Indian Telecom …… - Cloud Object Storage | Store ... · Source: Based on data in Global...

September 2006

Indian Telecom ……

A SUCCESS STORY OF REFORMS

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.

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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Mobile Services Broadband & Telephone Services Enterprise Services

India…moving towards forefront of world economy

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India – a paradigm shift

India in 1992-93

Political instability Zero forex reservesHigh interest ratesPoor stock market activityHigh inflationNegligible exports

India Today

Political stabilityHigh forex reservesLow interest ratesBuoyant stock mkt. activityLow inflationSubstantial export growth

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India – strong fundamentals

A healthy GDP composition

A well diversified & globally competitive industrial base

A large & sophisticated financial system –

robust capital markets

over 9,000 listed companies

An acknowledged leader in knowledge driven industries

Emerging leader in biotechnology, pharma research & entertainment software, among others

World class IT & telecom infrastructure

Reservoir of Intellectual Capital250 universities, 1,500 research institutions, 10,000 higher education institutes Over a million graduates are produced every yearPool of 23m professionals – doctors, graduates, masters, engineers increasing by nearly half a million every year

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India – demographics advantage

1.1 billion population

54% of the Indian population is less than 25 yrs of age

One quarter of the world’s youth lives in India

By 2013, the net addition to the productive population (aged 25-44 yrs) will be 91 million

Benefits of DemographicsHuge consumer baseLarge and cheap labor forceEducated labor forceQuicker absorption of technology

239

147

123

159

211

231

121

199

157

122

86

102

109220

50 100 150 200 250

55+ yrs

45-54 yrs

35-44 yrs

25-34 yrs

15-24 yrs

5-14 yrs

0-4 yrs

2001 (Mn) 2013 (Mn)

Today's youth…………. will drive tomorrow’s boom

Demographic breakdown

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Indian economy – drivers of future growth

1. Investments1. Investments

2. Consumption2. Consumption

3. Exports3. Exports

Infrastructure Investments, supported by government policies and private-public initiatives

Corporate capex recovery is aided by high capacity utilization levels and free cash flows

Strong growth in urban areas due to services and outsourcing industries

Well dispersed monsoon driving rural demand

Demand facilitated by growth in retail lending

Trickle-down impact is also coming into play

Cross section of globally competitive industries driving export growth

ITES/ Business Process Outsourcing

Knowledge based industries

Pharma, textiles & jewellery

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0 5,000 10,000 15,000 20,000 25,000

RussiaIndia

MexicoBrazilChina

CanadaItaly

FranceUK

GermanyJapan

US

GDP (US$bn)

Year 2000 vs. Year 2020 predictions

India ….poised to become 3rd largest economySource: KPMG, Goldman Sachs


The “Confidence” called India

One of the fastest growing economies, second only to China

Fourth-largest economy on purchasing power parity basis

3rd in investor confidence for FDI investments

India offers the best return on investment among emerging markets

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Indian Telecom……………..poster boy of reforms

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Indian telecom – a snapshot

Source: Based on data in Global Wireless Matrix 1Q06- Merrill Lynch .COAI & AUSPI data

1992 2006

- Total Telecom Base ~ 7 Mln ~ 165 Mln 5th largest in the world

- Mobile Sub Base - ~ 114 Mln 4th largest in the world

- Mobile Penetration - ~ 10 % Lowest in the world

- ARPU - < USD 10 One of lowest

- Mou/Sub/Month - > 400 minutes 2nd highest after US

- Realised RPM - ~ 2 US cents/ min Lowest in the world(A ll Inc lus ive)

time to connect…6 months to 6 minutes

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114

10

20

40

60

80

100

120

Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Aug-06

Mobile

Subsc

riber

s (M

n)

23

165

5

45

85

125

165

Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Aug-06

Tele

com

sub

scrib

ers

(Mn)

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Tele-density

Telecom subscribers (LHS) Tele-density (RHS)

Indian telecom – growth trajectory

CAGR 86% CAGR 30%

mobile exceeds fixed-line subscriber baseone of the fastest growing mobile market in the world

Indian telecom mobile led growth

Source: AUSPI and COAI data

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0.0

1.5

3.0

4.5

6.0

Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06

Sub

scri

ber

ad

dit

ion

(in

Mn)

India China

Indian mobile – comparison with China – net additions

Source: TRAI’s report on “Service Performance Indicators” dated January 31, 2006 and industry data

Outpacing China

5.8 mn

4.7 mn

2.0 mn

2.7 mn

0.3 mn

5.5 mn

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Indian wireless – performance versus global peers

Top 5 – Subscriber Base (As at Mar 31’06)

Source: Based on data in Global Wireless Matrix

amongst the top wireless markets

Top 5 – QE Mar’06 Net Additions

Country Mobile Subs (Mn) RankChina 409.7 1US 214.3 2Russia 132.1 3India 96.7 4Japan 96.5 5

Countries Net Adds (Mn) % of Total Net AddsChina 16.3 18.3%India 14.7 16.5%US 6.4 7.2%Russia 6.3 7.1%Brazil 3.3 3.7%

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competitive landscape

Source: AUSPI and COAI data

services offeredmobile

technology

no. of operational

circles (of 23)

mobile market share (Aug - 06)

no. of mobile subscribers

(mn)a. Private GSM1. Bharti Integrated GSM 23 22.5% 25.62. Hutch Mobile GSM 16 18.0% 20.43. Idea Mobile GSM 11 8.6% 9.74. Others Mobile GSM - 5.1% 5.8

b. Private CDMA5. Reliance Integrated CDMA, GSM 23 19.2% 21.96. Tata Integrated CDMA 20 6.9% 7.8

c. Government Owned7. BSNL + MTNL Integrated GSM, CDMA 23 19.7% 22.4 Total 100.0% 113.7

Note: 1) Hutch subscriber base included BPL operations in Mumbai.Note: 2) All India Mobile Subscribers includes GSM and Digital Mobile (CDMA) subscribers as reported by COAI and AUSPI. Due to non - availability of subscriber

data of few of the CDMA operators into Digital mobile and WLL(F) services, we have excluded the last available WLL(F) subscriber numbers of these operator's from the overall subscriber base.

highly competitive – top 4 garnering 80% share

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Indian mobile – growth potential…

increasing affordability + increasing coverage…….market expansioneven at 300 million subscribers, penetration lower than many other comparable economies

Source: Based on data in Global Wireless Matrix 1Q06- Merrill Lynch.

Various market estimates

Country Subs in

Mn.Pen / Pop

India in 2010 (if) 300 27%

china 410 31%philippines 36 41%thailand 32 51%canada 17 53%malaysia 21 78%usa 214 72%korea 39 80%singapore 4 101%uk 68 113%world average 41%

Current Status (Mar'06)

230

257

258

300

300

320

349

392

207

100 150 200 250 300 350 400

COAI (Yr '07)

TRAI (Yr '09)

JPM (Yr '10)

SSKI (Yr '10)

LB (Yr '10)

Gartner (Yr '09)

ABN (Yr '10)

Macquarie (Yr '10)

CS (Yr '10)

Mobile Subscribers (Mn)

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The Road Map

Bharti Airtel Limited

……………..a case in point

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Bharti – past to present

Revenues: US$ 14.2 mnEBITDA: US$ 1.5 mnNet profit: US$ 1.2 mn Net worth: US$ 12.9 mn

Inception

Revenues, EBITDA, Net profit for full year ended march 31, 2006 are as per USGAAP.Market cap is as on date.

1995

Today

2006

Revenues: US$ 2,613 mnEBITDA: US$ 980 mnNet profit: US$ 507 mnMarket cap: US$ 18 bn

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Integrated play - service offerings

deriving synergies….financial & operational

Mobile servicesBroadband &

Telephone servicesEnterprise services

Bharti Airtel Limited

Corporates Carriers

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mobile services

customer base (Aug'06) 25.65 mnmobile market share (Aug'06) 22.5%net additions (Aug'06) 1.31 mnoperational (as at end of Jun'06)

mobile minutes carried (Q1FY07) 28.19 Bn Mincensus towns 4,026non census towns & villages 101,614population covered 46%strategy mass market

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broadband & telephone services

customer base (Aug'06) 1.59 mnDSL customers (% of total cust.) ~27.6 %net additions (Aug'06) 43 kcoverage (as at end of Jun'06) 92 citiesstrategy selective

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enterprise services – carriers NLD

LegendExisting OFC RouteUnder Execution

Kolkata

Mumbai

Chennai

Hyderabad

Bangalore

Jaipur

Ahmedabad

Bhopal

Chandigarh

Delhi

Nagpur

Lucknow

Jalandhar

ErnakulamCoimbatore

Kolkata

Mumbai

Chennai

Hyderabad

Bangalore

Jaipur

Ahmedabad

Bhopal

Chandigarh

Delhi

Nagpur

Lucknow

Jalandhar

ErnakulamCoimbatore

Voice Network

captive traffic (group traffic) 2/3 rd

NLD minutes carried (Q1FY07) 2.88 Bn Minoptic fibre laid ~ 35,000 Km

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enterprise services – carriers ILD

Major international carriers connected to the ILD gateways through i2i, SMW4, SMW3 and Flag Submarine cable systems

Legendi-2-iSEA-ME-WE-4Other Int’l ConnectivityInt’l Gateways Connectivity

SEA-ME-WE-4 Connectivity to Westi-2-i Connectivity to EastILD minutes carried (Q1FY07) 753 Mn MinILD gateways 4landing stations 2

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enterprise services - corporates

Voice services

Satellite services Managed data & Internet services

Managed e -business services

Managed customized integrated solutions

Mobile services

competition limitedsegment one stop telecom solution

1000 top large corporates2,000 - 3,000 medium multi

location companiesleveraging integrated play

target

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overall financial performance

Source: Results for the quarter ended June 30, 2006 are un-audited and as per US GAAP.

Amount in USD Million

June 30, 2006

June 30, 2005

Y-o-Y Growth

Subscribers (000's) 24,577 13,191 86%

Revenues 841 549 53%

EBITDA 327 205 60%

EBITDA Margin 39.0% 37.4%

Cash Profit from Operations 291 202 44%

Earning before tax 187 130 44%

Net Profit 165 111 48%

ParametersQuarter Ended

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our partners - alliances with best in class

Asia’s telecom power house

World’s leading mobile telecommunications

company

IBM Daksh

Mphasis

Hinduja TMT

Tele Tech

Nortel

Strategic Equity Partners Business Partners

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focus on core competence

transformational business innovations – outsourcing & capex

Features/ AdvantagesVendorsOutsourcing

Deals

Enhanced & consistent customer experienceCommon platform across the groupScalable business model to meet business needs

IBM DakshMphasisHinduja TMTTele TechNortel

Call Center

Outsourcing

Pricing & payment as a % of revenuesS1 Outsourcing – to provide end to end IT including hardware, software and services SDP – to deliver Service Delivery Platform enabling delivery of content to end – user devices like mobiles, PCs etcSLA’s for quality and deployment.Scalability, sustainability and accountability

Information Technology

Pricing linked to capacity - US$ per erlangPayments linked to

usage and network qualityservice level agreements (SLAs)

Ease in network planningScalability, sustainability and accountability

Network outsourcing & Maintenance

Assured networkquality

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Our vision

By 2010 Airtel will be the most admired brand in India:

loved by more customerstargeted by top talentbenchmarked by more businesses

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India – outlook

“The question is no longer whether India can fly but how high”

(Prime Minister Dr. Manmohan Singh)

Indian Telecom …… - Cloud Object Storage | Store ... · Source: Based on data in Global...

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