liabilities provisions (6.9) (8.0) 14 Finance leases (1.5) (1.7) 12 Total liabilities (15.2) (27.5) 45 Net equity 3.8 (11.7) >100

CASH FLOW ANALYSIS R’bln Dec 2017 Dec 2016 % Change Cash flows from operating activities 1.5 4.0 63 Cash flows from investing activities (1.5) (2.6) 42 Cash flows from financing activities (0.22) (1.9) 88 Net decrease in cash and cash equivalents (0.15) (0.5) 70 Cash and cash equivalents at the beginning of the year 0.28 0.78 64 Cash and cash equivalents at the end of the year 0.13 0.28 54

2017 RESULTS PRESENTATION REPORTED FINANCIAL KEY PERFORMANCE INDICATORS 7 months 5 months Total 2017 2016 R’bln 2017 2017 % Change Dec Dec Pre-recap Post-recap Total revenue 9.0 6.7 15.7 14.6 7 Once off items - 4.1 4.1 0.21 >100 EBITDA 1.9 5.9 7.8 3.1 >100 EBIT 0.8 4.9 5.7 1.3 >100 Net Finance Costs (2.6) (1.1) (3.7) (0.8) >100 Net (loss)/profit before tax (1.9) 3.9 2.0 0.5 >100 Tax - 2.1 2.1 - - Net (loss)/profit (1.9) 6.0 4.1 0.5 >100

2017 RESULTS PRESENTATION NORMALISED FINANCIAL KEY PERFORMANCE INDICATORS 7 months 5 months Total 2017 2016 % R’m 2017 2017 Dec De Dec Change Pre-recap Post-recap Total revenue 9.0 6.7 15.7 14.6 7 Normalised EBITDA 1.9 1.7 3.6 2.8 28 Normalised EBIT 0.8 0.8 1.6 1.1 45 Net finance costs (2.6) (1.1) (3.7) (0.8) >100 Normalised net (loss)/profit (1.8) (0.3) (2.1) 0.3 >100 before tax Tax - 2.1 2.1 - - Normalised net (loss)/profit (1.8) 1.8 (0.026) 0.3 >100

IMPROVING COST BASE Operational Expenditure 5 months 7 months 2017 % R’bln 2017 2017 2016 Pre-recap Change Post-recap Direct expenditure 4.4 3.1 7.5 7.2 4 Operating 2.8 2.0 4.8 4.6 4 expenditure Depreciation and 1.2 0.8 2.0 1.8 11 amortisation Total expenditure 8.3 6.1 14.4 13.6 6 Capital Expenditure • Capital expenditure has been strategically focused to enable us to provide mobile voice, data services and content through a combination of our own LTE-Advanced network that overlays our LTE, 3G and 2G networks. • Cell C capital expenditure has slowed in H1 2017 due to the delayed recapitalization but picked up again post recapitalization. Our total capital expenditure was: R’bln 2014 2015 2016 2017 Network 2.0 2.1 2.3 1.2 investments

KEY RATIOS OTHER KEY PERFORMANCE IN INDICATORS 2017 2016 % Var Interest expense/ Revenue 0.14 0.16 13 Interest cover 2.5 0.8 >100 Net Debt/EBITDA >100 0.85 5.7 Net Debt/ Normalised EBITDA >100 1.8 6.1 Net Debt/Capex 5.6 7.7 27 Please note that the recapitalisation occurred in August 2017, as a result the full impact on interest cost savings cannot been seen in 2017 financial results.

VOICE VS DATA REVENUE Voice vs Data revenue • Growth in customer base 6.0 5.0 4.9 4.8 4.6 4.8 5.0 5.2 • Increased customer spend 4.0 4.1 • Data centric product offerings 3.0 3.0 • Increased smartphone users 2.0 2.1 • 1.0 Improved network quality 1.2 - 2013 2014 2015 2016 2017 Voice Data

SERVICE REVENUE VS EQUIPMENT REVENUE R’m Service Revenue vs Equipment Revenue 18,000 16,000 14,000 Service Revenue CAGR – 9% 12,000 10,000 8,000 6,000 4,000 2,000 - 2013 2014 2015 2016 2017 Service revenue Equipment revenue

IMPACT OF IFRS 15 AND IFRS 16 IFRS 15 Impact IFRS 16 Impact Equipment revenue will be recognized at the amount Cell C has elected to early adopt IFRS 16 effective 1 received from the subscriber and not the January 2018. Communications Equipment Company Proprietary Limited (“CEC”). The subsidy provided to customers will be offset The standard requires the recognition of an assets and against revenue. liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Admin and margin fees payable to CEC will be Increase in EBITDA, Net debt, depreciation and finance recognized as an interest expense. charges. The revaluation of the financial guarantee expense will be recognised an operational expense. Costs incurred to obtain and fulfil post-paid/hybrid contracts are capitalized as an intangible asset and amortised over the contract period whilst prepaid costs will be recognised in the period incurred.