Investor Presentation Oct'10 older version · PDF file... and future developments in our...

Investor Presentation

Bharti Airtel Limited

October 2010

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.”

3

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

4


Bharti – a growth journey

‘DELHI

1996 2001 2003 2004 2010

No. of circles Today

1 5 15 22 19 countries

5


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 31st Mar 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

6


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 31st Mar 10 exchange rate.

Exchange rate as of 31st Mar 10 : Rs 45.14

EBITDATotal revenues

Cash profit from operations Net profit

� Bharti Airtel – demonstrating robust performance

39% CAGR

42% CAGR

42% CAGR

36% CAGR

42% CAGR

7


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

8


Latest Results – 1Q’11

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 standalone

basis

•Includes 23 days of Airtel Africa Exchange rate as of 30th June 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*

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

evenue (

US

D 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


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 by 2010

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 Global Wireless Matrix 2Q10 dated 9th July 10 by Merrill Lynch, and reflective of Industry numbers.

12


Net Adds in Aug 18.2 Mn…greater than over last 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

13


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

7769

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%

Air

tel

Re

lia

nce

Vo

da

fon

e

BS

NL

+M

TN

L

Ide

a

Ta

ta

Oth

ers

CMS(Aug'10) CMS(Aug'09)

14


Airtel…Performance Indicators (Operational)

Customers & Market Share Prepaid/Postpaid

MoU/Sub/Month & MONARPU & RPM

0.450.480.60 0.58 0.53

215220230252

278

-

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

420

440

460

480

500

Q110 Q210 Q310 Q410 Q111

0

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

110.5102.4 118.9 127.6136.6

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) CM S (%)

15


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 financial vitals

Cost

New Revenue Streams

Net Adds

Maximizing usage

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 August2010)

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

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’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)

20


Emerging Growth Engines

►Passive Infra

► Africa iiiiiiiiii

21


Financial Performance – 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 enhancement…driving Revenue & Profitability

22


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 Sharing Factor

Sharing Revenue per Sharing Operator per Month (Rs)

38,107

36,420 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

Sharing Revenue per Sharing Operator per Month (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 of towers Sharing Factor

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 all

existing and new operators

IndusInfratel

23


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 term

strategic benefits and creates tremendous shareholder value

24


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 of Competitors

3-510-12

Differences between the two markets

And therefore huge opportunity space

25


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 acquired

through Zain Africa

• Strong competitive positioning

450575

Airtel Africa Footprint Other African Countries

Population, 2009 (mn)

26


� 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 the world

� Usage per sub per month: 103 Minutes

→one of the lowest

� ARPU: ~ US$ 7.4

� Rate per minute: ~ US¢ 7.2

→ one of the highest

� VAS: ~ 7.9%

→One of the lowest

Another Growth Engine - Africa

27


Recent Honours

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 - 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 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

� 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

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.”

Investor Presentation Oct'10 older version · PDF file... and future developments in our...

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Transcript of Investor Presentation Oct'10 older version · PDF file... and future developments in our...