#1Investors Presentation Kuwait Telecommunications Company K.S.C.P 3M-2019 Celebrating 10 Years VIVA#2Table of content VIVA's History in Brief Key Milestones Vision and Values Shareholders' Structure Population & Penetration Competitive Strengths Market Share Financial Results Financial Highlights Stock Performance Appendix - Balance Sheet & Income Statement 2 Investor Relations 3 4569 7 8 9 = 11 13 14 15 15 VIVA#3VIVA's History in Brief 2007 2008 2008 2008 2014 Feb Jun Sep Dec Dec VIVA Stock was listed on Boursa Kuwait Commercial Launch of VIVA Operations in Kuwait Public placement of VIVA shares which was 2.4x oversubscribed. distributed among c. 1 million Kuwaiti shareholders The incorporation contract and principal law of the company was adopted by the MOC and Fatwa and Legislation Dep., and documented at the Ministry of Justice ..Emiri decree number 187/2007 was released regarding the license of the incorporation of Kuwait Telecommunications Company. *In Compliance with the Islamic Shariah rules and principles 3 Investor Relations VIVA#4Key Milestones 2008 ■ Launches commercially ■ VIVA abolishes incoming calls fees and other operators follow ■First Operator in the world to have all IP network " 2010 Expand retail network and launch joint promotions with retailers. ■ VIVA wins CommsMEA Best Telecom Finance Deal. 2012 ■ VIVA launches Elite Program for loyal, VIP and high value customers. ■ VIVA turns into profitability during the fourth year of operation. ■ VIVA Starts deployment of 4G LTE network 2014 Partnership with Real Madrid. ■ Listing on KSE ■ Retained earnings turned to be positive. ■Ranked 2nd in terms of revenue and subscriber market share ◉ 2016 Best Telecom Company by Arabian Business. ■Member of (ITU) ■Leading Corporate for IR Business Innovation in Risk Management 2018 ■ Best Network Development Award at 5G MENA ■ VIVA Reap Three Accolades at ME Call Centre Awards ■ VIVA Recognized as Leading Corporate for Investor Relations in Kuwait 2018 - third in the MEA ■ Signing of an initial agreement for the sale and purchase of QualityNet shares ■ VIVA Wins "Advertising Creativity Award" at Arab Media Forum O O 2009 ■ VIVA introduces high speed Mobile Broadband in Kuwait. ■ VIVA launches innovative prepaid offerings and acquire 500K customers in one year. 2011 ■First to introduce Apple iPhone " Strategic partnership with Manchester United. First to introduce newest HSPA+ (42.2 Mbps) Broadband network. 2013 ■Complete nationwide 4G LTE Coverage and awarded Best LTE Deployment in the Middle East. ■ Number Portability and VIVA acquires majority of ported numbers between operators. 2015 ■The first in Kuwait to introduce the all-new (VOLTE) technology. ■ VIVA Branches network reached a total of 70 across Kuwait. ■First to introduce the LTE Advanced 2017 VIP Customer Service Award ■ "2017 Speedtest Award" ■ Excellence in Governance Award ■ Best Operator Network ■ 5G Innovator of the Year Awards 2019 ■ VIVA wins Sharjah Gulf Top 10 Business Award 2018. ■ VIVA, Acquired Quality Net ■ VIVA announces nationwide 5G services with Huawei in 2019 4 Investor Relations VIVA#5Vision and Values Our vision is to provide unique services and products that satisfy the aspirations of our clients and accommodate their needs, which in turn will earn us their trust. This is through presenting our customers with numerous telecommunications opportunities with the goal of boosting our relationships with them and giving them the best experience around the clock. Energetic Our passion is performance, innovation, and delivering of superior quality. We are efficient, reliable, and highly responsive to our clients' needs. Engaging Transparent We are open, trustworthy and collaborative. Our Values All of our activities revolve around our customers. Fulfilling We offer a wide range of easy to understand products. Our actions create value, helping our customers lead more rewarding and enjoyable lives Our vision is embodied in a fundamental and detailed understanding of the Kuwait market and focusing on the needs of customers in everything we say and do. We have pledged to work to enrich the lives of our customers through telecommunications, entertainment and information, and data transfer services. 5 Investor Relations VIVA#6Shareholders' Structure VIVA Kuwaiti Governmental Saudi Telecom 52% 24% Public Shareholders 24% Entities STC الاتصالات السعودية ■ ☐ STC, the leading regional telecom operator, won the bid for third mobile license in November 2007, and paid USD 980 million for the license. STC has a management agreement with VIVA. STC increased its ownership percentage from 26% to 51.8% through a VTO at the beginning of 2016. Currently, 4 out of 7 board members are representative of STC group. The Kuwaiti government holds 24% of VIVA through different governmental entities. Currently 2 out of 7 board members are representing the Kuwaiti government bodies. Public Share holders consists of companies, portfolios, funds and individuals. The public shareholders are mix between local, regional and international investors. Independent Board member elected during the AGM on 16th of May 2016. 6 Investor Relations VIVA#7Population & Penetration 7 Kuwait population since 2010 is growing at the same level of 2.8% yearly and the growth is forecasted by IMF at 2.8% over the next 5 years compared to almost 1% for the global population growth. This growth coupled with rising income levels will propel growth in consumer spending. Kuwait boasts the highest telecom penetration levels in the MENA region, which stood at the end of 2018 at 193% and estimates by VIVA shows that the penetration rate in Kuwait declined to reach 189% at the end of Mar 2019. Kuwait Population (Million Person) & Penetration Rate (%) 5.0 4.5 4.0 3.5 3.0 155% 150% 133% 250% 227% 218% 220% 201% 200% 189% 193% 189% 150% 25 2.5 2.0 4.5 4.6 4.7 4.3 93% 3.4 3.4 3.5 3.6 3.7 3.8 3.9 4.0 4.1 100% 1.5 3.2 10 57% 57% 1.0 50% 50% 0.5 0.0 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Mar-19 Investor Relations VIVA#8Competitive Strengths STC (the largest telecom company in the region) will continue to be a major shareholder and VIVA will continue to benefit from being a member of the STC group. Through this relationship, VIVA has access to technical support, industry best practice for provision of telecom services, as well as stronger purchasing power benefiting from joint procurement and coordination of regional initiatives. VIVA has an extensive, well-developed and increasingly sophisticated direct and indirect distribution network covering all parts of Kuwait. VIVA Inaugurates New Branches to its network amounting to a total of 93 branches across Kuwait Extensive distribution channels VIVA benefits from having a modern and efficient network that is adaptable to emerging technologies. The Network backbone is modern and has been designed to facilitate scalability of new operations and the future deployment of emerging technology. Modern & Scalable Network 8 Investor Relations Relationship with STC VIVA Successful Branding Customer- Centric Strategy VIVA follows a customer-centric strategy, which entails focusing on the communication needs of customers and providing differentiated service. This strategy positions VIVA as the only telecom provider in Kuwait that targets enhancing customer experience. Strong Growth & Results VIVA has a proven track record of successfully providing high-quality product and services to its customers. VIVA's customers' reached 2.04 million by end of March 2019, which represents a market share of 29%. Since its launch in 2008, VIVA has built a valuable brand associated with excellence. VIVA is perceived as the “challenger" bringing healthy competition to the Kuwait telecom market. VIVA's entry prompted the incumbent players to make several tariff changes, focus on subscriber retention and introduce new services, thereby benefiting the consumer. VIVA#9Market Share 10 8 Total Subscriber Base in Kuwait (Mn) Total Subscirbers in kuwait (Mn) 6.41 5.9 6 5.2 4.5 4+ 7.6 VIVA Subscribers (Mn) 7.7 7.7 7.1 7.1 7.1 2 0.8 1.6 2.2 2.4 2.5 2.4 2.2 2.2 2.0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Mar-19 Telecom Sector Revenues in Kuwait (KWD Mn) Total Telecom Revenue in Kuwait (KWD Mn) VIVA's Revenue (KWD Mn) 1,000 860 841 788 799 753 800 717 684 690 627 600 400 200 61 94 205 277 279 288 288 239 17] 182 137 66.6 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1-2019 9 Investor Relations VIVA#10Market Share vs. peer group Subscriber Market Share - Mar-2019 Revenue Market Share - Q1 2019 Ooredoo 35% 0000000 VIVA 29% VIVA ZAIN Zain 36% Ooredoo 27% 0000000 ZAIN Zain 40% VIVA 33% VIVA EBITDA Market Share - Q1 2019 Net Profit Market Share - Q1 2019 10 Investor Relations Ooredoo 26% 0000000 ZAIN Zain 47% VIVA 27% VIVA ponedoo Ooredoo* 10% VIVA 28% O ZAIN Zain 62% VIVA *Ooredoo Kuwait Financial Results are consolidated with Fastelco Results. VIVA#11Financial Results 11 In 2018, the company has applied IFRS 15 "Revenue from Contracts with Customers "and IFRS 9 "Financial Instruments" which are effective from 1st January 2018 and opted for full retrospective approach for the 2017 numbers. VIVA's revenue decreased by 14.1% during the three months ended 31 March 2019 to reach KD 66.6 million as compared to KD 77.6 million recorded during the three months ended 31 March 2018. VIVA's EBITDA increased by 4.2% to reach KD 18.7 million during the three months ended 31 March 2019 with an EBITDA Margin of 28% as compared to KD 18 million and margin of 23% during the same period last year. The net profit reached KD 9.6 million (earning per share 19 fils) during Q1-2019 as compared to KD 11.6 million (earning per share 23 fils) recorded during Q1-2018. Shareholders' equity base increased to KD 181.6 million at the end of March 2019 with a growth rate of 18% compared to KD 153.4 million at the end of March 2018. VIVA'S customers' reached 2.04 million by end of March 2019. Revenue (KD Mn) Key Figures & Ratios Subscribers (Mn) Q1-2018 (Restated) Q1-2019 Change 2.32 2.04 -12.1% 77.6 66.6 -14.1% EBITDA 18 18.7 +4.2% EBITDA Margin (%) 23% 28% +4.9 pt. Net Profit (KD Mn) 11.6 9.6 -16.7% Net Profit Margin (%) 15% 14% -0.5 pt. EPS (Fils) 23 19 -16.7% Equity (KD Mn) 153.4 181.6 +18% 307 364 +18% BVPS (Fils) Subscribers (Mn) Revenue (KD Mn) Net Profit (KD Mn) 2.32 2.04 77.6 66.6 11.6 9.6 Investor Relations Mar-18 Mar-19 Q1-2018 Q1-2019 Q1-2018 Q1-2019 VIVA#12Financial Highlights 400 Revenue (KD Million) EBITDA (KD Million) EBITDA (KWD Million) EBITDA Margin (%) 47% 47% 47% 112.6 100.0 150.0 277 279 288 288 300 239 200 100 45 78 50.0 67 67 27% 28% 25% 23% 131.0 131.9 71.1 77.8 18.0 18.7 0 0.0 2014 2015 2016 2017 2018 Q1-2018 Q1-2019 2014 2015 2016 2017 2018 Q1-2018 Q1-2019 CAPEX (KD Million) ■Capex (KWD Million) 60 Net Profit (KD Million) 50.4 43.0 42.8 40.4 39.8 40 40 39 38 30 31 33 14% 14% 15 7% 12% 11% 20 9% 6 0 1% 2014 2015 2016 2017 2018 Q1-2018 Q1-2019 11.6 9.6 0 2014 2015 2016 2017 2018 Q1-2018 Q1-2019 *FY 2017 and 2018 numbers are based on the IFRS 15 'Revenue from Contracts with Customers “and IFRS 9 "Financial Instruments" which are effective from 1st January 2018 and opted for full retrospective approach. 12 Investor Relations VIVA#13Financial Highlights Total Assets (KD Million) Total Debt/Equity (KD Million) Total Debt (KWD Million) 350 332 100 6.9 305 98 300 263 267 273 86 72 66 250 214 200 179 47 50 150 100 1.7 0.8 0 0.4 9 50 0 0.0 0 2013 2015 2014 2013 2016 2017 2014 2015 2018 Mar-19 2017 2016 2018 Mar-19 Shareholders Equity (KD Million) Book Value Per Share (KD) 250 0.500 192 0.384 200 182 0.400 0.364 157 133 150 93 100 50 50 10 ill 0.314 0.300 0.266 0.186 0.200 0.100 0.100 0.019 ïïll 0 2013 2014 2015 2016 2017 2018 Mar-19 2013 2014 2015 2016 2017 2018 Mar-19 *2018 numbers are based on the IFRS 15 'Revenue from Contracts with Customers "and IFRS 9 "Financial Instruments" which are effective from 1st January 2018 and opted for full retrospective approach. 13 Investor Relations VIVA#14Rebased 100 Index Stock Performance Closing Price (KD) 0.899 PE (X) Paid up Capital (KD Million) 49.9 PB (X) Market Cap (KD Million) 448.9 Dividend Yield (%) Data as of 31 March 2019 180 8.90 2.34 4.4% Rebased Index Since VIVA's Listing Date 14 Dec 2014 - Stock Performance vs. KSE and Telecom weighted Indices VIVA's Stock Price (KWD) KSE Weighted Index - Telecom Weighted Index 160 140 120 100 80 80 60 60 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 14 Investor Relations Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 سليم Aug-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 VIVA#15Appendix Balance Sheet (2016 - March 2019) Income Statement (2016 - 3M 2019) 15 Investor Relations VIVA#16Balance Sheet (2016 - March 2019) (restated) Balance Sheet 2016 *2017 *2018 KD Mn KD Mn KD Mn March 2019 KD Mn ASSETS Property and equipment 137.7 145.0 150.5 161.2 Intangible assets 47.5 0 Other non-current assets 0 Non-current assets 185.2 145.0 150.5 161.2 Inventories 4.4 12.9 6.9 9.2 Prepayments and other current assets 5.0 4.7 4.0 1.9 Trade and other receivables 25.7 31.2 35.8 36.4 Contracts assets 47.2 42.5 40.3 Cash and cash equivalents 47.2 32.2 65.7 82.9 Current assets Total assets EQUITY AND LIABILITIES Share capital Statutory reserve Voluntary reserve Other Reserves Retained earnings Total equity Employees' end of service benefits Loans and borrowings NC Trade and other payables NC Non-current liabilities Islamic financing facilities Trade and other payables Current liabilities 82.2 128.2 154.8 170.6 267.4 273.2 305.4 331.8 49.9 49.9 49.9 49.9 8.7 12.9 18.2 18.2 8.7 12.9 18.2 18.2 (0.3) (0.3) 65.4 81.0 105.9 95.5 132.7 156.9 192.0 181.6 3.2 3.6 5.3 5.3 11.6 5.5 14.8 3.6 5.3 10.9 35.5 9.0 84.4 103.7 108.1 139.3 119.9 112.7 108.1 139.3 Total liabilities 134.7 116.3 113.4 150.2 Total equity and liabilities 267.4 273.2 305.4 331.8 *FY 2017 & 2018 numbers are based on the IFRS 15 'Revenue from Contracts with Customers "and IFRS 9 "Financial Instruments" which are effective from 1st January 2018 and opted for full retrospective approach. 16 VIVA Investor Relations#17Income Statement (2016 - 3M 2019) Income Statement Revenue 2016 (Restated) *2017 *2018 3M 2018 3M 2019 KD Mn KD Mn KD Mn KD Mn KD Mn 279.1 287.7 287.9 77.6 66.6 Operating expenses Staff costs (80.9) (145.5) (139.3) (41.7) (32.8) (18.0) (20.4) (21.7) (5.7) (5.6) Expected credit losses on trade & other receivables and contract assets (8.9) (14.2) (18.2) (4.7) (3.7) Depreciation and amortization (88.4) (25.9) (25.6) (6.1) (9.0) General and administrative expenses (39.2) (38.7) (34.8) (9.6) (5.6) Finance cost (Net) (1.6) (0.7) (0.1) (0.1) (0.1) Other income/(expenses) 0.1 2.7 4.9 2.6 0.6 Loss before BoD remuneration, contribution to KFAS and Zakat 41.9 45.0 53.0 12.2 10.2 KFAS (0.4) (0.4) (0.5) (0.1) (0.1) NLST (1.1) (1.2) (1.4) (0.3) (0.3) Zakat BOD remuneration (0.4) (0.5) (0.6) (0.1) (0.1) (0.2) (0.2) (0.2) (0.04) (0.04) 39.8 42.7 50.4 11.6 9.6 Net Profit/loss for the period Basic earnings per share (in fils) 80 86 101 23 *FY 2017 & 2018 numbers are based on the IFRS 15 'Revenue from Contracts with Customers "and IFRS 9 "Financial Instruments" which are effective from 1st January 2018 and opted for full retrospective approach. 17 Investor Relations VIVA 19#18Thank you Investor Relations Department: E-mail: [email protected] Tel: +965 5000 1911 www.viva.com.kw 18 Investor Relations VIVA