Idea Cellular Limited · Focus On Optimisation, Not Maximisation Providing pan India footprint...
Transcript of Idea Cellular Limited · Focus On Optimisation, Not Maximisation Providing pan India footprint...
Idea Cellular Limited
Investor Presentation
Disclaimer
The information contained in this presentation is only current as of its date. All actions and statements made herein orotherwise shall be subject to the applicable laws and regulations as amended from time to time. There is norepresentation that all information relating to the context has been taken care of in the presentation and neither weundertake any obligation as to the regular updating of the information as a result of new information, future events orotherwise. We will accept no liability whatsoever for any loss arising directly or indirectly from the use of, reliance of anyinformation contained in this presentation or for any omission of the information. The information shall not be distributedor used by any person or entity in any jurisdiction or countries were such distribution or use would be contrary to theapplicable laws or regulations. It is advised that prior to acting upon this presentation, independent consultation / advisemay be obtained and necessary due diligence, investigation etc may be done. You may also contact us directly for anyquestions or clarifications.
This presentation contain certain statements of future expectations and other forward-looking statements, including thoserelating to our general business plans and strategy, our future financial condition and growth prospects, and futuredevelopments in our sector and our competitive and regulatory environment. In addition tostatements which are forward looking by reason of context, the words‘may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential or continue’ and similarexpressions identify forward looking statements.
Actual results, performances or events may differ materially from these forward-looking statements including theplans, objectives, expectations, estimates and intentions expressed in forward looking statements due to a number offactors, including without limitation, future changes or developments in our business, our competitiveenvironment, telecommunications technology and application, and political, economic, legal and social conditions inIndia. 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 beused 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 maynot be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of1933, as amended. Any public offering of securities to be made in the United States will be made by means of aprospectus and will contain detailed information about the Company and its management, as well as financialstatements. No money, securities or other consideration is being solicited, and, if sent in response to the informationcontained herein, will not be accepted.”
263.8 265.6
277.8
287.2 290.2
304.4
316.7
331.9335.8
240
250
260
270
280
290
300
310
320
330
340
Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12
Indian Wireless Sector – Revenue Trend
Source: Data released by the TRAI ; revenue for UAS and Mobile licenses only
Idea 14.0%
Others 86.0%
Idea 10.7%
Others 89.3%
Q2 FY09
Q2 FY12
Sector Gross Revenue (INR bn) Idea - Increase in Revenue Market Share
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Idea – An Overview
A pan India 2G service provider
Won 3G spectrum in 11 service areas
Third largest operator in India, in terms ofMobility Revenues#
Minutes on network > 1.15bn per day, placing itamong the top 10 operators in the world
Currently owns ~9,000 towers, besides 11,094towers transferred to Indus under IRU
Have over 58,000 km optical fibre cable (OFC)transmission network
Idea’s NLD and ILD capacities, currently carry~94% of captive outgoing minutes
Leads the industry, in terms of activesubscribers, as more than 91% of reportedsubscribers are on VLR
Highest number of Net subscribers additionsunder Mobile Number Portability
# Data released by the TRAI; revenue for UAS and Mobile licenses only
900 MHz Spectrum900 MHz Spectrum
1800 MHz Spectrum1800 MHz Spectrum
900 MHz Spectrum
1800 MHz Spectrum
5
2.5%
4.7%5.2% 5.3% 5.5%
7.1%
8.7%9.5% 9.7%
0%
2%
4%
6%
8%
10%
12%
Har. Pun. UPW Ker. M.P. Guj. Kar. Maha. A.P.
900 MHz spectrum band provides capex/opexadvantage, compared to 1800 MHz
900 MHz spectrum also accompanied by earlymover advantage
Idea holds 900 MHz spectrum in 9 serviceareas, covering~ 48% of national revenue and ~74% of Idea’s revenue
~ 58% of national revenue base (excl. metros*)
Idea’s spectrum profile is very attractiveacross all private operators
Service areas share of gross revenue (excl. metros)58%
Competitiveness Lever 1 - Spectrum
Source: Data released by the TRAI for Q2FY12 quarter, revenue for UAS and Mobile licenses only * Metros as Mumbai, Delhi and Kolkata
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Competitiveness Lever 2 - Scale within Service Area
Service Area (900 MHz)
Revenue Mkt Share 1
(RMS)Rank 2
Kerala 32.0% 1
M.P. 30.9% 1
Maharashtra 28.1% 1
UP (W) 28.1% 1
Haryana 21.8% 2
Punjab 19.6% 2
Gujarat 17.4% 2
A.P. 17.3% 2
Karnataka 8.6% 4
Total 21.7% 2
In 9 service areas, comprising ~ 48% of national revenue market & ~74% of Idea’s revenue, Idea’s competitiveness is intrinsically strong based on a) 900 MHz spectrum and b) scale of operations
1Based on gross revenue for Q2FY12, as released by TRAI2Based on revenue market share
# 1 Player# 2 Player# 1 Player# 2 Player
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1800 MHz Operations (6 Service Areas)Emerging Stronger
Service AreaRevenue Mkt Share 1
(RMS)Rank 2
UPE 11.8% 3
Rajasthan 10.3% 3
Delhi 10.3% 4
Bihar 8.9% 4
H.P. 7.6% 5
Mumbai 7.2% 6
Total 9.6% 4
These service areas cover ~32% of all Indiarevenue and ~22% of Idea’s revenue
Idea has increased its combined RMS from6.4% in Q2FY10 to 9.6% in Q2FY12, improvingits position from 6th to 4th ranked operator, inthese service areas
With continuous improvement in RMS, Idea isemerging stronger
1Based on gross revenue for Q2FY12 as released by TRAI 2Based on revenue market share
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1800 MHz Operations (7 New Service Areas)Focus On Optimisation, Not Maximisation
Providing pan India footprint
Leverage synergies of pan India operationsi.e. roaming, NLD, ad spend, commonnetwork elements, etc.
Infra sharing to reduce capex, and quickertime to market
Focus on operational and financialgoals, not league tables
Combined RMS of 2.6% in Q2FY12, potentialfor future growth
3G Footprint
Idea’s 3G Service Areas
Roaming arrangements with other operators
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Idea launched 3G services in 10 serviceareas, out of 11 service areas where it won3G spectrum
Around 9,750 3G sites in these serviceareas (Sep’11)
Launched 3G services under roamingarrangements for the service areas ofMumbai, Bihar, Karnataka, Rajasthan, WestBengal, Delhi, Kolkata, Tamil Nadu (incl.Chennai), Assam and North East
With these arrangements Idea currentlyoffers 3G services in 20 service areas
Committed to offer 3G services in 3,000towns by end of this financial year
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Idea – Long Term Shareholder Value
Cover ~48% of national revenue market
Strong position in these service areas
900 MHz spectrum accompanied by early mover advantage
900 MHz spectrum provides capex and opex advantage
900 MHz( 9 Service Areas )
Leverage spectrum and scale to enhance
leadership
Pan India Footprint
Leverage synergies of scale and footprint
Emerging Stronger in 6 service areas of
UP(E), Rajasthan, Delhi, Bihar, H.P. and Mumbai
Focus on operational & financial goals, not league tables in 7 New
service areas
Calibrated Capex with infra sharing
1800 MHz( 13 Service Areas )
Sustainable and profitable growth
3G Value Drivers
Market power to drive new business: Ranked #1 or #2, in 7 out of 11 service areas, where it won 3G
spectrum
Roaming arrangements: Ability to provide 3G service in almost all
parts of India
Other value: Besides enhanced data performance, High 2G spectrum
utilisation makes the 3G spectrum also valuable for voice
Best placed to exploit 3G
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The Indus Advantage
Indus Service Areas
Indus Share Holding
Provides passive infrastructure services in15 service areas
Largest independent tower company in theworld with over 109,000 towers
Indus benefits from assured tenancy frompromoters (combined revenue marketshare of ~66%*), apart from other operators
Idea benefits by reduced capex, speed tomarket, and embedded value ofshareholding
Bharti Infratel Ltd 42%
Vodafone Essar Ltd
42%
Idea Cellular Ltd* 16%
Indus Share Holding
*through Aditya Birla Telecom Ltd.* Data released by the TRAI ; revenue for UAS and Mobile licenses only
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Idea – A Power Brand
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World Class Operations and Cost Management
*ARR is based on service revenue (exclusive of infrastructure revenues)
** Includes Depreciation & Amortisation, but excludes Interest & Finance Cost
Paisa
36.9 39.9 42.745.6 46.6
84.8
93.5
102.0108.6 106.2
42.341.8
40.6 41.0
42.7
34.533.9
32.632.1
34.0
40.7 39.6
38.4 38.0
40.3
30
33
36
39
42
45
10
20
30
40
50
60
70
80
90
100
110
Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12
Revenue (INR bn) Minutes (bn) ARR* Pre-EBITDA Cost/Min Operational Cost/Min**(Pre- EBIT)
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Strong Balance Sheet to Support Strategic Intent
*Figures for Idea including its 100% subsidiaries and excluding Joint Venture Spice (till February 28,2010) and Indus.
Financial Ratios1
Balance Sheet*
INR INR bnbn
Gross debt
Cash & Cash equivalent
Net Debt
Net Worth
Cash Profit1
Net Debt to Net Worth
Net Debt to Annualised EBITDA
Q2 FY10
59.2
23.1
36.0
139.0
7.1
0.26
1.23
Q2 FY11#
97.5
5.0
92.5
117.8
7.0
0.79
3.04
ROCE 7.7% 4.7%
Q2 FY09
98.9
67.1
31.9
112.3
4.7
0.28
1.32
9.1%
Q2 FY12#
113.0
1.0
112.0
125.2
7.9
0.89
2.68
5.2%
#Post payment for 3G spectrum fee
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Promoter Group, 46.0%Foreign
Holding, 42.2%
Indian Others, 11.8%
As on 30th Sep’11Shareholding
PROMOTERS’ HOLDING
ADITYA BIRLA NUVO LIMITED 25.3%
BIRLA TMT HOLDINGS PVT LTD 8.6%
HINDALCO INDUSTRIES LIMITED 6.9%
GRASIM INDUSTRIES LTD 5.2%
TOP 5 SHAREHOLDERS
TMI MAURITIUS 14.1%
P5 ASIA INVESTMENTS (MAURITIUS) 10.0%
AXIATA INVESTMENTS 2 (INDIA) LTD. 5.9%
THE RBS PLC AS DEP. OF FIRST STATE 1.7%
LIC OF INDIA MONEY PLUS 1.3%
Appendix
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Key Trends (Quarterly)
84.8
93.5
102.0108.6 106.2
60
70
80
90
100
110
Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12
VAS as a % of Revenue
Realized rate per minute
42.3 41.840.6 41.0
42.7
20.00
25.00
30.00
35.00
40.00
45.00
Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12
paisa
Minutes of use on Network (QoQ)
bn - Minutes
2G - Cell Sites
67,98070,208
73,668
76,29178,367
55000
60000
65000
70000
75000
80000
Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12
12.9% 13.0%
12.1% 12.1%
13.2%
11.0%
11.5%
12.0%
12.5%
13.0%
13.5%
Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12
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Financial Matrix (Standalone*- Annual)
43.9 67.4
99.7
121.4
156.4
0
25
50
75
100
125
150
175
FY07 FY08 FY09 FY10 FY11
11.7
19.8
23.5
29.0 30.9
0
4
8
12
16
20
24
28
32
FY07 FY08 FY09 FY10 FY11
5.0
10.4 9.6
10.3
8.4
0
2
4
6
8
10
12
FY07 FY08 FY09 FY10 FY11
Robust Growth in Top Line
INR bn
14.9
22.7
27.530.5
33.3
0
5
10
15
20
25
30
35
FY07 FY08 FY09 FY10 FY11
Robust Growth in EBITDA
INR bn
Stable Net Profits
INR bn
Robust Growth in Cash Profits
INR bn
*Represents Idea and its 100% subsidiaries
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Financial Matrix (Consolidated*- Annual)
43.9 67.4
101.5
124.5
155.0
0
25
50
75
100
125
150
175
FY07 FY08 FY09 FY10 FY11
11.7
19.8
23.5
30.6 34.1
0
5
10
15
20
25
30
35
FY07 FY08 FY09 FY10 FY11
5.0
10.4 8.8
9.5 9.0
0
2
4
6
8
10
12
FY07 FY08 FY09 FY10 FY11
Robust Growth in Top Line
INR bn
14.9
22.7
28.4
34.137.9
0
5
10
15
20
25
30
35
40
FY07 FY08 FY09 FY10 FY11
Robust Growth in EBITDA
INR bn
Stable Net Profits
INR bn
Robust Growth in Cash Profits
INR bn
*Represents Idea, its 100% subsidiaries and Joint Ventures
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Thank You