Conferences Kotak

8/8/2019 Conferences Kotak

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September 2006

Indian Telecom

A SUCCESS STORY OF REFORMS


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Mobile Services Broadband & Telephone Services Enterprise Services

India a paradigm shift

India in 1992-93

Political instability

Zero forex reserves

High interest rates

Poor stock market activity High inflation

Negligible exports

India Today

Political stability

High forex reserves

Low interest rates

Buoyant stock mkt. activity Low inflation

Substantial export growth


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India strong fundamentals

A healthy GDP composition

A well diversified & globally competitive industrial base

A large & sophisticated financial system

robust capital markets

over 9,000 listed companies

An acknowledged leader in knowledge driven industries

Emerging leader in biotechnology, pharma research & entertainmentsoftware, among others

World class IT & telecom infrastructure

Reservoir of Intellectual Capital 250 universities, 1,500 research institutions, 10,000 higher education institutes Over a million graduates are produced every year

Pool of 23m professionals doctors, graduates, masters, engineers increasing

by nearly half a million every year


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India demographics advantage

1.1 billion population

54% of the Indian population is less than 25 yrsof age

One quarter of the worlds youth lives in India

By 2013, the net addition to the productivepopulation (aged 25-44 yrs) will be 91 million

Benefits of Demographics

Huge consumer base

Large and cheap labor force

Educated labor force

Quicker absorption of technology

239

147

123

159

211

231

121

199

157

122

86

102

109220

50 100 150 200 250

55+ yrs

45-54 yrs

35-44 yrs

25-34 yrs

15-24 yrs

5-14 yrs

0-4 yrs

2001 (Mn) 2013 (Mn)

Today's youth. will drive tomorrows boom

Demographic breakdown


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Indian economy drivers of future growth

1. Investments1. Investments

2. Consumption2. Consumption

3. Exports3. Exports

Infrastructure Investments, supported bygovernment policies and private-public initiatives

Corporate capex recovery is aided by high capacityutilization levels and free cash flows

Strong growth in urban areas due to services andoutsourcing industries

Well dispersed monsoon driving rural demand

Demand facilitated by growth in retail lending

Trickle-down impact is also coming into play

Cross section of globally competitive industriesdriving export growth

ITES/ Business Process Outsourcing

Knowledge based industries

Pharma, textiles & jewellery


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0 5,000 10,000 15,000 20,000 25,000

Russia

India

Mexico

Brazil

ChinaCanada

Italy

France

UK

Germany

Japan

US

GDP (US$bn)

Year 2000 vs. Year 2020 predictions

India .poisedto become3rd largest economySource: KPMG, Goldman Sachs


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The Confidence called India

One of the fastest growing economies, second only to China

Fourth-largest economy on purchasing power parity basis

3rd in investor confidence for FDI investments

India offers the best return on investment amongemerging markets


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Indian Telecom

..poster boy of reforms


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Indian telecom a snapshot

Source: Based on data in Global Wireless Matrix 1Q06- Merrill Lynch .COAI & AUSPI data

1992 2006

- Total Telecom Base ~ 7 Mln ~ 165 Mln 5th largest in the world

- Mobile Sub Base - ~ 114 Mln 4th largest in the world

- Mobile Penetration - ~ 10 % Lowest in the world

- ARPU - < USD 10 One of lowest

- Mou/Sub/Month - > 400 minutes 2nd highest after US

- Realised RPM - ~ 2 US cents/ min Lowest in the world(A ll Inc lus ive)

time to connect6 months to 6 minutes


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114

1

0

20

40

60

80

100

120

Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Aug-06

MobileSubscribers(Mn)

23

165

5

45

85

125

165

Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Aug-06

Telecoms

ubsc

ribers(Mn)

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Tele

-density

Telecom subscribers (LHS) Tele-density (RHS)

Indian telecom growth trajectory

CAGR86%

CA

GR30%

mobile exceeds fixed-line subscriber base one of the fastest growing mobile market in the world

Indian telecom mobile led growth

Source: AUSPI and COAI data


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0.0

1.5

3.0

4.5

6.0

Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06

Subs

criberaddition(inM

n)

India China

Indian mobile comparison with China net additions

Source: TRAIs report on Service Performance Indicators dated January 31, 2006 and industry data

OutpacingChina

5.8 mn

4.7 mn

2.0 mn

2.7 mn

0.3 mn

5.5 mn


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Indian wireless performance versus global peers

Top 5 Subscriber Base (As at Mar 3106)

Source: Based on data in Global Wireless Matrix

amongst thetop wireless markets

Top 5 QE Mar06 Net Additions

Country Mobile Subs (Mn) Rank

China 409.7 1

US 214.3 2Russia 132.1 3

India 96.7 4

Japan 96.5 5

Countries Net Adds (Mn) % of Total Net Adds

China 16.3 18.3%

India 14.7 16.5%

US 6.4 7.2%

Russia 6.3 7.1%Brazil 3.3 3.7%


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competitive landscape

Source: AUSPI and COAI data

services offeredmobile

technology

no. of

operational

circles (of 23)

mobile market

share (Aug - 06)

no. of mobile

subscribers

(mn)

a. Private GSM

1. Bharti Integrated GSM 23 22.5% 25.6

2. Hutch Mobile GSM 16 18.0% 20.4

3. Idea Mobile GSM 11 8.6% 9.7

4. Others Mobile GSM - 5.1% 5.8

b. Private CDMA

5. Reliance Integrated CDMA, GSM 23 19.2% 21.9

6. Tata Integrated CDMA 20 6.9% 7.8

c. Government Owned

7. BSNL + MTNL Integrated GSM, CDMA 23 19.7% 22.4

Total 100.0% 113.7Note: 1) Hutch subscriber base included BPL operations in Mumbai.Note: 2) All India Mobile Subscribers includes GSM and Digital Mobile (CDMA) subscribers as reported by COAI and AUSPI. Due to non - availability of subscriber

data of few of the CDMA operators into Digital mobile and WLL(F) services, we have excluded the last available WLL(F) subscriber numbers of theseoperator's from the overall subscriber base.

highly competitive top 4 garnering 80% share


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Indian mobile growth potential

increasing affordability + increasing coverage.market expansion even at 300 million subscribers, penetration lower than many other

comparable economies

Source: Based on data in Global Wireless Matrix 1Q06- Merrill Lynch.

Various market estimates

CountrySubs in

Mn.Pen / Pop

India in 2010 (if) 300 27%

china 410 31%

philippines 36 41%

thailand 32 51%

canada 17 53%

malaysia 21 78%

usa 214 72%

korea 39 80%singapore 4 101%

uk 68 113%

world average 41%

Current Status (Mar'06)

230

257

258

300

300

320

349

392

207

100 150 200 250 300 350 400

COAI (Yr '07)

TRAI (Yr '09)

JPM (Yr '10)

SSKI (Yr '10)

LB (Yr '10)

Gartner (Yr '09)

ABN (Yr '10)

Macquarie (Yr '10)

CS (Yr '10)

Mobile Subscribers (Mn)


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The Road Map

BhartiAirtel Limited

..a case in point


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Bharti past to present

Revenues: US$ 14.2 mn

EBITDA: US$ 1.5 mn Net profit: US$ 1.2 mn

Net worth: US$ 12.9 mn

Inception

Revenues, EBITDA, Net profit for full year ended march 31, 2006 are as per USGAAP.

Market cap is as on date.

1995

Today

2006

Revenues: US$ 2,613 mn

EBITDA: US$ 980 mn Net profit: US$ 507 mn

Market cap: US$ 18 bn


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Integrated play - service offerings

deriving synergies.financial & operational

Mobile servicesBroadband &

Telephone servicesEnterprise services

Bharti Airtel Limited

CorporatesCarriers


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mobile services

customer base (Aug'06) 25.65 mn

mobile market share (Aug'06) 22.5%

net additions (Aug'06) 1.31 mn

operational (as at end of Jun'06)

mobile minutes carried (Q1FY07) 28.19 Bn Mincensus towns 4,026

non census towns & villages 101,614

population covered 46%

strategy mass market


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broadband & telephone services

customer base (Aug'06) 1.59 mn

DSL customers (% of total cust.) ~27.6 %

net additions (Aug'06) 43 k

coverage (as at end of Jun'06) 92 citiesstrategy selective


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enterprise services carriers NLD

LegendExisting OFC Route

Under Execution

Kolkata

Mumbai

Chennai

Hyderabad

Bangalore

Jaipur

Ahmedabad

Bhopal

Chandigarh

Delhi

Nagpur

Lucknow

Jalandhar

Ernakulam

Coimbatore

Kolkata

Mumbai

Chennai

Hyderabad

Bangalore

Jaipur

Ahmedabad

Bhopal

Chandigarh

Delhi

Nagpur

Lucknow

Jalandhar

Ernakulam

Coimbatore

Voice Network

captive traffic (group traffic) 2/3 rd

NLD minutes carried (Q1FY07) 2.88 Bn Min

optic fibre laid ~ 35,000 Km


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enterprise services carriers ILD

Major international carriers connected to the ILD gateways through i2i, SMW4,SMW3 and Flag Submarine cable systems

Legendi-2-i

SEA-ME-WE-4Other Intl Connectivity

Intl Gateways Connectivity

SEA-ME-WE-4 Connectivity to West

i-2-i Connectivity to East

ILD minutes carried (Q1FY07) 753 Mn Min

ILD gateways 4

landing stations 2


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enterprise services - corporates

Voice services

Satellite services Managed data &Internet services

Managed e -business services

Managed customizedintegrated solutions

Mobile services

competition limited

segment one stop telecom solution

1000 top large corporates

2,000 - 3,000 medium multi

location companies

leveraging integrated play

target


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overall financial performance

Source: Results for the quarter ended June 30, 2006 are un-audited and as per US GAAP.

Amount in USD Million

June 30,

2006

June 30,

2005

Y-o-Y

Growth

Subscribers (000's) 24,577 13,191 86%

Revenues 841 549 53%

EBITDA 327 205 60%

EBITDA Margin 39.0% 37.4%

Cash Profit from Operations 291 202 44%

Earning before tax 187 130 44%

Net Profit 165 111 48%

ParametersQuarter Ended


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our partners -alliances with best in class

Asias telecom power

house

Worlds leading mobile

telecommunicationscompany

IBM Daksh

Mphasis

Hinduja TMT

Tele Tech

Nortel

Strategic Equity Partners Business Partners


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focus on core competence

transformational business innovations outsourcing & capex

Features/ AdvantagesVendorsOutsourcing

Deals

Enhanced & consistent customer experience

Common platform across the group

Scalable business model to meet business needs

IBM Daksh

Mphasis Hinduja TMT

Tele Tech

Nortel

Call Center

Outsourcing

Pricing & payment as a % of revenues

S1 Outsourcing to provide end to end IT includinghardware, software and services

SDP to deliver Service Delivery Platform enablingdelivery of content to end user devices like mobiles,PCs etc

SLAs for quality and deployment.

Scalability, sustainability and accountability

InformationTechnology

Pricing linked to capacity - US$ per erlang

Payments linked to usage and network quality

service level agreements (SLAs)

Ease in network planning

Scalability, sustainability and accountability

Network

outsourcing &Maintenance

Assured networkquality


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Our vision

By 2010 Airtel will be the most admired brand in India:

loved by more customers

targeted by top talent

benchmarked by more businesses


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India outlook

The question is no longer whether India can fly but how high

(Prime Minister Dr. Manmohan Singh)

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