#1Q1-2016 Investor Presentation Kuwait Telecommunications Company K.S.C.P 11010 101 1010101 201 102400 1214541 22144 11 222 VIVA 201100#2222 1010 101 1010101 201 102400 1214541 22144 Table of content 201 214541 102400 0101 000 01100 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 3 4 5 6 7 8 6 10 11 12 1 Investor Relations#31010 101 1010101 201 102400 1214541 22144 222 VIVA's History in Brief 01100 201 214541 102400 0101 000 2007 Jun 2008 Sep 2008 Dec 2008 Dec 2014 Jun 2015 VIVA's Stock under KSE15 Index VIVA Stock was listed on Kuwait Stock Exchange 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 Investor Relations 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 2#411010 101 1010101 201 102400 1214541 22144 222 01100 201 214541 102400 0101 000 Key Milestones 2008 Launches commercially under the brand name VIVA VIVA abolishes incoming calls fees and other operators follow, bringing change to the market. 2010 Expand retail network and launch joint with retailers. promotions VIVA wins CommsMEA Best Telecom Finance Deal. VIVA 2012 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 Strategic partnership with Real Madrid. Listing on KSE Retained earnings turned to be positive. Ranked 2nd in terms of and subscriber revenue market share 2016 During April 2016, VIVA Recognized as Best Telecom Company by Arabian Business. VIVA Becomes a Member of Inter'l Telecommunication Union (ITU) 3 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. Launch of Portability and Number VIVA acquires majority of ported numbers between operators. The 2015 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 Investor Relations#511010 101 1010101 201 102400 1214541 22144 222 Vision and Values 201 214541 102400 0101 000 01100 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. Transparent We are open, trustworthy and collaborative. Our Values Engaging 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 telecommunications, customers through entertainment and information, and data transfer services. 4 Investor Relations#611010 101 1010101 201 102400 1214541 22144 11 222 Shareholders' Structure 5 VIVA 01100 201 214541 102400 0101 000 Saudi Telecom 52% Kuwaiti Government 24% Public Shareholders 24% STC الاتصالات السعودية ☐ ☐ STC, telecom the leading regional 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. Investor Relations#711010 101 1010101 201 102400 1214541 22144 222 Population & Penetration 201 214541 102400 0101 000 01100 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 2014 at 218% as reported by (ITU-D) and 217% at the end of 2015, and expected to remain at same levels during 2016. Kuwait Population (Million Person) & Penetration Rate (%) 4.5 4.1 4.0 3.9 3.8 4.0 3.7 3.4 3.4 3.5 3.6 218% 217% 3.5 3.2 3.0 2.5 190% 158% 157% 133% 2.0 92% 1.5 1.0 56% 56% 49% 0.5 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 6 Source of Population: IMF Source of Penetration rate till 2014: ITU Investor Relations#8102400 1214541 22144 222 201 11010 101 1010101 Competitive Strengths 201 214541 102400 0101 000 01100 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 Seven New Branches to its network amounting to a total of 70 branches across Kuwait Extensive distribution channels Relationship with STC 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 VIVA 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. Successful Branding 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 2.4 million customers by the end of Mar 2016, which represents a market share of 31%. 7 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. Investor Relations#9201 102400 1214541 22144 222 11010 101 1010101 Market Share 10.0 Total Subscriber Base in Kuwait (Mn) 201 214541 102400 0101 000 01100 7.6 7.7 7.7 8.0 6.4 5.9 6.0 5.2 4.5 3.9 4.0 3.3 2.5 2.8 2.0 Subscriber Market Share - Mar 2016 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Mar-16 VIVA Subscribers (Mn) 31% 31% 0000000 VIVA Zain 38% Revenue Market Share - Q1 2016 3.0 2.5 VIVA 2.0 1.5 1.0 0.5 2.5 2.4 2.4 2.2 1.6 1.1 0.8 0.6 0.1 24.4% 34.5% 0000000 VIVA ZAIN 0.0 41.1% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Mar-16 8 Investor Relations#1011010 101 1010101 201 201 214541 102400 0101 000 01100 Financial Results • VIVA's Revenue grew by 6% during the first quarter of 2016 to reach KD 70.5 million as compared to the same period in 2015. VIVA's Subscribers' base reached 2.4 million by end of March 2016. The Net profit reached KD 9.8 million (earning per share 20 fils) during the Q1-2016 as compared to KD 10.4 (earning per share 21 fils) recorded during the same period last year. VIVA's Shareholders Equity base increased by 70% to reach KD 102.7 million at the end of Q1-2016 as compared to KD 60.3 million at the end of Q1-2015. Key Figures & Ratios Subscribers (Mn) Revenue (KD Mn) Q1 2016 Q1 2015 Change % 2.4 2.5 -4% 70.5 66.5 +6% 10.5 Operating Profit (KD Mn) 12.2 -14% 15% Operating Profit Margin (%) 18% -3pt. 9.8 Net Profit (KD Mn) 10.4 -5% 14% 16% -2pt. 20 21 -5% 102.7 60.3 +70% 206 121 +70% Net Profit Margin (%) EPS (Fils) Equity (KD Mn) BVPS (Fils) Subscribers (Mn) Revenue (KD Mn) Net Profit (KD Mn) 2.5 2.4 10.4 70.5 9.8 66.5 102400 1214541 22144 11 222 6 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Investor Relations#1111010 101 1010101 201 102400 11 22144 1214541 222 Financial Highlights 10 182.4 Revenue (KD Million) 239.0 276.9 66.5 70.5 01100 201 102400 214541 0101 000 Net Profit (KD Million) 24.3 40.4 43.0 10.4 9.8 T 2013 2014 2015 Q1 2015 Q1 2016 2013 2014 2015 Q1 2015 Q1 2016 Operating Profit (KD Million) Operating Profit (KWD Million) Operating Profit Margin (%) CAPEX (KD Million) Capex (KWD Million) Capex to Sales Ratio 23% 19% 18% 18% 14% 15% 41.4 48.9 45.1 26.1 14% 13% 12% 39.2 7% 17.1 12.2 10.5 8.4 8.4 2013 2014 2015 Q1 2015 Q1 2016 2013 2014 2015 Q1 2015 Q1 2016 Investor Relations#1211010 101 1010101 201 102400 1214541 22144 222 Stock Performance 170 150 130 Rebased 100 Index 110 90 70 Dec-14 01100 Rebased Index Since VIVA's 31 Dec 2014 - Stock Performance vs. KSE and Telecom weighted Indices -VIVA's Market Stock Price (KWD) KSE Weighted Index Telecom Weighted Index Jan-15 Jan-15 Feb-15 Mar-15 Mar-15 Apr-15 May-15 May-15 Jun-15 Jul-15 Aug-15 Q1 2016 Stock Performance and Trading Indicators Volume Traded (Mn Shares) KWD 1.050 1.000 0.950 0.900 0.850 31.12.15 31.1.16 Source: Kuwait Stock Exchange, 11 لســـــلسلا Aug-15 Sep-15 Oct-15 Oct-15 Nov-15 Dec-15 Dec-15 Jan-16 Feb-16 Feb-16 Mar-16 VIVA KSE Weighted Index -14.6% Telecom Weighted Index -21.2% -VIVA's Market Closing Price (KWD) 0.00 29.2.16 31.3.16 Mn Shrs 3.00 1.00 2.00 Investor Relations 201 214541 102400 0101 000 +56.9%#1311010 101 1010101 201 102400 1214541 22144 222 Appendix 201 214541 102400 0101 000 01100 Balance Sheet (2013– 31 Mar 2016) Income Statement (2013- Q1 2016) 12 Investor Relations#1411010 101 1010101 201 102400 11 22144 1214541 222 201 214541 102400 0101 000 01100 Balance Sheet (2013 - Q1 2016) Balance Sheet ASSETS Property and equipment Intangible assets Other non-current assets Non-current assets 2013 2014 KD Mn KD Mn 2015 KD Mn 31 Mar 2016 KD Mn 119.0 113.1 125.4 126.4 30.6 36.3 50.6 53.7 0.7 0.7 0.6 0.6 150.3 150.1 176.5 180.6 Inventories 4.9 5.8 7.1 7.5 Prepayments and other current assets 4.3 4.7 4.8 4.4 Trade and other receivables 12.8 21.2 22.9 23.3 Cash and cash equivalents 6.7 32.3 51.8 53.2 Current assets Total assets EQUITY AND LIABILITIES Share capital Statutory reserve 28.7 63.9 86.6 88.3 179.0 214.0 263.1 268.9 49.9 49.9 49.9 49.9 0.0 4.5 4.5 Voluntary reserve 4.5 4.5 Retained earnings (losses) (40.4) 0.0 33.9 43.7 Total equity 9.6 49.9 92.9 102.7 Employees' end of service benefits 1.7 2.6 2.8 2.8 Islamic financing facilities 42.9 51.6 31.4 26.3 Non-current liabilities 44.7 54.1 34.2 29.1 Islamic financing facilities 25.0 34.0 41.0 40.9 Trade and other payables 99.7 75.9 95.0 96.2 Current liabilities 124.7 109.9 136.0 137.1 Total liabilities 169.4 164.0 170.2 166.2 Total equity and liabilities 179.0 214.0 263.1 268.9 13 Investor Relations#15201 101 1010101 11010 201 214541 102400 0101 000 01100 2013 2014 KD Mn KD Mn 2015 KD Mn Q1 2015 KD Mn 01 2016 KD Mn Income Statement (2013 - Q1 2016) 102400 11 22144 1214541 222 Revenue Operating expenses Depreciation and amortization 182.4 239.0 276.9 66.5 70.5 (116.8) (126.3) (145.8) (35.3) (37.2) (39.5) (67.6) (82.2) (18.9) (22.8) (1.4) (2.2) (2.6) (0.6) (0.5) Finance costs Other income/ (expense) (0.2) (1.8) (1.0) (0.6) 0.4 Profit before contribution to KFAS, Zakat and Board of Directors' remuneration 24.5 41.0 45.2 11.0 10.4 Income Statement KFAS NLST Zakat (0.3) Board of Directors' remuneration . Net Profit and other comprehensive income for the period 24.3 Basic and diluted earnings per share (fils) 14 (0.0) (0.4) (0.1) (0.2) (0.1) (1.2) (0.3) (0.2) (0.5) (0.5) (0.1) (0.1) (0.2) (0.2) 40.4 43.0 10.4 9.8 49 81 86 21 20 Investor Relations#16Thank you Investor Relations Department: E-mail: [email protected] Tel: +965 5000 1911 www.viva.com.kw 11010 101 402400 201 22145412 20101 1000 201100 20 101010101010 201 102400 121454122 22144 11 2223