Investcom LLC
10 April 2006
For immediate release
INVESTCOM REPORTS FULL YEAR 2005 RESULTS
Dubai, UAE, 10 APRIL, 2006 - Investcom LLC (Ticker: INVT), the international
mobile telecommunications company, today announced its preliminary financial
results for the year ended 31 December 2005. Financial Statements have been
prepared in accordance with International Financial Reporting Standards (IFRS),
but are as yet unaudited.
Full year 2005 highlights include:
- Total mobile subscribers up 91 percent on 2004 to 4.9 million
- Gross operating revenues reached US$903 million, an increase of 43%
percent on 31 December 2004
- EBITDA reached US$396 million, a year-on-year increase of 42%
- EBITDA margin for the year ended December 31, 2005 was 44%
Net profit for the year ended December 31, 2005 up 31%1
year-on-year to US$207.8 million
1 Excludes the positive effect in net profit in 2004 from a one-off gain of
US$7.1 million resulting from the disposal of Mobinvest.
Chairman's statement
Commenting on the full year results, Mr. Taha Mikati, Chairman of Investcom,
said:
'It is my pleasure to report on a year of record achievement and one that has
been a milestone in the evolution of our company. In 2005, we made significant
progress in our mission to be a leading international telecommunications company
in each of the markets in which we operate. This is especially the case for our
mobile telecommunications business in the regions of Asia, Africa, and Europe
where we are already demonstrating a strong competitive advantage.
'The expansion of our subscriber base has translated into very strong financial
performance for the year. Investcom's revenues have grown rapidly, reaching
US$903 million, up 43% on the previous year. More importantly we continue to
improve profitability, with EBITDA of US$396 million for the full year 2005, and
a net profit of US$207.8 million. Many of our operations were EBITDA and net
income positive in their first year of operation and improving on this level of
profitability is something our management team continues to be highly focused
on.
'Growth also continued geographically. Our strategy has always been to target
telecommunications markets that are under-penetrated and which we believe
represent exciting, high growth opportunities. In September, we were awarded
one of two new licenses to operate GSM services in Afghanistan, a country with
an approximate population of 30 million and very low mobile penetration, which
is clearly in a crucial stage of infrastructure development. But, one which
represents a large market opportunity for us.
'At the same time we extended our coverage in West Africa with a new license to
build and operate a GSM network under the Areeba brand in Guinea, a country with
an approximate population of 10 million, where mobile penetration growth is
already outpacing that of fixed line telecommunications, as consumers opt for
the cost and convenience of mobile connectivity.
'The build-out in both of these territories is well underway and we remain on
track to launch commercial services in both Guinea and Afghanistan during the
first half of 2006. These new operations have boosted Investcom's licensed
population coverage to 147 million, in ten countries.
'Another exciting market opportunity is Sudan, with its large population and
sizeable, flat land mass. In July 2005, with the high-profile commercial launch
of services under our Areeba network, we became the second mobile phone operator
in Sudan. By the end of 2005, after just five months of operation, we have
already added 268,517 subscribers; an immense achievement in the timeframe.
'Our ability to upgrade our technology and launch multiple services so rapidly
is evidence of how Investcom is beginning to deliver the advantages of scale and
scope and, in particular, shows the breadth of our operational and technological
expertise across emerging and high growth telecommunications markets.'
Summary
Investcom is a fast-paced, international telecommunications company with
operations in ten countries in Asia, Africa, and Europe.
Beginning in the 1980s with the launch of the first mobile network in Lebanon,
it has worked to expand our telecommunications portfolio to become one of the
leading operators in some of the most exciting, high-growth telecommunications
markets in the Middle East and Africa.
Investcom owns and operates GSM networks, mostly under the AreebaTM brand, in
Syria, Ghana, Yemen, Benin, Liberia, Cyprus, Guinea-Bissau and Sudan and has
also recently been awarded GSM licenses to build and operate mobile networks in
Afghanistan and Guinea. This expands our operations to ten countries and boosts
the combined population we have under license to approximately 147 million.
While still at single digit mobile penetration rates, many of Investcom's
operating countries have seen dynamic growth in the number of mobile users over
the last few years, with more and more people becoming 'mobile' on a daily
basis.
Investcom also provides international carrier services, principally through its
operations in Monaco, fixed telephony services in the United Kingdom and
telecommunications engineering and consulting services.
In constantly expanding its international portfolio into new territories,
Investcom seeks to leverage its experienced management team and track record of
developing and operating mobile telecommunications businesses. The result is a
diverse revenue base, drawn from strong customer demand and loyalty, which,
because of strict financial planning and controls, it is able to operate on a
profitable basis.
Operational highlights
As one of the leading international providers of mobile telecommunications
services in Asia, Africa, and Europe, we have experienced a significant growth
in our subscriber base during the last twelve months. The demand for
telecommunications services is high in these developing countries and, as we
pointed out overleaf, fixed line infrastructure is, in most cases, limited.
Waiting times for fixed-line connections can sometimes extend to a number of
years.
We believe that mobile networks represent a cost-effective alternative to
fixed-line networks, but in many instances mobile services are being made
accessible to large parts of local populations for the first time.
As at December 31, 2005, we had a total of 4.9 million customers, compared to
2.5 million on December 31, 2004, representing a rise of 91%.
Growth in the number of our customers and their volume of usage during the
period under review has contributed to higher revenues and profits. As at
December 31, 2005, we already recorded a total population under license across
eight countries of operation of 107 million and are now working hard to reach
our deadline for the launch of commercial services for our newest mobile
operations in Guinea and Afghanistan during the first half of 2006. This will
expand our population under license to 147 million.
While the number of mobile telecommunications customers in most countries in
which we operate mobile networks has grown rapidly during 2005, overall mobile
penetration remains low.
Total Subscribers
2004 2005 % change
Syria 870,517 1,465,470 68%
Pre-paid 450,347 944,660 110%
Post-paid 420,170 520,810 24%
Ghana 955,311 1,819,646 91%
Pre-paid 942,947 1,807,682 92%
Post-paid 12,364 11,964 -3%
Yemen 441,239 824,846 87%
Pre-paid 384,683 769,689 100%
Post-paid 56,556 55,157 -2%
Benin 172,966 267,583 55%
Pre-paid 171,434 265,607 55%
Post-paid 1,532 1,976 29%
Liberia 82,186 108,997 33%
Pre-paid 82,186 108,997 33%
Post-paid - - -
Cyprus 17,737 64,591 264%
Pre-paid 14,133 55,889 295%
Post-paid 3,604 8,702 141%
Guinea-Bissau 10,510 44,100 320%
Pre-paid 10,510 44,100 320%
Post-paid - - -
Sudan - 268,517 n/a
Pre-paid - 266,355 n/a
Post-paid - 2,162 n/a
Total subscribers 2,550,466 4,863,750 91%
Total pre-paid subscribers 2,056,240 4,262,979 107%
Total post-paid subscribers 494,226 600,771 22%
As at December 31, 2005, approximately 87.6% of our managed customers were
pre-paid customers, compared to 80.6% as at December 31, 2004. Pre-paid services
are, in our view, more appropriate for the cash economies in the countries in
which we operate and our customers feel more comfortable with paying small
incremental amounts in the form of top-up fees, rather than facing a large
initial payment or monthly fees.
Financial Review
Gross Operating Revenues
While the results of operations during 2005 have been positively affected by the
launch of new operations and should be taken into account when comparing our
results with previous years, we have also experienced strong organic growth of
our existing operations.
The increase in our mobile customer base and increased mobile usage, combined
with increased international carrier traffic resulted in gross operating revenue
growth for the twelve months ended December 31, 2005 of 43% from US$633 million
for the same period in 2004 to US$903 million.
Gross operating revenues comprise revenues from mobile telephony services,
including sales of handsets, international telephony services, including
international carrier and fixed telephony services, and engineering and other
services, but do not include our share of revenues from Spacetel Yemen, which we
account for under the equity method of accounting and is reflected in our share
of results of associates.
Gross operating revenues from mobile telephony are the main component of our
gross operating revenues, representing 90% in 2005, compared to 87% in the same
period in 2004. Revenues from international telephony, including international
carrier and fixed telephony services, and engineering and other
telecommunications services to third parties represented 10% and 13%,
respectively.
Mobile telephony
Revenues from mobile telephony include revenues generated by our mobile
operating companies from mobile calls, interconnect charges and roaming, as well
as a small amount of revenues from sales of handsets as part of promotional
packages.
Gross operating revenues from mobile telephony were US$816 million in the year
ended, December 31, 2005 compared to US$551 million in 2004, which represented
an increase of 48%. The increase in our consolidated gross operating revenues
from mobile telephony was principally the result of growth in our mobile
customer base and in network usage by our customers over the period under
review.
Gross operating revenues (US$ in millions)
2004 2005 % change
Syria 319.0 399.6 25%
Ghana 181.2 323.9 79%
Yemen 92.5 104.7 13%
Benin 27.7 37.7 36%
Liberia 26.7 27.5 3%
Cyprus 2.6 21.1 705%
Guinea-Bissau 1.0 6.1 545%
Sudan - 20.5 NA
While our customer base and usage are increasing as our operations grow, this
has had some negative effect on the overall monthly average usage per customer
as penetration increases among lower spending customer segments.
Average Revenue Per User (ARPU) is calculated as total yearly revenue less
connection fees divided by average yearly subscribers. For 2005, the
accelerated growth we experienced during the month of December is important to
consider, as the new subscribers may not have had the time to consume during the
full month and such a rise in subscribers distorts the yearly average.
Monthly ARPU US$
(average for the year)
2004 2005
Syria
Pre-paid 27.6 18.6
Post-paid 39.4 36.9
Ghana
Pre-paid 17.7 17.7
Post-paid 92.7 130.1
Yemen
Pre-paid 16.0 8.6
Post-paid 39.5 26.7
Benin
Pre-paid 12.3 11.7
Post-paid 83.7 73.1
Liberia
Pre-paid 36.0 26.8
Post-paid n/a n/a
Cyprus
Pre-paid 20.0 22.5
Post-paid 111.3 92.6
Guinea-Bissau
Pre-paid 18.4 16.8
Post-paid n/a n/a
Sudan
Pre-paid n/a 18.7
Post-paid n/a 189.0
International and fixed telephony
International and fixed telephony includes revenues from international carrier
services generated by our international carrier businesses, Med Net and Spacetel
Africa, and from fixed telephony services generated by our UK fixed telephony
subsidiary, Spacetel UK.
Gross operating revenues from international and fixed telephony were US$ 81.3
million in the twelve months ended December 31, 2005, compared to US$79.2
million in 2004, which represents an increase of 3%.
The contribution to consolidated revenues from international and fixed telephony
has declined during the course of 2005, representing 9% of our consolidated
gross operating revenues in the year ended December 31, 2005, compared to 13% in
2004. Declining tariffs for international traffic, in line with trends in the
international carrier market, partially offset an increase in international
traffic volumes carried by Med Net. As a result gross operating revenues from
international carrier services increased by 3% to US$79.4 million in the year
ended December 31, 2005. Declining fixed telephony tariffs in the UK and a
fall in traffic volumes have resulted in a decrease in gross operating revenues
from fixed telephony of 8% to US$2 million in the year ended December 31, 2005
as compared to US$ 2.2 million in the year ended December 31, 2004.
Other services
Other services comprise revenues from the provision of engineering and
consulting services, including technical assistance in connection with network
design and construction, and various other telecommunications services to third
parties.
Gross operating revenues from other services were US$5.5 million in the year
ended December 31, 2005, compared to US$2.2 million in the same period in 2004,
which represented an increase of 158%. This increase was mainly due to the
acquisition of Inteltec in April 2005. Inteltec contributed US$1.6 million to
our consolidated gross operating revenue for the year ended December 31, 2005
for which it was consolidated.
Gross Operating Costs
Our business has grown rapidly, however, we have worked hard to contain costs
and ensure that they are consistent with the percentage increases in our
customer base. We are keen to maintain the profitability of each of our
operating companies and will continue to keep a strict control on costs and have
maintained a gross margin of 60% for the year ended December 31, 2005.
Gross operating costs for the year ended December 31, 2005 were US$359 million,
compared to US$252 million in 2004, representing an increase of 42% in line with
the increase in gross operating revenues.
The components of our gross operating costs are cost of cards (SIM and
recharge), cost of handsets, commissions, cost of mobile interconnection,
revenue sharing, spectrum frequency and technical costs, cost of international
carrier interconnection, site costs and other costs.
EBITDA
EBITDA for the year ended December 31, 2005 reached US$396 million, a
year-on-year increase of 42% compared to December 31, 2004.
Consolidated EBITDA (US$ millions)
2004 2005 % change
Syria 109.1 134.3 23%
Ghana 109.9 186.2 70%
Benin 13.1 18.7 42%
Liberia 14.7 11.9 (19)%
Cyprus (8.0) (9.0) (12)%
Guinea-Bissau (0.7) 1.7 n/a
Sudan (1.8) (11.2) n/a
Guinea - (0.7) n/a
Afghanistan - (0.2) n/a
Other 42.6 64.1 51%
Total 278.9 395.8 42%
Investcom's consolidated EBITDA margin for the year ended December 31, 2005 was
44%, equal to that achieved during the same period in 2004.
Share of results of associates
Our share of results of associates in the year ended December 31, 2005 was US$16
million, compared to US$10 million in the same period in 2004, representing an
increase of 69%. The increase in our share of results of associates mainly
reflects an increase in our ownership of Spacetel Yemen.
In the year ended December 31, 2005, Spacetel Yemen had gross operating revenues
of US$104.7 million, compared to US$92.5 million in 2004. Spacetel Yemen had
EBITDA of US$54.5 million and net profit of US$41.2 million in the year ended
December 31, 2005, compared to EBITDA of US$52.2 million and net profit of
US$38.5 million in the same period in 2004.
Net profit
Net profit for the year ended December 31, 2005 was US$207.8 million compared to
US$158.2 million in 2004, representing an increase of 31%. This excludes the
positive affect in net profit in 2004 due to a one-off gain of US$7.1 million
resulting from the disposal of Mobinvest.
Net Debt
The group shows a positive cash position of US$143.6 at the year ended December
31, 2005 compared to US$(106.1) million in 2004.
CAPEX
In line with our estimates, total capital expenditure for Investcom's
subsidiaries in the year ended December 31, 2005 was US$257.1 million,
representing an increase of 65%. This increase was mainly due to strong
subscriber growth and network rollout in Syria, Ghana, Sudan and Guinea.
Capital Expenditure (US$, in millions)
2004 2005
Syria 78.0 118.9
Ghana 35.6 51.6
Benin 4.2 5.8
Liberia 4.4 6.8
Cyprus 26.9 4.0
Guinea-Bissau 5.3 0.6
Sudan 0.2 52.4
Guinea - 12.0
Afghanistan - -
Other 1.6 5.0
Total 156.2 257.1
Outlook
Commenting on the outlook for 2006, Azmi Mikati, Chief Executive Officer, said:
'We expect the markets of Asia, Africa, and Europe in which we operate to
continue progressing in terms of both economic development and the strong growth
in the number of people accessing mobile phone networks for the first time. We
see penetration levels across the region following their recent impressive
trends, to keep on rising across the ten markets Investcom is present in.
'We also expect usage patterns for our existing subscribers in the region to
rise, as existing subscribers use their mobiles more and more, as has been seen
in both developing markets as well as developed markets.
'It is our aim to maintain our position as a leading operator in each of our
existing markets and ensure that we leverage our unique experience in the region
to strengthen our position across the group.
'Finally, in terms of non-organic growth, Investcom will continue to look at
interesting opportunities which we feel will add value to the group. 2006 will
see a number of licenses being sold in countries across Asia, Africa, and
Europe, and there is expected to be some industry consolidation. We will take
all of these opportunities very seriously and consider those that will enable us
to continue our course of strong, profitable growth.'
Investcom LLC (Formerly Investcom Holding (Luxembourg), S.A.)
CONSOLIDATED INCOME STATEMENT
Year ended 31 December 2005
2005 2004
US$ US$
Gross 903,325,146 632,797,411
operating revenue
Gross (358,561,433) (252,008,524)
operating costs
GROSS PROFIT 544,763,713 380,788,887
Other 1,850,169 1,420,384
operating income
General and (147,480,787) (99,152,306)
administration expenses
Depreciation, (116,788,205) (57,835,695)
amortization and goodwill
written off
Provisions for (3,186,494) (4,104,868)
doubtful receivables
Doubtful debts (142,063) (31,961)
written off
PROFIT FROM 279,016,333 221,084,441
OPERATIONS
Finance 9,799,937 4,316,895
revenue
Finance costs (19,725,552) (9,864,585)
(Loss) gain on (2,103,596) 222,599
exchange
Share of 16,259,022 9,637,107
results of associates
Provisions (7,386,589) -
Net (loss) (103,945) 5,237,619
gain on sale
of investment
in subsidiaries
Negative 1,543,101 -
goodwill arising from
acquisition of subsidiaries
Gain on sale 82,370 50,538
of held for trading
securities
PROFIT BEFORE 277,381,081 230,684,613
TAXATION
Income tax (69,544,135) (65,399,307)
expense
PROFIT FOR THE 207,836,946 165,285,306
YEAR
Attributable to:
Equity holders 195,876,476 148,094,803
of the parent
Minority 11,960,470 17,190,503
interests
Basic earnings 0.16 0.12
per share
Investcom LLC (Formerly Investcom Holding (Luxembourg), S.A.)
CONSOLIDATED BALANCE SHEET
At 31 December 2005
2005 2004
ASSETS US$ US$
Non current assets
Intangible 348,984,045 267,474,664
assets
Property, 420,423,953 281,310,052
plant and equipment
Investments 58,602,189 41,308,178
in associates
Long term 78,027 81,197
accounts receivable
Available for 80,208 662,860
sale securities
828,168,422 590,836,951
Current assets
Inventories 4,762,553 4,676,593
Accounts 166,479,076 111,202,195
receivable and
prepayments
Held for 2,601,543 1,424,389
trading securities
Bank balances 450,619,409 116,210,871
and cash
624,462,581 233,514,048
TOTAL ASSETS 1,452,631,003 824,350,999
EQUITY AND LIABILITIES
Capital and reserves
Share capital 66,427,428 20,000,000
Share premium 296,737,327 -
Statutory 2,000,000 2,000,000
reserve
Foreign (4,987,308) (6,660,519)
currency translation
reserve
Retained 206,159,799 113,064,996
earnings
Result for 195,876,476 148,094,803
the year
Attributable 762,213,722 276,499,280
to equity holders of
the parent
Minority 133,863,147 118,903,906
interests
Total equity 896,076,869 395,403,186
NON CURRENT LIABILITIES
Provisions 539,253 81,398
Long term 93,926,479 68,039,630
accounts payable
Term loans 71,899,256 15,832,310
Deferred 15,537,947 15,371,030
income tax liability
181,902,935 99,324,368
CURRENT LIABILITIES
Accounts 179,823,986 134,532,038
payable and accruals
Taxes payable 21,892,541 37,075,365
Bank 74,756,019 106,763,912
overdrafts
Amounts due 8,398,207 5,138,399
to shareholders
Current 42,644,470 12,283,715
portion of term loans
Current 23,770,364 19,411,796
portion of long term
accounts payable
Other current 23,365,612 14,418,220
liabilities
374,651,199 329,623,445
TOTAL EQUITY 1,452,631,003 824,350,999
AND LIABILITIES
Investcom LLC (Formerly Investcom Holding (Luxembourg), S.A.)
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 December 2005
2005 2004
OPERATING US$ US$
ACTIVITIES
Profit before 277,381,081 230,684,613
taxation
Adjustments for:
Share of (16,259,022) (9,637,107)
results of associates
Provisions 7,386,589 -
Depreciation, 116,788,205 57,835,695
amortization and goodwill
written off
Provisions 3,186,494 4,104,868
for doubtful debts
Doubtful 142,063 31,961
debts written off
Loss (gain) 103,945 (5,237,619)
on sale of subsidiaries
(net)
Gain on (82,370) (50,538)
disposal of held for
trading securities
Negative (1,543,101) -
goodwill arising from
acquisition of
subsidiaries
Finance (9,799,937) (4,316,895)
income
Finance costs 19,725,552 9,864,586
Operating 397,029,499 283,279,564
profit before
working capital
changes:
Inventories (85,960) (859,011)
Receivables (33,826,650) (19,539,260)
Payables 32,128,001 52,330,698
Cash from 395,244,890 315,211,991
operations
Taxation (69,302,025) (44,172,640)
paid
Net cash from 325,942,865 271,039,351
operating
activities
INVESTING ACTIVITIES
Disposal of - (5,730)
investments,
net of (cash)
overdraft
disposed of
Acquisition 1,181,926 (100,650,000)
of a subsidiary,
net of cash acquired
Acquisition (41,176,845) (28,045,997)
of investments
in associates
Disposal of 27,783,987 957,906
investment in
associates
Purchases of (257,134,201) (155,823,030)
property, plant and
equipment
Proceeds from 2,568,626 -
disposal of property,
plant, and equipment
Purchases of (1,094,785) 93,320
held for trading
securities
Proceeds from 478,706 7,199,419
disposal of available for
sale securities
Advance (24,778,789) (19,150,002)
payments on assets
purchased
Purchase of (85,281,504) (39,255,185)
intangible assets
Acquisition - (1,753,987)
of additional shares in a
subsidiary
Dividend 11,347,680 3,280,222
income from associates
Finance 9,799,937 4,316,895
income
Net cash used (356,305,262) (328,836,169)
in investing activities
FINANCING ACTIVITIES
Proceeds from 93,324,805 25,615,042
term loans
Repayment of (5,380,129) (3,725,055)
term loans
Proceeds from 53,273,485 52,241,939
long term accounts
payable
Repayment of (16,373,569) (15,056,996)
long term accounts
payable
Proceeds from 3,172 7,714,158
long term receivables
Receipts from 3,259,808 (8,243,891)
/ (repayments to)
shareholders
Distribution (15,000,000) (15,600,000)
of dividends
Finance costs (19,725,552) (9,864,586)
Minority's (2,366,960) (1,335,628)
share in dividends
distributed by
subsidiaries
Increase in 303,164,755 -
share capital
Net cash from 394,179,815 31,744,983
financing activities
NET INCREASE 363,817,418 (26,051,835)
(DECREASE) IN CASH AND CASH
EQUIVALENTS
Net foreign 2,599,013 (979,119)
exchange difference
Cash and cash 9,446,959 36,477,913
equivalents at the
beginning of the year
CASH AND CASH 375,863,390 9,446,959
EQUIVALENTS AT THE END OF
THE YEAR
-Ends-
For more information please contact:
Investcom LLC
Elie Bardawil, Investor Relations Officer, on +44 20 7307 5341 or
[email protected]
Capital MS&L
Neil Doyle on +44 20 7307 5330 or +44 777 1978 220 or on
[email protected]
Claire Maloney on +44 20 7307 5330 or +44 777 0958 479 or on
[email protected]
About Investcom
Investcom LLC (www.investcomllc.com) is an international provider of mobile
telecommunications services with operations in eight countries in Asia, Africa,
and Europe. The company operates GSM networks, mostly under the AreebaTM brand,
in Syria, Ghana, Yemen, Benin, Liberia, Cyprus, Guinea-Bissau and Sudan.
Investcom has also recently been awarded GSM licenses to build and operate
mobile networks in Afghanistan and Guinea, expanding its operations to ten
countries and boosting its combined population under license to approx. 147
million.
The company also provides international carrier services, principally through
its operations in Monaco, fixed telephony services in the United Kingdom and
telecommunications engineering and consulting services.
This information is provided by RNS
The company news service from the London Stock Exchange