Enriching Sri Lankan Lives Dialog Axiata PLC ......... Dialog Axiata PLC Up-Scaling Enterprise & Broadband Play via Fixed Sector Consolidation an axiata company .
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Enriching Sri Lankan Lives
Dialog Axiata PLC.........
Dialog Axiata PLCUp-Scaling Enterprise & Broadband Play via Fixed Sector Consolidation
an axiata company
.
Acquisition and Amalgamation of Suntel by Dialog Broadband
Dialog Axiata PLCDialog Axiata PLC Overseas Telecom AB & OthersOverseas Telecom AB & OthersAcquisition
SuntelSuntel
Market ShareMarket P iti
Market Sh
Market P iti
Acquisition of 100% Shareholding
DBNDBN
Position
Fixed Sector Positioning 5%
CDMA WLLEnterprise VPN/MPLS Voice & Data Services
WiMAX 16D BWA Tele‐Infra Fibre Optic Transmission
Share Position
Fixed Sector Positioning 11%
CDMA WLLEnterprise VPN/MPLS
WiMAX 16D BWAVoice & Data Services
4 2
Voice & Data Services Fibre Optic Transmission
DBN – Suntel Merged EntityDBN – Suntel Merged Entity
Market ShareMarket
Valuation & Multiples
• Enterprise Value: USD 33 9mn 34 9mnMarket Share
Position
Fixed Sector Positioning 16%
CDMA WLLEnterprise VPN/MPLST l I f
WiMAX BroadbandVoice & Data ServicesFib O ti T i i
USD 33.9mn - 34.9mn• EBITDA Multiple1:
3.0x – 3.1x• Revenue Multiple1:
0 8x
2
Tele‐Infra Fibre Optic Transmission 0.8x
Headline Transaction OutcomesRevenue Accretive to Dialog Group circa 12%2
EBITDA Accretive to Dialog Group circa 9%2EBITDA Accretive to Dialog Group circa 9%PAT Accretive to Dialog Group
Strong No. 2 Position in the Fixed Telecommunication/ Converged Services Sector
11 based on USD 1 = Rs 1142 based on FY 2010 Financials
xxx
GDP per capital (ppp) USD Real GDP growth rate Enterprise & SME Fixed/Converged Services
Economic Growth Projected to Drive Fixed and Converged Services Momentum
5,6306,080
6,670
0 8
0.9
1.0
1.1
100.00%
120.00%
ICT Spend USD (bn) Enterprise & SME Fixed/Converged Services
Market will Grow by 10% CAGR (2010-15)
• Per Capita GDP % on ICT Spend Expected to Increase from 1.9% in 2009 to 2.5%+ by 2012
E t i /SME S t i E t d t b E l
4,7705,160
0.8
40.00%
60.00%
80.00%
• Enterprise/SME Sector is Expected to be a Early Driver of Economic Resurgence and ICT Consumption
3.5%8.0% 8.5% 9.0% 9.5%
0.00%
20.00%
2009 2010 2011F 2012F 2013F
Enterprise/SME Growth will Translate to Enhanced Demand for Fixed /Converged Services
• IP Data Networks • Enterprise Voice/Video • Cloud Services
2009 2010 2011F 2012F 2013F
Source: EIU, World Bank, Global Insight, Central Bank of Sri Lanka
Significant Market Position and Cost/Service Competitiveness in Fixed/Convergent
• IP Data Networks• Data security• IPLC services
• Enterprise Voice/Video • SME Connectivity• High Speed Broadband
• Cloud Services• Managed Services• Hosted services
Significant Market Position and Cost/Service Competitiveness in Fixed/Convergent Services Domain will be a Strategic Lever to Capture ICT Growth Potential Accruing
from Economic Resurgence
2
DBN Last Entrant in Fixed Telecom Space- Stable PerformanceFinancial Metrics
Stable Financial Performance Featuring Six Consecutive Quarters of Positive EBITDA
Increasing Traction in Enterprise and SME Segments
(in Rs mn) 9M 11 YTDChange
Revenue 1,772 +0.1%
EBITDA 456 +>100%
Fiber Optic Network Rollout in ProgressEBITDA Margin 26% +17pp
PAT (658) +31%
Fixed Sector Revenue Market Share Financial Performance Trends
29%20% 25% 27% 25%
10%
20%
30%
40%
500
600
700
Dialog5.2%
Lanka Bell10.2%
Fixed Sector Revenue Market Share Financial Performance Trends
604 589 584 580 608
-24%
-59%
-34% -35%-42%
‐60%
‐50%
‐40%
‐30%
‐20%
‐10%
0%
100
200
300
400
Suntel10.7%
604 589 584 580 608‐70%0
Q3 10 Q4 10 Q1 11 Q2 11 Q3 11
Revenue- Rs Mn EBITDA Margin PAT Margin
SLT73.9%
Lagging Market Position on the Backdrop of Fragmented Market Structure
* Full year 2010
Lagging Market Position on the Backdrop of Fragmented Market Structure Deemed Sub Optimal vis a vis Dialog Group Aspiration to Capture Major
Share of ICT Growth Potential3
Revenues and EBITDA (Rs mn)Business Overview
Commenced Operations in1996 and Privately Controlled
Suntel – Premier Positioning and 2nd Ranked Fixed Player
7,6066,743
5,080 4,8343 719
49%40%
28%
Revenues EBITDA EBITDA margin (%)Commenced Operations in1996 and Privately Controlled by Overseas Telecom AB (Sweden)
Performance Trajectory Stabilised 2009/10 via Revenue and Cost Initiatives Following the Decline during 2007–2009 due to Price Competition on the Backdrop of Fixed 3,719
2,6771,434 1,297
28% 27%
2007 2008 2009 2010
p pCost Structure
Possesses 800 MHz CDMA, 3.5GHz, WiMAX 16D Spectrum Licenses. Recently Awarded 2.3GHz BWA Spectrum
Subscribers¹ (‘000s)
571 604663
Comprehensive Coverage Based on 380+ Base Stations
Product portfolio Includes Corporate Voice Solutions, Direct Point to Point and Point to Multi Points Connectivity, Data Management, Managed Services and
Source: Revenue is based on audited financials, EBITDA is based on management accounts
446
571y, g , gInternational Private Leased Circuits
Market Performance
Suntel is Ranked 2nd in the Fixed/Converged Services Enterprise /SME segment
2007 2008 2009 2010
¹ Connected Subscribers/Lines
Enterprise /SME segment
350,000+ CDMA Subscriber Base on its 800 MHz Spectrum Network. Ranked No 3 in Retail Fixed Telecom Space
4
Suntel Provides Fixed Telephony and Converged Voice/Data/Broadband Services to circa 0.7mn Corporate and Retail Consumers and is a Preferred
Telecom Partner to a Large Base of Enterprise/SME Clientele
Acquisition Rational Centered on Scale, Cost Leadership and Establishing a Platform for Growth
Internalise and Imbibe Fixed /Converged Services Operations Dialog Gro p Sector PositioningInternalise and Imbibe Fixed /Converged Services Operations Framework and Core Competencies of Suntel
Secure Critical Mass and Scale in Fixed/Converged Services Space
Dialog Group - Sector Positioning
Fixed & Broadband
Combine Scale of Suntel with Modern Infrastructure (Radio Access and Fibre Optic Backbone) of DBN to Provide Cutting Edge Service Portfolio to Targeted Sectors
Secure Position of Strength in Enterprise/SME Sectors whileTele InfraSecure Position of Strength in Enterprise/SME Sectors while
Elevating Combined Market Position in Retail Segment
Cost Synergies of up to Rs 600mn Leading to Superior Cost Competitiveness
2 3 41
Mobile
Market position
Optimization and Maximisation of Network Footprint – Tower Sites, Access Networks, Network RedeploymentNetwork Consolidation and Spectrum Rationalisation – CDMA, WiMAX, TransportO tl t N t k d S t O ti R ti li ti
Pay Television
Global
Outlet Network and Support Operations Rationalisation
Acquisition will Elevate the Position of Dialog Group within Fixed/Converged g gServices Segments to a Strong No.2 on a platform of Product Strength, Cost
Leadership and Converged Brand Strength
5
Transaction Summary
The Transaction will Lead to Dialog Broadband Acquiring and Thereafter Merging with Suntel, Resulting in the Formation of a Strong No 2 Player in the Fixed/Converged Services SpaceFormation of a Strong No 2 Player in the Fixed/Converged Services Space
Enterprise Value of Suntel is in the Range of USD 33.9mn– 34.9mn Corresponding to Valuation Multiples of 3.0x to 3.1x of FY10 EBITDA and 3.5x to 3.6x of Annualised FY11 EBITDA Forecast (based on nine months 2011)
Dialog GroupFinancial
Impact
Dialog GroupFinancial
Impact
Revenue Accretive to Dialog Group circa 12%1
EBITDA Accretive to Dialog Group circa 9%1
EBIT Neutral & PAT Accretive
Transaction Transaction
Combination of DBN and Suntel will Create a Strong No 2 in the Fixed/Converged Services Space, Strongly Placed to Capture the Upswing in Demand for Fixed/Converged Services from Enterprise/SME Sectors on the Backdrop of Economic GrowthOutcomesOutcomes Enterprise/SME Sectors on the Backdrop of Economic Growth
Projected Annualised Cost Savings up to Rs 600mn through Synergy Extraction Leading to Position of Enhanced Cost Competitiveness
C fi t D Dili
Next StepsLeading up to
Closure
Next StepsLeading up to
Closure
Confirmatory Due Diligence
Suntel will Align Depreciation Policies to Dialog Group and Effect Changes to Carrying Value of Fixed Assets
Operating Cost Framework will be Restructured to Reach Alignment with Dialog Group g g gBenchmarks
Debt Restructuring in Alignment with Dialog Group Capital Structure
61 based on FY 2010 Financials
Thank You
For Further InformationContact : Investor Relations Team, Dialog Axiata PLCMobile : +94 777 334363 E il i @di l lkEmail : [email protected] site : www.dialog.lk
7
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