Indus Towers Limited · NSE:INDUSTOWER
Indus Towers — Bharti Infratel — 20th CLSA India Forum 2017
35 slides from Indus Towers's conference presentation, Nov 14, 2017
Slide 1: Exchange filing cover letter for investor presentation
S 2 aa November 14, 2017 BSE Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers, Exchange Plaza, C -1, Block G, Bandra kurla Complex, Dalal Street, Mumbai-400001 Bandra (E}, Mumbai 400 051 Ref: Bharti Infratel Limited (534816 / INFRATEL) Sub: Investor Presentation Dear Sir/ M
Slide 2: Investor Presentation November 2017
Investor Presentation November 2017 Building and Sharing Vital Infrastructure
Slide 3: Disclaimer
Disclaimer By attending the meeting where this presentation is made, or by reading the presentation materials, you agree to be bound by the following limitations: The information in this presentation has been prepared by Bharti Infratel Limited (the “Company”) for use in presentations by the Company
Slide 4: Table of Contents
Table of Contents Company Overview Industry Overview Business Model Strengths In Summary 3 of 34
Slide 5: Company Overview
Ss » 2 Bharti Infratel Limited Company Overview 4 of 34
Slide 6: Bharti Infratel – Who We Are?
Bharti Infratel – Who We Are? A Leading Tower Infrastructure Operator Pan India Presence across all 22 Telecommunications Circles Indus Towers – JV between Bharti Infratel, Vodafone and Aditya Birla Telecom Top 3 Operators Anchor Customers & Relationships with all other Operators Marquee promoter an
Slide 7: Performance at a Glance
Performance at a Glance 90,955 towers and 220,088 co-locations(1) Market share in terms of installed tower base, FY15 39,264 towers of Bharti Infratel and 51,691 towers from 42% stake in Indus (1) Infratel + Indus: 40.8% Co-location additions during Q2 FY18 at 1,687 Others 10.1% FY17 Consolidated Re
Slide 8: Pan India Footprint: Leading Positions Across India
Pan India Footprint : Leading Positions Across India Pan India presence ⁻ Opportunities for voice growth in rural areas given rural penetration of 56.39%(1) ⁻ Data services to drive data consumption ⁻ Given inadequate wire-line infrastructure, wireless services expected to cater to new demand Bharti
Slide 9: Industry Overview
Ss » 2 Bharti Infratel Limited Industry Overview 8 of 34
Slide 10: Operator Industry Dynamics
Operator Industry Dynamics Market Concentrated in Hands of Select Players The Indian market is dominated by the top 3 operators Top 3 operators have 81.7% Revenue Market Share (RMS) Right of First Refusal (RoFRs) Non-discriminatory nature All operators are customers from Anchor Operators Source: (1)
Slide 11: Increasing Operator Focus on Data
Increasing Operator Focus on Data An operator agnostic business model, superior network footprint and service quality standards allow Bharti Infratel to capitalize on the growth in the data market Operator Investment in Licenses1 Data Usage per customer (MB/month)2 3G/4G auctions held since 2010 l
Slide 12: Data Revolution Unfolding
Data Revolution Unfolding • Favorable demographics –Median Age of India’s population ~26 years • Broadband penetration ~23%1 & Internet penetration ~33%2 • Technology Adoption and smartphone penetration leading to higher data uptake Technology shift for future growth3 Data growth driven by smartphon
Slide 13: India Mobile Data Trends
India Mobile Data Trends Findings from NSN MBIT Index • Continued 3G and 4G network expansion (top 3 operators’ 3G and 4G footprint grew 1.25X and 2.5X of 2G footprint), limited fixed broadband reach and falling data prices have been driving mobile data traffic growth • Overall traffic increased by
Slide 14: Network & Data Growth Forecasts and Recent Trends
Network & Data Growth Forecasts and Recent Trends Exponential Growth expected in Data over the next five years1 Current Data usage trends indicate significant incremental opportunity2 3G and 2G saw a 13% and 18% increase, respectively in 2016 over the data usage/sub from 2015 levels Even with li
Slide 15: Phases of Data led Tower Revenue Growth
Phases of Data led Tower Revenue Growth Airtel has 100 sites in Delhi Due to Propagation effect Total Towers available with Circle (900 + 1800 Mhz) for 2G Airtel will need 150 sites on Indus in Delhi - 135 coverage 2100 MHz for 3G Loading all the existing Loading Revenue for STAGE 1 100 sites with 3
Slide 16: Business Model Strengths
Business Model Strengths 15 of 34
Slide 17: Business Model Strengths
Business Model Strengths 1 A Leading Tower Infrastructure Operator 2 Visibility of Future Revenues Through Long Term Contracts 3 Demonstrated Operational and Financial Performance 4 Implementation of Green Initiatives 5 Experienced Management 16 of 34
Slide 18: A Leading Global Tower Infrastructure Operator
A Leading Global Tower Infrastructure Operator Indian Tower Companies(1) Global Listed Tower Companies(1) Sharing Factor 2.41(2) 1.00 2.2 1.74 1.83 2.2 2.3 1.8 1.7 1.7 180 160 140 71 Towers (‘000s) 120 100 Bharti Infratel + 42% equity interest in Indus 80 148 60 91 40 69 58 20 44 40 28 26 27 15 13 0
Slide 19: Long Term Contracts with Visibility of Future Growth
Long Term Contracts with Visibility of Future Growth Key Features of Master Service Agreements (MSAs) Tenor Long term (10 to 15 years) with built in escalations (2.5% p.a) Termination Penalty Significant exit penalties A base rental rate is applicable, based on the following factors: Base Rent
Slide 20: Business Model Unique to India
Business Model Unique to India Key Features of Master Service Agreements unique to India unlike US Tower Cos Purpose Key Feature Result • It is not economically rewarding for the operators Most operators in India are not building Disarming The Operators to build new towers themselves towers on their
Slide 21: Demonstrated Operational and Financial Performance: Towers and Co-locations
Demonstrated Operational and Financial Performance Stable tower growth… 95,000 90,646 90,955 90,000 CAGR: 2.6% 88,808 Towers (1) 85,892 (1) Towers 85,000 83,368 82,083 80,000 79,064 75,000 70,000 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 2Q18 …coupled with an increase in co-locations 1.85 1.90
Slide 22: Demonstrated Operational and Financial Performance: Revenue and EBITDA
Demonstrated Operational and Financial Performance Strong revenue growth… Strong Operating Leverage 2500 Indexed to 100 CAGR CAGR: 8.1% 2070 800 Revenues(1)(2) (US$m) 2000 1902 1783 1638 1500 41.4% 1000 500 FY 2014 FY 2015 FY 2016 FY 2017 250 13.9% …faster EBITDA growth 225 1100 46.0% CAGR: 14.6% 91
Slide 23: Focus on Delivering Shareholder Value
Focus on Delivering Shareholder Value Bharti Infratel is focused on delivering return to its shareholders through multi-pronged strategy Pursuit of viable value accretive inorganic growth Leverage Diversified Customer Base to Capitalize on Data Growth Explore Opportunities to Return Cash to Sh
Slide 24: New Opportunities under 'Smart Cities' Project
New opportunities for Telecom Infrastructure development under ‘Smart Cities’ Project Development of Smart Cities key for ‘Digital India’ Program Government has announced the creation of 100 Smart Cities Communication backbone is key to a Smart City Entails setting up of telecom infrastructure w
Slide 25: Quarterly Performance Reposed Significant Growth
Quarterly Performance Reposed Significant Growth Co-locations Revenue1 (US$m) 230,000 570 558 220,088 Y-o-Y Growth: 10.8% Y-o-Y Growth: 10.7% 218,401 220,000 550 539 539 210,606 210,000 530 520 204,934 198,795 510 504 200,000 490 190,000 470 180,000 450 170,000 430 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
Slide 26: Implementation of Green Initiatives
Implementation of Green Initiatives Bharti Infratel has institutionalized ‘GreenTowers P7’ programme, aimed at minimizing dependency on diesel consumption and thereby, reducing the carbon footprint The ‘GreenTowers P7’ programme is based on seven innovative ideas deploying cleaner energy technol
Slide 27: Experienced Management Team
Experienced Management Team Joined Bharti Infratel in March 2008 as Director Work experience of over 30 years Akhil Gupta Certified Chartered Accountant and fellow member of ICAI. Completed an advanced management program at Chairman Harvard Business School. Has received various awards includ
Slide 28: CSR, Awards and Recognition
CSR, Awards and Recognition Awards and Recognition National CSR & Sustainability Awards 2017 • Indus has won the Best Sustainability Report award at the 3rd edition of National CSR & Sustainability Awards 2017 Dun & Bradstreet Infra Awards 2017 • Bharti Infratel has again excelled in Dun & Bradstree
Slide 29: In Summary
Ss » 2 Bharti Infratel Limited In Summary 28 of 34
Slide 30: Company Strategy
Company Strategy Promote Tower Sharing Capitalize on opportunities of Data Organic Growth and Acquisition growth, Digital India, Smart Cities Opportunities Initiatives of Government Achieving Cost Efficiencies Across Increasing Revenue and Capital Tower Portfolios Productivity 29 of 34
Slide 31: Investment Thesis
Investment Thesis Demonstrated Operational and Financial Performance Insulated from Major Concerns - Data-led revenue growth $-Re, Leverage, Import Dependence Operator Agnostic way to benefit from Experienced Management Team Data Growth Regulatory Environment High Standards of Corporate Favorable Go
Slide 32: Appendix
Ss » 2 Bharti Infratel Limited Appendix 31 of 34
Slide 33: Bharti Infratel Overview
Bharti Infratel Overview Corporate Structure Public(1) Vodafone Providence Idea #2 #3 Wireless Wireless Operator(3) Operator(3) 42.00% 42% 100% 4.85% 58.00%(5) Bharti Infratel Indus Towers 42% 11.15% Aditya Bharti Airtel Birla 90,955 Towers(2) Telecom 123,073 Towers(2) #1 Wireless Operator(3) #2 Tow
Slide 34: Impact of Data Growth on Tower Industry
Impact of Data Growth on Tower Industry Expansion of 3G / 4G Networks by Operators will necessitate demand for towers Propagation on higher frequency band weaker Data usage to drive co-location growth 3G/4G only sites to drive tower demand Propagation effects in different bands Tower Multipl
Slide 35: Thank You
Thank You Building and Sharing Vital Infrastructure