investor presentation - cloud object storage · investor presentation bharti airtel limited aug...

Investor Presentation

Bharti Airtel LimitedAug 2010

DisclaimerThe 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.

Investor Relations :- http://www.bhartiairtel.inFor any queries, write to: [email protected]

“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.”

3

Mobile Services Telemedia Services Enterprise Services DTH

Emerging Market Characteristics…

Telecom Penetration

Population (mm)

GDP Size, (PPP adjusted)

GDP Growth (Real) %

Broadband Penetration

India Africa

8.6%

1200 mm

US$ 3,530 bn

56.83% (671.69 mn telecom subs)

0.80% (9.45 mn)

465mm

3.1%

US$ 6,90 bn

NA

Note: (1) *Telecom and Broadband penetration for India as on June 30th 2010 as per TRAI press release. (2) Data pertaining to the 15 African countries where Zain Africa has operations (Source: IMF, Global Insight , Economist Intelligence Unit,CIA World Factbook, World Resource Institute.)

32%

4


The Company...Bharti Airtel – An Integrated Telco

Wireless Services

2G/3GRural MarketSri LankaBangladeshAfrica

Telemedia Services

Fixed Line

Broadband

IPTV

Enterprise Services

CarriersCorporate

Passive Infrastructure Services

DTH (Media)

Fully integrated telecom player offering end to end solutions

5


Bharti – a growth journey

‘ DELHI

1996 2001 2003 2004 2010

No. of circles Today1 5 15 22 19 countries

6


3rd LARGEST wireless operator in the world1

LARGEST operator in NLD, ILD and VSAT business

Bharti Airtel - positioning in the world and India

LARGEST private INTEGRATED telecom company in India

LARGEST WIRELESS operator in India

LARGEST private FIXED LINE operator in India

Note: (1) 3rd largest wireless operator in the world refers to in-country (single country) operator based on the number of subscribers.

LARGEST TELECOM company listed on Indian Stock Exchanges

5th LARGEST INTEGRATED telecom operator in the world

7


Latest Results – Q1 FY10/11

Key operating and financial metrics

Q1 FY 11 Y-on-Y

Customers 183.37 mn 71.0%

Revenue $ 2,625 mn 17.4%

EBITDA $ 947 mn 3.0%

Cash Profit $ 857 mn -10.0%

Net Income $ 361 mn -32.0%

EBITDA Margin 36.9%

Net Profit Margin 13.7%

ROCE 18.4%

ROE 21.3%

Continued Strong Performance

Wireless Customer market share leadership at 21.5%.

Total minutes on network carried in Q1 – 206.2 bn

Total employee strength – 24,843

Balance sheet strength:

Assets – $ 31 billion

Net debt – $ 12.9 billion

Net debt to EBITDA (Annualised)– 2.9 Times

Continues to be FCF positive on a standalone basis

The company recommended a dividend of Rs.1 per equity share of Rs. 5 each (20% of face value for the year 2009-10) This is subject to approval by shareholders at the ensuing AGM to be held on September 1, 2010.

Note: (1) Wireless customer market share of India. (2) The recommended dividend is for the shareholders in India.

8


Segment contribution…Rev, EBITDA and Investment

Note: (1) Revenue and EBITDA is gross of inter segment eliminations.(2) Investments are on gross basis.

REVENUE

80%

7%

8%

17% 2%

EBITDA

78%9%

6%

16%-7%

INVESTMENTS

89%

9%3%

17% 2%

Mobile Services Telemedia Services Enterprise ServicesInfratel Services Others

9


Performance dashboard - 3 line graph

Productivity Indicators = growing revenues + cost efficiencies + capital productivity

112,725

107,491

103,053103,785104,143

38.1% 38.4% 39.9% 40.9% 40.6%

69%66%

63% 63% 65%

80,000

85,000

90,000

95,000

100,000

105,000

110,000

115,000

Q110 Q210 Q310 Q410 Q111

Gro

ss R

even

ue (U

SD M

n)

10%

20%

30%

40%

50%

60%

70%

80%

Gross Revenue (USD Mn) (LHS)

Opex to Gross Rev (RHS)

Revenue (annualized) to Gross Cummulative Capex (RHS)

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

10


Wireless Services

11


Sub Base : 635.51 mn→second largest market

Wireless Penetration: 53.77%→lowest in the world

HHI Index: very high→one of the most competitive market

Prepaid Base: 96%→one of the highest in the world

Usage per sub per month:Minutes: 480

→one of the highestARPU: ~ US$ 4.6

→one of the lowestRate per minute: ~ US$ 0.01

→ one of the lowest in the worldVAS: ~ 11.6%

→One of the lowest

Indian Wireless Market…KPIs

Note: (1) Subscriber numbers and wireless penetration numbers as on June 30, 2010 are as per TRAI release (2) Other indicators on the slide are based on Global Wireless Matrix 2Q10 dated 9th July 10 by Merrill Lynch, and reflective of Industry numbers.

MUM

HP

DELHI

AP

CHN

MADHYA PRADESH`

TNKER

PB

DEL

UP(W)

MP

RAJUP(E)

KK

OR

HAR

JK

BH

WBGUJ

MAH

AS

NE

Metros

A Cat.

B Cat.

C Cat.

MUM

HP

DELHI

AP

CHN

MADHYA PRADESH`

TNKER

PB

DEL

UP(W)

MP

RAJUP(E)

KK

OR

HAR

JK

BH

WBGUJ

MAH

AS

NE

Metros

A Cat.

B Cat.

C Cat.

MUM

HP

DELHI

AP

CHN

MADHYA PRADESH`

TNKER

PB

DEL

UP(W)

MP

RAJUP(E)

KK

OR

HAR

JK

BH

WBGUJ

MAH

AS

NE

Metros

A Cat.

B Cat.

C Cat.

Metros

A Cat.

B Cat.

C Cat.

Kol

12


Net Adds in Jun 18.0 Mn…greater than over last 2 months average run rate of 16.6 Mn S-curve triggered

Rapidly Growing Indian Wireless Market

Note: (1) Actual Data as per Industry Association Releases and Industry Estimates in India.

Fastest Growing Market in the World

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019-

200

400

600

800

-

2

4

6

8

10

12

14

16

18

20

22

Closing Subs Net Adds

13


Wireless Market Structure in India

• Airtel continuously consolidating its market leadership position despite intense competition• Airtel current monthly net adds at 3.0 million vs. 2.8 million a year ago• Airtel ranks 1& 2 in 17 circles in terms of number of subscribers• Over 59% of net adds coming from B&C circles (rural India)

Customer Market Share – CMS (%)

Airtel Continues to lead on Revenue Market Share

Subscriber Trends

110.8 109.1

77.968.9 72.5

59.7

34.3 31.2 32.6

18.926.1

35.429.7

136.6

-

20

40

60

80

100

120

140

160

Airte

l

Rel

ianc

e

Voda

fone

BSN

L+M

TNL

Idea

Tata

Oth

ers

(mn)

Jun-10 Jun-09 Net adds during the year

21%

12%11%

17%

9%

11%

17%

24%

19%

18%

14%

10%

9%

7%

5%

7%

9%

11%

13%

15%

17%

19%

21%

23%

25%

Airte

l

Rel

ianc

e

Voda

fone

BSN

L+M

TNL

Idea

Tata

Oth

ers

CMS(Jun'10) CMS(Jun'09)

14


Company Highlights on Wireless Services

15


Performance Indicators - Financial

EBITDA (INR mn) & Margin (%)Revenues (INR mn)

EBITDA

33,31034,10630,400

30,23731,710

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Q110 Q210 Q310 Q410 Q111

40.5 40.2 37.6 36.4 35.9

84,30182,902

80,898

83,174

88,237

70,000

74,000

78,000

82,000

86,000

90,000

Q110 Q210 Q310 Q410 Q111

16


Performance Indicators - OperationalCustomers & Market Share Prepaid/Postpaid

ARPU & RPM MoU/Sub/Month & MON

0.450.480.60 0.58 0.53

215220230252278

-

0.2

0.4

0.6

0.8

Q110 Q210 Q310 Q410 Q1110

100

200

300

RPM (Rs.) ARPU (INR)

480468446450478

195,197172,797

153,241143,680140,713

420440460

480500

Q110 Q210 Q310 Q410 Q1110

100,000

200,000

300,000

MoU/ Sub (Min) Tot al minut es on Net work (Mn Min)

96.0%95.8%95.3%95.2%94.7%94.2%93.5%92.9%92.3%

99.2%101.7%97.5%100.4%

101.1%

100.8%97.9%98.4%

99.6%

85%

90%

95%

100%

105%

Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 1Q11

Prepaid Subs Prepaid Net Adds

110.5102.4 118.9 127.6 136.6

21.8%

22.7%23.5%

24.0%

21.5%

0

40

80

120

160

Q110 Q210 Q310 Q410 Q11120%

21%

23%

24%

26%

Customers (mn) CM S (%)

17


Customer Base : 36.36 Mn

Performace Indicators:

Revenue: 9,583 Mn

EBITDA: 2,635 Mn

Prepaid Base: 99.3%→one of the highest in the world

Usage per sub per month: 103 Minutes→one of the lowest

ARPU: ~ US$ 7.4→one of the competitive market

Rate per minute: ~ US¢ 7.2→ one of the highest in the world

VAS: ~ 7.9%→One of the lowest

Africa Wireless Market…KPIs

18


Current positioning and way forward…

BrandDistribution Churn lower than industrySpectrum Mix (900/1800 MHz)

Improving cost efficiencies

Lowest cost GSM network

Revenue size (>$ 9 Bn)

Revenue Market Share

Increasing the usage through U&R driveWallet share

Driven by rural strategy

Changing face of growth through M-Com, M-entertainment & 3G

Leadership Positioning Growth strategy and plans

Revenue

Non financial vitals

Cost

New Revenue Streams

Net Adds

Maximizing usage

19


Telemedia Services

20


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: 3.15 million (end June2010)

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

21


21

Telemedia Services

Business Units SMBs Homes

Products

• Voice• Data• Mobile Services• Applications•SaaS

• Broadband• Voice• IPTV

Goal One-Stop Shop for All Airtel Services and Solutions to SMBs

Dominant Broadband & Fixed Voice share of the affluent in targeted 95 cities

Strategies

• Data Products: Internet, MPLS etc.• Integrated Solutions to drive share of

wallet like hosted e mail, online desktop etc.

• Strategic Alliances• Indirect Channel to Drive Penetration

• Deeper & Not Wider: 95 Cities• Enhancing Broadband experience :

Speed on Demand, Games on Demand & VAS

• Vertical & Not Horizontal: Hi-Rise• Drive Triple Play• Drive Higher spends for better

customer experience

22


22

Product Portfolio

http://airtel.in/wps/wcm/connect/Airtel.in/airtel.in/home/foryou/home+phones/fixed+line/pg_fy_hp_fl

23


Performance Indicators

Customers (overall & DSL) ARPU (INR)

Revenues (INR mn) EBITDA (INR Mn) & Margin (%)

8,551 8,543 8,549

8,960

8,511

7,000

7,300

7,600

7,900

8,200

8,500

8,800

9,100

Q110 Q210 Q310 Q410 Q111

1,027989

964937

961

800

850

900

950

1,000

1,050

1,100

1,150

1,200

Q110 Q210 Q310 Q410 Q111

2,928 2,9893,067 3,153

2,828

13431,2971,2411,1871,138

1,250

1,500

1,750

2,000

2,250

2,500

2,750

3,000

3,250

Q110 Q210 Q310 Q410 Q1110

500

1,000

1,500

2,000

Fixed Line Customers ('000) DSL Cust. ('000)

3,466

3,646

3,933

3,684

3,938

3,000

3,200

3,400

3,600

3,800

4,000

Q110 Q210 Q310 Q410 Q111

40.5 42.7 46.0 43.3 44.0

24


Enterprise Services

25


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)

26


Highlights

# 1 Operator in India in terms of:

NLD Revenue (Voice & Data)

ILD Revenue (Voice & Data)

Private Fixed Line Operator

Corporate Internet Provider

VSAT Provider (installed base)

27


What We Offer

• Wholesale Voice - Domestic & International Voice Carriage

Services- International & Domestic Toll Free

services- International Calling Services- Signaling Based Services- Global Wholesale Voice (Hubbing &

Transit)

• Wholesale Data- Transport Services- Access Services – Terrestrial/WiMax in

India- Managed Network Services- Internet Access Services- Hosting & Services for Carrier PoPs - Carrier Outsourcing & Content Distribution

• Retail Voice - Mobility Solutions

- Corporate Mobile Ser Voice Services- Mobile Data (Blackberry, Data card, applications)- SMS-Based Tools & Bulk SMS Solutions- Workforce Mobility Solutions (Vehicle Tracking,

etc.)- Fixed line Solutions

- Fixed Line/ PRI/ Centrex Services- Domestic Toll Free Service- Hosted Contact Centre Services- Premium International Toll Free Service

• Retail Data- Internet Services &Managed MPLS Services- Domestic and Int’l Private Leased Lines- Data Center & Managed Services- Digital Media & Teleport Services- Audio and Video Conferencing Solutions

27

28


Performance Indicators – Enterprise Services

Voice Minutes on Network

Revenues (INR mn) EBITDA (INR mn) & Margin (%)

12,41713,944

15,87517,333

11,781

3,0443,1733,1003,1812,869

0

3,000

6,000

9,000

12,000

15,000

18,000

Q110 Q210 Q310 Q410 Q111

NLD M inutes (mn) ILD M inutes (mn)

11,627 11,355 11,048 10,76810,186

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

Q110 Q210 Q310 Q410 Q111

2,9423,141

3,274 3,221

2,497

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Q110 Q210 Q310 Q410 Q111

25.3 27.7 29.6 29.9 24.5

29


Passive Infrastructure Services

30


A snapshot

Bharti Infratel operates in 11 circles.Indus Tower operates in 15 circles.Standard Master Services Agreement with competitive rates already in place.Key focus areas:

To increase sharing factor (tenancy) from current levels of 1.65 for Infratel and 1.75 for Indus.Provide energy optimization solutions and other network management services.Evaluate other revenue streams.

Key performance Indicators (Infratel):Total Towers: 31,196 (nos)Sharing Factor: 1.65Sharing Revenue per sharing operator per month at Rs. 36,290.EBITDA margin: 35.5%

Key performance Indicators (Indus):Total Towers: 104,901 (nos)Sharing Factor: 1.75Sharing Revenue per sharing operator per month at Rs. 30,379.

Aim to be the preferred choice of vendor for all existing and new operators

31


Performance Indicators - Bharti Infratel

15,93717,049

18,40719,459

20,412

10,000

12,000

14,000

16,000

18,000

20,000

22,000

Q110 Q210 Q310 Q410 Q111

Revenues (INR mn) EBITDA (INR mn) & Margin (%)

Towers (nos) & Sharing Factor Sharing Revenue per Sharing Operator per Month (Rs)

28,078 29,112 30,568 31,19629,806

1.431.49

1.571.62

1.65

26,000

27,000

28,000

29,000

30,000

31,000

32,000

Q1 10 Q2 10 Q3 10 Q410 Q1111.001.101.201.30

1.401.501.601.70

No of towers Sharing Factor

38,10736,420 36,696 36,878 36,290

25,000

29,000

33,000

37,000

41,000

Q1 10 Q2 10 Q3 10 Q410 Q111

Sharing Revenue per Sharing Operator per month

7,2407,224

6,267

5,831

5,201

5,000

5,500

6,000

6,500

7,000

7,500

Q110 Q210 Q310 Q410 Q111

32.6 34.2 34.0 37.1 35.5

32


Indus TowersRoof Top Tower

Ground Based TowerFirst of its kind deal…Bharti (42%), Voda (42%) & Idea (16%)

Largest independent tower company in the world

~ 100,000 towers under its management

Benefits from captive tenancy as well as external tenants

Incremental investment in towers to come from new operators / subscriber growth / 3G

102,696

104,901102,938

100,728

97,925

1.75

1.71

1.61

1.61

1.55

93,000

95,000

97,000

99,000

101,000

103,000

105,000

Q110 Q210 Q310 Q410 Q1111.40

1.50

1.60

1.70

1.80

No of towers Sharing Factor

33


Recent Honours

34


Rated as the ‘Powerful Brand’in the Economic Times- Brand

Finance ‘Brand Power (the only corporate brand to be awarded the

AAA rating)

Rated as India's Best Enterprise Services

Provider for 2009 at the annual Users’ Choice Awards

instituted by PC Quest.

Bharti Airtel – Leadership in business Recent Honours

Bharti Airtel won tele.net Telecom Operator awards in 6 out of total 14 categories including Most Admired

Company, Best National Mobile operator, Best Internet and

Broadband operator, Best Operator in Rural Market, Best Enterprise

Services

Sunil Bharti Mittal, Chairman & Group CEO•Honorary degree of Doctor of Laws by University of Leeds (UK) in 2009•Tenth Lal Bahadur Shastri National Award by the Hon’ble President of India in 2009 Akhil Gupta, Deputy Group CEO & MD•CA Business Achiever Award by Institute of Chartered Accountants of India. Manoj Kohli, CEO( International) & Joint MD• Telecom Man of the year by Tele.net in Apr’10

Best Cellular Service Provider and Best VSAT &

NLD player Service Provider at the 2009 Voice & Data

100 Awards

Adjudged Wireless Service Provider of the Year 2009 -Frost & Sullivan Asia Pacific

ICT Awards( in recognition of innovation, vision ,

strategy and profitability)

Best Global Wholesale Carrier for 2009 at the

Telecoms World Awards Middle East.

Voted as the India’s Most Innovative company in a survey conducted by Wall

Street Journal

Adjudged Most Preferred Cellular Service Provider Brandaward at the 2010 CNBC Awaaz Consumer Awards

DisclaimerThe 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.

Investor Relations :- http://www.bhartiairtel.inFor any queries, write to: [email protected]

“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.”

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