GreenPower Motor Company Inc. (GP) Q4 2021 Earnings Report, Transcript and Summary

Good morning, everyone. My name is Naureen. I'm Grameenphone's Head of Investor Relations, and I would like to thank you for joining our earnings disclosure for the fourth quarter of 2021. With me today are our CEO -- I apologize. With me today are our CEO, Yasir Azman; and CFO, Jens Becker. Before we start, please note that our presentation, financial statements, additional documents are available on our Investor Relations website. [Operator Instructions] With this, I would like to hand over to our CEO, Mr. Yasir Azman, to start our presentation.

Thank you, Naureen, and good morning, everyone. Thank you for joining us for our fourth quarter results announcement. I'm Yasir Azman, Chief Executive Officer of Grameenphone. I would like to begin with some industry facts on our mobile subscribers in the country, and that's -- we have until November 2021 as latest report by the telecom regulator. As of November 2021 subscriber base reached to 181.53 million. It is an increasingly by almost 7 million subscribers, registering a 7% growth from end of 2020. GP stood at 84.04 million in November, which is 46.3% of the total mobile subs in the country, which means GP had a higher share of the growth until November. In the same period, mobile data users have increased by over 14 million, reaching to 116.53 million Internet users in the country, a 14% increase from the end of 2020. Let me start with a short overview of some of the key highlights of the year. 2021 has been full of uncertainties as we continue to face challenges from the COVID-19 pandemic and related restrictions, which impacted our operational and financial performance to an extent. Despite the many challenges, we reaffirmed our commitment to empowering the nation by continuing our planned investment in network and in spectrum. The extensive effort we made towards expanding coverage and improving customers' experience along with modernization initiatives led to improved growth momentum as the year progressed. I'm happy to share that in collaboration with our authorities and stakeholders, we were able to resolve 22 out of 30 financial disputes with LTU-VAT through alternative dispute resolution and bilateral discussions, even receiving a recognition from LTU-VAT for our resolution-oriented efforts. We'll continue these paths to amicably solve the remaining disputes with us and in between NBR and Grameenphone. Growth improvement continued in fourth quarter. We know in 2021, Bangladesh faced the highest rates of COVID-19 infections and deaths. In attempt to curb the infection rates, the authorities have imposed several lockdowns throughout the year. We continue to see prolonged macroeconomic impact from the pandemic. However, the situation significantly improved in the fourth quarter as infection rate lowered to near 0 during the quarter, economic activities resumed back and educational institution reopened among ongoing months of vaccination programs. Throughout the year, we have prioritized our efforts towards the enhancement of our network. In partnership with TowerCo vendors, we were able to achieve our ambition of planned site rollouts of the year 2021. We also deployed 10.4 megahertz spectrum that we had acquired in March 2021, which led to significant enhancement of our customer experience at our network. As a result and coupled with revamped product portfolio, we see 10% growth in data usage in fourth quarter compared to the previous quarter. As customer consumption and engagement patterns continuously evolved during this period, we continued to rapidly update our portfolio of services and the ways we which -- in which we actually engage our customers, leading to a 40% growth in full year data users base. And also, as digitalization continues to evolve, we focused on the adoption of our digital channels, leading to a full year growth of 27% in [ reloads ] from our digital channels and 12.3 million users on our self-service app MyGP. We continued our ongoing journey towards the future to a future-fit company. In our ongoing transformation journey with the aim of becoming a future-fit company that we can cater to the rapidly evolving needs of our customers, we have been focusing on driving customer simplification across all our platforms. As a result, at the end of the year, 98% of our customer-facing interactions have been digitized and made available at our MyGP flagship app. And to cater to the needs of our customers who are yet not part of a digital world, we continue to expand our flagship physical stores across the nation, reaching 211 Grameenphone centers, those are penetrating deeper areas of the country. And I'm also pleased to share that our GP Online Shop has expanded, reached the whole country, bringing 64 districts under our services. Through the GP Online Shop, we accept all orders for any of our products or services, including the new SIM acquisition or subscriber acquisition and deliver them to our customer doorstep anywhere into the country. Our digitalization efforts have also expanded to our sales and distribution channels. In the physical world, the mass retail base in 2019, we launched our retailer app which we call Cockpit. And over the last few years, we have been continuously working together with our value chain to digitize our interaction with our physical retail touch points. As a result, we see rapid progress in this case and leading to 70% retailer adoption at the end of 2021. This makes the interaction with our retailer much faster and our action and response to the market is also much faster toward the customer. We are also driving modernization within our organization with the transformation of our operating models, implementation of robotics and automation as well as continuously upskilling our talent with future-fit capability. We believe the right mix of competency, capabilities and tools would elevate our growth ambition, reinforce our position as a connect TV partner and act as key enablers for sustainable growth. We have seen our business environment dialogue around spectrum, new spectrum auction as well as quality of services. As far as the spectrum auction concerned, government is considering a potential spectrum auction in 2,300 and 2,600 megahertz bands linked with [ ML-listed ] license for 2G, 3G, 4G and 5G, which may take place anytime from March '22 onwards. This guideline creates obligation for 5G rollout. However, the spectrum can be used in any other existing technology and potentially for 4G. BTRC has initiated consultations, and industry has provided its common feedback while GP had also provided its individual feedback on the [ health of ] guideline. More clarity will come during the process of this ongoing consultation. I'd also like to highlight a little bit of quality of service-related dialogue happening. We have seen concerns regarding the quality of service of mobile network operators from the policymakers and regulators level. We see that COVID has changed the customer behavior and users pattern especially for data. Working from home and online schooling and others have created new demand for our mobile services, which is a good side of it, at the same time that there are a lot of like regulators and policymakers is putting lots of emphasis on the quality of MNOs' network, especially in the metros and rural areas and initiate different dialogues and putting requirements on the MNOs, which we are working on. This area will remain as extremely important for us to act on, continuously work on and to provide better experience for our customer being a leading telecom service provider in the country. To highlight on our activities around empowering societies and social impact projects, digitalized inclusion and environment as of 31st December 2021, Grameenphone is connecting a subscriber base of 83.3 million people out-of-home, 44.6 million customer access Internet and 27.6 million empowered with 4G connectivity. While expanding our 4G network and increasing number of 4G users, online safety program remains a key priority in how we impact our societies. We stayed -- started training and sensitization sessions on safe Internet among adolescents in partnership with UNICEF. Our ambition is to reach 120,000 adolescents and create awareness among 1 million children, parents and teachers by March 2022. We signed an agreement with UNDP to implement future national project in alliance with private, public and development sectors to accelerate future economic growth by enhancing skills and potential of [ Bangladeshi yield]. For many years, GP Accelerator has played a pivotal role in patronizing entrepreneurship and start-up ecosystem in Bangladesh. As a recognition for our efforts and for our contribution to the ICT sector, we recently received the prestigious National Digital Bangladesh Award 2021 in the institutional category from our honorable Prime Minister in Bangladesh. I will now welcome our CFO, Jens Becker, to take you through our financial performance for the quarter 4. Jens?

Thank you, Azman, and good morning to everybody. Let me start with a short overview of the key KPIs. In Q4 '21, Grameenphone delivered a solid financial performance with improved growth momentum both in top line and EBITDA. The top line growth momentum was supported by deployment of new spectrum, sites rollout and enhanced customer and market-focused activities. We recorded a 3.6% year-on-year growth in subs and traffic revenue in Q4 after a 1.9% growth in Q3. EBITDA grew by 2.6% with a margin of 62.4% in Q4 after a 1.3% growth in Q3. With the increased investment efforts, backed by the newly acquired spectrum at the end of Q1 '21, GP's CapEx to sales ratio for the quarter stood at 12.1% based on a 4-quarter moving average, which was 18% on a stand-alone basis. EPS for the quarter stood at BDT 6.04 with a 21% decrease from last year on a reported basis. The decrease in EPS was mainly contributed by favorable one-off adjustments, gained finance costs and tax expenses in the fourth quarter of last year, means 2020. Looking at our subscriber development, Grameenphone's total subscriber base reached 83.3 million in Q4, constituting a 5.3% growth from last year while our data users reached 44.6 million with an 8% growth year-on-year. Compared to previous quarter, means Q3, the total sub base decreased by 0.3 million since Grameenphone focused more on driving usage from existing subscribers rather than new acquisition during the seasonal downtrend from winter. As a result, substantial growth in data usage was observed from last year as well as from previous quarter, contributing towards top line growth. The superior 4G network experience, Grameenphone's 4G data users reached 27.6 million, with 39.7% growth from last year. According to BTRC published information as of November 21, GP subscription market share decreased to 46.3% from last quarter, which was 46.5% in Q3. Turning to the revenue. Total revenue of Grameenphone grew by 4.2% in Q4, which was mainly driven by growth in subscription and traffic revenue. Year-on-year daily subs and traffic revenue growth for the quarter was 3.6%, which was 1.9% in last quarter. The growth in subs and traffic revenue was mainly driven by growth in bundle and data supported by spectrum, site rollout and enhanced market initiatives. Now getting in some more details, next page. In addition to the data and voice only services, Grameenphone continued its enhanced focus on promoting bundled services in Q4 in order to provide better customer value, along with enhanced experience. By launching attractive bundled packs, along with the continued digital adoption efforts through both owned and third-party digital channels, bundle revenue grew by 7x compared to last year. With this substantial growth in bundle, the overall subscription and traffic revenue grew by 1.2 billion or 3.6%. In addition, data only packs and Pay as you Go revenue increased by 5.2% from last year. Grameenphone continued its value proposition through attractive market offers supported by superior network experience through employment of newly acquired spectrum in more than 10,000 case sites and 4G network expansion. As a result, GP's average megabyte per user grew by 49% from last year and 9.6% from last quarter, reaching 4.3 gigabyte per user. The overall service ARPU decreased by 3.1% from last year, mainly due to lower contribution from the voice segment, partly offset by higher contribution from bundles. In terms of EBITDA, GP had a year-on-year 2.6% growth with a solid margin of 62.4%. The growth in EBITDA was mainly driven by our growth in top line. OpEx for the quarter stood at BDT 11.1 billion with a year-on-year 6.1% growth. The year-on-year growth in OpEx was mainly driven by higher market expenses and operation and maintenance cost. GP has invested BDT 6.5 billion CapEx in Q4, focusing mainly on 4G network and coverage expansion. We rolled out 3,000-plus new 4G sites and 1,700 plus new coverage sites in the last 12 months. Besides this, GP deployed new spectrum in 10,000-plus sites within the last 9 months. At the end of Q4, the number of 4G sites reached at 17,230. 4G population coverage reached 96.8%, which a 5.7 percentage points increase from last year. Coming to the profit picture. Net profit for the quarter stood at BDT 8.2 billion with 22.5% margin. On a reported basis, year-on-year net profit and EPS for the quarter decreased by 21%. The year-on-year degrowth in net profit was contributed by favorable one-off adjustment in finance costs and tax expenses in Q4 2020. However, excluding the one-off items in both the periods, underlying net profit grew by 2.4%. GP's full year EPS stood at BDT 25.28 with a solid profit margin of 23.9% on a reported basis. Operating cash flow degrew year-on-year by BDT 2 billion, driven by BDT 2.6 billion higher CapEx, partly offset by BDT 0.6 billion better EBITDA. Net debt stood at BDT 2.8 billion as of Q4 in combination of BDT 5.5 billion liability and BDT 2.7 billion cash balance, excluding the restricted cash. Net debt position improved by BDT 7.1 billion from previous quarter, mainly driven by a decrease in short term liabilities. As a result of this, our net-debt-to-EBITDA ratio stood at 0.03. For the full year of 2021, Grameenphone has paid BDT 102.8 billion, equaling 71.8% of total revenues in the form of taxes, VAT duties, license and spectrum fees and revenue share to the national exchequer. With this, our contribution since inception, comes at BDT 956.9 billion. Now turning to the dividend. I'm happy to announce that the Board of Directors of Grameenphone has recommended BDT 25 dividend per share for the full year, including BDT 12.5 interim dividend. With this, the total cash dividend stands at 250% of paid-up capital, which represents 98.9% of profit after tax for the year 2021, including the 125% interim cash dividend. This is subject to the shareholders' approval at their 25th AGM to be held on 26th April 2022. I will now hand back to Azman to summarize and wrap up. Thank you.

Thank you, Jens. We have continued to deliver growth in our top line and EBITDA, mainly driven by growth in users and usage. And improving our customer experience through new sites rollout and spectrum deployment will continue to remain as key to us, hence better trust on us, and growth. We'll continue to pursue our journey towards sustainable growth through modernization, evolving business models, competency development, creating partnership and being socially responsible through our various programs. With that, I hand over to Naureen for our Q&A session.

Thank you, Azman bhai. We will now switch to Q&A. [Operator Instructions] I have received one question already. So this is from IDLC. What are the major reasons for subscriber decline in Q4 2021? Azman bhai, would you like to take this?

Yes. We have been focusing on existing subscriber base usage and ARPU growth. At the same time, we are basically now working on the new [ numbers ].

Okay. Additional question for Jens. GP's EPS has been plateauing at 25% to 27% range for the past 3 years. What would be your key priorities in 2022 to bring growth?

Yes. I think, overall, the strategic priorities, I think I discussed in all the calls also before, and growth is one of the key priorities that we see coming from the market overall. So driver for anyhow -- for any -- on the net profit and EPS, therefore, is coming from top line growth.

Thank you, Jens. We will wait for some more questions. Azman bhai, I have a question for you. There was a guideline saying customers will get unused data if they renew the same package. What is the implication and financial impact of this guideline?

I think we have been giving the unused data already for the same package not used. But however, this and an extended version new guideline coming where probably at the same volume, a different pack also to carry forward unused data. And we are working on it. It requires a new event product portfolio. At this point of time, it's not towards the financial. In fact, our implication is rather customer convenience, how we can provide. That's what we are working on.

[Operator Instructions] Azman bhai, I have a question for you. Reportedly, the network quality of GP has been very poor recently around Dhaka City. Is there any specific reason?

So I think as far as Dhaka City concerned that we have significantly improved in terms of our network coverage being in new sites, as we mentioned, the total sites have been increasing during 2021. We have also rolled out 2,100 megahertz after the new spectrum acquisition and also [ refound ] 1,800. So we believe that we are working on to give better data networks experience in data where the Dhaka topography is constantly changing, and we need to also continue working dynamically in this area.

Jens, I have a bit of a forward-looking question for you. What strategy do you have to trim down costs in 2022 since EBITDA margin slowed down in Q4?

Yes. As you can see, we see the overall, of course, we see that the EBITDA margin is fairly stable over the past months and quarters that we have seen. But as Azman has mentioned in his speech, we have a huge topics that we follow up on the modernization agenda of our organization. So in terms, as we know, going forward, and entering the data space, it's very important for us to have a close look on the cost base, as you mentioned in your question here. So in base terms, it -- modernization initiative that we have started this year, be it on the IT side, be it on the network side as well as on the organization is what we carry forward. This includes, of course, digitalization as a main lever that we see going forward.

Thank you, Jens. Azman bhai, I have a question for you, whether we can share any updates on tower sharing.

We don't have as such any update on tower sharing, but at this point of time, we are open to have followed the regulations on this area, and we are working with regulators and other operator.

Thank you, everyone. We will wait one more minute for any questions.

Yes, I think there's a question also what I see here on the data prices. How much have this decreased over the last years. Onto it. There's a constant pressure on the data pricing that we have seen. Can't tell you this for the industry, and it's getting also more and more complicated or complex to distract it as the whole industry moves through bundles, so isolated data prices not there. But what we see from our own experience is that the decline in pressure on the data prices is constant. So don't see any acceleration so far on the pressure rather being stable, but it's not accelerating on it, but of course, competitive price pressure is there. This is a highly competitive market, especially on the data side.

Thank you, Jens. We will wait just one more minute. If there are any last questions, requesting everybody to post them now. Okay. I do not see any other questions. So thank you, everyone, for joining in. If you have missed our Q&A session, feel free to reach out to me. We will get back to you as soon as possible. Thank you and take care.

Thank you.

Thank you, everyone.