bharti management presentation vfc

7/29/2019 Bharti Management Presentation Vfc

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Management Presentation

Bharti Airtel Limited

May 2013


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Agenda

Introduction to Bharti Airtel

Bharti Airtel Business Model

Bharti Airtel Wireless Operations

Bharti Airtel Africa

Overview of Other Businesses

Financial Overview

Key Highlights


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Bharti Airtel Who we are


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Bharti Airtel

1.8bnAddressablePopulation 4

US$14.7bnRevenue 3

Present in20Countries

#1OperatorIn India 1

#4OperatorIn Africa 1 #3

in-countrywireless serviceoperator in the

world 2

#4Operator

in the World1

Source: TRAI and Informa Telecoms and MediaNotes:1. As of March 31, 20132. Fourth largest mobile operator in the world and Africa as of September 30, 2012, based on proportionate equity subscriptions .Based on data from

Informa Telecoms and Media. In-country wireless operator refers to single country subscribers3. FY2013 Revenue4. Combined population for the regions in which Airtel has a footprint


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Notes:1. As per The BrandZ Top 100 Most Valuable Global Brands study conducted by leading global research firm Millward Brown- May-20122. Brand Equitys Most Trusted Brands Annual survey - 2012

The airtel Brand

Alive

Inclusive

Respectful

Vision: Become the most loved brand by 2015

Multiplatform services in telecom, enterprise and digital

television, unified under brand airtel

Amongst the Top 100 of Most Valuable Global Brands List 1

No. 1 service brand in India 2

Successfully unified operations across the globe under the

umbrella of airtel


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Global Telecom Company

Cellular mobileservices across20 countries

Customer andrevenue market

leader in India 259.8 mn

wirelesssubscribersglobally

MobileServices

Services to largeenterprises andcarriers

Serves as singlepoint of contact

for all telecomneeds

Globalinfrastructure ofover 225,000Rkm covering 50countries across5 continents

Airtel Business

Bharti Infratel(BIL) owns 35,119towers across11 circles3

BIL owns 42%

stake in IndusTowers, one of thelargestindependent towercompanies in theworld, with111,819 towersacross 15 circles

Average tenancyratio of ~1.91

Listed with amarket cap ofUS$6.7bn

Tower

InfrastructureServices

Worlds leading telecom player offering end-to-end solutions

Offers fixedtelephony andbroadbandinternet (DSL +IPTV)

Customer baseof 3.3mnbroadband &internetcustomers

Servicesprovided across87 cities

Telemedia Services

Pan India DTHoperations

8.1 mnsubscribers witha market share of

over 19%2

Coverage across639 districts

Digital TV

B2C B2B

Notes:

1. All f igures as of March 31, 20132. As published on October 21, 2012 in the Business Standard Tite: Digital wars3. Bharti Infratel IPO Prospectus


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Scale and Profitability across Diversified Segments

FY13 Revenues of $14.7 bn and EBITDA of $4.6 bn

Q4 FY13 Revenues of $ 3.8 bn and EBITDA of $1.2 bn

Bharti Airtel Africa contributed 27% of FY13 revenues

FY13 Revenue: $14.7 bn1 FY13 EBITDA: $4.6 bn1

Source: Company Filings (NSE, BSE)

Note:1. Revenue and EBITDA pie charts are based on pre inter-segment eliminations

Diversified suite of offerings with non-wireless segments contributing 24%to revenue

Q4 FY13 EBITDA: $1.2 bn1Q4 FY13 Revenue: $3.8 bn1

India & SAWireless

49%Africa Wireless

27%

Tower Infra.12%

Airtel Business6%

Telemedia4%

Digital TV

2%

54%

25%15%

6% 4% 0%

(4%)

India &

SAWireless

AfricaWireless

TowerInfra Telemedia

AirtelBusiness Digital TV Other

India & SAWireless49%

AfricaWireless

27%

Tower Infra.12%

AirtelBusiness

6%

Telemedia4%

Digital TV2%

54%

23%16%

6% 4% 0%

(4%)

India & SAWireless

AfricaWireless

TowerInfra Telemedia

AirtelBusiness Digital TV Other


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Leader Amongst Global and Emerging Market Telcos

Key HighlightsWireless Subscribers as of September 20122

Today, Bharti Airtel is present in 20 countries, with a total addressablepopulation of 1.85 bn peopleSource: Company Filings and World Cellular InvestorsNote:

1. As of March 31, 2013. Includes Digital TV and Telemedia subscribers in addition to wireless telecom subscribers2. Based on proportionate equity subscriptions

One of the worlds leading providers oftelecommunication services with significantpresence in 20 countries including India,Bangladesh, Sri Lanka and 17 countries in Africa.

Global customer base of 271.2 mn subscribers1

683

387

252

244

251 271

Telefonica Group

Bharti Airtel

America Movil

Group

Vodafone Group

China Mobile

Subscribers (million)

1

India199.6m

74%

Africa63.7m23%

Bangladesh6.2m2%

Sri Lanka1.7m1%


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The CompanyBharti Airtel

No. of circles (India) Today: Countries1 5 15 22 20

Expanded Africanoperation to Rwanda

Acquired 49% stake in

Qualcomm India (BWAVenture)

Launched 4G services inKolkata, Bengaluru andPune

IPO of Bharti Infratel Ltd

1996 2001 2003 2004 2011 2012

Mobile servicesunder the brandname Airtel

launched inDelhi andHimachalPradesh

IPO ofBharti Airtelthrough

Indias first100%book-buildingissue

BecomesIndias largestwireless

telecomoperator withpan-Indiafootprint

Launched mobileservices in Sri Lanka

Launched DTH services

Acquired 70% stake inWarid Telecom,Bangladesh

Acquired Zain AfricaB.V., launching entryinto Africa

Launched 3G services

in IndiaSource: Company Filings


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Amongst the worlds leading telecom players offering end-to-end solutions

FY2002 FY2013

Company ProfileOperations in 7 circles

(In India)

Operations in 20

CountriesCustomer Base3 1.4m 271m

Revenue (US$) 310m 14.7bn

EBITDA (US$) 83m 4.6bnCash Profit 1 (US$) 64m 3.8bn

Market Cap 2 (US$) ~1.5bn 20.4bn

Strong Growth Trajectory Since IPO

Source: Company Filings, Company website, BSE, NSENotes:1. Cash profit defined as EBITDA Net Finance Cost2. 2002 market capitalization as on 31/03/02 ; FY2013 market capitalization as on 31/03/13; (Source: BSE, NSE)3. Customer Base includes non-mobile customers (DTH, Enterprise, Telemedia, etc.)


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Unique Business Model


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Bharti Airtel: Challenging mindsets

Text Text Challenging The ModelChallenging The Mindset

Mobiles for classes not for themasses

Post-paid customer is betterthan prepaid customer

High ARPU performance

High tariffs performance

Low usage is better

A lower Capex / Sales BetterCapital Usage

Outsourcing non coreactivities

From competition to

competitive collaborationthrough infrastructure sharing

Innovative business deliverymodel


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Created a Unique Business Model Minutes Factory

Focus on producing thelowest cost minute whilstmaintaining / growingmargins

Drive affordability more users

more usage

Increased scale of

minutes; drivingoperating leverage

Bharti Airtel successfully used its Minutes Factory model to move towardsa high usage environment, while building its customer base profitably

Improving affordability to gain positiveelasticity is at the heart of our MinutesFactory model

ImprovedProfitability

Affordability

PositiveElasticity

Increase in

Usage

Economies ofScale (costefficiency)


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Built Strategic Partnerships in Business Delivery Model

Nortel, Avaya, Cisco, Wipro,IBM Daksh, Mphasis,

Hinduja TMT, Aegis BPO

Teleperformance, Firstsource

> 1.4m retail outlets

Indus Towers; Bharti Infratel

The strategic partnership model has been a key

enabler for Bharti Airtel to lower its costs

Network management

Information technology outsourcing

Call centers / customer service

Distribution

Towers / passive infrastructure


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Bharti Airtel: IndiaWireless Overview


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Bharti Airtel: The Leading Indian Wireless Operator

12%CustomerMarketShare

22% 14% 14% 8% 7% 17% 6%

Wireless Revenue Market Share2Wireless Subscriber Market Share1

87% nationwide coverage with 30% revenue market share and 22%customer market shareSource: TRAINotes:1. As of February 28, 2013, as announced through TRAI press release dated April 18, 2013

2. For quarter ended December31, 2012. Calculated on the basis of Gross Revenue for UASL + Mobile +CMTS licenses

187

150

120119

106

67

6152

Bharti Airtel Vodafone Reliance

Comm.

Idea BSNL +

MTNL

Tata Aircel Others

Su

bscri

bers

(millions

)


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India Wireless Significant Upside From Data

Bharti Airtels Non-Voice Revenues as a %of Mobile Revenues1

Data as a percent of Mobile Revenuesacross Emerging Markets

India is expected to have one of the fastest growth rates in the datasegment over the next 5 years, to be driven by low cost mobile handsetsand new technologies (3G/4G)Source: Informa, Company filingsNote:1. For Mobi le Services India

Bharti Airtels Data and 3G Subscriber Base

(mn)

51

34 34 3331

22

14 14

8 7

60

51 49 4945

33

24

32

16

24

Philipp

ines

Indones

ia

Singapore

Ma

lays

ia

China

Korea

Tha

ilan

d

India

Nigeria

Ugan

da

(%)

2010: Data as % of Mobile revenues

2015E: Data as % of Mobile revenues

35.8 38.7 40.6 41.5 43.5

11.612.7

13.815.0 15.6

16.1 15.8 16.2 16.316.8 17.3 17.4

Q1FY11

Q2FY11

Q3FY11

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

Q1FY13

Q2FY13

Q3FY13

Q4FY13

CAGR 24%


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Start of the Data Revolution (3G + 4G)

3G and 4G UpdateBharti Airtels 3G/4G Position

Allocated 3G and/or BWA licenses in 16 telecomcircles and for a total consideration of ~$3.5bn

Bharti Airtel acquired 49% of Qualcomm India (BWA

venture), thereby gaining access to Delhi, Mumbai,Kerala and Haryana spectrum for BWA

Currently, these 18 circles contribute ~85.1% ofBhartis mobile revenues1

Bharti Airtel launched its 3G network in India onJanuary 24th 2011 and 4G network services in April2012 (Kolkata)

Since then, added over 8.0 million3G customers and launched 4G in BengaluruPune ,Chandigarh and its suburbs

ICR (Inter Circle Roaming) arrangements with otheroperators for 3G services have been entered intofor the circles it does not have spectrum in, except

for Orissa

Bharti Airtel plans to leverage its existing network and superior spectrumposition for data roll-outs

Andhra Pradesh

Maharashtra

Gujarat

Karnataka

Tamil

NaduKerala

Haryana

West Bengal

Punjab

Uttar Pradesh (E)

Uttar Pradesh (W)

Madhya Pradesh

Rajasthan

Orissa

Assam

Bihar

J&K

NE

NE

NE

NE

NE

Mumbai

Kolkata

Delhi

Himachal Pradesh

Source: TRAI, Department of Telecom, Company Filings

Note:1. Based on quarter ended Sep 30, 2012. Calculated on the basis of Gross Revenue for UASL + Mobile licenses

2G, 3G and 4G spectrum

2G and 4G spectrum and 3Gvia ICR arrangements

2G + 3G via ICR Arrangements

2G + 3G spectrum only

2G Spectrum Only


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Venture into Africa


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Transaction Rationale

The transaction met the objectives of Bharti Airtel with long termstrategic benefits

Bharti AirtelObjectives

Shareholding and FullManagement Control

Ability to use brand Airtel

Manageable Deal Size

Diversification of IndiaRisk

Avoiding Greenfield

TransactionAchievements

Global Stature with focuson Emerging Markets

Significant Synergies

Strong Platformfor Future ExpansionReplicating core

competency: minutefactory model


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Africa Opportunity for Growth

Business Model Low usage, high pricing modelHigh usage, low pricing model

Minutes of Usage

per sub2 ~123~455

ARPU (US$) 2 ~$5.9~$3.6

ARPM (US cents ) 2 4.80.8

Mobile Penetration ~56%~71%

Average Number of

Competitors

3-510-12

India Africa 1

Africa presented an opportunity where Bharti could replicate its minutefactory model successfullySource: Company Filings, World Cellular Information Service (WCIS)Notes:1. Data pertaining to the 17 African countries where Bharti Airtel Africa has operations.2. Bharti Airtel numbers for the quarter Dec Mar 2013


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Africa Performance Indicators

Capex (US$m) and Number of Sites

Total Subscribers (mn) and Total Minutes (bn)

ARPU (USD) and ARPM (Usc)

Minutes of Usage per sub

Source: Company Filings

254

119

210

160

235

14,831

15,439

15,979 16,37116,653

12,500

14,000

15,500

17,000

0

50

100

150

200

250

300

Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13

Capex (US$m) Number of Sites

6.8

6.5

6.46.2

5.9

5.6 5.44.6 4.3 4.8

0.0

5.0

10.0

15.0

5.2

5.4

5.6

5.8

6.06.2

6.4

6.6

6.8

7.0

7.2


ARPU (US$) ARPM (US)

122 120

138 144

123


MoU per sub. per month

53.155.9

58.761.7 63.7

19.1 19.7

23.626.2

23.4

0.0

5.0

10.0

15.0

20.0

25.0

30.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0


Subscribers (m) Total Minutes (bn)


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Other Businesses


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EBITDAMargin (%)

42.4 43.1 45.0 42.5 42.5

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Telemedia Services

Revenue (US$m)

Broadband revolution to follow wireless revolution in India


Operates in the entire broadbandcontinuum with a presence in voice,broadband, IPTV and data

Focus on Retail and Small & MediumBusiness (SMB) segment

Key Performance Indicators

Voice (wire-line) and Data (DSL)

Presence in 87 top cities in India Customer base: 3.3 million

Broadband penetration at 42.3% ofcustomer base

Average ARPU of $18.1 per month forquarter ended March 31, 2013

658717

797 779

705

FY09 FY10 FY11 FY12 FY13


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Airtel Business

Reclassified starting FY10

44.5 28.1 24.1 18.7 17.6

Source: Company FilingsNote:

1. Post FY09 this segment was reclassified

Airtel Business provides a broad portfolio ofservices to large Corporates and Carriercustomers:

Corporates: Single point of contact for alltelecom needs for large corporate customers

Carriers: Wholesale voice and data services todomestic and international telecom carriers

Extensive national and internationalinfrastructure

Pan-India network with 171,610 Route kmsof optical fiber

International network with over 225,000Route-km, connecting over 50 countries and5 Continents

Revenue (US$m)

EBITDAMargin (%)

1,666

992925 931

983



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Digital TV Services

Launched Airtel Digital TV service in October 2008 as fifthoperator providing Direct-to-Home (DTH) services in India

Current subscriber base of ~8.1 million subscribers

Currently offers a total of 373 channels including 15 HD

channels and 6 interactive services First Company in India which provides real integration of

all the three screens viz. television, mobile and computerenabling our customers to record their favorite TVprograms through mobile and web

Present across 639 districts , partnering with local servicepartners to provide customer service and operate call centers

Also offers High Definition (HD) Set Top Boxes and Digital TVRecorders with 3D capabilities delivering superior customerexperience

Key Performance Indicators (FY13)

Revenue: US$ 299.6m (3% Segment Contribution Share)

Average ARPU of $3.4 per month for quarter endedMarch 31, 2013


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Tower Infrastructure

Bharti Infratel is a tower infrastructureprovider to telecom operators in 11circles in India

Bharti Infratel also holds a 42% stake in

Indus Towers, amongst the largest towercompanies in the world, operating in 15circles, thereby enabling the Company toprovide leading pan-India passiveinfrastructure services

Bharti Infratel conducted its Initial PublicOffering in December 2012, raising$761m for a 10% stake, current marketcapitalization of US$6.7bn1

Sharing factor (Tenancy ratio) of ~1.91xper tower

Bharti Infratel owns 42% stake in Indus Towers one of the worlds largest passive infrastructureproviders


Note1 As of March 31, 2013

Revenue (US$m)

35.4 34.6 37.1 37.8 37.4 EBITDAMargin (%)

834

1,488

1,8761,988

1,906


111,819

35,119 35,119

46,964

81,389

1.99

1.81

1.91

1.00

1.20

1.40

1.60

1.80

2.00

0

20,000

40,000

60,000

80,000

100,000

120,000

Indus Bharti InfratelStandalone

Bharti InfratelConsolidated

Sharing

Factor(x)

Towers

Indus Pro-rata share Sharing Factor


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Financial Overview


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Robust Financials (Consolidated) 1

EBITDA (US$bn) and EBITDA marginTotal Revenues (US$bn)

Enterprise Value / EBITDACash Flow from Operations (US$bn)


Note:1. Africa operations consolidated starting from 8th June 2010

8.0 8.8

13.1

14.9 14.8


3.3 3.5

4.4

5.0

4.6

41% 40%34%

33%31%

0%

10%

20%

30%

40%

50%

0

3

5

8


3.3 3.4

4.04.3

3.8


7.0x

9.8x

8.1x

7.0x

FY10 FY11 FY12 FY13


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Leadership


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Leadership in Business

Sunil Bharti Mittal,Chairman

Rajan Bharti Mittal,Vice Chairman & MD

Manoj Kohli,MD & CEO (International)

Honorary Degree awarded byNewcastle University - 2012

Business Leader for the WorldAward from INSEAD in 2011

Indian Business Leaders ofthe Year award at the GlobalIndia Business Meeting, 2011

Telecom Man of the year byTele.net in Apr10

Bharti Airtel was placed among the top

200 brands globally in the annual

survey undertaken by Brand Finance,

an international agency

Ranked #71 in top 100 list of

Global Brands by Millward Brown

Optimer, published in Financial

Times , with an estimated brand

value of over USD 11 billion,2012

Airtel has bagged the BrandLeadership Award in Telecom

Sector for the year 2012 and

Emerging Brand Award for airtel

money at the Brand Leadership

Awards

Airtel digital TV (HD) was

recognized as the Product of the

year 2012, by AC Nielsen, an

international research firm.

Airtels myairtel application has

won the App of the Year award

for Best Application using

Network Application Programming

Interfaces (APIs) at the

prestigious GSMA (Groupe

Speciale Mobile Association)

Global Mobile Awards 2013

Airtel bags five awards at tele.netTelecom Operator Awards 2013

which includes - Telecom Operator

Awards 2013, Most Admired Telecom

Operator, Best National Mobile

Operator, Best Ad Campaign by an

Operator, Best 3G Operator and Best

VAS Provider (for airtel money)

categories.

Bharti Airtel Nigeria won 3

industry Awards at the prestigious

8thedition of the Nigerian

Telecoms Awards:Telecoms Brand

of the Year, Best Customer Service

and the Most Innovative Network.

Airtel bagged the Quality

Excellence Award for Fastest

growing Company at the National

Quality Excellence Awards

Akhil Gupta,Deputy Group CEO & MD

Outstanding Contribution tothe Sector award at theTelecom Operator Awards 2012

CFO India Hall of Fame by CFO

India , 2011


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Highest Standards of Corporate Governance

Credit Rating and Information Services of India(CRISIL) has assigned its Governance and Value

Creation rating CRISIL GVC Level 1 to the corporategovernance and value creation practices of Bharti Airtel

Quarterly financials audited on IFRS, IGAAP basis

Diversified Board 50% independent directors

SingTel representatives on the Board of the company

Professional organization with empowerment tooperating team

Professional Entrepreneurial combination


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InvestmentHighlights


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Investment Highlights

Leading EmergingMarkets Telco

(Asia and Africa)

Growth Strategy:Mobile Data,

Increased Penetrationand New Services

Present acrossnon-wireless

segments

Strong financial andcredit profile

Experiencedmanagement team

Focused on FreeCash Flow Generation

Innovative businessmodel driving valueand efficiency from

scale


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bharti management presentation vfc

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