Reliance Communications Limited · NSE:RCOM
Reliance Communications — Investor Presentation (April 2012)
34 slides from Reliance Communications's investor presentation, April 2012
Slide 1: RCOM's subsea cable business
RCOM’s subsea cable business Cornerstone Presentation April 2012
Slide 2: Overview of RCOM's subsea cable business
Overview of RCOM’s subsea cable business – Operates one of the world’s largest private subsea cable networks – Covers six of the eight major global data traffic routes Assets – Metropolitan networks in 25 countries and 45 cities – Nine owned data centres Customers – 386 ISPs, content providers, mobi
Slide 3: Investment highlights
Investment highlights Presence in key markets and global reach High entry barriers – Cost, Time, Right of Way Significant available capacity, low incremental upgrade costs, long useful life High quality network, Global Ethernet enabled – Low latency IP Strong customer relationships 4x IP traffic gro
Slide 4: Contents
Contents Section 1 The Global Telecommunications Infrastructure Industry 1 2 Overview of assets 8 3 Sales & customers 23
Slide 5: Section 1: The Global Telecommunications Infrastructure Industry
Section 1 The Global Telecommunications Infrastructure Industry
Slide 6: Evolution of the Global Telecommunications Infrastructure Industry
Evolution of the Global Telecommunications Infrastructure Industry Introduction of the first Introduction of satellite Introduction of subsea Construction of In 2001-2002, the industry witnessed Trans-Atlantic optical fibre transmission to augment Branching Unit (“SBU”) the first two bankruptcy and
Slide 7: Subsea cable design
Subsea cable design Metro PoP PoP- Point of Presence Area Metro land backhaul links Cable Landing Metro PoP Station Area Cable Landing Station Subsea repeaters Branching Unit Metro PoP Area Cable Landing Metro PoP Cable Landing Station Area Station Source: Company’s data 2
Slide 8: Evolution of fibre transport technology
Evolution of fibre transport technology Per fibre pair capacities Time frame Technology evolution Technology (in Gigabits)(a) Wave Division Multiplexing (WDM) and Late 1990s 2.5G 5 (2x2.5G) Zero Dispersion Shifted Fibre (ZDSF) Early 2000 10G 320 (32x10G) to 640 (64x10G) 2009 40G 1,600 (40x40G) to 2,
Slide 9: Technological advancement of fibre optic cables
Technological advancement of fibre optic cables Advancements in optical technology have dramatically increased the capacity of subsea fibre optic cables Extended useful life of existing subsea cable systems by 10-15 years Enabled capacity upgrades for existing cable systems as compared to building n
Slide 10: Four key trends are driving the growth in IP traffic
Four key trends are driving the growth in IP traffic Increasing – By 2015, there will be nearly 15 billion network connections via devices (up from 7 billion in 2010), including number of machine to machine, and more than 2 connections for each person devices More internet – By 2015, there will be n
Slide 11: Global IP traffic is expected to grow 4x between 2010-2015
Global IP traffic is expected to grow 4x between 2010-2015 Central / Eastern Europe 902 million Western Europe North America 2.3 billion 20 Mbps (229%) 2.2 billion 36 Mbps (290%) 3.7 EB/month (424%) Japan 27 Mbps (266%) 727 million 18.9 EB/month (295%) 22.3 EB/month (218%) 63 Mbps (312%) Asia
Slide 12: Connections will double and speeds will quadruple by 2015
Connections will double and speeds will quadruple by 2015 2015 3 Billion 14.6 Billion Annual Global IP Traffic Global internet users Global network connections 966 Exabytes 7.2 Billion 24.8 Gigabytes World’s 2015 Population Traffic generate by average internet user per month January 2015 28 Mbps 1.9
Slide 13: Section 2: Overview of assets
Section 2 Overview of assets
Slide 14: RCOM's subsea cable assets
RCOM’s subsea cable assets FA-1 FEA (a) HAWK FALCON FNAL Backhaul RCOM’s subsea cable assets have a market share of 20% of all capacity sold across its six routes Source: Company’s data, TeleGeography 8
Slide 15: RCOM's subsea cable assets are privately owned and cover six of eight major routes
RCOM’s subsea cable assets are privately owned and covers six out of eight major global routes Routes Middle Middle Cables India-West India-East East-West East-East Intra-Asia Trans-Atlantic FA-1 FEA FNAL Tbps Lit capacity Europe Asia 7 FALCON Intra Asia 11 Trans-Atlantic 16 Sub-to
Slide 16: RCOM has a market share of 20% of capacity sold on its routes
RCOM has a market share of 20% of capacity sold on its routes Market share of lit capacity across 6 routes (Gbps)(a) Total capacity sold by market Capacity sold by RCOM Market share India-West 700 134 19.0% India-East 567 31 5.4% Middle East-West 601 345 57.4% Middle East-East 218 31 14.1% Intra Asi
Slide 17: Competitive advantages of RCOM's cable systems
Competitive advantages of RCOM’s cable systems 1 Wholly-owned cables with strong regional connectivity 2 Benefit of cable assets on key routes 3 Significant saleable capacity 4 Substantial remaining useful life 5 Landing stations at strategic locations 11
Slide 18: Wholly-owned cables with strong regional connectivity
1 Wholly-owned cables with strong regional connectivity Private subsea cable operators have greater flexibility in operating cable systems – Concurrence of all members of the consortium not required for upgrades – Network changes, routing, and terrestrial backhaul upgrades can be done independently
Slide 19: Benefit of cable assets on key routes
2 Benefit of cable assets on key routes Existing operators have significant advantages over new entrants due to the construction cost of subsea fibre cables – Upgrade existing system cost ~US$50m-US$75m from 10G to 40G versus cost of ~US$800m-US$900m for new build The cost of subsea fibre cables (wi
Slide 20: Significant saleable capacity
3 Significant saleable capacity Route(a) Design capacity(b) at 40G (Gbps) Installed capacity(c) (Gbps) Current lit capacity(d) (Gbps) India-West 9,560 2,710 580 India-East 240 170 55 Middle East - West 9,880 3,740 960 Middle East - East 240 170 55 Intra -Asia 10,120 6,530 1,860 Trans-Atlantic 18,720
Slide 21: Substantial remaining useful life
4 Substantial remaining useful life Subsea cable Year of completion Stated life at completion End of design life FEA November 1997 25 2022 FA-1 June 2001 25 2026 FNAL July 2002 25 2027 FALCON September 2006 25 2031 HAWK April 2011 25 2036 Source: Company’s data 15
Slide 22: Landing stations at strategic locations
5 Landing stations at strategic locations A total of 46 landing stations with 31 partners, in the following countries: – China – Qatar – India – Bahrain – Japan – Iraq – Korea – Kuwait – Malaysia – Yemen – Thailand – Republic of Maldives – Egypt – Hong Kong – UAE – Sri Lanka – Jordan – France – Saud
Slide 23: Cable systems
Cable systems Third-Party Networks Subsea Cable Route Purpose Capacity (Gbps) Length (Rkm) Tata Trans Pacific Japan to United States Resale 550 22,300 Japan US Japan to United States Resale 1 22,682 SMW4 France to Singapore Resiliency and diversity 100 38,000 EAC Singapore to Hong Kong Resiliency an
Slide 24: Metropolitan network: Europe
Metropolitan network Europe Europe Ring FA-1 Ring Europe’s metropolitan network allows flexibility to connect to multiple data centres and Meet Me Rooms (“MMR”) Source: Company’s data 18
Slide 25: Metropolitan network: Egypt
Metropolitan network Egypt New Ring Existing Ring Four routes across Egypt which makes it one of most resilient network globally. The metropolitan network crossing Egypt is the most vulnerable terrestrial fibre segment between (i) Europe and India and (ii) Middle East and Asia for fibre cuts Source:
Slide 26: Metropolitan network: United States
Metropolitan network United States The US Metropolitan network connects FA-1 cable landing stations to data centres in the Eastern US namely 111 8th Avenue, 60 Hudson, 325 Hudson, and 165 Halsey, extending up to Equinix Ashburn Source: Company’s data 20
Slide 27: Data centres
Data centres Owns nine data centers in the US, UK, France, Hong Kong, and Taiwan with a total potential floor space of approximately 85,000 square feet # of data Floor space Country centers (’000 sq ft) USA 3 27.98 UK 2 21.39 France 2 18.68 Hong Kong 1 12.32 Taiwan 1 5.38 Total 85.75 Provides “carri
Slide 28: Network asset strategy
Network asset strategy – Sophisticated subsea cable network design Express routes allow lower latency Leverage on Local routes provide connectivity to underserved markets owned asset – Providing connectivity on six of eight routes, reaching 46 landing stations in 26 countries – Extensive Metropo
Slide 29: Section 3: Sales & customers
Section 3 Sales & customers
Slide 30: RCOM's subsea cable business customers
RCOM’s subsea cable business customers Customer diversity Revenue breakdown by customers Revenue breakdown by geography United States 13% Top 20 Middle East Other customers 29% customers 34% Europe 38% 13% Asia 17% India RCOM 28% 28%(a) (a) The large increase of revenues from RCOM is due to the incr
Slide 31: Global sales network
Global sales network Regional office map London New York Ashburn Dubai Hong Kong Mumbai Sales and marketing team (number of employees) FY2009 FY2010 FY2011 9M ended Dec 2011 Marketing & product management 40 31 18 14 Sales and sales force 80 74 73 72 Total sales and marketing team 120 105 91 86 24
Slide 32: Customer and sales strategy
Customer and sales strategy – Every customer has a dedicated “Account Manager” to address their requirements and ensure end-to-end support on all aspects Account of the Sales process from “quote to cash” i.e. presales support, contract negotiations, pricing, delivery, service assurance and managemen
Slide 33: Customer and sales strategy (continued)
Customer and sales strategy (continued) Cross selling – Promotional offers for various products on periodic basis for cross selling and upselling – Increase the revenue market share of the carrier business through the effective management of the existing product portfolio and Development of through
Slide 34: Investment highlights
Investment highlights Presence in key markets and global reach High entry barriers – Cost, Time, Right of Way Significant available capacity, low incremental upgrade costs, long useful life High quality network, Global Ethernet enabled – Low latency IP Strong customer relationships 4x IP traffic gro
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