Indian Telecom A SUCCESS STORY OF REFORMS. September 2006

Transcription

1 Indian Telecom A SUCCESS STORY OF REFORMS September 2006

2 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. 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 Relations :- For any queries, write to: ir@bharti.com

3 India moving towards forefront of world economy 3

4 India a paradigm shift India in India Today Political instability Zero forex reserves High interest rates Poor stock market activity High inflation Negligible exports Political stability High forex reserves Low interest rates Buoyant stock mkt. activity Low inflation Substantial export growth 4

5 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 Capital 250 universities, 1,500 research institutions, 10,000 higher education institutes Over a million graduates are produced every year Pool of 23m professionals doctors, graduates, masters, engineers increasing by nearly half a million every year 5

6 India demographics advantage Demographic breakdown 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 yrs) will be 91 million 0-4 yrs 5-14 yrs yrs yrs yrs yrs 55+ yrs Benefits of Demographics Huge consumer base Large and cheap labor force Educated labor force Quicker absorption of technology (Mn) 2013 (Mn) Today's youth. will drive tomorrow s boom 6

7 Indian economy drivers of future growth 1. Investments 2. Consumption 3. 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 7

8 Year 2000 vs. Year 2020 predictions US Japan Germany UK France Italy Canada China Brazil Mexico India Russia 0 5,000 10,000 15,000 20,000 25,000 Source: KPMG, Goldman Sachs GDP (US$bn) India.poised to become 3rd largest economy 8

9 The Confidence called India Fourth-largest economy on purchasing power parity basis One of the fastest growing economies, second only to China 3rd in investor confidence for FDI investments India offers the best return on investment among emerging markets

10 Indian Telecom..poster boy of reforms 10

11 Indian telecom a snapshot Total Telecom Base ~ 7 Mln ~ 165 Mln 5 th largest in the world -Mobile Sub Base - ~ 114 Mln 4 th largest in the world - Mobile Penetration - ~ 10 % Lowest in the world -ARPU - < USD 10 One of lowest - Mou/Sub/Month - > 400 minutes 2 nd highest after US -Realised RPM - ~ 2 US cents/ min Lowest in the world (A ll Inclus iv e ) time to connect 6 months to 6 minutes Source: Based on data in Global Wireless Matrix 1Q06- Merrill Lynch.COAI & AUSPI data 11

12 Indian telecom growth trajectory % Mobile Subscribers (Mn) CAGR 86% 1 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Aug-06 Telecom subscribers (Mn) CAGR 30% 23 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Aug % 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Tele-density Telecom subscribers (LHS) Tele-density (RHS) Indian telecom mobile led growth mobile exceeds fixed-line subscriber base one of the fastest growing mobile market in the world Source: AUSPI and COAI data 12

13 Indian mobile comparison with China net additions Subscriber addition (in Mn) mn 2.0 mn 2.7 mn 5.8 mn 0.3 mn 5.5 mn 0.0 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06 India China Outpacing China Source: TRAI s report on Service Performance Indicators dated January 31, 2006 and industry data 13

14 Indian wireless performance versus global peers Top 5 Subscriber Base (As at Mar 31 06) Country Mobile Subs (Mn) Rank China US Russia India Japan Top 5 QE Mar 06 Net Additions Countries Net Adds (Mn) % of Total Net Adds China % India % US % Russia % Brazil % amongst the top wireless markets Source: Based on data in Global Wireless Matrix 14

15 competitive landscape services offered mobile technology no. of operational circles (of 23) mobile market share (Aug - 06) no. of mobile subscribers (mn) a. Private GSM 1. Bharti Integrated GSM % Hutch Mobile GSM % Idea Mobile GSM % Others Mobile GSM - 5.1% 5.8 b. Private CDMA 5. Reliance Integrated CDMA, GSM % Tata Integrated CDMA % 7.8 c. Government Owned 7. BSNL + MTNL Integrated GSM, CDMA % 22.4 Total 100.0% 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 Source: AUSPI and COAI data 15

16 Indian mobile growth potential Various market estimates CS (Yr '10) 392 Macquarie (Yr '10) 349 ABN (Yr '10) 320 Gartner (Yr '09) 300 LB (Yr '10) 300 SSKI (Yr '10) 258 JPM (Yr '10) 257 TRAI (Yr '09) 230 COAI (Yr '07) Mobile Subscribers (Mn) Subs in Country Pen / Pop Mn. India in 2010 (if) % Current Status (Mar'06) china % philippines 36 41% thailand 32 51% canada 17 53% malaysia 21 78% usa % korea 39 80% singapore 4 101% uk % world average 41% increasing affordability + increasing coverage.market expansion even at 300 million subscribers, penetration lower than many other comparable economies Source: Based on data in Global Wireless Matrix 1Q06- Merrill Lynch. 16

17 The Road Map Bharti Airtel Limited..a case in point 17

18 Bharti past to present Inception 1995 Today 2006 Revenues: US$ 14.2 mn EBITDA: US$ 1.5 mn Net profit: US$ 1.2 mn Net worth: US$ 12.9 mn Revenues: US$ 2,613 mn EBITDA: US$ 980 mn Net profit: US$ 507 mn Market cap: US$ 18 bn Revenues, EBITDA, Net profit for full year ended march 31, 2006 are as per USGAAP. Market cap is as on date. 18

19 Integrated play - service offerings Bharti Airtel Limited Mobile services Broadband & Telephone services Enterprise services Carriers Corporates deriving synergies.financial & operational 19

20 mobile services customer base (Aug'06) mn mobile market share (Aug'06) 22.5% net additions (Aug'06) 1.31 mn operational (as at end of Jun'06) mobile minutes carried (Q1FY07) Bn Min census towns 4,026 non census towns & villages 101,614 population covered 46% strategy mass market 20

21 broadband & telephone services customer base (Aug'06) 1.59 mn DSL customers (% of total cust.) ~27.6 % net additions (Aug'06) 43 k coverage (as at end of Jun'06) 92 cities strategy selective 21

22 enterprise services carriers NLD Voice Network Jalandhar Chandigarh Jaipur Delhi Lucknow Ahmedabad Mumbai Bhopal Nagpur Hyderabad Kolkata Bangalore Ernakulam Chennai Coimbatore captive traffic (group traffic) 2/3 rd NLD minutes carried (Q1FY07) 2.88 Bn Min optic fibre laid ~ 35,000 Km Legend Existing OFC Route Under Execution 22

23 enterprise services carriers ILD Major international carriers connected to the ILD gateways through i2i, SMW4, SMW3 and Flag Submarine cable systems Legend i-2-i SEA-ME-WE-4 Other Int l Connectivity Int l Gateways Connectivity SEA-ME-WE-4 Connectivity to West i-2-i Connectivity to East ILD minutes carried (Q1FY07) 753 Mn Min ILD gateways 4 landing stations 2 23

24 enterprise services - corporates Mobile services Voice services Satellite services Managed data & Internet services competition segment target leveraging limited one stop telecom solution 1000 top large corporates 2,000-3,000 medium multi location companies integrated play Managed e - business services Managed customized integrated solutions 24

25 overall financial performance Amount in USD Million Quarter Ended Parameters June 30, 2006 June 30, 2005 Y-o-Y Growth Subscribers (000's) 24,577 13,191 86% Revenues % EBITDA % EBITDA Margin 39.0% 37.4% Cash Profit from Operations % Earning before tax % Net Profit % Source: Results for the quarter ended June 30, 2006 are un-audited and as per US GAAP. 25

26 our partners - alliances with best in class Strategic Equity Partners Business Partners Asia s telecom power house World s leading mobile telecommunications company IBM Daksh Mphasis Hinduja TMT Tele Tech Nortel 26

27 transformational business innovations outsourcing & capex Outsourcing Deals Network outsourcing & Maintenance Vendors Features/ Advantages Pricing linked to capacity - US$ per erlang Payments linked to usage and network quality Assured network service level agreements (SLAs) quality Ease in network planning Scalability, sustainability and accountability Information Technology Call Center Outsourcing IBM Daksh Mphasis Hinduja TMT Tele Tech Nortel Pricing & payment as a % of revenues S1 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 etc SLA s for quality and deployment. Scalability, sustainability and accountability Enhanced & consistent customer experience Common platform across the group Scalable business model to meet business needs focus on core competence 27

28 Our vision By 2010 Airtel will be the most admired brand in India: loved by more customers targeted by top talent benchmarked by more businesses 28

29 India outlook The question is no longer whether India can fly but how high (Prime Minister Dr. Manmohan Singh) 29