Q419 Presentation March 2020 Disclaimer This investor presentation - PowerPoint PPT Presentation

Q419 Presentation March 2020

Disclaimer This investor presentation (the “Presentation”) has been prepared by Joint Stock Company Silknet (the “Company”). For the purposes of this disclaimer, “Presentation” shall mean this document, the oral presentation of the slides by the Company and the related question-and-answer session and any materials distributed at, or in connection with, that presentation. The information contained herein is subject to change without notice and past performance is not indicative of future results. No person shall have any right of action (except in case of fraud) against the Company or any other person in relation to the accuracy or completeness of the information contained herein. This Presentation contains projections and forward looking statements. The words “believe”, “expect”, “anticipate”, “intend” and “plan” and similar expressions identify forward-looking statements. All statements other than statements of historical facts included in this Presentation, including, without limitation, those regarding the Company’s financial position, business strategy, plans and objectives, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future. Further, certain forward-looking statements are based upon assumptions of future events which may not prove to be accurate. The forward-looking statements in this document speak only as at the date of this Presentation and the Company assumes no obligation to update or provide any additional information in relation to such forward-looking statements. The contents of this presentation have not been independently verified by or on behalf of the company or by any other independent third party. No representation, warranty or undertaking, express or implied, is made by any of the company, any of their respective affiliates or any of their or their affiliates’ respective members, directors, officers or employees as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the company nor any of their respective members, directors, officers, employees, affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation. This presentation does not purport to contain all the information that may be required by the recipient agency to make an evaluation. The information presented herein is provided as at the date of this presentation and will be deemed to be superseded by any subsequent versions of this presentation. Contacts : LILI PSHAVLISHVILI ILIA ENUKASHVILI MARIAM JAVAKHIA CFO Head of Strategy Deputy CFO, Head o fBudgeting and Reporting +995-577-149700 +995-577-955540 +995-598-553335 bpshavliishvili@silknet.com ienukashvili@silknet.com mjavakhia@silknet.com 2

3 Silknet at a Glance 1 2 10 2019 Highlights Business Overview 20 3 Appendix & 2019 Financial Information 36 4 3

Silknet at a glance Key financials pro forma acquisition Overview § One of the leading convergent telcos in Georgia 1 w/o IFRS 16 with IFRS 16 • #1 fixed line with 53% market share 1 GELm 2016 2017 2018 2019 2019 Commercial revenue 299 319 332 346 346 • #2 fixed broadband with 31% market share 1 Carrier services 74 80 67 41 41 • Total revenue 2 #2 pay television with 33% market share 1 373 399 399 387 387 • #2 mobile with 35% market share 1 EBITDA 141 165 188 203 216 § Transformational acquisition by Silknet of Geocell completed in March 2018 EBITDA margin 38% 41% 47% 52% 56% § Network of 4,000km+ fibre backbone across Georgia; FTTH network passing ~55% of households; 96% 4G population coverage § Credit ratings: B1 (Moody’s) / B+ (Fitch) Number of services/SIMs 3 1,734 288 264 222 Pay television Fixed broadband Fixed line Mobile 4 Source: Company information, GNCC, NBG Note: ¹ Based on the number of subscribers as of 31 December 2019; Pay TV market share does not include mobile streaming application subscribers; 2 Includes GEL4m inter-company eliminations in 2016, GEL9m in 2017 and GEL2m in 2018; 3 As of 31 December 2019 .

Organic growth and operating efficiencies driving EBITDA Revenue 399 399 387 373 GELm § Increasing trend in commercial revenue mainly due to: 67 41 80 74 • Growth in broadband and pay TV segments, coupled with mobile data growth… 346 332 319 299 • …offsetting fixed voice shrinkage • Reduction of excise tax on mobile services in 2017 and 2018 § Downtrend in carrier service revenue driven by reduction of termination rates. Refer to 2016PF 2017PF 2018PF 2019A slide 30 Commercial revenue Carrier services Impact of 52% IFRS 16 EBITDA 47% GELm 41% 13 IFRS 16 38% IFRS 16 was adopted from 1st January, 2019. 203 188 165 Impact on EBITDA is positive GEL 13m in 2019 141 2016PF 2017PF 2018PF 2019A *EBITDA margin EBITDA margin Capex 1 without giving effect § to IFRS 16 Growing EBITDA and margin driven by: 38% GELm 27% • Commercial revenue growth 26% 27% • Operating synergies partially captured in 2018 and, to almost the full extent, in 2019… 143 • …despite the negative effect of the termination rate changes. Refer to 109 102 99 slide 30 • …despite GEL depreciation against USD by 11% on a y/y basis (change in average annual exchange rates) 2016PF 2017PF 2018A 2019A % revenue Note: 1 Capex in this presentation represents recurring Capex and is based on balance sheet additions for property, plant and equipment and 5 intangible assets. Capex does not include non-recurring projects: 1) IT transformation of GEL5 million and GEL8 million in 2018 and 2019, respectively 2) spectrum licenses of GEL26 million in 2018 2) Land plot acquisition for HQ purposes of GEL 30 million in 2019 (refer to slide 13). Capex for 2018 does not include Geocell’s Capex for Q1 2018 (pre-acquisition period),

EBITDA Bridge +7.8% +14.1% +11.9% -1.5% -2.7% 2.8 5.0 22.5 -0.9% +3.2% -0.2% +12.0% 1.5 5.3 0.3 19.7 203.2 188.5 165.2 2017 Organic FX Effect Excise tax LRIC effect 2018 Organic FX effect LRIC effect 2019 growth effect growth Percentage changes attributable to each component • Some non-organic factors affecting the evolution of Group EBITDA were: Excise tax – mobile revenue in Georgia was previously subject to excise tax. Tax rate decreased from 8 percent to 3 percent in • 2017 and was fully abolished in 2018 Call termination rate cut – Refer to slide 30 • Currency movements - GEL depreciated against USD by 1 percent and 10 percent in 2018 and 2019 respectively (calculated on • an annual average exchange rates) 6

Performance strengthened through the year Quarterly financials § Organic revenue growth allowed us to maintain the record quarterly commercial revenue in Q4, despite Q3 Q1 18 Q2 18 Q3 18 Q4 18 FY 18 Q1 19 Q2 19 Q3 19 Q4 19 FY 19 GELm, w/o IFRS 16 traditionally being the peak quarter during a year : Commercial 79 82 87 84 332 81 83 91 91 346 Revenue 1 • Double-digit growth in fixed broadband and Carrier Services 1 17 20 16 14 67 9 11 11 10 41 pay TV driven by the subscriber base Total revenue 96 102 103 98 399 90 94 102 101 387 expansion and ARPU uplift following the launch of new packages in Q2 • EBITDA 39 49 53 47 188 45 49 56 53 203 Mobile data revenue growth driven by EBITDA margin 41% 48% 51% 48% 47% 50% 52% 55% 52% 52% mobile data traffic increasing by 30% on a y/y basis (refer to slide 23) coupled with new bundled offers with enriched content launched in August 2019 Commercial Revenue 1 EBITDA 55% 51% 52% +8% +5% 60 48% 56 52% 91 91 48% 92 53 53 55 90 50% 49 49 50 41% 47 87 88 45 +1% 86 45 84 83 84 +3% 39 40 82 81 82 35 79 80 78 30 76 25 74 20 72 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 EBITDA margin 2018 2019 2018 2019 7 Note: 1 Both, commercial revenue and carrier services are subject to seasonal volatility, especially mobile segment. 2HY is usually GEL 10-15m higher than 1HY.

Segment performance EBITDA 1 split Total Revenue 11% 15% 1% 5% Carriers Mobile data 11% Mobile Voice Other mobile services 43% Fixed 11% Mobile Mobile Fixed Broadband Margin Margin 48% 48% 55% Mobile services Pay TV Fixed 41% 57% 27% Fixed line Fixed services Other fixed services Carrier Services 24% 6% 8 Note: 1 Figures are without giving effect to IFRS 16.