Investor Presentation

Transcription

1 Investor Presentation Bharti Airtel Limited October 2010

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 The Company...Bharti Airtel An Integrated Telco Wireless Services 2G 3G Rural Market Telemedia Services Fixed Line Broadband IPTV Enterprise Services Carriers Corporates Passive Infrastructure Services Infratel Indus Pay per view / HD Interactive Services including Gaming Fully integrated telecom player offering end to end solutions and entering new geographies 3

4 Bharti a growth journey No. of circles Today countries DELHI

5 Growth trajectory reflected in the numbers Single Circle Operator + telephone instruments Company Profile Largest integrated private telecom operator < 25k Customers ~ 137 mn ~ USD 17 mn Revenue ~ USD 9 bn ~ USD 2.5 mn EBITDA ~ USD 4 bn ~ USD 1.4 mn Cash Profit ~ USD 4 bn ~ USD 16 mn Market Capitalization ~ USD 26 bn Continuing on our journey of Value Creation Note: 1) 2010 financials are as per FY 2010 results. 2) Exchange rate: Financials as of 31 st Mar 10 : Rs

6 Revenue & Profitability trends 10,000 8,000 6,000 Total revenues 5,987 8,188 36% CAGR 8,776 5,000 4,000 3,000 2,519 EBITDA 3,360 39% CAGR 3,550 4,000 4,103 2,000 1,651 2,000 1, Years Years Cash profit from operations 42% CAGR Net profit 42% CAGR 4,000 3,500 3,000 2,500 2,000 1,500 1,619 2,467 3,103 3,679 2,500 2,000 1,500 1, ,484 1,876 2,017 1, Years Years Bharti Airtel demonstrating robust performance Source: Financials for the year ended March 31, 2006, 2007, 2008, 2009 & 2010 are audited and as per USGAAP. The above numbers are in Mn USD re-stated at 31 st Mar 10 exchange rate. 6 Exchange rate as of 31st Mar 10 : Rs 45.14

7 Financials & Positioning Key financial metrics FY 10 (in Mn) Customers Revenue $ 9,271 EBITDA $ 3,714 Cash Profit $ 3,710 Net Income $ 1,989 EBITDA Margin (%) 40.3* ROCE (%) 24.4 Positioning in the world & in India 3rd LARGEST wireless operator in the world (1) LARGEST private INTEGRATED telecom company in India 5th LARGEST INTEGRATED telecom operator in the world LARGEST operator in NLD, ILD and VSAT business LARGEST TELECOM company listed on Indian Stock Exchanges Note: FY10 numbers are as per IFRS as per June10 quarterly report. Exchange rate for Re to $ conversion: * EBITDA Margin before acquisition related costs of Rs 976 mn for the quarter & FY ended Mar 31, (1) 3 Mobile Services rd largest wireless operator in the world refers to in-country (single country) operator based on the number of subscribers. Telemedia Services Enterprise Services

8 Latest Results 1Q 11 Key operating and financial metrics Continued Strong Performance Q1 FY 11* Y-on-Y Wireless CMS 21.5% Customers mn 71.0% Wireless RMS 31.2% Revenue $ 2,625 mn 17.4% Total MOU carried in Qtr bn EBITDA Cash Profit $ 947 mn $ 857 mn 3.0% -10.0% Balance sheet strength: Assets Net debt $ 31 bn $ 12.9 bn Net Income $ 361 mn -32.0% Net debt to EBITDA 2.9 Times EBITDA Margin ROCE 36.9% 18.4% (annualized) Continues to be FCF positive on a standalone basis Includes 23 days of Airtel Africa Exchange rate as of 30 th June 2010:

9 Performance dashboard - 3 line graph Gross Revenue (USD Mn) 115, , , ,000 95,000 90, ,725 69% 66% 63% 63% 65% 107, , , , % 38.4% 39.9% 40.9% 40.6% 80% 70% 60% 50% 40% 30% 85,000 20% 80,000 Q110 Q210 Q310 Q410 Q111 10% Gross Revenue (USD Mn) (LHS) Opex to Gross Rev (RHS) Revenue (annualized) to Gross Cummulative Capex (RHS) Productivity Indicators = growing revenues + cost efficiencies + capital productivity Note: (1) The graph shown above is based on Bharti Airtel (India & South Asia), excluding Bharti Airtel African Operations as it is for less than one month in this quarter 9

10 Wireless Services 10

11 Indian Market Overall Telecom Market Wireless Market Population 1.2 billion Sub Base c.652 mn Relatively large youth population Wireless Penetration c.55% Telecom penetration (~688 mn telecom subs) c.58% Operational metrics per month Usage per user 480 min Sub number should go upto 1 Billion by 2015 Broadband penetration 0.83% (9.77 mn) Govt. target to reach 20 mn. Broadband subs by 2010 ARPU ~ US$ 4.6 Rate per minute US$ 0.01 VAS ~ 11.6% Lot of opportunity ahead. Note: (1) Subscriber numbers and wireless penetration numbers as on July 31, 2010 are as per TRAI release (2) Other indicators on the slide are based on Global Wireless Matrix 2Q10 dated 9 th July 10 by Merrill Lynch, and reflective of Industry numbers. 11

12 Rapidly Growing Indian Wireless Market Net Adds in Aug 18.2 Mn greater than over last 3 months average run rate of 17.1 Mn S-curve triggered Closing Subscribers Net Adds 90% % 70% 60% 50% 40% 30% 20% 10% 0% India - Fastest Growing Market in the World Note: (1) Actual Data as per Industry Association Releases and Industry Estimates in India. 12

13 Wireless Market Structure in India Subscriber Trends Customer Market Share CMS (%) % % 21% % % 62 15% % % % 7% 5% 23.6% 21.1% 18.4% 17.2% 17.7% 17.0% 13.6% 12.1% 11.5% 10.8% 11.0% 10.3% 9.4% 6.3% Airtel Reliance Vodafone BSNL+MTNL Idea Tata Others Aug-10 Aug-09 Net adds during the year CMS(Aug'10) CMS(Aug'09) Airtel continuously consolidating its market leadership position despite intense competition Airtel current monthly net adds at 2.0 million vs. 2.8 million a year ago Airtel ranks 1& 2 in 17 circles in terms of number of subscribers Over 62% of net adds coming from B&C circles (rural India) Airtel Continues to lead on Revenue Market Share Note: Based on subscriber data for India as on August as per TRAI press release. 13

14 Airtel Performance Indicators (Operational) Customers & Market Share Prepaid/Postpaid % 23.5% 22.7% 21.8% 21.5% 26% 24% 23% 105% 100% 95% 97.9% 92.3% 99.6% 98.4% 93.5% 92.9% 101.1% 100.8% 100.4% 94.7% 95.2% 94.2% 97.5% 95.3% 101.7% 99.2% 95.8% 96.0% % 90% 0 Q110 Q210 Q310 Q410 Q111 20% 85% Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 1Q11 Customers (mn) CM S (%) Prepaid Subs Prepaid Net Adds ARPU & RPM MoU/Sub/Month & MON Q110 Q210 Q310 Q410 Q , , , , , Q110 Q210 Q310 Q410 Q , , ,000 0 RPM (Rs.) ARPU (INR) MoU/ Sub (Min) Total minutes on Network (Mn Min) 14

15 Current positioning and way forward Leadership Positioning Growth strategy and plans Revenue Revenue size (>$ 9 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 15

16 Telemedia Services 16

17 A snapshot Largest private operator having presence in the voice, broadband, IPTV and data. Focus on SMB segment & Broadband at Homes Key Performance Indicators 1. Voice (wire-line) and Data (DSL) Presence in 88 top cities of India. 2. Target Segment : Retail and Small and Medium Enterprises. 3. Customer base: 3.2 million (end August2010) 4. Broadband (DSL with speeds>256 kbps) penetration at 42.6% of customer base. 5. Average ARPU for Quarter ended Jun 10 $ 20.6 per month. 6. Segment contributing to 7% of overall revenues of the company. 7. EBITDA margin of over 44.0%. Broadband revolution to follow wireless revolution in India SMB opportunity across ICT stream 17

18 Enterprise Services 18

19 A snapshot Enterprise Services provides a broad portfolio of services to large Enterprise and Carrier customers Corporates: Single point of contact for all telecommunication needs for Top 2500 corporate customers, providing full suite of voice, data, and managed communications solutions Carriers: Wholesale voice and data services to over 130 domestic and 450 international telecommunications carriers, as well as ILD and NLD carriage for Airtel s own customers Extensive national and international infrastructure Pan-India network with 129,244 Route kms of optical fiber, over 4,150 MPLS and SDH POPs Access network (terrestrial) in 88 cities, Wimax network in 143 cities, and over 1,500 local POIs International network with 225,000 Route Kms, connecting over 50 countries and 5 Continents. Key Performance Indicators (Q1 11) NLD Minutes Carried: 17.3 Billion ; ILD Minutes Carried: 3.0 Billion Revenue: Rs.10,186 Million (8 % Segment Contribution Share) EBITDA: Rs. 2,497 Million (24.5% EBITA Margin) 19

20 Emerging Growth Engines Passive Infra Africa iiiiiiiiii 20

21 Financial Performance Passive Infra Revenue EBITDA 30,000 10,000 9, ,000 8,000 7,224 7,240 22,000 18,000 14,000 15,937 17,049 18,407 19,459 20,412 7,000 6,000 5,000 4,000 5,201 5,831 6,267 10,000 Q110 Q210 Q310 Q410 Q111 3,000 Q110 Q210 Q310 Q410 Q111 Revenue (in INR Mn) EBITDA (INR Mn) Focus on tenancy enhancement driving Revenue & Profitability 21

22 Operational Performance Passive Infra Infratel Indus Towers (nos) & Sharing Factor Towers (nos) & Sharing Factor 32,000 31,000 30,000 29,000 28,000 27,000 28, , , , , , , ,000 99,000 97,000 95,000 97, , , , , ,000 Q1 10 Q2 10 Q3 10 Q410 Q ,000 Q110 Q210 Q310 Q410 Q No of towers Sharing Factor No of towers Sharing Factor Sharing Revenue per Sharing Operator per Month (Rs) Sharing Revenue per Sharing Operator per Month (Rs) 41,000 37,000 33,000 29,000 38,107 36,420 36,696 36,878 36,290 40,000 35,000 30,000 25,000 20,000 28,915 28,333 25,917 29,674 30,379 25,000 Q1 10 Q2 10 Q3 10 Q410 Q111 15,000 Q110 Q210 Q310 Q410 Q111 Sharing Revenue per Sharing Operator per month Sharing Revenue per Sharing Operator per month Aims to enhance the tenancy ratio & be the preferred choice of vendor for all existing and new operators 22

23 Transaction Rationale Shareholding and Management Control Brand Airtel Clean / certainty of transaction Manageable Deal Size Global Stature Emerging Market Characteristics Strong Platform for Future Expansion Low Competitive Intensity 100% Cash Transaction Focus on Core Middle East Operators Diversification of India Risk Significant Synergies Speed in Transaction Avoid Greenfield Repayment of Debt The proposed transaction meets the objectives of Airtel with long term strategic benefits and creates tremendous shareholder value 23

24 Differences between the two markets India Africa (1) Mobile Penetration 55% 32% Average Number of Competitors Business Model High usage, low pricing model Low usage, high pricing model Minutes of Usage ~480 ~100 ARPU (US$) ~$5 ~$7 ARPM (US cents ) 1 7 And therefore huge opportunity space Source: Global Insight, annual / quarterly reports. 1. Data pertaining to the 15 African countries where Zain Africa has operations. 24

25 Africa Strong Platform Airtel Africa Coverage Addressable Market Opportunity Population, 2009 (mn) Population, 2009 (mn) 50.9% 32.0% Total Africa: 1,025mn Airtel Africa 450mn Airtel Africa Footprint Other African Countries Leading African Operators Subscribers, 2009 (mn) Telecom Operators by Subs in Africa Penetration, 2009 Large addressable population with low teledensity (1) Leading telecom operations acquired through Zain Africa Strong competitive positioning Source: Zain Filings, WCIS. 25

26 Another Growth Engine - Africa Customer Base : Mn Performace Indicators (CY 2009): Revenue: $ 3,667 Mn EBITDA: $ 1,160 Mn Prepaid Base: 99.3% one of the highest in the world Usage per sub per month: 103 Minutes ARPU: ~ US$ 7.4 Rate per minute: ~ US 7.2 one of the lowest one of the highest VAS: ~ 7.9% One of the lowest 26

27 Recent Honours 27

28 Bharti Airtel Leadership in business Recent Honours NDTV Profit Business Leadership Awards 2010 Top Telecom Company Sunil Bharti Mittal - Business Innovator of the Year India s Most Innovative company - Wall Street Journal Most Preferred Cellular Service Provider CNBC Awaaz Consumer Awards Tele.net Telecom Operator award Won in 6 out of total 14 categories. Few among them being Most Admired company Best Internet and Broadband operator Best National Mobile operator Best Enterprise services Powerful Brand - Economic Times (the only corporate brand to be awarded the AAA rating) Bharti Airtel rated as India s Best Enterprise Connectivity Provider- Users choice award Instituted by PC Quest Sunil Bharti Mittal Global Telecom Leader - Voice & Data magazine Philanthropist of the Year at Asian Awards 2010 Akhil Gupta, Deputy Group CEO and MD - Asia Corporate Dealmaker Award 2010 Manoj Kohli, CEO( International) & Joint MD - Telecom Man of the year - Tele.net Business world FICCI SEDF Corporate Social Responsibility Awards

29 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