Investor Presentation

Transcription

1 Investor Presentation Bharti Airtel Limited June 2009

2 Disclaimer The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwise shall be subject to the applicable laws and regulations as amended from time to time. There is no representation that all information relating to the context has been taken care off in the presentation and neither we undertake any obligation as to the regular updating of the information as a result of new information, future events or otherwise. We will accept no liability whatsoever for any loss arising directly or indirectly from the use of, reliance of any information contained in this presentation or for any omission of the information. The information shall not be distributed or used by any person or entity in any jurisdiction or countries were such distribution or use would be contrary to the applicable laws or Regulations. It is advised that prior to acting upon this presentation independent consultation / advise may be obtained and necessary due diligence, investigation etc may be done at your end. You may also contact us directly for any questions or clarifications at our end. This presentation contain certain statements of future expectations and other forward-looking statements, including those relating to our general business plans and strategy, our future financial condition and growth prospects, and future developments in our industry and our competitive and regulatory environment. In addition to statements which are forward looking by reason of context, the words may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential or continue and similar expressions identify forward looking statements. Actual results, performances or events may differ materially from these forward-looking statements including the plans, objectives, expectations, estimates and intentions expressed in forward looking statements due to a number of factors, including without limitation future changes or developments in our business, our competitive environment, telecommunications technology and application, and political, economic, legal and social conditions in India. It is cautioned that the foregoing list is not exhaustive This presentation is not being used in connection with any invitation of an offer or an offer of securities and should not be used as a basis for any investment decision. The information contained herein does not constitute an offer of securities for sale in the United States. Securities may not be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Any public offering of securities to be made in the United States will be made by means of a prospectus and will contain detailed information about the Company and its management, as well as financial statements. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted. Investor Relations :- For any queries, write to: ir@bharti.in

3 Bharti Airtel crosses 100 Mn customers Third company in the world to cross 100 million subscriber mark in a Single country Joins China Mobile and China Unicom in the 100M-Plus Club Sixth largest integrated operator in the world after China Mobile, China Unicom, China Telecom, AT&T and Verizon Started in 1995 took 13-1/2 years to reach 100 million mark If Airtel customers were to form a single country, it would be 12 th the largest country in the world Continues to lead Revenue Market Share and Subscriber Market Share What s Next Plans to reach 200 million users in the next 2-1/2 years Next phase of growth will come from Rural India which is still under penetrated MNP and 3G will also act as catalyst in spurring further growth Proud to lead the telecom revolution positively impacting the lives of people 3

4 Advantage India Population: 1.1 billion increasing urbanisation relatively large youth population GDP Growth (Real) : ~6.7% second highest growing economy GDP Size (PPP adjusted): US$ 3 trillion fourth largest economy in the world Telecom penetration: 38.88% ( mn telecom subs) one of the lowest Govt. target to reach 500 mn. telecom subs by 2010 Broadband penetration: 0.55% (6.40 mn) one of the lowest Govt. target to reach 20 mn. Broadband subs by 2010 Deep Domestic Demand Huge Growth Potential Note: (1) Telecom and Broadband penetration is as at May 31st 2009, as per TRAI press release. 4

5 The Company...Bharti Airtel An Integrated Telco Wireless Services 2G/3G Rural Market Enterprise Services Carriers Corporate Telemedia Services Fixed Line Broadband DTH (Media)/IPTV Passive Infrastructure Services Fully integrated telecom player offering end to end solutions 5

6 Bharti Airtel - positioning in the world and India 3 rd LARGEST wireless operator in the world 1 LARGEST private INTEGRATED telecom company in India 6 th LARGEST INTEGRATED telecom operator in the world LARGEST WIRELESS operator in India LARGEST private FIXED LINE operator in India LARGEST operator in NLD, ILD and VSAT business LARGEST TELECOM company listed on Indian Stock Exchanges Note: (1) 3 rd largest wireless operator in the world refers to in-country (single country) operator based on the number of subscribers. 6

7 Latest Results Q4 FY08/09 Key operating and financial metrics Q4 FY 09 Y-on-Y Customers mn 50.0% Revenue $ 1,928 mn 25.6% EBITDA $ 785 mn 23.1% Cash Profit $ 743 mn 24.8% Net Income $ 440 mn 20.9% Continued Strong Performance Wireless Customer market share leadership at 24.0%. Total minutes on network carried in Q4 150 billion Total employee strength 24,538 Balance sheet strength: Assets - $ 12 billion Net debt - $ 629 million* Net debt to EBITDA times* Continues to be FCF positive on a standalone basis EBITDA Margin 40.7% Net Profit Margin 22.8% ROCE 30.8% ROE 32.6% Company declared Maiden dividend of 20% of face value for the year. Board has also proposed sub-division (share split) of existing equity shares of Rs. 10/- each into two equity shares of Rs. 5 each. Note: * Net Debt is excluding fully and compulsory convertible, non-cumulative, unsecured and interest free Debentures of US$

8 Segment contribution Rev, EBITDA and Investment Revenue EBITDA 18% 4% 7% 1% 20% 5% 7% -3% 9% 84% 9% 65% Mobile Services Enterprise Services - Carriers Telemedia Services Enterprise Services - Corporates Mobile Services Enterprise Services - Carriers Telemedia Services Enterprise Services - Corporates Passive Infrastructure Services Others Passive Infrastructure Services Others INVESTMENTS 24% 1% 1% 13% 11% 49% Mobile Services Enterprise Services - Carriers Passive Infrastructure Services Telemedia Services Enterprise Services - Corporates Others Note: (1) Revenue and EBITDA is gross of inter segment eliminations. 8

9 Performance dashboard - 3 line graph 110, ,000 74% 74% 73% 72% 70% 70.0% Amount in Rs. Mn 90,000 80,000 70,000 60,000 50,000 78,191 33% 96,334 98,245 90,203 84,833 34% 35% 35% 34% Q4FY08 Q1FY09 Q2FY09 Q3FY09 Q4FY % 50.0% 40.0% 30.0% Gross Revenue (Rs mn.) (LHS) Opex to Gross Rev (RHS) Capital Productivity Productivity Indicators = growing revenues + cost efficiencies + capital productivity 9

10 Recently in news... Announced Managed Services Joint Venture with Alcatel-Lucent to manage Bharti Airtel s pan- India Broadband and Telephone services and help Airtel s transition to Next Generation Networks. Offered Net PC by launching cloud computing service on broadband a low-cost online computer for its broadband customers. Airtel digital TV launched Magic dekho, talk time pao offer - Exclusive offer only for Airtel Prepaid Mobile customers across the country where on buying a digital TV connection at Rs with 3 months of Super Value Pack, the Airtel Prepaid Mobile customer receives 1000 minutes of local Airtel to Airtel talk time. Partnered with UK based in-flight solutions company, AeroMobile, to offer in-flight cell phone connectivity to its customers. Signed a 5 year multi million dollar content partnership deal with Manchester United (world s second richest football club) to provide Airtel s subscribers across India, Sri Lanka and Seychelles, exclusive access to United football s content over mobile. Announced managed services deal with Comviva for its value added portfolio to manage around of Airtel s VAS nodes across India from various partners to meet the defined service level agreements. 10

11 Wireless Services 11

12 Indian Wireless Market KPIs JK Sub Base : mn second largest market GUJ RAJ HP PB UP(W) HAR DEL DELHI UP(E) MADHYA MP PRADESH` BH WB AS NE Wireless Penetration: 35.8% lowest in the world HHI Index: very high one of the most competitive market Prepaid Base: 90%+ one of the highest in the world Usage per sub per month: MUM MAH KK KER AP TN CHN OR Kol Metros A Cat. B Cat. C Cat. Minutes: 430 one of the highest ARPU: ~ US$ 5.95 one of the lowest Rate per minute: 1.4 cents one of the lowest in the world VAS: ~ 9% One of the lowest Note: (1) Subscriber numbers and wireless penetration numbers as at May 31, 2009 as per TRAI. (2) Other indicators on the slide are based on QE Mar, 2009 Global Wireless Matrix released by Merrill Lynch, and reflective of Industry numbers. 12

13 Rapidly Growing Wireless Market Net Adds in May 11.6 Mn, a more sustainable number than 15 Mn average net adds per month in last quarter S-curve triggered Closing Customers (mn) Net Adds (mn) 90% % 70% 60% 50% 40% 30% 20% 10% 0% Fastest Growing Market in the World Note: (1) Actual Data as per Industry Association Releases and Industry Estimates. 13

14 Wireless Market Structure Subscriber Trends Customer Market Share CMS (%) (mn) % 23.0% 21.0% 19.0% 17.0% 15.0% 13.0% 11.0% 9.0% 7.0% 5.0% 24.0% 24.0% 18.6% 17.8% 17.6% 17.1% 16.3% 14.0% 9.9% 9.4% 8.8% 9.2% 6.9% 6.4% Airtel Reliance Vodafone BSNL+MTNL Idea Tata Others Airtel Reliance Vodafone BSNL+MTNL Idea Tata Others May-09 May-08 Net adds during the year CMS(May'09) CMS(May'08) Airtel continuously consolidating its market leadership position despite intense competition Airtel current monthly net adds at 2.81 million vs million a year ago Airtel ranks 1& 2 in 19 circles in terms of number of subscribers 64% of net adds coming from B&C circles (rural India) Airtel Continues to lead on Revenue Market Share 14

15 Company Highlights on Wireless Services 15

16 First mover advantage / Product innovations Electronic Recharge / Micro Prepaid Life time validity product Easy Music Hello Tunes (Ring Back Tones) Song Catcher Call Home Service Music on Demand Airtel Live (Portal) Money Transfers Google search Portfolio Manager (Stock Tracker) iphone Blackberry focus on product innovations M Commerce 16

17 Performance Indicators - Financial Revenues (USD mn) EBITDA (USD mn) & Margin (%) 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1, ,558 1,614 1,357 1,430 1,260 1, Q208 Q308 Q408 Q109 Q209 Q309 Q Q208 Q308 Q408 Q109 Q209 Q309 Q409 17

18 Performance Indicators - Operational Customers & Market Share Prepaid/Postpaid % 24.7% % 23.7% 24.0% 23.4% 23.6% 28.0% 27.0% 26.0% 25.0% 24.0% 23.0% 105.0% 100.0% 95.0% 90.0% 95.4% 90.4% 91.0% 91.6% 92.3% 92.9% 93.5% 100.8% 94.2% 40.0 Q208 Q308 Q408 Q109 Q209 Q309 Q % 85.0% Q208 Q308 Q408 Q109 Q209 Q309 Q409 Customers (Mn) CMS (%) Prepaid Subs Prepaid Net Adds ARPU & RPM MoU/Sub/Month & MON Q208 Q308 Q408 Q109 Q209 Q309 Q Q208 Q308 Q408 Q109 Q209 Q309 Q ARPU (US$) RPM (US Cents) MOU / sub Total mins (bn) 18

19 Road map Wireless Market Current Proposed Presence Operational in 22 circles of India on GSM technology. Launched Operations in Srilanka Looking for options primarily in emerging markets. Option in emerging markets. Population Coverage 81% of population covering 5060 census towns and over 4 lakh non-census towns and villages. Poised to cover all census towns and majority of non-census towns and villages Penetration wider and deeper into rural India Network Rollout & Strength Hive off of passive infrastructure into a separate independent tower company Largest GSM (900/1800 Mhz) network in India comprising of over 93,368 network sites Strong partners: Ericsson; Nokia; Huawei; Alcatel Lucent Network sites ~ 100,000 + Plan to get 3G license and spectrum. 19

20 Road map Wireless Market Current Proposed Sales & Distribution Network One of the widest distribution network. Following the FMCG company distribution model - Match Box Approach Present in over a million PoP in India. Tie-up with IFFCO, an edge over others to reach out to Rural India Continue distribution expansion, especially in rural areas Customer Service Continuous improvement in CSAT scores Multi pronged service strategy in place Focus on service through service training and employee sensitivity Unified service backend for enhanced customer experience Employee Engagement Significant improvement in employee engagement Awarded Great Work Place 2008 by Gallup Sustain employee engagement Focus on employee capability development and leadership pipeline 20

21 Current positioning and way forward Leadership Positioning Growth strategy and plans Revenue Revenue size ($ 6 Bn) Revenue Market Share New Revenue Streams Changing face of growth through M-Com, M-entertainment & 3G Non financial vitals Brand Distribution Churn lower than industry Spectrum Mix (900/1800 MHz) Cost Improving cost efficiencies Lowest cost GSM network Maximizing usage Increasing the usage through U&R drive Wallet share Net Adds Driven by rural strategy 21

22 Telemedia Services 22

23 A snapshot Largest private operator having presence in the voice and data (broadband). Foraying into the media space - IPTV & DTH (Direct-To-Home) services. Key Performance Indicators 1. Voice (wire-line) and Data (DSL) Presence in 95 top cities of India. 2. Target Segment : Retail and Small and Medium Enterprises. 3. Customer base: 2.8 million (end May,2009) 4. Broadband (DSL with speeds>256 kbps) penetration at 39% of customer base. 5. Average ARPU for Quarter ended March 09 $ 21.0 per month. 6. Segment contributing to 9% of overall revenues of the company. 7. EBITDA margin of over 42.1%. Broadband revolution to follow wireless revolution in India 23

24 Telemedia Services Business Units Media SMBs Homes Products DTH IPTV Voice Data Mobile Services Broadband Voice Goal A Pan-India DTH Businesses; and a targeted IPTV Presence in top metros One-Stop Shop for All Airtel Services and Solutions to SMBs Dominant Broadband & Fixed Voice share of the affluent in targeted 95 cities Strategies Best-in-class technology: World-class Installation & Customer Service Interactive VAS to Drive ARPU enhancement One Airtel Synergies for Distribution, Brand & IT Data Products: Internet, MPLS etc Integrated Solutions to Drive Share of wallet Strategic Alliances Indirect Channel to Drive Penetration Deeper & Not Wider: 95 Cities Vertical & Not Horizontal: Hi-Rise Network Enhancement to Deliver 8+ MBPS New Products & VAS to drive Flat, Combo Plans 24

25 Product Portfolio Our Media Play 25

26 Performance Indicators Revenues (USD mn) EBITDA (USD Mn) & Margin (%) Q208 Q308 Q408 Q109 Q209 Q309 Q Q208 Q308 Q408 Q109 Q209 Q309 Q409 Customers (overall & DSL) ARPU (USD) 2,750 2,500 2,250 2,000 1,750 1, , , ,283 2, , ,619 1,072 2,726 1,200 1, ,250 Q208 Q308 Q408 Q109 Q209 Q309 Q409 B&T Customers ('000) DSL Customers ('000) Q208 Q308 Q408 Q109 Q209 Q309 Q409 26

27 Enterprise Services 27

28 A snapshot Carrier: - one of the largest carriers of voice and data, both domestic and international. Corporate: - providing end to end telecom solutions to large corporate and Small & Medium Businesses. Present Competition: National Long Distance: BSNL; Reliance; VSNL; Vodafone; Tata International Long Distance: VSNL, Bharti, Reliance, BSNL 28

29 Enterprise Services Carriers NLD Voice Network Jalandhar Chandigarh Jaipur Delhi Lucknow Ahmedabad Mumbai Bhopal Nagpur Hyderabad Kolkata Bangalore Ernakulam Chennai Coimbat ore Legend Existing OFC Route Under Execution captive traffic (group traffic) ~ 90 % NLD minutes carried (Q4FY09) 11.7 Bn Min optic fibre capacity (Q4FY09) 101,337 km 29

30 Enterprise Services Carriers ILD Bude London EIG Marseilles Monaco Sesimbra Palermo Catania Gibraltar Annaba Bizerte Tajoura EIG IMEWE Alexandria Tripoli Suez Fujairah Karachi Port Sudan Jeddah Djibouti Mogadishu Mombasa Dar es Salaam Maputo Mtunzini EASSy Muscat IMEWE Toliary SMW4 Mumbai Chennai Colombo Cox s Bazaar i2i SMW4 Sri Racha SJC Vung Tau Satun Songkhla Melaka Kuantan Mersing Singapore Hong Kong AAG Tungku La Union Nasugbu SJC Chikura Guam AAG UNITY Hawaii Los Angeles San Luis Obispo SEA-ME-WE-4 Connectivity to West i-2-i Connectivity to East ILD minutes carried (Q4FY09) 2.8 Bn Min ILD gateways 4 landing stations 2 30

31 Performance Indicators - Carriers Revenues (USD mn) EBITDA (USD mn) & Margin (%) Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Voice Minutes on Network 12,000 10,000 8,000 6,774 7,898 9,398 10,322 11,349 11,609 11,690 6,000 4,000 2,000 1,345 1,591 1,850 2,048 2,284 2,603 2,772 0 Q208 Q308 Q408 Q109 Q209 Q309 Q409 NLD Minutes (mn) ILD Minutes (mn) 31

32 Enterprise Services - Corporates Mobile services Voice services Satellite services Managed data & Internet services Managed e - business services Managed customized integrated solutions competition segment target leveraging limited one stop telecom solution 2,000 top large corporates integrated play 32

33 Performance Indicators - Corporates Revenues (USD mn) EBITDA (USD mn) & Margin (%) Q208 Q308 Q408 Q109 Q209 Q309 Q Q208 Q308 Q408 Q109 Q209 Q309 Q409 33

34 Passive Infrastructure Services 34

35 A snapshot Bharti Infratel operates in 11 circles. Indus Tower operates in 16 circles. Standard Master Services Agreement with competitive rates already in place. Key focus areas: To increase sharing factor (tenancy) from current levels of 1.34 for Infratel and 1.48 for Indus. Provide energy optimization solutions and other network management services. Evaluate other revenue streams. To reduce sharing revenue per sharing operator through increased sharing factor and efficiencies Key performance Indicators (Infratel): Total Towers: 27,548 (nos) Sharing Factor: 1.34 Sharing Revenue per sharing operator per month at Rs. 33,586. EBITDA margin: 40.1% Key performance Indicators (Indus): Total Towers: 95,154 (nos) Sharing Factor: 1.48 Aim to be the preferred choice of vendor for all existing and new operators 35

36 Recent Honours 36

37 Bharti Airtel Leadership in business Recent Honours Awarded with top honors at the GSMA Mobile World Congress Conference 2008 in Barcelona for the category Best Billing/ Customer Care solution Best Cellular Service Provider and Best Broadband Service Provider at the 2008 V&D 100 Awards Best Carrier India at the Telecom Asia Award 2008 Adjudged Wireless Service Provider of the Year Frost & Sullivan Asia Pacific ICT Awards ( in recognition of innovation, vision, strategy and profitability) Voted as the India s Most Innovative company in a survey conducted by Wall Street Journal Won Platinum Trusted Brand Award in Mobile Service Provider category in Reader Digest Asia Trusted Brand s Survey Bharti Airtel and IFFCO JV bagged the Best Content Service award and Gujrat E- Gram project executed by Bharti Airtel won Best Project Management award at the world Communications Awards at London Sunil Bharti Mittal, Chairman & Group CEO GSM Association Chairman s Award 2008 Chosen for Padma Bhushan Awards in 2007 Sarvjit Dhillon, Group Director Best Performing CFO in Telecom sector by CNBC-TV18 in Mar 09 37

38 Disclaimer The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwise shall be subject to the applicable laws and regulations as amended from time to time. There is no representation that all information relating to the context has been taken care off in the presentation and neither we undertake any obligation as to the regular updating of the information as a result of new information, future events or otherwise. We will accept no liability whatsoever for any loss arising directly or indirectly from the use of, reliance of any information contained in this presentation or for any omission of the information. The information shall not be distributed or used by any person or entity in any jurisdiction or countries were such distribution or use would be contrary to the applicable laws or Regulations. It is advised that prior to acting upon this presentation independent consultation / advise may be obtained and necessary due diligence, investigation etc may be done at your end. You may also contact us directly for any questions or clarifications at our end. This presentation contain certain statements of future expectations and other forward-looking statements, including those relating to our general business plans and strategy, our future financial condition and growth prospects, and future developments in our industry and our competitive and regulatory environment. In addition to statements which are forward looking by reason of context, the words may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential or continue and similar expressions identify forward looking statements. Actual results, performances or events may differ materially from these forward-looking statements including the plans, objectives, expectations, estimates and intentions expressed in forward looking statements due to a number of factors, including without limitation future changes or developments in our business, our competitive environment, telecommunications technology and application, and political, economic, legal and social conditions in India. It is cautioned that the foregoing list is not exhaustive This presentation is not being used in connection with any invitation of an offer or an offer of securities and should not be used as a basis for any investment decision. The information contained herein does not constitute an offer of securities for sale in the United States. Securities may not be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Any public offering of securities to be made in the United States will be made by means of a prospectus and will contain detailed information about the Company and its management, as well as financial statements. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted. Investor Relations :- For any queries, write to: ir@bharti.in

39 Option in emerging markets. Renewed effort of possible partnership between Bharti and MTN Potential transaction between the two would create a leading telecommunications service provider with combined subscriber base of over 200 million and revenues of over $20 billion. Pursuant to the scheme, Bharti will acquire a stake of 49% in the enlarged capital of MTN and in turn, give MTN & its shareholders 36% economic interest in Bharti. Bharti would have substantial participatory and governance rights in MTN enabling it to fully consolidate the accounts of MTN MTN would have appropriate representation on the Bharti Board. Both the companies will stand to benefit from sharing each other s best practices in addition to savings from enhanced scale. The two companies have decided to discuss the potential transaction exclusively with each other until 31 st July 09. Discussion at an early stage and may or may not lead to any transaction 39