#125 50 25 25 25 50% Investors Presentation Kuwait Telecommunications Company K.S.C.P 25 50 75 100 FY-2018 Celebrating 10 Years VIVA#2Table of content 25 50 25 25 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 50 75 100 3 45678 9 11 13 14 15 VIVA#325 50 VIVA's History in Brief 25 50 25 2007 Jun 2008 Sep 2008 Dec 2008 Dec 2014 50 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 50 75 100 VIVA#4-O O Key Milestones 255 2008 ■ Launches commercially ■ VIVA abolishes incoming calls fees and other operators follow ■First Operator in the world to have all IP network 25 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 25 50 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. 4 Investor Relations 50 75 100 VIVA O#5Vision and Values 25 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. 25 Energetic Our passion is performance, innovation, and delivering of superior quality. We are efficient, reliable, and highly responsive to our clients' needs. 25 50 50 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 50 75 100 VIVA#6Shareholders' Structure 25 25 VIVA Saudi Telecom 52% Kuwaiti Government 24% Public Shareholders 24% STC الاتصالات السعودية 25 50 ■ 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 50 75 100 VIVA#7Population & Penetration 25 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 2017 at 201% and estimates by VIVA shows that the penetration rate in Kuwait declined to reach 193% at the end of Dec 2018. Kuwait Population (Million Person) & Penetration Rate (%) 5.0 250% 40 4.0 3.0 155% 150% 133% 227% 218% 220% 201% 193% 200% 189% 150% 4.5 4.6 2.0 93% 3.4 3.4 3.5 3.6 3.7 3.8 3.9 4.0 4.1 4.3 100% 3.2 10 57% 57% 50% 50% 0.0 T 20 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 25 50 1.0 7 Investor Relations 50 75 100 VIVA#8Competitive Strengths 25 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 25 Extensive distribution channels 25 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 50 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 has grown rapidly since it commenced operations in December 2008 acquiring 2.2 million customers by the end of December 2018, which represents a market share of 31%. 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. 8 Investor Relations 50 75 100 VIVA#9Market Share 25 10 8 Total Subscriber Base in Kuwait (Mn) Total Subscirbers in kuwait (Mn) 7.6 VIVA Subscribers (Mn) 7.7 7.7 7.2 7.1 6.41 5.9 6 5.2 4.5 4 1.6 2.2 2.4 2.5 2.4 2.2 2.2 2 0.8 25 0 2010 2011 2012 1,000 2013 2014 2015 2016 2017 2018 Telecom Sector Revenues in Kuwait (KWD Mn) Total Telecom Revenue in Kuwait (KWD Mn) VIVA's Revenue (KWD Mn) 860 841 799 788 753 800 717 684 690 627 25 50 600 50 9 400 200 277 279 288 288 239 61 94 137 182 Investor Relations 2010 2011 2012 2013 2014 2015 2016 2017 2018 50 75 100 VIVA#10Market Share vs. peer group 25 25 25 50 50 Subscriber Market Share - Dec 2018 Revenue Market Share - FY 2018 Ooredoo 32% 0000000 VIVA 31% VIVA ZAIN Zain 37% EBITDA Market Share - FY 2018 Ooredoo* 22% VIVA 31% VIVA Zain 46% ZAIN VIVA 33.5% Ooredoo* 28.0% VIVA 0000000 Zain 38.5% ZAIN Net Profit Market Share - FY 2018 0000000 Ooredoo* 9% VIVA 35% ZAIN Zain 56% VIVA 10 Investor Relations *Ooredoo Kuwait Financial Results are consolidated with Fastelco Results. 50 75 100 VIVA#11Financial Results Key Figures & Ratios Subscribers (Mn) FY-2017 (Restated) FY-2018 Change 2.3 2.2 -5% Revenue (KD Mn) 287.7 287.9 +0.1% EBITDA 71.1 77.8 +9.5% EBITDA Margin (%) 25% 27% +2.3pt. Net Profit (KD Mn) 42.8 50.4 +17.8% Net Profit Margin (%) 15% 18% 3.Opt. EPS (Fils) 86 101 +17.4% Equity (KD Mn) 156.9 192.0 +22% 314 384 +22% 25 25 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. 50 VIVA's revenue grew by 0.1% during the year ended 31 Dec 2018 to reach KD 287.9 million as compared to KD 287.7 million recorded during the year ended 31 Dec 2017. VIVA's EBITDA increased by 9.5% to reach KD 77.8 million during the year ended 31 Dec 2018 with an EBITDA Margin of 27% as compared to KD 71.1 million and margin of 25% during the same period last year. The net profit reached an historical level of KD 50.4 million (EPS 101 fils) during FY 2018 as compared to KD 42.8 million (EPS 86 fils) in 2017, the increase in net profit attribute to the increase in revenues and also due to cost optimization initiatives. Shareholders' equity base stood at KD 192 million at the end of Dec 2018 with a growth rate of 22% compared to KD 157 million at the end of Dec 2017. BVPS (Fils) Subscribers (Mn) Revenue (KD Mn) Net Profit (KD Mn) 2.3 287.7 287.9 2.2 50.4 42.8 Dec-17 Dec-18 FY-2017 FY-2018 FY-2017 FY-2018 11 Investor Relations 50 75 100 VIVA#12Financial Highlights 25 Revenue (KD Million) EBITDA (KD Million) 350 EBITDA (KWD Million) ◆ EBITDA Margin (%) 288 288 300 277 279 150.0 47% 47% 47% 239 250 112.6 100.0 200 150 27% 25% 131.0 131.9 100 50.0 50 50 45 45 IIII 71.1 77.8 0.0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 30 25 50% 50 15 CAPEX (KD Million) ■Capex (KWD Million) Capex to Sales Ratio 7% 39 14% 38 14% HE 60 60 40 40 33 31 20 12% 11% Net Profit (KD Million) 50.4 43.0 42.8 40.4 39.8 0 2014 2015 2016 2017 0 2018 2014 2015 2016 2017 *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 50 75 100 2018 VIVA#1325 50 Financial Highlights 25 Total Assets (KD Million) 250 200 150 550 100 Total Debt/Equity (KD Million) | Total Debt (KWD Million) 350 Debt to Equity Ratio (x) 305 100 6.9 300 263 267 273 86 250 214 80 72 66 200 179 60 150 40 60 00 47 1.7 100 0.8 20 50 0.4 9 0 0 0 0.0 25 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 10 0 2013 Shareholders Equity (KD Million) 50 93 Book Value Per Share (KD) 0.450 0.400 192 0.350 157 0.300 133 0.250 0.200 0.150 0.100 0.100 0.050 0.019 0.384 0.314 0.266 0.186 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 *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 50 75 100 VIVA#1425 50 Stock Performance 25 Closing Price (KD) 0.800 PE (X) Paid up Capital (KD Million) 49.9 PB (X) Market Cap (KD Million) 400 Dividend Yield (%) Rebased 100 Index 7.77 2.08 5.0% Data as of 31 Dec 2018 Dividend Yield calculated based on the KD 0.040 Proposed for the year end 2018. Rebased Index Since VIVA's Listing Date 14 Dec 2014 - Stock Performance vs. KSE and Telecom weighted Indices 180 160 140 120 100 80 60 60 VIVA's Stock Price (KWD) سد བར་ཆད་ད། KSE Weighted Index Telecom Weighted Index مسلس Dec-14 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 14 Investor Relations 50 75 100 VIVA#1525 50 Appendix 25 25 Balance Sheet (2014 - 2018) Income Statement (2014 - 2018) 50% 15 Investor Relations VIVA 50 75 100#16Balance Sheet (2014 - September 2018) Balance Sheet 2014 2015 2016 (restated) *2017 2018 KD Mn KD Mn KD Mn KD Mn KD Mn ASSETS Property and equipment 113.1 125.4 137.7 145.0 150.5 Intangible assets 36.3 50.6 47.5 Other non-current assets 0.7 Non-current assets 150.1 175.9 185.2 145.0 150.5 Inventories 5.8 7.1 4.4 12.9 6.9 Prepayments and other current assets 4.7 5.4 5.0 4.7 4.0 Trade and other receivables 21.2 22.9 25.7 31.2 35.8 Contracts assets 47.2 42.5 Cash and cash equivalents 32.3 51.8 47.2 32.2 65.7 Current assets Total assets EQUITY AND LIABILITIES Share capital Statutory reserve 63.9 87.2 82.2 128.2 154.8 214.0 263.1 267.4 273.2 305.4 49.9 49.9 49.9 49.9 49.9 0.0 4.5 8.7 12.9 18.2 Voluntary reserve 4.5 8.7 12.9 18.2 Retained earnings 0.0 33.9 65.4 81.0 105.9 Total equity 49.9 92.9 132.7 156.9 192.0 Employees' end of service benefits 2.6 2.8 3.2 3.6 53 5.3 Loans and borrowings NC 51.6 31.4 11.6 50 Non-current liabilities 54.1 34.2 14.8 3.6 5.3 Islamic financing facilities 34.0 41.0 35.5 9.0 Trade and other payables Current liabilities 75.9 95.0 84.4 103.7 108.1 109.9 136.0 119.9 112.7 108.1 Total liabilities Total equity and liabilities 164.0 170.2 134.7 116.3 113.4 214.0 263.1 267.4 273.2 305.4 16 *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 for 2017 numbers. Investor Relations 50 75 100 VIVA#17Income Statement (2014-2018) (Restated) Income Statement 2014 2015 2016 *2017 *2018 KD Mn KD Mn KD Mn KD Mn KD Mn Revenue 239.0 276.9 279.1 287.7 287.9 Operating expenses (65.5) (78.7) (80.9) (145.5) (139.3) Staff costs (15.9) (15.8) (18.0) (20.4) (21.7) Expected credit losses on trade & other receivables (4.1) (7.1) (9.0) (14.2) (18.2) Depreciation and amortization (67.6) (82.2) (88.4) (25.9) (25.6) General and administrative expenses (40.8) (44.2) (39.2) (36.4) (30.6) Finance cost (Net) (2.3) (2.8) (2.1) (1.2) (0.1) Other income/(expenses) (1.8) (0.9) 0.4 0.9 0.7 Loss before BoD remuneration, contribution to KFAS and Zakat 41.0 45.2 41.9 45.0 53.0 KFAS (0.0) (0.4) (0.4) (0.4) (0.5) NLST (0.1) (1.2) (1.1) (1.2) (1.4) 25 Zakat (0.5) (0.5) (0.4) (0.5) (0.6) 50 BOD remuneration Net Profit/loss for the period (0.2) (0.2) (0.2) (0.2) (0.2) 40.4 43.0 39.8 42.8 50.4 Basic earnings per share (in fils) 81 86 80 86 101 *FY 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 for 2017 numbers. 17 Investor Relations 50 75 100 VIVA#1825 25 50 25 Thank you 25 Investor Relations Department: E-mail: [email protected] Tel: +965 5000 1911 www.viva.com.kw 18 Investor Relations 50 75 100 VIVA