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The Company...Bharti airtel – An Integrated Telco Wireless Services Enterprise Services 2G Carriers Corporates 3G Rural Market Passive Infrastructure Services Infratel Telemedia Services Indus Fixed Line Broadband DTH IPTV Pay per view / HD Interactive Services including Gaming Fully integrated telecom player offering end to end solutions and entering new geographies
The Company…Bharti airtel No. of circles (India) Today Countries 1 5 15 22 19 ‘1996 2001 2003 2004 2010Fully integrated telecom player offering end to end solutions and entering new geographies
Growth trajectory reflected in the numbers 1996 2011 Single Circle Operator Company Profile Largest integrated private telecom operator < 25k Customers ~ 221 mn ~ USD 17 mn Revenue ~ USD 13 bn ~ USD 2.5 mn EBITDA ~ USD 4 bn ~ USD 1.4 mn Cash Profit ~ USD 4 bn ~ USD 16 mn Market Capitalization ~ USD 30 bn Continuing on our journey of Value CreationNote: 1) 2011 financials are as per FY 2011 results. 2) Exchange rate: Financials as of 31st Mar 11 : Rs 44.65
Financials & Positioning Key financial metrics Positioning in the world & in India 3rd LARGEST wireless operator in the world (1) FY 11 (in Mn) LARGEST private INTEGRATED telecom company in Customers 220.9 India Revenue $ 13,319 5th LARGEST INTEGRATED telecom operator in the EBITDA $ 4,472 world Cash Profit $ 3,983 LARGEST operator in NLD, ILD and VSAT business Net Income $ 1,354 LARGEST TELECOM company listed on Indian Stock EBITDA Margin (%) 34.6 Exchanges ROCE (%) 10.8Note: FY11 numbers are as per IFRS as per March11 quarterly report. Exchange rate for Re to $ conversion: 44.65.(1) 3rd largest wireless operator in the world refers to in-country (single country) operator based on the number ofsubscribers.
Latest Results – 4Q’11 Key operating and financial metrics Continued Strong Performance Q4 FY 11* Y-on-Y Wireless CMS 19.9% Customers 220.9 mn 65.9.% Wireless RMS 31.2% Total MOU carried in Qtr 240.2 bn Revenue $ 3,643 mn 51% Balance sheet strength: EBITDA $ 1,112 mn 33% Assets $ 32.8 bn Cash Profit $ 1,068 mn 16% Net debt $ 13.4 bn Net Income $ 314 mn -31% Net debt to EBITDA 2.8 Times (annualized) EBITDA Margin 33.5% Continues to be FCF positive on at South Asia ROCE 9.2% Level.•Includes full quarter numbers for Africa•Exchange rate as of 31st Mar 2011: 44.65•**RMS as per December quarter released by TRAI
Performance dashboard - 3 line graph 165,000 80% 73.6% 157,560 72.1% 162,654 155,000 69.8% 70% 63.2% Total Revenue (Rs.mn) 70.8% 145,000 152,150 60% 135,000 50% 122,308 45.4% 125,000 41.4% 46.9% 44.8% 40% 115,000 42.4% 107,491 105,000 30% Q410 Q111 Q211 Q311 Q411 Total Revenue (Rs. Mn) (LHS) Opex to Total Revenue (RHS) Capital Productivity (RHS) Productivity Indicators = growing revenues + cost efficiencies + capital productivityThe above chart is for Airtel Consolidated including Africa
Indian Market Overall Telecom Market Wireless Market Sub Base c.811.59 mn Population 1.2 billion → Relatively large youth population Wireless Penetration c.67.98% Telecom penetration c.70.89% Operational metrics per month (~846.32 mn telecom subs) Usage per user 449 min Sub number should go upto 1 Billion by 2015 ARPU ~ US$ 3.67 Broadband penetration 0.96% (11.87 mn) Rate per minute ~ US$ 0.01 → Govt. target to reach 20 mn. Broadband subs by 2011 VAS ~ 13.5% Lot of opportunity ahead….Note: (1) Subscriber numbers and wireless penetration numbers as on Mar 31, 2011 are as per TRAI (2)Other indicators on the slide are based on Global Wireless Matrix 1Q11 dated 28th Apri11 by MerrillLynch, and reflective of Industry numbers.
Rapidly Growing Indian Wireless Market Net Adds in Feb 20.2 Mn…lesser than over last 3 S-curve triggered months average run rate of 20.6 Mn Closing Subscribers Net Adds 90% 80% 900 26 24 70% 800 22 700 20 60% 600 18 16 50% 500 14 (m n) 40% 400 12 10 30% 300 8 200 6 20% 4 100 10% 2 - - 0% N ov -03 M ay -0 4 N ov -04 M ay -0 5 N ov -05 M ay -0 6 N ov -06 M ay -0 7 N ov -07 M ay -0 8 N ov -08 M ay -0 9 N ov -09 M ay -1 0 N ov -10 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 India - Fastest Growing Market in the WorldNote: (1) Actual Data as per Industry Association Releases and Industry Estimates in India.
Wireless Market Structure in India Subscriber Trends Customer Market Share – CMS (%) 25% 180 23% 21.8% 162 160 21% 20.0% 136 135 19% 140 128 17.5% 16.7% 17.3% 16.6% 120 17% 102 101 103 97 100 90 89 15% (mn) 12.8% 12.7% 75 13% 12.0% 80 66 64 1 .0% 0.9% 1 1 1 .0%1 1 1 .3% 54 11% 60 49 35 33 34 9% 8.4% 40 26 23 23 20 7% - 5% BSNL+MTNL BSNL+MTNL Reliance Idea Tata Others Airtel Reliance Idea Tata Vodafone Others Airtel Vodafone M ar-11 CMS( Mar 11) CMS( Mar 10) M ar-10 • Airtel continuously consolidating its market leadership position despite intense competition • Airtel current monthly net adds at 3.2 million vs. 3.0 million a year ago • Airtel ranks 1& 2 in 16 circles in terms of number of subscribers • Over 57% of net adds coming from B&C circles (rural India) Airtel Continues to lead on Revenue Market ShareNote: Based on subscriber data for India as on March 31 2011 as per TRAI press release.
Current positioning and way forward… Leadership Positioning Growth strategy and plans Revenue New Revenue Streams Revenue size Changing face of growth (>$ 9 Bn) through M-Com, M- Revenue Market Share entertainment & 3G Cost Net Adds Improving cost efficiencies Non financial Maximizing Driven by rural strategy Lowest cost GSM network vitals usage Brand Increasing the usage through U&R drive Distribution Wallet share Churn lower than industry Spectrum Mix (900/1800 MHz)
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 87 top cities of India. 2. Target Segment : Retail and Small and Medium Enterprises. 3. Customer base: 3.3 million (end Mar 2011) 4. Broadband (DSL with speeds>256 kbps) penetration at 43.1% of customer base. 5. Average ARPU for Quarter ended Dec’10 $ 20.9 per month. 6. Segment contributing to 8% of overall revenues of the company. 7. EBITDA margin of over 45.2%. Broadband revolution to follow wireless revolution in India SMB opportunity across ICT stream
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 134,026 Route kms of optical fiber, over 4,150 MPLS and SDH POPs Access network (terrestrial) in 87 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 (Q4‘11) NLD Minutes Carried: 19.5 Billion ; ILD Minutes Carried: 3.0 Billion Revenue: Rs.10,179 Million (8 % Segment Contribution Share) EBITDA: Rs. 2,619 Million (25.7% EBITA Margin)
Financial Performance – Passive Infra Revenue EBITDA 37.1 35.5 37.1 38.6 37.0 200 490 493 189 500 183 471 175 180 438 450 431 160 155 160 400 140 350 120 300 Q410 Q111 Q211 Q311 Q411 100 Q410 Q111 Q211 Q311 Q411 Focus on tenancy enhancement…driving Revenue & ProfitabilityThe above nos for Revenue & EBITDA are in IFRS as per Quarterly Report & includes proportionateshare (42%) in Indus .
Operational Performance – Passive Infra Infratel Indus Towers (nos) & Sharing Factor Towers (nos) & Sharing Factor 33,000 1.8 109,000 1.83 1.90 1.78 1.80 1.73 1.75 107,000 1.71 1.80 32,000 1.68 1.7 1.65 1.65 1.70 105,000 1.62 1.60 31,000 32,792 1.6 103,000 108,586 32,424 107,789 1.50 31,831 106,438 101,000 104,901 31,196 1.40 30,000 1.5 102,938 30,568 99,000 1.30 29,000 1.4 97,000 1.20 Q410 Q111 Q211 Q311 Q411 Q410 Q111 Q211 Q311 Q411 No of t ower s Shar ing Fact or No of t owers Sharing Fact or Sharing Revenue per Sharing Operator per Month (Rs) Sharing Revenue per Sharing Operator per Month (Rs) 41,000 35,000 38,041 37,859 31,389 30,501 36,878 36,599 29,674 30,379 30,847 37,000 36,290 30,000 33,000 25,000 29,000 20,000 25,000 15,000 Q410 Q111 Q211 Q311 Q411 Q410 Q111 Q211 Q311 Q411 Shar ing Revenue per Sharing Oper at or per mont h Shar ing Revenue per Sharing Oper at or per mont h Aims to enhance the tenancy ratio & be the preferred choice of vendor for all existing and new operators
Transaction Rationale Shareholding and 100% Cash Transaction Management Control Focus on Core Brand – ‘Airtel’ Global Middle East Stature Operators Clean / Emerging Market certainty Characteristics of transaction Strong Platform for Future Expansion Manageable Low Competitive Deal Size Intensity Diversification of Significant Speed in India Risk Synergies Transaction Repayment of Avoid Greenfield Debt The transaction meets the objectives of Airtel with long term strategic benefits and creates tremendous shareholder value
Differences between the two markets India Africa(1) Mobile Penetration 66% 40% Average Number of 10-12 3-5 Competitors Business Model High usage, low pricing model Low usage, high pricing model Minutes of Usage ~449 ~115 ARPU (US$) ~$4 ~$7 ARPM (US cents ¢) 1¢ 6¢ And therefore huge opportunity spaceSource: Global Insight, annual / quarterly reports.1. Data pertaining to the 16African countries where Zain Africa has operations.
Another Growth Engine - Africa Customer Base : 44.2 Mn Performance Indicators (CY 2011): Revenue: $ 2,878 Mn EBITDA: $ 6,30 Mn Prepaid Base: 99.3% →one of the highest in the world Usage per sub per month: 115 Minutes →one of the lowest ARPU: ~ US$ 7.2 Rate per minute: ~ US¢ 6.2 → one of the highest VAS: ~ 7.8% →One of the lowestNote: Above numbers based on Quarterly report ended 31 March ,2011.
Bharti airtel – Leadership in business Recent Honours Economic Times Telecom Awards 2011 Innovative Product Value Added Service Customer Experience Enhancement 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 Telecom Operator award 2011 - Won in 5 categories. Most Admired company Best VAS provider Best National Mobile operator Best Enterprise services Operator with Rural performance ‘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 Game changer at Economic Times Telecom Awards 2011 – Global Telecom Leader - Voice & Data magazine Akhil Gupta, Deputy Group CEO and MD - CFO India Hall of Fame by CFO India Manoj Kohli, CEO( International) & Joint MD - Telecom Man of the year - Tele.net Business world – FICCI – SEDF Corporate Social Responsibility Awards 2009-10