Making Acquisitions Work – Tata Communications Experience NASSCOM 2008 CORPORATE 14 FEB 2008

Contents Put Strategy First Integrate Measure Value CORPORATE

Put Strategy First

Integrate

Measure Value

Let Strategy Lead Acquisitions and Not vice-versa CORPORATE End of monopoly in core Voice business Steep reduction in tariffs  profits decline 90% Good international infrastructure but almost no customer franchise VSNL in 2002-03 Focus on Enterprise Data services, on the back of international strength Achieve scale in Voice, diversify traffic mix Enter new markets to capture local opportunities Strategic Response Acquisition Rationale Enhance International Network to supplement own build / consortium capacity  TGN Acquisition Achieve Scale in Wholesale Voice & Reduce India Market dependence  Teleglobe Acquisition

End of monopoly in core Voice business

Steep reduction in tariffs  profits decline 90%

Good international infrastructure but almost no customer franchise

Focus on Enterprise Data services, on the back of international strength

Achieve scale in Voice, diversify traffic mix

Enter new markets to capture local opportunities

Integrate, but only what must be… CORPORATE Voice Traffic: inter-company; termination rates Overlapping Roles Network / bandwidth utilization Primary Areas of Synergy Global Voice Business integrated immediately Creation of Global Delivery Center Capacity mapping and migration Integration Focus The Entire Organization All the Brands All IT Systems All HR Practices What we did not integrate* * During the first 12-18 mos; pursued later

Voice Traffic: inter-company; termination rates

Overlapping Roles

Network / bandwidth utilization

Global Voice Business integrated immediately

Creation of Global Delivery Center

Capacity mapping and migration

The Entire Organization

All the Brands

All IT Systems

All HR Practices

Measure Value Creation CORPORATE Business plans are never accurate No such thing as a “fair value” Periodic Review: assumptions vs performance Mid-course corrections Learning Cycle for the next M&A

Business plans are never accurate

No such thing as a “fair value”

Periodic Review: assumptions vs performance

Mid-course corrections

Learning Cycle for the next M&A

The Tata Communications M&A Experience Let your Strategy lead you to the M&A, not vice-versa Integrate, but don’t integrate “everything” Periodically Measure Value Creation from your M&A CORPORATE

Let your Strategy lead you to the M&A, not vice-versa

Integrate, but don’t integrate “everything”

Periodically Measure Value Creation from your M&A

Thank you CORPORATE