investor presentation oct10
TRANSCRIPT
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Investor Presentation
Bharti Airtel LimitedOctober 2010
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Mobile Services Telemedia Services Enterprise Services DTH
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
DTH
Pay per view / HD
Interactive Services including
Gaming
Fully integrated telecom player offering end to end solutions
and entering new geographies
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Mobile Services Telemedia Services Enterprise Services DTH
Bharti a growth journey
DELHI
1996 2001 2003 2004 2010
No. of circles Today
1 5 15 22 19 countries
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Mobile Services Telemedia Services Enterprise Services DTH
Growth trajectory reflected in the numbers
Continuing on our journey of Value Creation
Note: 1) 2010 financials are as per FY 2010 results. 2) Exchange rate: Financials as of 31stMar 10 : Rs 45.14
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
1996 2010
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Mobile Services Telemedia Services Enterprise Services DTH
3,3603,550
1,651
2,519
0
1,000
2,000
3,000
4,000
5,000
2007 2008 2009 2010
Years
1,8762,017
1,484
943
0
500
1,000
1,500
2,000
2,500
2007 2008 2009 2010
Years
3,103
3,679
2,467
1,619
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2007 2008 2009 2010
Years
8,1888,776
5,987
4,103
0
2,000
4,000
6,000
8,000
10,000
2007 2008 2009 2010
Years
Revenue & Profitability trends
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 31stMar 10exchange rate.Exchange rate as of 31st Mar 10 : Rs 45.14
EBITDATotal revenues
Cash profit from operationsNet profit
Bharti Airtel demonstrating robust performance
39%CAGR
42%CAGR
42%CAGR
36%CAGR
42%CAGR
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Mobile Services Telemedia Services Enterprise Services DTH
Financials & Positioning
Key financial metrics 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: 45.14.
* EBITDA Margin before acquisition related costs of Rs 976 mn for the quarter & FY ended Mar 31, 2010.(1) 3rd largest wireless operator in the world refers to in-country (single country) operator based on the number of subscribers.
FY 10 (in Mn)
Customers 137.0
Revenue $ 9,271
EBITDA $ 3,714
Cash Profit $ 3,710
Net Income $ 1,989
EBITDA Margin (%) 40.3*
ROCE (%) 24.4
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Mobile Services Telemedia Services Enterprise Services DTH
Latest Results 1Q11
Key operating and financial metrics Continued Strong Performance
Wireless CMS 21.5%
Wireless RMS 31.2%
Total MOU carried in Qtr 206.2 bn
Balance sheet strength:
Assets $ 31 bn
Net debt $ 12.9 bn
Net debt to EBITDA 2.9 Times
(annualized)
Continues to be FCF positive on a standalonebasis
Includes 23 days of Airtel Africa Exchange rate as of 30 thJune 2010:
46.60
18.4%ROCE
36.9%EBITDA Margin
-32.0%$ 361 mnNet Income
-10.0%$ 857 mnCash Profit
3.0%$ 947 mnEBITDA
17.4%$ 2,625 mnRevenue
71.0%183.37 mnCustomers
Y-on-YQ1 FY 11*
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Mobile Services Telemedia Services Enterprise Services DTH
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
GrossRevenue(U
SD
Mn
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
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Wireless Services
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Mobile Services Telemedia Services Enterprise Services DTH
Indian Market
Lot of opportunity ahead.
Population 1.2 billion
Relatively large youth population
Telecom penetration c.58%
(~688 mn telecom subs)
Sub number should go upto 1 Billion by 2015
Broadband penetration 0.83% (9.77 mn)
Govt. target to reach 20 mn. Broadband subs by2010
Wireless MarketOverall Telecom Market
Sub Base c.652 mn
Wireless Penetration c.55%
Operational metrics per month
Usage per user 480 min
ARPU ~ US$ 4.6
Rate per minute US$ 0.01
VAS ~ 11.6%
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 GlobalWireless Matrix 2Q10 dated 9thJuly 10 by Merrill Lynch, and reflective of Industry numbers.
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Mobile Services Telemedia Services Enterprise Services DTH
Net Adds in Aug 18.2 Mngreater than overlast 3 months average run rate of 17.1 Mn
S-curve triggered
Rapidly Growing Indian Wireless Market
Note: (1) Actual Data as per Industry Association Releases and Industry Estimates in India.
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
-
100
200
300
400
500
600
700
800
-
2
4
6
8
10
12
14
16
18
20
22
Closing Subscribers Net Adds
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Mobile Services Telemedia Services Enterprise Services DTH
Wireless Market Structure in India
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
Subscriber Trends Customer Market Share CMS (%)
Note: Based on subscriber data for India as on August 31 2010 as per TRAI press release.
141
115 114
8173 77 69
108
84 81
62
5043
2933 31 33
19 23
3440
-
20
40
60
80
100
120
140
160
Aug-10 Aug-09 Net adds during the year
21.1%
17.2%
12.1%11.5%
10.3%10.8%
17.0%
23.6%
18.4%17.7%
13.6%
11.0%
9.4%
6.3%
5%
7%
9%
11%
13%
15%
17%
19%
21%
23%
25%
Airtel
Reliance
Vodafone
BSNL+MT
NL
Id
ea
T
ata
Others
CMS(Aug'10) CMS(Aug'09)
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Mobile Services Telemedia Services Enterprise Services DTH
AirtelPerformance Indicators (Operational)
Customers & Market Share Prepaid/Postpaid
MoU/Sub/Month & MONARPU & RPM
0.450.480.600.58 0.53
215220230
252278
-
0.2
0.4
0.6
0.8
Q110 Q210 Q310 Q410 Q111
0
100
200
300
RPM (Rs.) ARPU ( INR)
480468446450478
195,197172,797
153,241143,680
140,713
420440
460
480
500
Q110 Q210 Q310 Q410 Q111
0
100,000
200,000
300,000
MoU/Sub (Min) Total minutes on Network (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
110.5102.4 118.9 127.6136.6
21.8%
22.7%
23.5%24.0%
21.5%
0
40
80
120
160
Q110 Q210 Q310 Q410 Q111
20 %
21%
23 %
24 %
26 %
Customers (mn) CMS (%)
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Mobile Services Telemedia Services Enterprise Services DTH
Current positioning and way forward
Brand
Distribution
Churn lower than industry
Spectrum Mix (900/1800 MHz)
Improving cost efficiencies
Lowest cost GSM network
Revenue size
(>$ 9 Bn)
Revenue Market
Share
Increasing the usage through U&R drive
Wallet share
Driven by rural strategy
Changing face of
growth through M-Com,
M-entertainment & 3G
Leadership Positioning Growth strategy and plans
Revenue
Non financialvitals
Cost
New RevenueStreams
Net Adds
Maximizingusage
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Mobile Services Telemedia Services Enterprise Services DTH
Telemedia Services
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Mobile Services Telemedia Services Enterprise Services DTH
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 Jun10 $ 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
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Mobile Services Telemedia Services Enterprise Services DTH
Enterprise Services
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Mobile Services Telemedia Services Enterprise Services DTH
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 internationaltelecommunications carriers, as well as ILD and NLD carriage for Airtels 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:17.3Billion ; ILD Minutes Carried:3.0Billion
Revenue: Rs.10,186 Million (8 %Segment Contribution Share)
EBITDA: Rs. 2,497 Million (24.5%EBITA Margin)
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Mobile Services Telemedia Services Enterprise Services DTH
Emerging Growth Engines
Passive Infra
Africaiiiiiiiiii
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Mobile Services Telemedia Services Enterprise Services DTH
FinancialPerformance Passive Infra
EBITDARevenue
Revenue (in INR Mn)
15,93717,049
18,40719,459
20,412
10,000
14,000
18,000
22,000
26,000
30,000
Q110 Q210 Q310 Q410 Q111
EBITDA (INR Mn)
5,201
5,8316,267
7,224 7,240
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Q110 Q210 Q310 Q410 Q111
32.6 34.2 34.0 37.1 35.5
Focus on tenancy enhancementdriving Revenue & Profitability
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Mobile Services Telemedia Services Enterprise Services DTH
Operational Performance Passive Infra
Towers (nos) & Sharing Factor
29,806
31,196
30,568
29,112
28,078
1.651.62
1.57
1.491.43
26,000
27,000
28,000
29,000
30,000
31,000
32,000
Q1 10 Q2 10 Q3 10 Q410 Q111
1.40
1.50
1.60
1.70
No of towers Shar ing Factor
Sharing Revenue per Sharing Operator perMonth (Rs)
38,107
36,420 36,696 36,87836,290
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
Sharing Revenue per Sharing Operator perMonth (Rs)
Towers (nos) & Sharing Factor
102,696
104,901
102,938
100,728
97,925
1.75
1.71
1.66
1.61
1.55
93,000
95,000
97,000
99,000
101,000
103,000
105,000
Q110 Q210 Q310 Q410 Q111
1.40
1.50
1.60
1.70
1.80
No o f t ower s Shar ing F ac to r
30,37929,674
25,91728,915 28,333
15,000
20,000
25,000
30,000
35,000
40,000
Q110 Q210 Q310 Q410 Q111
Sharing Revenue per Sharing Operator per month
Aims to enhance the tenancy ratio & be the preferred choice of vendor for allexisting and new operators
IndusInfratel
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Mobile Services Telemedia Services Enterprise Services DTH
Manageable
Deal Size
Clean /
certainty
of transaction
Shareholding and
Management
Control
Brand Airtel
Diversification of
India Risk
Avoid Greenfield
100% Cash Transaction
Focus on Core
Middle East
Operators
Speed in
Transaction
Repayment of
Debt
Significant
Synergies
Global
Stature
Emerging Market
Characteristics
Strong Platform
for Future
Expansion
Low Competitive
Intensity
Transaction Rationale
The proposed transaction meets the objectives of Airtel with long termstrategic benefits and creates tremendous shareholder value
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Source: Global Insight, annual / quarterly reports.1. Data pertaining to the 15 African countries where Zain Africa has operations.
Mobile Penetration
Business Model
Minutes of Usage
ARPU (US$)
ARPM (US cents )
Africa(1)
Low usage, high pricing model
~100
~$7
7
32%
India
High usage, low pricing model
~480
~$5
1
55%
Average Number ofCompetitors
3-510-12
Differences between the two markets
And therefore huge opportunity space
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Airtel Africa
450mnTotal Africa:1,025mn
Population, 2009 (mn)
Source: Zain Filings, WCIS.
32.0%
50.9%
Penetration, 2009
Airtel Africa Coverage Addressable Market Opportunity
Africa Strong Platform
Telecom Operators by Subs in Africa
Leading African Operators
3922 19 15
42
77
Subscribers, 2009 (mn)
(1)
Large addressable population with low tele-
density
Leading telecom operations acquiredthrough Zain Africa
Strong competitive positioning
450575
Airtel Africa Footprint Other African Countries
Population, 2009 (mn)
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Customer Base :36.36 Mn
Performace Indicators (CY 2009):
Revenue:$ 3,667 Mn
EBITDA:$ 1,160 Mn
Prepaid Base:99.3%
one of the highest in theworld
Usage per sub per month:103 Minutesone of the lowest
ARPU: ~ US$ 7.4
Rate per minute: ~ US7.2
one of the highest
VAS: ~ 7.9%
One of the lowest
Another Growth Engine - Africa
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Recent Honours
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BhartiAirtel Leadership in business Recent Honours
NDTV Profit Business Leadership Awards 2010 Top Telecom Company
Sunil Bharti Mittal - Business Innovator of the Year
Indias Most Innovative company - Wall Street Journal
Most Preferred Cellular Service Provider - 2010 CNBC Awaaz Consumer Awards
Tele.net Telecom Operator award
Won in 6 out of total 14 categories. Few among them being
Powerful Brand - Economic Times (the only corporate brand to be awarded the AAA rating)
Bharti Airtel rated as Indias 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 2009-10
Most Admired company
Best National Mobile operator
Best Internet and Broadband operator
Best Enterprise services
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