Analyst PPT v4 - School of Information...

Tata Tata

indicomindicom

Tata Teleservices (Maharashtra) LimitedTata Teleservices (Maharashtra) Limited

2

The Tata Group

The India Telecom Opportunity

Tata Group’s Telecom Leadership Play

Tata Teleservices (Maharashtra) Limited

Key Performance Indicators

What makes us Unique

Contents

3

Over 50% of Group Revenues earned from outside IndiaOver 50% of Group Revenues earned from outside India

Largest Employer in the Private Sector with 250,000 Employees**Largest Employer in the Private Sector with 250,000 Employees**

FY 06-07 Revenues (est.)** of USD 27.1 Bn, Profits (est.) of USD 2.4 BnFY 06-07 Revenues (est.)** of USD 27.1 Bn, Profits (est.) of USD 2.4 Bn

Market Capitalization** of USD 54 Bn, Highest in IndiaMarket Capitalization** of USD 54 Bn, Highest in India

Only Indian Entity in Forbes’s list of World’s 20 Most Reputed CompaniesOnly Indian Entity in Forbes’s list of World’s 20 Most Reputed Companies

India’s Most Respected Multinational Business Conglomerate*India’s Most Respected Multinational Business Conglomerate*

India’s Largest Business GroupIndia’s Largest Business Group

The Tata Group The Tata Group –– A SnapshotA Snapshot

* Awarded in 2006 by the United States-India Business Council (USIBC)

** The Corus acquisition would notionally add, for FY 06-07, USD 19 Bn (est.) to revenues, USD 12 Bn to market

capitalization, and 47,000 employees to the Group

11

22

33

44

55

66

77

4

Business SectorsBusiness Sectors

Materials, 23%

Consumer

Products, 5%

Energy, 7%

Information Systems

& Communications,

20%

Services, 9% Engineering, 31%

Chemicals, 4%

REVENUE FY 2006

TTL

VSNL

TCS

Indian

Hotels

Tata Power

TitanTata Tea

Tata Chemicals

Voltas

Tata

Motors

Tata

Autocomp

Tata Steel

5

The Tata Group






Contents

6

Savings Rate as a % of GDP

26%

30% 31% 32%32%

0%

5%

10%

15%

20%

25%

30%

35%

FY2003 FY2004 FY2005 FY2006 FY2007

The Macroeconomic EnvironmentThe Macroeconomic Environment

GDP Growth Rate

4%

8% 8% 8%

9%

0%

2%

4%

6%

8%

10%

FY2003 FY2004 FY2005 FY2006 FY2007

Inflation

3.4%

5.5%

4.4%

5.3%

6.4%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

FY2003 FY2004 FY2005 FY2006 FY2007

Forex Reserves(USD Bn)

78

118

142162

199

0

50

100

150

200

250

FY2003 FY2004 FY2005 FY2006 FY2007

Sources: RBI, CSO, Goldman Sachs

By 2032, India will be amongst the three largest economies in the world

7

0

40

80

120

160

FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07

Fixed Mobile Broadband

Telecom Telecom –– The Story Thus FarThe Story Thus Far

Source: TRAI, COAI, AUSPI

Mn

Su

bscri

bers

National Telecom Policy ‘99 : Introduction of Revenue

Share

Entry of 3rd and 4th

GSM Operators

Unified Access Service Licences issued

“Calling Party Pays”Introduced

Micro Prepaid/ Long Validity Plans

launched

CDMA Limited Mobility

Entry

8

India outperforms ChinaIndia outperforms China

Source: Study paper on ‘Indicators for Telecom Growth Subscribers value are as at the end of the year (December).

9

India Growth PotentialIndia Growth Potential

Key growth drivers

affordability (falling handset prices, lowest tariffs)

availability (network, distribution)

Source: Based on data in Global Wireless Matrix 3006- Merrill Lynch.

10

The Tata Group






Contents

11

Presence Across the ICT Service SpectrumPresence Across the ICT Service Spectrum

Enterprise WholesaleWireless Fixed Line Broadband DTH IT ITeS

TIEBU VSNLTTL* VSNL Tata Sky TCS Serwizsol

*Includes Tata Teleservices (TTSL) & Tata Teleservices (Maharashtra) Ltd (TTML)

16Mn wireless

subscribers, 0.5Mn

wireline subscribers

0.2Mn broadband

subscribers

India’s fastest

growing DTH

operator

Serves majority of the

Top 1000 enterprise

customers in India

World’s 12th largest software

services company; software

vendor to world’s leading telcos

and telecom equipment

manufacturers

3200 seat BPO;

supports English,

Hindi and 9 Indian

languages

Global No.1

wholesale voice

provider

12

TataGroup

Competitive LandscapeCompetitive Landscape

Enterprise WholesaleWireless Fixed Line Broadband DTH IT ITeS

TTL TIEBU VSNLTTL VSNL Tata Sky TCS Serwizsol

IncumbentGovt.

Operators

India-

Centric

BhartiIndia-

Centric

Reliance

Hutch

Idea

Significant Presence No PresenceLimited Presence

13

Fixed Wireless Phones

“Best Service in Emerging Markets” -

World Communication Awards 2005

Wireless Internet

TTL is the first to launch ERP

access on PDA in India

Mobile Content / ApplicationsHigher bandwidth = better services

+ enhanced experience

Pay Telephony BoothsTTL has over 1 Mn high

ARPU PTB

Wireless ServicesWireless ServicesThe CDMA Advantage The CDMA Advantage –– Innovative Products & ServicesInnovative Products & Services

RoadWarrior – Mobile VPN

Strong uptake from segments

such as BFSI, Retail and Lottery

PARSEC

Payphone +PoS

14

Wireless ServicesWireless ServicesHandsets PortfolioHandsets Portfolio

� TTL offers over 40 handset models from Motorola, Nokia, Samsung, LG, Huawei, ZTE, Haier, Pantech and Kyocera

� TTL was the first mobile operator to launch handsets under its own brand name in the Indian market

� Most new handsets being launched are RUIM based and BREW enabled

� TTL’s Instachange Card allows subscribers to change their handset while retaining their number in 3 simple steps

� TTL subscribers can seamlessly roam across GSM and CDMA networks in 178 countries using dual-mode phones (Worldphones) or One World One Number T-SIM Card

Low End / Mass Market High EndMid End / Youth Market

15

TTL recently entered the Limca Book of Records by launching 100 exclusive outlets on a

single day

Wireless ServicesWireless ServicesDistribution ChannelDistribution Channel

� India’s largest branded telecom retail chain

� Over 3,300 exclusive outlets, occupying 0.6 Mn Sq Ft of prime retail space

� Extensive handset distribution reach through presence at over 60,000 multi-brand retail outlets

� Recharge vouchers distributed through more than 140,000 outlets

16

The Tata Group






Contents

17

Telecom Operator’s Business LifecycleTelecom Operator’s Business Lifecycle

Phase 1

Setup

Phase 2

Growth mode

Phase 3

Maturity

Falling

Tariffs

Highly

Regulated

Industry

Infrastructure intensive industry

leading to longer gestation period

Rapid Technological changes

making certain assets obsolete

TTML is in the 4th

year of wireless

operations

Once we get into matured mode, the business starts yielding recurring revenue

which impacts positively on the financials of the company

Once we get into matured mode, the business starts yielding recurring revenue

which impacts positively on the financials of the company

18

The Story So Far…The Story So Far…

Successful operational turnaround through a fine balance of MarkSuccessful operational turnaround through a fine balance of Market Share and Financialset Share and Financials

Commenced CDMA

Wirelessoperations in Maharashtra

Launch of Prepaid Offerings

Sub Base crossed 1 million

Exited EBITDA Positive

Launch of Long Validity Products

Became 1000Cr Company

Exited Cash Positive

Sub Base Crossed 3 million

Robust growth in Financials

FY04Launch

FY04Launch

FY05120 towns

FY05120 towns

FY06222 towns

FY06222 towns

FY07410 towns

FY07410 towns

19

Advanced Network ArchitectureAdvanced Network Architecture

High “resilience” of network

architecture provides strong

platform for scalability

“Distributed network” design

optimizes transmission costs

Awarded for the best

performance in Key Network

Parameters

World Class network leads to robust and Reliable operationsWorld Class network leads to robust and Reliable operations

Switches

Pioneers in RF

New Technology RF

20

Reaching Out with a Strong BrandReaching Out with a Strong Brand

Touching lives at

every stageTouching lives at

every stage

Best in Class

Network

Infrastructure

Best in Class

Network

Infrastructure

Pioneers in

wireless home phones

Pioneers in

wireless home phones

Providing the

fastest wireless data services

Providing the

fastest wireless data services

21

The Tata Group






Contents

22

FY07 HighlightsFY07 Highlights

SubscribersSubscribers11EOP crossed 3 million subscribers :

67% growth over last year

EOP crossed 3 million subscribers :


RevenueRevenue22Revenue crossed Rs.1400Cr :


Revenue crossed Rs.1400Cr :


EBITDAEBITDA33EBITDA crossed Rs.300Cr :


EBITDA crossed Rs.300Cr :


Cash ProfitCash Profit44Cash Profit over Rs.130Crs :


Cash Profit over Rs.130Crs :


PBTPBT55 74% improvement over last year74% improvement over last year

23

SCORECARD FY07 vs FY06SCORECARD FY07 vs FY06

Total Revenue (Rs.Crs.)Total Revenue (Rs.Crs.)

FY 06

EBITDA (Rs.Crs.)EBITDA (Rs.Crs.)

EBITDA Margin % EBITDA Margin %

Cash Profit (Rs.Crs.)Cash Profit (Rs.Crs.)

10971097

125125

11%11%

(21)(21)

30%30%

142%142%

91%91%

624%624%

14221422

303303

21%21%

131131

FY 07

EOP Sub Base (Nos. in lacs)EOP Sub Base (Nos. in lacs) 18.4018.40 67%67%30.7430.74

EBITDA Crosses Rs.300CrsEBITDA Crosses Rs.300Crs

% improvement

PAT (Rs.Crs.)PAT (Rs.Crs.) (541)(541) 74%74%(311)(311)

Full Year Cash ProfitFull Year Cash Profit

24

TTML Operations TTML Operations (Q3 FY 06 (Q3 FY 06 –– Q4 FY 07)Q4 FY 07)

Operational cost per sub is comparable to IndustryOperational cost per sub is comparable to Industry

Subscriber Base Market Share

Cost per Sub Productivity

1,840

2,104

2,350

2,711

3,074

1,677

1,500

1,700

1,900

2,100

2,300

2,500

2,700

2,900

3,100

3,300

Q3F

Y05

Q4F

Y05

Q1F

Y06

Q2F

Y06

Q3F

Y06

Q4F

Y06

1,844

2,043

2,164

2,4252,493

1,699

1,500

1,700

1,900

2,100

2,300

2,500

2,700

Q3F

Y06

Q4F

Y06

Q1F

Y07

Q2F

Y07

Q3F

Y07

Q4F

Y07

10.5%

11.2%11.3%

11.7%

12.1%

10.8%

10.0%

10.5%

11.0%

11.5%

12.0%

12.5%

Q3F

Y05

Q4F

Y05

Q1F

Y06

Q2F

Y06

Q3F

Y06

Q4F

Y06

479

449

413

374

340

562

300

350

400

450

500

550

600

650

Q3F

Y06

Q4F

Y06

Q1F

Y07

Q2F

Y07

Q3F

Y07

Q4F

Y07

CAGR 89%

25

Growing faster than the marketGrowing faster than the market

Market growing at CAGR of 52% over last 2 years

TTML grew at a CAGR of 89% in the same period

10

O.78

23

2.78

CAGR 52%

CAGR 89%

FY05 FY07

Sub Base(mn)

Market

TTML

26

Market Share

* Wireline & Data Products

Enterprise Enterprise –– Integrated PlayIntegrated Play

Mobile

Audio

Conferencing

Fixed Wired

Phone

Fixed Wireless

Phone

ADSL

High capacity

Leased LinesMobile

Shopping

SMS Based

Application

Wireless

Access

Office on

Mobile

V-Data

TTML

42%

Others

58%

27

TTML TTML -- Financials Financials (Q3 FY 06 (Q3 FY 06 –– Q4 FY 07)Q4 FY 07)

Consistent Financial PerformanceConsistent Financial Performance

Revenue EBITDA

EBITDA Margin PAT

307

324

340

367

389

289

250

270

290

310

330

350

370

390

410

Q3F

Y06

Q4F

Y06

Q1F

Y07

Q2F

Y07

Q3F

Y07

Q4F

Y07

40

5558

64

83

96

35

45

55

65

75

85

95

Q3F

Y06

Q4F

Y06

Q1F

Y07

Q2F

Y07

Q3F

Y07

Q4F

Y07

18% 18%19%

23%

25%

14%

12%

14%

16%

18%

20%

22%

24%

26%

Q3F

Y06

Q4F

Y06

Q1F

Y07

Q2F

Y07

Q3F

Y07

Q4F

Y07

(152)

(113)

(93)

(59)

(45)

(129)

(160)

(140)

(120)

(100)

(80)

(60)

(40)

(20)

-

Q3F

Y06

Q4F

Y06

Q1F

Y07

Q2F

Y07

Q3F

Y07

Q4F

Y07

28

694

1,234

817

600

700

800

900

1,000

1,100

1,200

1,300

FY05 FY06 FY07

Significant Investments for Significant Investments for

aggressive growthaggressive growth

Capex (Rs.Cr.) Coverage of Population Centers

No. of Sites

120

222

410

-

50

100

150

200

250

300

350

400

450

FY05 FY06 FY07

738

507

564

-

100

200

300

400

500

600

700

800

FY05 FY06 FY07

29

792

730678

635

582547

509482

441

885

700

610562

479449

415374

340

1,444

1,118

1,013

891

764738

650

561508

300

450

600

750

900

1050

1200

1350

1500

Q4 FY05 Q1 FY06 Q2 FY06 Q3 FY06 Q4 FY06 Q1 FY07 Q2 FY07 Q3 FY07 Q4 FY07

Revenue per sub Operational cost per sub Total cost per sub

Per Subs TrendPer Subs Trend

Revenue & Costs Per Subs (Rs p.m)

Positive EBITDA from Q1 FY06

Cash Profit from Q4 FY 06

Operational cost per sub is comparable to IndustryOperational cost per sub is comparable to Industry

30

The Tata Group






Contents

31

Process Training & CertificationProcess Training & Certification

ISO Documented

Processes

Certification

Pro

cess

Au

dit

Tra

inin

g

In-trackIn-track

Employees

Out-trackOut-track

Outsourced& Partners

Quarterly Cycle

32

The RuralThe Rural--Urban MixUrban Mix

Urban Strategy

Branded Shops

Organized

Retail

Youth Focus

Corporate

Focus

Urban Strategy

Branded Shops

Organized

Retail

Youth Focus

Corporate

Focus

Rural Reach Strategy

Branded Van

Bullock Cart

Exploring untapped villages

Covering Sales of Mobile, FWPsand RCVs

Rural Reach Strategy

Branded Van

Bullock Cart

Exploring untapped villages

Covering Sales of Mobile, FWPsand RCVs

3,00015,000

62,000

109,000

200,000

682

-

50,000

100,000

150,000

200,000

Q3F

Y06

Q4F

Y06

Q1F

Y07

Q2F

Y07

Q3F

Y07

Q4F

Y07

Rural Subscribers

33

Innovate & ReInnovate & Re--inventinvent

PCOs Installed at

BEST Buses

Police Chowkies

Airports

Railway Stations

PCOs Installed at

BEST Buses

Police Chowkies

Airports

Railway Stations

PTB in Autorikshaw Mobile PTB

PTB in BEST Bus

34

Differentiator Differentiator –– Bulls Eye ApproachBulls Eye Approach

Robust Growth

Rural

Enterprise

Operational Efficiency

Employee

Value toShareholders

35

TTML Key Business Parameters TTML Key Business Parameters Year on Year Growth (FY05 to FY07)Year on Year Growth (FY05 to FY07)

0

1.81.8

11

3.13.1

Year 1 Year 2 Year 3

0

10971097

807807

14221422

Year 1 Year 2

0

125125

(66)(66)

Year 1

Year 2

0 (21)(21)

(210)(210)

131131

Year 1 Year 2

EOP Subscriber Base (Mn) Revenue (Rs. Crs.)

Cash Profit (Rs. Crs.)EBITDA (Rs.Crs.)

Year 3

Year 3

Year 3

303303

36

Operational Turnaround HighlightsOperational Turnaround HighlightsMarket Share6th PositionMarket Share6th Position

EBITDA(Negative)

EBITDA(Negative)

Low in Customer Care & Network

Performance

Low in Customer Care & Network

Performance

Cost Per Sub1047

Cost Per Sub1047

AccumulatedLosses

AccumulatedLosses

Cash Profit(Negative)Cash Profit(Negative)

Revenue807CrRevenue

807Cr

PAT(Negative)

PAT(Negative)

Market Share3rd PositionMarket Share3rd Position

EBITDAPositive 8 Seq. quarters

EBITDAPositive 8 Seq. quarters

# 1 in Customer Care & Network

Performance

# 1 in Customer Care & Network

Performance

Cost Per Sub340

Cost Per Sub340

Cash ProfitPositive 5 Seq. quarters

Cash ProfitPositive 5 Seq. quarters

RevenueOver 1400Cr

RevenueOver 1400Cr

Last Entrant into

crowded market

PAT(Negative)

Improved 74%

PAT(Negative)

Improved 74%

37

…in Summary…in Summary

Most aggressive improvement

In Operational Efficiency

Most aggressive improvement

In Operational Efficiency

Increasing Market ShareIncreasing Market Share

Increasing Operating

Profits (EBITDA)

Increasing Operating

Profits (EBITDA)

Leveraging on People

Training & Certification

Leveraging on People

Training & Certification

Fastest Growing

Subscriber base (89% CAGR)

Fastest Growing

Subscriber base (89% CAGR)

Cro

ssed

th

e 3

mil

lio

n S

ub

scri

ber

Lan

dm

ark

Sig

nif

ican

t im

pro

ve

men

t in

re

ve

nu

e

EB

ITD

A p

osit

ive 8

qu

art

ers

in

a r

ow

EB

ITD

A o

ve

r R

s.3

00 C

r

Sig

nif

ican

t im

pro

ve

men

t in

Cash

Pro

fit

Sig

nif

ican

t im

pro

ve

men

t in

C

ost

eff

icie

nc

y

Sig

nif

ican

t im

pro

ve

men

t in

Pro

du

cti

vit

y

167% 130% 242% 624% 133% 135%

38

Thank You

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