Final Ppt of Vodafone

7/29/2019 Final Ppt of Vodafone

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Mumbai, March 5, 2008 WFA/ISA - Global Advertiser Conference 1

Presentation by:

ANKITA BRAHMBHATT- 04

NILESH PATEL-33

RAGINI PATEL-34RIMPLE PATEL-36

SONAL PATEL-37

Submitted To:-Prof Drashti Shah


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Introduction About HutchHWL started mobile business in 1983 in home market of HongKong and now serves over 37 million customers.

Hutch telecommunications and data infrastructure supportofferings in the areas of mobile telephony (voice and video basedmultimedia), fibre-optic broadband networks, fixed-line servicesand radio broadcasting.

In 1992 Hutchison Whampoa and its Indian business partnerestablished a company that in 1994 was awarded a license toprovide mobile telecommunications services in Mumbai.

Hutchison Whampoa had acquired interests in six mobiletelecommunications operators providing service in 13 of India's 23licence areas and following the completion of the acquisition of BPLthat number increased to 16.


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In 2006, it announced the acquisition of a company (EssarSpacetel - A subsidiary of Essar Group) that held licence

applications for the seven remaining licence areas.

Hutch Essarwas a leading Indian telecommunications mobileoperator with :

-23.3 million customers at 31 December 2006,

-representing a 16.4% national market share.

Continued

Then it also targeted business users and high-end post-paidcustomers which helped Hutchison Essarto consistently generate

a higher ARPU than its competitors.


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Continued -

Vodafone maintains the 74 percent FDI limit.

Hutchison held 52 per cent, Analjit Singh and Asim Ghosh

together hold 15 per cent, while Essar holds 33 per cent.

In Essars stake, 22 per cent is held abroad (Mauritius) as a

foreign investor, and the balance 11 per cent as a domestic

investor.


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Hutch was often praised for its award winning

advertisements which all follow a clean,

minimalist look. Its successful ad campaign in

2003 featured a pug named Cheeka following aboy around in unlikely places, with the tagline,

Wherever you go, our networkfollows. The

simple yet powerful advertisement campaigns wonit many admirers.

Continued -


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The name Vodafone

comes

fromVoicedata

fone, chosen by the

company to " ref lectthe provision of voice

and data services

over mobile phones.


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Vodafone was formed in 1984 as a subsidiary of Racal Electronics.

It was fully demerged from Racal Electronics Plc and became an

independent company in September 1991, at which time it changed its

name to Vodafone Group.

Vodafone is a mobile network operator with its headquarters

in Newbury, Berkshire, England, UK.

It is the largest mobile telecommunications network company in the

world by turnover and has a market value of about 75 billion (August

2008).

Vodafone currently has operations in 25 countries and partnernetworks in a further 42 countries. Make the most of now.

Vodafone


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BUSINESS STRATEGIES.


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WHYIndia?


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Operator Subscriber base

Bharti Airtel 118,864,031

RelianceCommunications

93,795,613

Vodafone Essar 91,401,959

BSNL 62,861,214

Idea Cellular 57,611,872

Tata Teleservices 57,329,449

Aircel 31,023,997

Spice 4,875,913

DOCOMO 3,042,741

All India 525,147,922

Position Of Vodafone

Essar in India after

acquisition of Hutch

(Rank 3rd from 4th )


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Vodafone need -

Vodafone wants to expand into the Asian markets. India has 2ndlargest market for mobile. It is growing at the rate of 6 million

subscribers per month.

Why Take Over

Why Hutch Want to Sell

Major Reasons for sell are :

Hutch-Essar : mutual distrust

The right time to quit Indian operations to finance other

operations. Li Ka-Shing was the 10th richest man globally in 2006.In the early 1990s, he sold his stake in Star TV to Rupert Murdoch

for $825 million.


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cont..

Hutchison Essar is a leading India telecommunications mobile

operator with 25 million customers currently. representing a 16.4% national market share.

Hutchison Essar has over 6,000 employees, operates in 16 circles andhas licenses in an additional six circles.

In the year to 31 December 2005, Hutchison Essar reported revenueof US$1.3 billion, EBITDA of US$415 million, and operating profit ofUS$313 million.

In the six months to 30 June 2006, Hutchison Essar reported revenueof US$908 million, EBITDA of US$297 million, and operating profit of

US$226 million.


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Hutch Hutch Hutch

The biggest one is a presence in a market of 143 million subscribers

that's growing at a rate of 5 per cent on a month-on-month basis

Fourth largest mobile operator in India with 24.41 million subscribers

16.41% of the Indian mobile market, present in 16 of 23 circles.

Accounted for 41 per cent of Hutchison Telecommunication

Internationals revenues

Revenues of $908 million (Rs 4,086 crore) in H1 2006.

Operating profits of Rs 1,017 crore.


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Contenders in race

Essar Group

Anil Ambani-owned Reliance Communications

The UK-based Vodafone

Malaysias Maxis Communications

Egyptian Telco Orascom


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WHY HUTCH

Accelerates Vodafones move to a controlling position in a

leading operator in the attractive and fast growing Indian

mobile market

Hutch Essar delivers a strong existing platform in India

Driving additional value in Hutch Essar

Increases Vodafones exposure to high growth emerging

markets

ACQUISITION DETAILS


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ACQUISITION DETAILS

Enterprise value of Hutchison Essar is $18.8 billion

Value of 67% stake in Hutch Essar - $11.1 billion

Vodafone is selling 5.6% stake in Bharti for $1.6 billion

Vodafone will retain 4.4% in Bharti as pure financial investment

Vodafone acquired 10% in Bharti for $1.5 billion in Oct 2005

Vodafone and Bharti to share infrastructure

Hutch has 23.3 million subscribers as of Dec 31, 2006

Vodafone is targeting a 20-25 per cent market share by 2012

The mobile market is expected to grow at 40% CAGR till 2012


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Valuation

Average Revenues per User

It had the highest ARPUs Rs 374(Avg Rs335)

perspective of the buyer

market share

$54.8 billion Vodafone bagged Hutchison Essar, it valued the company at

$18.8 billion or $770 per subscriber


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Valuation of Hutch Essar

Value in ($ billion)

Hutch Essar 100% enterprise value: 18.8

Hutch Essar debt: 1.33

Equity Value: 17.47

Value of 67% stake: 11.70

Other Debt: 0.63

Net Value: 11.08

Fi i th d l


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Financing the deal

least leveraged

$5 billion from the sale of its Japanese unit

$1.62 billion cash from its 5.6 per cent stake sale in Bharti.

cash reserves in excess of $3 billion.

sold its 25 per cent stake in Swisscom Mobile and exited Belgium


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FINANCIAL RESULTS(2007)

COUNTRY NETWORK OWNERSHIP MARKET

SHARE

RANK

INDIA (V) HUTCH 52% 22.93% 3/9

AUSTRALIA VODAFONE 100% 16.8% 3/4

N.ZEALAND (V)BELL-

-SOUTH

100% 52.3% 1/2

ITALY (V)OMNITEL 76.86% 31.1% 2/4

TURKEY (V)TELSIM 100% 26% 2/3


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YEAR TURNOVER

(MILLION POUNDS)

2005 34073

2006 29350

2007 31104

2008 35478

Synergies C aimed


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Synergies C aimed

Vodafone gets access to the fastest growing mobile phone market in the worldthat is expected to touch 500 million subscribers by 2010.

Cellular penetration in rural India is below 2%, but 67% of Indias population livesin rural India

Hutchison-Essar is not just the 4 player, but also one of the better-run companieswith higher average revenue per subscribers.

3G is set to take off in India, allowing data and video to ride on cellular networks.Vodafone already offers 3G elsewhere in the world.

India is key to Vodafone strengthening its presence in Asia, a region seen as thebig telecom story

Hurdles of the deal


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Hurdles of the deal

Telecom Watchdog, a non-governmental group, which alleged breach of

foreign direct investment regulations.

Ministry suggesting appointment of inspectors to investigate the actual

ownership of mobile services company Hutchison Essar.

The Foreign Investment Promotion Board (FIPB) had earlier sought the

views of Law Ministry about Vodafone's proposed acquisition of

Hutchison Telecommunication International Ltd's stake in the Indian

mobile company.


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Motives & Benefits of Acquisitions Accelerates Vodafones move to a controlling position in a

leading operator in the attractive and fast growing Indian mobilemarket .

India is the worlds 2nd most populated country with over 1.1billion inhabitants

Use of existing management. Hutch Essar delivers a strong existing platform in India.

Brand

Circumvent government regulations

Emerging market focus

Value-added services: In terms of value-add, Vodafone can plugHutch Essar into its global procurement chain, especially in thearea of ultra-low-cost handsets.

3G foray


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Most Advantage of Acquisition

Accelerated Growth

Enhanced Profitability

Economies of scale

Operating economies

Synergy

Diversification of Risk


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Legal Procedures

Permission for merger Information to the stock exchange

Approval of board of directors

Application in the High Court Shareholders and creditors meetings

Sanction by the High Court

Filing of the Court order Transfer of assets and liabilities

Payment by cash or securities


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ChallengesThe cellular telephony is extremely competitive,and India has one of the lowest

ARPUs in the world. Besides, ARPU growth is slowing.

It has an uneasy equation with Essar, which is one-third partner in Hutch-

Essar. Tht could be a source of problem.

The Vodafone brand is relatively unknown in the Indian market. Besides the

brand will cost money and take time

Telecom valuations are at a high and this could mean it is years Vodafone

recovers its multi-billion dollar investment

Its big competitors are home-grown majors, who can manage the

environment better.


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Issue

The showcause notice (SCN) will simply ask Vodafonewhy it should not be taxed for capital gains in Indiaunder Section 163 of the IT Act, a source close to thedevelopment said.

Section 163 of the Act defines who all may beconsidered as agents of non-residents for the purposeof tax in India. Contending that the erstwhileHutchison-Essar was an agent of non-residentHutchison Inter-national; the income tax departmenthas claimed that the Vodafone-Essar deal involvedIndian operations and so is liable to be taxed in thecountry


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5 force model


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CONCLUSION

Taken steps to make a positive difference, by

supporting recycling campaigns

Win-win-win situation for shareholders,

employees & the environment

Improved relationships between stakeholders

& has helped to ensure future growth


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