Investor Presentation. December 2010

Transcription

1 Investor Presentation Bharti airtel limited December 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 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 DTH Infratel Indus Pay per view / HD Interactive Services including Gaming Fully integrated telecom player offering end to end solutions and entering new geographies

4 The Company Bharti airtel No. of circles (India) Today Countries Fully integrated telecom player offering end to end solutions and entering new geographies

5 Growth trajectory reflected in the numbers Single Circle Operator 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 ) The above numbers do not include Africa which has 40 mnsubs as on 30 th Sept 10.

6 Revenue & Profitability trends Total revenues EBITDA 10,000 8,000 36% CAGR 8,188 8,776 5,000 4,000 39% CAGR 3,360 3,550 (In $ Mn) 6,000 4,000 4,103 5,987 (In $ Mn) 3,000 2,000 1,651 2,519 2,000 1, Years Cash profit from operations Net profit Years 4,000 3,500 42% CAGR 3,103 3,679 2,500 2,000 42% CAGR 1,876 2,017 (In $ Mn) 3,000 2,500 2,000 1,500 1,619 2,467 (In $ Mn) 1,500 1, ,484 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.Theabove numbers are in MnUSD re-stated at 31 st Mar 10 exchange rate..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* 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 ROCE (%) 24.4 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 mnfor the quarter & FY ended Mar 31, (1) 3 rd largest wireless operator in the world refers to in-country (single country) operator based on the number of subscribers.

8 Latest Results 2Q 11 Key operating and financial metrics Continued Strong Performance Q2 FY 11* Y-on-Y Wireless CMS 20.8% Customers mn 68.2% Wireless RMS 31.2% Revenue $ 3,387 mn 47.4% EBITDA $ 1,140 mn 19.0% Cash Profit $ 1,066 mn 17.0% Total MOU carried in Qtr Balance sheet strength: Assets Net debt bn $ 32.1 bn $ 13.4 bn Net Income $ 370 mn -27.0% EBITDA Margin 33.7% ROCE 10.9% Net debt to EBITDA 2.9 Times (annualized) Continues to be FCF positive on at South Asia Level. Includes full quarter numbers for Africa Exchange rate as of 30 th Sept 2010: **RMS as per June quarter as Sept quarter nosare not yet released by TRAI

9 Performance dashboard - 3 line graph 155,000 74% 152, % Total Revenue (Rs.mn) 145, , , , ,000 95,000 66% 38.4% 63% 63% 122, % 41.4% 107, , , % Q210 Q310 Q410 Q111 Q211 72% 45.7% 70.0% 60.0% 50.0% 40.0% 30.0% Total Revenue (Rs. Mn) (LHS) Opex to Total Revenue (RHS) Capital Productivity (RHS) Productivity Indicators = growing revenues + cost efficiencies + capital productivity The above chart is for Airtel Consolidated including Africa

10 Wireless Services

11 Indian Market Overall Telecom Market Wireless Market Population 1.2 billion Sub Base c.707 mn Relatively large youth population Wireless Penetration c.59% Telecom penetration c.62.51% (~742 mntelecom subs) Sub number should go upto1 Billion by 2015 Broadband penetration 0.89% (10.52 mn) Govt. target to reach 20 mn. Broadband subs by 2010 Operational metrics per month Usage per user 454 min ARPU ~ US$ 4.5 Rate per minute US$ 0.01 VAS ~ 12.7% Lot of opportunity ahead. Note: (1) Subscriber numbers and wireless penetration numbers as on Oct 31, 2010 are as per TRAI (2) Other indicators on the slide are based on Global Wireless Matrix 3Q10 dated 24th September 10 by Merrill Lynch, and reflective of Industry numbers.

12 Rapidly Growing Indian Wireless Market Net Adds in Oct 19.0 Mn greater than over last 3 months average run rate of 17.4 Mn S-curve triggered Closing Subscribers Net Adds (mn) % 80% 70% 60% 50% 40% % % 10% - Nov-03 May- Nov-04 May- Nov-05 May- Nov-06 May- Nov-07 May- Nov-08 May- Nov-09 May- - 0% India - Fastest Growing Market in the World Note: (1) Actual Data as per Industry Association Releases and Industry Estimates in India.

13 Wireless Market Structure in India Subscriber Trends Customer Market Share CMS (%) (mn) % 23% 21% 19% 17% 15% 13% 11% 9% 7% 20.7% 23.2% 16.9% 18.1% 17.6% 16.7% 13.1% 12.2% 10.8% 10.9% 11.4% 10.4% 11.3% 6.7% - Airtel Relianc e Vodafone BSNL+MTNL Idea Tata O thers 5% Airtel Reliance Vodafone CMS(Oct '10) BSNL+MTNL Idea CMS(Oct'09) Tata Others Oct -10 Oct -09 Net adds during t he year Airtel continuously consolidating its market leadership position despite intense competition Airtelcurrent monthly net adds at 3.0 million vs. 2.8 million a year ago Airtelranks 1& 2 in 16 circles in terms of number of subscribers Over 66% of net adds coming from B&C circles (rural India) AirtelContinues to lead on Revenue Market Share Note: Based on subscriber data for India as on October as per TRAI press release.

14 Airtel Performance Indicators (Operational) Customers & Market Share Prepaid/Postpaid 105% 101.1% % % % 21.5% % 24% 24% 23% 23% 22% 22% 21% 21% 20% 20% 100% 95% 90% 85% 94.7% 100.4% 101.7% 99.2% 97.5% 97.5% 95.2% 95.3% 95.8% 96.0% 96.1% Q210 Q310 Q410 Q111 Q211 Q110 Q210 Q310 Q410 Q111 Q211 Customers (mn) CMS (%) Prepaid Subs Prepaid Net Adds ARPU & RPM MoU/Sub/Month & MON , , , , , , , , , ,000 Q210 Q310 Q410 Q111 Q211 RPM (Paise) ARPU (INR) Q210 Q310 Q410 Q111 Q211 MoU/Sub (Min) Total minutes on Network (Mn Min)

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

16 Telemedia Services

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 Oct 2010) 4. Broadband (DSL with speeds>256 kbps) penetration at 42.8% of customer base. 5. Average ARPU for Quarter ended Jun 10 $ 21.2 per month. 6. Segment contributing to 6% of overall revenues of the company. 7. EBITDA margin of over 46.1%. Broadband revolution to follow wireless revolution in India SMB opportunity across ICT stream

18 Enterprise Services

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 sown customers Extensive national and international infrastructure Pan-India network with 134,026 Route kms of optical fiber, over 4,150 MPLS and SDH POPs Access network (terrestrial) in 88cities, Wimaxnetwork in 143 cities, and over 1,500local POIs International network with 225,000 Route Kms, connecting over 50 countries and 5 Continents. Key Performance Indicators (Q2 11) NLD Minutes Carried: 17.7 Billion ; ILD Minutes Carried: 3.0 Billion Revenue: Rs.10,424 Million (7 % Segment Contribution Share) EBITDA: Rs. 2,571 Million (24.7% EBITA Margin)

20 Emerging Growth Engines Passive Infra Passive Infra Africa

21 Financial Performance Passive Infra Revenue EBITDA ,000 9,000 8,000 7,000 6, ,858 7,224 7,240 6,267 5, ,000 4, Q210 Q310 Q410 Q111 Q211 3,000 Q210 Q310 Q410 Q111 Q211 Focus on tenancy enhancement driving Revenue & Profitability The above nosfor Revenue & EBITDA are in IFRS as per Quarterly Report & includes proportionate share (42%) in Indus.

22 Operational Performance Passive Infra Infratel Indus Towers (nos) & Sharing Factor Towers (nos) & Sharing Factor 33,000 32,000 31,000 30,000 29,000 28,000 29, , , , , , , , ,000 99,000 97,000 95, , , , , , ,000 Q2 10 Q3 10 Q410 Q111 Q ,000 Q210 Q310 Q410 Q111 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 36,696 38,107 36,878 36,290 38,041 40,000 35,000 30,000 25,000 20,000 25,917 28,333 29,674 30,379 31,389 25,000 Q2 10 Q3 10 Q410 Q111 Q211 15,000 Q210 Q310 Q410 Q111 Q211 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

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

24 Differences between the two markets India Africa (1) Mobile Penetration 62% 40% Average Number of Competitors Business Model High usage, low pricing model Low usage, high pricing model Minutes of Usage ~454 ~112 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 16African countries where Zain Africa has operations.

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

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: 112 Minutes one of the lowest ARPU: ~ US$ 7.4 Rate per minute: ~ US 6.6 one of the highest VAS: ~ 7.1% One of the lowest Note: Above numbers based on Quarterly report ended 30 September,2010.

27 Recent Honors

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 AwaazConsumer Awards Tele.net Telecom Operator award Won in 6 out of total 14 categories. Few among them being Most Admired company Best National Mobile operator Best Internet and Broadband 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 AkhilGupta, Deputy Group CEO and MD -Asia Corporate Dealmaker Award 2010 ManojKohli, CEO( International) & Joint MD -Telecom Man of the year -Tele.net Business world FICCI SEDF Corporate Social Responsibility Awards

29 thank you