In Investo estor r Roads oadsho how 2 2 - 10 No 10 November - - PowerPoint PPT Presentation
Cell Cell C C Limited Limited In Investo estor r Roads oadsho how 2 2 - 10 No 10 November ember 2017 2017 TABL ABLE E OF OF CONTE CONTENTS NTS 01 05 Financial Overview 04 25 Conclusion Operational 06 02 27 12
Financial Overview Post Recapitalisation Governance Strategy
12 20 15 Operational 04 25 Questions 27 Conclusion
28 Disclaimer
Robert Pasley - Cell C CSO A qualified Theoretical Physicist and Chartered Accountant, Robert has combined experience in finance and telecommunications since before the launch of mobile communications in South Africa. Robert was involved in the launch of the South African mobile industry, through the development of the
Corporate Strategy until 2004. Robert joined Cell C in 2012 as Chief Strategy Officer and subsequently took on the additional role of Chief Financial Officer while Cell C was recapitalised. From June 2017 Robert has returned to his preferred role in strategy. Tyrone Soondarjee - Cell C CFO Tyrone, a Chartered Accountant who holds a BCompt Honours, provides 30 years of experience in the financial services industry. Before joining Cell C, Tyrone’s decade of distinguished service at the listed Sasfin Group started in 2007 as the Group’s Chief Financial Officer. In 2010 Tyrone was appointed as the Financial Director. Throughout his tenure, Tyrone served on several Boards within the Sasfin Group. Previously, he also held several executive level positions at the Deloitte & Touche Group over a 10 year period, and was the Financial Director at TNBS Mutual Bank. 3
01 02 03 04 Total Revenue 11% R7.7 Billion EBITDA 17% R1.6 Billion EBIT (4%) R0.6 Billion Capital Expenditure (68%) R561 million Active Mobile Subscribers 12% 15.7 Million Service Revenue 12% R6.3 Billion 05 06
5
84% Data Traffic Growth YOY
8.1 Smartphones on our network (million)
Other Key Performance Indicators H1 2017 H1 2016 Million
Var
Var %
15.7 2 603 Total Active Subscriber Data Revenue (R’m) 14.0 1 953 1.7 650 12% 33%
Financial Key Performance Indicators H1 2017 H1 2016 R’m Var Var %
6 321 1 386 7 707 1 613 605 (588) Service Revenue Non-Service Revenue Total Revenue EBITDA EBIT Net (loss)/profit 5 625 1 338 6 964 1 381 629 3 696 48 743 223 (24) (591) 12% 4% 11% 16% (4%) (>100%)
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LTE-Advance network overlaying our LTE, 3G and 2G networks.
recapitalisation.
H1 2016
R 1 738 million
H1 2017
Total Expenditure
H1 2017
3 723 2 471 6 194
H1 2016
3 384 2 365 5 749
R’m
Direct Expenditure Operating Expenditure Total Expenditure Var Var % 339 106 445 10% 5% 8% Total capital expenditure was: R 561 million
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1
8
BLT Net1 SPV1
(Bonds)
SPV2
(Chinese)
SPV3
(Nedbank)
MS15
100% 100% 100% 100% 45.0% 2.2% 16.0% 11.8% 5.0% 15.0% Subscription for equity in exchange for debt R3.6bn R4.6bn
Believe Trust 3C OTSA Lanun CellSAf
25% 60% 15% 100% 49%
OTL
51%
M5
5.0%
OTSAH
100% Cash equity to settle debt R0.7bn Effective 13.68% Effective 8.82% Effective 7.5%
Option to acquire
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ICASA Cell C has made the necessary notification to ICASA as required in respect of the recapitalisation. Despite this, CellSAf has made representations to ICASA that Cell C did not follow the correct process. Based on the many and various detailed legal opinions from eminent Senior Counsel obtained by the parties to the recapitalisation, Cell C has in fact followed the correct process. Cell C has now made extensive written and oral submissions to ICASA providing details of the structure and effect of the transaction. We are awaiting ICASA’s decision as to whether to accept Cell C’s position or to refer the matter to ICASA’s Complaints and Compliance Committee (CCC) for adjudication. Competition Commission The recapitalisation is not a merger within the meaning of the Competition Act. Despite this, CellSAf has laid a complaint with the Competition Commission that Cell C has not obtained approval from the Competition Commission. Cell C has now made an extensive submission to the Competition Commission to explain the factual and legal position as to why this is not a notifiable merger. CellSAf: High Court Litigation In November 2016, CellSAf issued summons in the High Court of South Africa against the then parties to the recapitalisation transaction seeking to have the agreements that had been signed prior to that date set aside. If this matter is ever heard by the Court on the merits of CellSAf’s claim, this is unlikely to be before 2019.
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Lender Currency Amount (USD'm) Amount (ZAR'm) Tenor Interest payment profile Capital repayment profile Hedge type Interest rate Bonds USD 184 2 466 3 years Semi-Annual Bullet FX Future 8.625% CDB USD 131 1 702 3 years Semi-Annual 2020 Cross currency swap LIBOR + 3.45% ICBC ZAR n/a 997 3 years Semi-Annual 2020 n/a JIBAR + 3.45% Nedbank ZAR n/a 768 3 years Semi-Annual 2020 n/a JIBAR + 5% DBSA ZAR n/a 180 3 years Semi-Annual 2020 n/a JIBAR + 5% Total 6 113
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H1 2016
14.0
H1 2017
15.7
Active Mobile Subscribers/millions ARPU H1 2016
75
H1 2017
75
Data percentage per subscriber
MB per customer per month
Year on Year Growth
72% New Connections
Fibre H1 2017
3 615 13
01 02 03 04 05 06 07 08
Purchase handsets from CEC Sale to channel partners Contract activated for Telco and handset Handset contractually funded by CEC Interest and subsidy paid monthly on behalf of customer Subscriber pays handset portion to CEC Provision for future losses Handset and contract sold to CEC
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84 84 91 100 108
2013 2014 2015 2016 2017
Mobile market service revenue (R’bn)
69 74 81 84 88
2013 2014 2015 2016 2017
Mobile market subscribers (mln)
3% 1% 4% 6% 4%
10% 3% 2% 9% 43% 47% 17% 16% 15% 8% 12% 9% 10%
2013 2014 2015 2016 2017
Operator service revenue growth YOY
Vodacom MTN Telkom CellC
63 59 57 59 60 21 25 34 41 48
2013 2014 2015 2016 2017
Voice vs data revenue (R’bn)
Voice revenue Data revenue
CAGR (1.2%) Cell C 16.6% (2013 – 12.5%) Cell C - 11.7% (2013 – 10.2%)
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Spectrum Allocations
850Mhz
1.4Mhz
900Mhz
Cell C
1800Mhz
5Mhz 10Mhz
2100Mhz
Voda MTN
TDD TDD
2300Mhz 3500Mhz 2600Mhz
Telkom Liquid
2.5Ghz 15Mhz
Sentech Rain Telkom Telkom Liquid MTN Telkom
60Mhz 28Mhz 28Mhz 28Mhz 28Mhz
Vodacom Cell C Rain Rain
15Mhz 15Mhz
Liquid MTN Telkom Cell C Vodacom
15Mhz 15Mhz TDD 12Mhz 12Mhz 10Mhz
MTN MTN Cell C Vodacom
12Mhz 12Mhz 12Mhz 12Mhz 4.92Mhz
Liquid Liquid
9.6Mhz 11Mhz 2.4Mhz 8.6Mhz TDD 4.92Mhz
Increased Data additions with Data rich value propositions Reduced High Value Subscriber Churn Increased Customer Loyalty Increased Contract Base
Promote strong Data rich proposition relevant to the market WhatsApp Bundles
Increase Prepaid Additions Reduced Prepaid Churn Offer great affordable value, and differentiating propositions Ultimate Converged Bundles
Free Facebook Social Bundles Disruptive and Innovative Propositions to achieve new Revenue streams (Digital / Content) Connector
To achieve revenue and subscriber growth through affordable and disruptive product propositions, that offers our customers tremendous value, whilst ensuring customer satisfaction, as well as retaining the exiting subscriber base.
Increased Postpaid and Hybrid Additions Reduced High Value Subscriber Churn Increased Customer Loyalty Increased Contract Base Differentiate on value creation
Pinnacle
Pinnacle Topup
Enable great value and realise growth in the High end Subscriber market segment SmartData Share SmartData Bundles LTE A Enable great value and realise growth in the High end Subscriber market segment
Increase Market share with strong Digital and Content positioning Create Stickiness Increase Customer Loyalty Increase Upsell and Cross Sell – Revenue upliftment
DATA CONTRACT CONTENT/ VAS PREPAID 18
Priority 1 Priority 2 Priority 3 Priority 4 Strategy: Less reliance on 3rd party retail distribution
Priority 1: High population density and majority of economic activity plus good own coverage Priority 2: Future Network coverage and opportunities Priority 3: Limited coverage and only operating in economic hotspots Identified areas where we will not venture into at all 19
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Jose Dos Santos CEO Robert Pasley Chief Strategy Officer Tyrone Soondarjee Chief Financial Officer Kuben Pillay Independent Chairman Laurence Nestadt Deputy Chairman Mark Levy Nominated by: Blue Label Telecoms Brett Levy Nominated by: Blue Label Telecoms Herman Kotzé Nominated by: Net1 Chris Seabrooke Nominated by: Net1 Joe Mthimunye Independent Director
Executives Directors Non-Executives Directors Non-Executives Directors - Shareholder Nominees
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Audit and Risk Committee Social and Ethics Committee Remuneration and Nominations Committee
Joe Mthimunye (Chairman) Joe Mthimunye (Chairman) Chris Seabrooke (Chairman) Chris Seabrooke Chris Seabrooke Kuben Pillay Robert Pasley Robert Pasley Larry Nestadt CEO, CFO CEO CEO, CHRO
Members Invitees
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Jose dos Santos Chief Executive Officer
Altech Autopage Cellular
Tyrone Soondarjee Chief Financial Officer
& Touche Group & TNBS Mutual Bank
Surie Ramasary Chief Executive: Content Previous Companies: MTN Telecom/Africa Experience: 15 years At Cell C since: 2012 Dana Bakker Chief Technical Officer Previous Companies: Vodacom Telecom/Africa Experience: 18 years At Cell C since: 2013 Douglas Craigie Stevenson Chief Operations Officer
Malawi Plc & Vodacom Business Africa
Björn Flormann Chief Executive: Wholesale Business Previous Companies: Unisys, Telefonica O2 and Vodafone Telecom/Africa Experience: 20+ years At Cell C since: 2011 Graham Mackinnon Chief Legal Officer
Juliet Mhango Chief HR Officer
Momentum Group; Standard Bank, Sanlam Capital and Ernst & Young
Joshua Moele Managing Executive for Government Relations Previous Companies: Telkom & IDT Corporation Telecom/Africa Experience: 25+ years At Cell C since: 2012 Sherhaad Kajee
Chief Property & Procurement Officer Previous Companies: Vodacom Telecom/Africa Experience: 24 years At Cell C since: 2012
Robert Pasley Chief Strategy Officer
(UK), Vodacom
Michelle Beetar Chief Customer Experience Officer Previous Companies: Experian, Novell, Oracle and MWeb CommerceZone Telecom/Africa Experience: 15 years At Cell C since: 2016 Nihmal Marrie Chief Digital Officer
Old Mutual Mass Market
Regional Managing Executives and Commercial Division
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2014 - 2016 Price strategy evolves to customer value and quality strategy New management team engaging with a price driven reboot strategy Cell C launch 2001 2012
Total Revenue
R’bn
EBITDA
R’bn 11.5 11.6 13.2 14.6 7.6
2013 2014 2015 2016 2017
0.4 1.9 3.1 1.6
2013 2014 2015 2016 2017
2018 - 2021 Customer experience centric strategy with focused capital spend and innovation ambitions re-establishing aggressive growth curve and profitability 0.8
# - 2013 reported EBITDA 0.8 vs operational EBITDA
14.3% 63.2% >100% 13.8% 10.6% RECAPITALISATION PROCESS 2016 – 2017 Growth stifled by limited capital investment and narrow commercial focus whilst securing recapitalisation
H1 H1
7.0 8.5%
H1 H1
1.4
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This presentation was produced in November 2017 by Cell C Limited solely for use as a source of general information regarding the financial condition of Cell C Limited and its consolidated subsidiaries (Cell C Limited together with its consolidated subsidiaries, “Cell C”). This presentation and its contents are confidential and may not be reproduced, redistributed, published or passed on to any other person, directly or indirectly, in whole or in part, for any purpose without the prior written consent of Cell C. If this presentation has been received in error, it must be returned immediately to Cell C. Unless otherwise expressly stated, all financial figures in this presentation are unaudited. This presentation contains certain forward-looking statements relating to the business, financial performance and results of Cell C, and the industry in which Cell C operates, and these statements are generally identified by using phrases such as “aim”, “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “guidance”, “intend”, “objective”, “plan”, “predict”, “target,” “project”, and “will be” and similar phrases. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond Cell C’s control that could cause Cell C’s actual results or performance to be materially different from future results or performance expressed or implied by such forward-looking
undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. This presentation and the information contained herein does not constitute an offer of any securities of Cell C or any other company or an invitation, solicitation or advertisement to purchase or subscribe for any securities in South Africa, the United States, any member state of the European Economic Area or any other jurisdiction. THIS PRESENTATION IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, INTO THE UNITED STATES. Moreover, this presentation is not for publication, release or distribution in South Africa, Australia, Canada or Japan or any other jurisdiction where such publication, release or distribution would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.