VSNL. Analyst Meet. November 9, 2006 Mumbai

Transcription

1 VSNL Analyst Meet November 9, 2006 Mumbai

2 Safe Harbor Some of the statements herein constitute forward-looking statements within the meaning of applicable securities laws and regulations that do not directly or exclusively relate to historical facts. These forward-looking statements reflect our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside our control. Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Because actual results could differ materially from our intentions, plans, expectations, assumptions and beliefs about the future, you are urged to view all forward-looking statements contained herein with caution. VSNL does not undertake any obligation to update or revise forward looking statements, whether as a result of new information, future events or otherwise. VSNL Proprietary 1

3 Our Strategy To leverage our unique reach and scale of underlying network assets to deliver converged services across voice, data, and video to carrier and enterprise customers globally and address retail opportunities in select geographies VSNL Proprietary 2

4 AGENDA LOB STRUCTURE BUSINESS HIGHLIGHTS & GROWTH STRATEGIES FINANCIAL PERFORMANCE REVIEW VSNL India Standalone VSNL Consolidated Q & A SESSION VSNL Proprietary 3

5 Three Lines of Businesses: 2 Global; 1 Selective Markets VSNL GLOBAL Wholesale Voice GLOBAL Carrier & Enterprise Data SELECT Broadband & Others INVESTMENTS TTSL; UTL; SNO Networks, International Facilities, Customer Service, IT, HR, Finance, Legal VSNL Proprietary 4

7 Our Strengths Global Scalability, Reach & Service Diversity Seamless end-to-end connectivity Ownership and operation on key international data traffic routes with ownership in over 100 cables Global leadership in Wholesale Voice with over 17 B International voice Minutes a year Strong focus & pro-active approach on QoS Enhanced global peering capability and redundancy- Tier 1 ISP Comprehensive suite of Voice, Data & Mobile Solutions addressed through a variety of network options (Submarine Cable, Switching Gateways, IP PoPs & Earth Stations) International principal provider of signaling conversion services Intellectual property and proprietary (VoIP) technology for better control of least cost routing Global GSM signaling services VSNL Proprietary 6

8 Integrated Network Strategy I Next-Generation Capabilities Partnerships and ecosystem + Content partners MPLS-NNI using service mediation technology N/W Management Security IMS IP based core network built on owned infrastructure Embedded applications for collaboration, security and communication Voice peering VSNL Proprietary Network Related Managed Services + IT Infrastructure Services Hosting Storage DR/BC = Next Generation Network Capabilities 7

9 VSNL Global Strategy India-Centric to Global Managed Services India Leadership Extensive India coverage and capabilities Leveraging Infrastructure Global infrastructure owned, managed and operated by VSNL - Lower Cost Base New Network and latest technology Global Managed Services India Enabled Service Delivery and Operations from India Leveraging expertise serving Fortune 500 client base in India Communication Solutions Network and communication solutions Tata Group competencies TCS Extensive Industry and domain expertise India Enabled Global Business Pathway India Leadership VSNL Proprietary 8

10 Global Business Pathway Worldwide Hubs Network Technology Diversity Migration Flexibility Bandwidth Consolidation Reduced Total Cost of Ownership VSNL Proprietary 9

11 Our Presence Global Data Centers & Co-Location 12 Data Centers 280,000 sf 10 Data Centers 386,000 sf 7 Data Centers 52,000 sf 5 Data Centers 170,000 sf 34 data centers globally; ~ 900,000 sq ft space First Service Provided in India to be VSNL Proprietary 10

12 Beyond the Network I Face-to-face Globality & Business Fluency Global orientation Over 4000 employee global workforce Stick to commitments Flexibility throughout customer lifecycle Provide transparency and predictability Solution orientation Responsiveness VSNL Proprietary 11

13 Wholesale Voice Comprehensive Range of Services Voice Termination Services Teleglobe VTS Teleglobe VTS Economy Teleglobe VTS Prime ILD NLD Access Services Teleglobe International Toll Free Teleglobe International Toll Free with SAC Teleglobe Universal Intl Free-Phone Number Teleglobe Home Country Direct Collect Call Services Teleglobe Collect Call ISDN Teleglobe ISDN Other Voice Services Audiotext Operator Services *VSNL has retained Teleglobe brand for its Voice Services. VSNL Proprietary 12

14 Wholesale Voice Growth Strategies Teleglobe acquisition VSNL has becomes # 1 global international wholesale voice player Pursuing greater than market volume growth Aggressive rates offered to major carriers Enhanced quality, stability, competitiveness Focus on VAS for improving margins Pursuing new, emerging segments VoIP Mobile to Mobile Addressable Market (2005) for wholesale international voice = B min.* Teleglobe/VSNL with 18 B minutes : approx.16% market share Major share of un-aligned NLD Traffic in India Aggressively pursuing un-aligned access providers to route their Inter Circle traffic TTSL subscriber growth likely to help build volumes SNO next major market target during H * Global Transit Forum (2005) VSNL Proprietary 13

15 Enterprise Data Expanding Geography & Service Scope Connectivity To/from India Increased reach using Global Business Pathway Products IPLC MPLS VPN Ethernet Voice and Security services Co-lo and Hosting Archiving, Storage, DR Managed Messaging and Collaboration IP Contact Center and Call Center Marketplace Coverage 7 cities, 15 AMs 23 cities, 30 account managers 10 Service Managers, Solution Architects Professional Svcs VSNL Proprietary 14

16 Expansion into SME Segment A large untapped market opportunity Over 200,000 potential customers for various data and voice services High level of geographic dispersion Revenue per customer would be relatively low Greater dependence on telcos for network management and integration services Last mile reach is a major challenge VSNL acquired Direct Internet Limited and its subsidiary, Primus India Wireless broadband provider Focusing on SME segment VSNL Proprietary 15

17 Retail Broadband - Initiatives Access management team setup across the country Significant relationship with Cable operator community: 2,000 Access partners Largest Wi-Fi deployment in Telco space Blanket Airport coverage: 19 terminals Wi-Fi at Stadiums: KSCA Bangalore, Eden Gardens, Wankhede, and FerozeShah Kotla 1st in the country ~ 300 hotspots contracted at major hotels, Pizza Corner, Coffee World, McDonalds, Crossword Major relationships with: Railways (~ 70 Cybercafes at leading railway stations) Co-branding, product bundling and channel sharing with global partners VSNL Proprietary 16

19 VSNL India Financials Summary Rs. Crores Particulars Q207 Q106 (QoQ) Q206 (YoY) Net Sales Other Income Total Income Total Expenditure Network Cost Operating and Other Expenses Salaries and Related Costs EBITDA Interest Expense Depreciation Prior Period Adjustments (14) 3 (4) PBT before exceptional items Tax Net Profit After Exceptional Items VSNL Proprietary 18

20 Trends in Income & Profit YoY % Growth 4.0% 1, Rs. in Cr % 16.8% 17.5% Revenues EBIDTA PBT Net Profit Sep Jun Sep VSNL Proprietary 19

21 India Financial Performance (QoQ) Operating Revenue up by 4% to Rs. 966 crores on account 25% growth in enterprise revenues Other income up by Rs. 13 crores, including certain one time write backs of Rs. 10 crores Network costs are up by 2%, operating & other expenses up by 46%, salaries constant leading to Operating EBIDTA for the quarter at Rs.198 crores EBIDTA margin for Q2 07 at 21% (Q1 at 23%) PBT at Rs. 160 crores while PBT margin for Q2 07 at 17% (Q1 at 14%) Tax up from Rs. 43 crores to Rs.53 crores Q2 PAT of Rs. 107 crores with PAT margin at 11% (Q1 at Rs. 88 crores & 9.5%) Cash and Cash equivalents as on Sept 30, 2006 was approx. 1,000 crores Assets capitalized during Q2 07 ~ Rs.282 Cr. VSNL Proprietary 20

22 Wholesale Business Unit Summary 50% increase in total voice traffic in H1 07 as compared to H1 06. Total Voice traffic carried in H1 07 close to 4.5 bn minutes, while on a consolidated basis, the company carried ~11.5 bn minutes Voice Revenue marginally down from Rs. 538 crores in Q1 to Rs. 507 crores in Q2 Incremental ILD & NLD volumes at expectedly lower retentions, causing segment result to drop by 65% Retentions aligned with global rates primarily on incoming traffic & also impacted by transfer pricing within the group, nullified on a consolidated basis VSNL Proprietary 21

23 Wholesale Voice Performance 2500 Mn. Minutes NLD ILD 0 Q2 Q3 Q4 Q1 07 Q2 07 Quarter-wise Volume Growth The Company carried a total voice traffic of 2.4 billion minutes in Q2 - ILD Volumes at 1.2 billion minutes up 12% q-o-q - NLD Volumes at 1.2 billion minutes up by 19% q-o-q VSNL Proprietary 22

24 Enterprise & Carrier Business Summary The market share for EBU is estimated as under as on 30th June, IPLC- 60% - ILL - 50% - MDNS- 55% Data business volumes have increased by ~ 28% in Q2 07 Revenue has increased 25% QoQ VSNL Proprietary 23

25 Retail Business Summary Broadband Revenue has increased by ~2% QoQ Customer base has increased by ~ 5% to 128,000 in Q from 114,166 in Q ARPU for broadband as on 30th September, 2006 is Rs. 830 VSNL Proprietary 24

26 Growth in Broadband Subscribers 140, , , , , ,000 80,000 60,000 58,880 70,037 Broadband Subs 40,000 20,000 0 Q206 Q306 Q406 Q107 Q207 Broadband revenue has increased by 2% QoQ ARPU for Broadband as on 30 th September 2006 is ~ Rs.830 Note: Q2 07 includes DIL subscribers VSNL Proprietary 25

28 Consolidated Highlights H1 Gross income crossed Rs Cr includes TGN & Teleglobe revenues The Company carried a total voice traffic of 11.7 bn minutes Direct Internet Ltd acquisition completed for a consideration of Rs. 95 Cr The Company has signed an MoU with leading global telecom firms to construct a new submarine cable linking India, the Middle East and Western Europe in Oct 06 Neotel (earlier SNO Telecommunications (Pty) Ltd) launched services in South Africa on Aug 31, 2006 Integration with acquisitions well underway as per plan, synergies mapped out and implementation strategy in place. There may be one time restructuring costs in fiscal 07 The group has a debt of Rs. 2,338 Crores as on 30th Sep, 2006 VSNL Proprietary 27

29 Consolidated Financials Particulars Total Income EBITDA Interest Expense Depreciation PBT before exceptional items PBT H1 07 4, Rs. Crores FY 06 4, VSNL Proprietary 28

30 Consolidated Financials Rs. Crores Particulars India International Others Interco Adjustments Consolidated Total Income 1,961 2, (268) 4,323 EBITDA Interest Expense (5) 73 Depreciation PBT 291 (141) 5 (11) 144 VSNL Proprietary 29

31 Consolidated Revenues Consolidated Revenue Breakup 28% 5% 67% Voice Data Others VSNL Proprietary 30

32 Today VSNL is # 1 global player in wholesale international voice One of the largest suppliers globally of submarine cable bandwidth Global Tier 1 ISP India s #1 ILD operator India s #1 in Enterprise Services w/o last mile India s #1 ISP (retail + corporate) 60% of revenue expected to be International 25% of workforce is International INDIA S FIRST TRUE TELECOM MULTINATIONAL VSNL Proprietary 31

33 Q & A VSNL Proprietary 32

34 THANK YOU VSNL Proprietary 33