Vodafone Idea Ltd · NSE:IDEA
Vodafone Idea — Idea Cellular — Investor Presentation (August 2013)
37 slides from Vodafone Idea's investor presentation, August 2013
Slide 1: Idea Cellular Limited Investor Presentation
IDEA CELLULAR LIMITED INVESTOR PRESENTATION
Slide 2: Disclaimer
Disclaimer This presentation does not constitute a prospectus, offering circular or offering memorandum or an offer, or a solicitation of any offer, to purchase or sell any securities. This presentation should not be considered as a recommendation that any investor should subscribe for or purchase a
Slide 3: Idea Cellular
Idea Cellular Pan India Pure Play Wireless Operator No.7 Ranked US$ 7.9 bn Operator in the Market World by Capitalisation(4) Subscribers (1) FY13 An Aditya Birla No. 3 Consolidated Group Company Operator in India Gross Revenue with 16.2% US$3.8 bn RMS(2) Serving 125.0 million subscribers (3) USD 1 =
Slide 4: Aditya Birla Group
Aditya Birla Group Aditya Birla Group One of India’s most respected business groups Strong confidence of all stakeholders, lenders, and vendors A leading business conglomerate Global player in aluminum, copper, carbon Ability to attract and retain talent black, viscose staple fiber, BPO an
Slide 5: India Telecom Sector Backdrop
India Telecom Sector Backdrop Growth Drivers Competition Regulatory Voice Active subscriber penetration Top 3 operators garnered Good supply of Spectrum with (measured on VLR) at 59% (723 70.2%(2) of Indian Mobile revenue the Government in 700 / 800 / million subscribers)(1) market share (“RMS”); 18
Slide 6: Indian Wireless Sector – Revenue Trend
Indian Wireless Sector – Revenue Trend Sector Quarterly Gross Revenue (INR bn) Idea – Steady Revenue Market Share (RMS) improvement 450.0 Industry Idea 409.2 Others 373.0 83.8% 375.0 331.9 Idea 16.2% 300.0 287.2 Q1FY14 225.0 Incremental 150.0 RMS 23.6% 75.0 Others 66.2 55.8 87.0% 46.0 37.4 - Idea Q1
Slide 7: Subscriber Trends
Subscriber Trends INDUSTRY Industry VLR (mn) VLR Penetration VLR Share of Top 3 Operators* 750 723 728 60% 62% 61.5% 61.7% 683 59.0% 59.3% 61% 56.5% 55% 600 574 60% 59.3% 483 50% 58.8% 59% 450 48.1% 58.0% 45% 58% 42.8% 300 40% 57% Sep'10 Mar'11 Mar'12 Mar'13 May'13 Sep'10 Mar'11 Mar'12 Mar'13 May'13
Slide 8: Declining Competitive Intensity
Declining Competitive Intensity Post Supreme Court 2012 license cancellation, Operators exit or selectively reduce India presence Cumulative Number of Operators in All Service Areas(1) 46 Idea – ARPM (paise) 65 64.5 [ US Cents 0.73 ] 260 249 45 55 43.7 44 43.3 240 43 220 42 41 200 40 QEDec'08 Dec'11
Slide 9: Adequate Spectrum Available for Future Telecom Growth
Adequate Spectrum Available for Future Telecom Growth (in MHz) Spectrum Band 700 800 900 1800 2100 2300 Total [22 Service Areas] Spectrum Available for 660.0 440.0 431.8 1,121.8 465.0 1,170.0 4,288.6 Telecom Allocated to Operators - 261.3 431.8 624.7 465.0 880.0 2,662.8 Balance with Government 660.0
Slide 10: Idea: Successful Growth Track-record
Idea: Successful Growth Track-record FY2007 FY2013 Comments (IPO in Q4FY07) Operation in 11 Pan India Strong Performance CMS Rank 6 in FY07(1) Company Profile circles Operations since IPO RMS Rank 3 in FY13(1) Customer Base (mm)(1) 14.0 121.6 8.7x Revenue (US$ mn) $735 $3,762 5.1x EBITDA (US$ mn) $2
Slide 11: Idea – An Overview
Idea – An Overview Idea has consistently gained Revenue Market Share …(1) Wireless Business 16.2% A pan India pure wireless play 2G-GSM service provider. 14.9% Third largest operator in India, by Mobility Revenues 13.9% and VLR subscribers(1) 13.0% Holds 3G Spectrum in 11 service areas(2), ove
Slide 12: 15 Service Areas – Strength
15 Service Areas – Strength Owns 3G Spectrum in 8 Established Service Areas (leadership) all ‘8 Leadership Service Area RMS RMS Rank 2 Service Areas’ and Q1FY111 Q1FY141 UPE, HP & J&K Kerala 29.4% 35.7% 1 40.7% of M.P. 31.2% 35.3% 1 India Mobility UP (W) 27.8% 29.2% 1 Revenue Maharashtra 29.9% 29.0%
Slide 13: 7 New Service Areas - Opportunity
7 New Service Areas - Opportunity Launched services during FY10; combined RMS of 4.1%1 in Q1FY14 Acquired 5 MHz spectrum in 1800 MHz frequency auction in Nov’12 (6.25 MHz in West Bengal) in these service areas (post cancellation of license by Supreme Court) Leverage synergies of pan India operations
Slide 14: Idea Mobile Data – The Next Opportunity
Idea Mobile Data – The Next Opportunity Improving Data penetration Strong Data Volume Growth 3G Data Usages (mn MB) 2G Data Usages (mn MB) 35 Data Subs (mn) 30% 92.2% (YoY) 68.9% (YoY) 24.7% 16,000 30 25% 13,791 21.6% 14,000 19.1% 11,421 6,334 25 20% 12,000 10,040 15.6% 16.4% 10,000 8,744 5,231 20 1
Slide 15: The Indus Advantage
The Indus Advantage Provides passive infrastructure services in 15 service areas Leading independent tower company in the world with around 112,000 towers and tenancy ratio of 1.99 Indus Share Holding Combined revenue market share of three shareholders is 70.2%(1) Idea benefits by reduced capex, spe
Slide 16: Idea – Key Capabilities & Strengths
Idea – Key Capabilities & Strengths Wide Cellular Network o Covers ~ 74% of all India Population extended to ~303,000 Towns & Villages on GSM network. o ~ 75,000 km of Fiber & 2100 3G fibre POPs serve as data network backbone o Earnest drive to reduce carbon footprint – solar-powered cell sites, low
Slide 17: Idea – Key Capabilities & Strengths
Idea – Key Capabilities & Strengths Growing Data Business o ~ 30.9 Million data users on 2G EDGE and 3G HSPA services o ~5.5 Million subscribers use 3G services out of 125 Million overall subscriber base o Idea’s own current range of 6 ‘Idea Smartfones’ starting at USD 90 (INR 5400) o ~11 Mn Idea su
Slide 18: Idea – Key Capabilities & Strengths
Idea – Key Capabilities & Strengths Strong IT Processes & Support o Modern Prepaid Vtop-Up system & Pan-India Postpaid billing system BSCS IX o Large Siebel based pan-India Prepaid and Postpaid CRM deployment o High emphasis on sales automation through advanced Dealer Sales Mgmt. application o Advan
Slide 19: Idea – Some Recent Awards & Recognitions
Idea – Some Recent Awards & Recognitions Corporate Awards o Won 3 Awards at Economic Times Telecom Awards 2012 Excellence in Marketing | Customer Experience Enhancement | Innovative Products o ‘Best Rural Service Provider of the Year’ – Amity Telecom Excellence Award 2012 o Telecom CEO of the Year –
Slide 20: Idea Brand Philosophy
Idea Brand Philosophy Transforming Indian consumers’ life through Mobile Telephony India’s No. 21 ‘Most Valuable Brand’ as per ‘Best Indian Brands 2013’ study by Interbrand, a leading global branding consultancy 20
Slide 21: Business Strategy
Business Strategy Data and other Emerging 15 Service Areas 7 Service Areas Businesses Cover ~80% of mobile industry revenue(1) Provides pan India footprint Own 3G spectrum in all service Own 3G spectrum in 10 service Leverage synergies of scale and areas where Idea is ranked #1 or #2 areas covering
Slide 22: Idea Revenue and Cost Per Minute
Idea Revenue and Cost Per Minute(1) Voice Pricing Power Returning as Competitive Intensity Declines 64.5 Gross Rev / Min (paise) Opex / Min (Pre-EBITDA) (paise) 65 60 55 53.0 50 43.9 45 42.4 42.6 46.4 41.5 40 40.1 35 33.8 33.1 30 31.8 31.4 25 FY 09 FY 10 FY 11 FY 12 FY 13 Q1 FY 14 Mounting losses fo
Slide 23: Key Operating Trends
Key Operating Trends Minutes of Use on Network Realized Rate per Minute Paisa Billion 65.0 62.7 600 532.1 60.0 Tariff recovering after hyper 500 453.1 55.0 competitive phase 400 362.6 50.0 300 247.5 45.0 40.6 43.7 46.4 42.2 41.2 175.0 200 40.0 147.3 100 35.0 0 30.0 FY09* FY10* FY11 FY12 FY13 Q1FY14
Slide 24: Financial Trending (Consolidated)
Financial Trending (Consolidated) INR Bn Growth in Revenue Growth in EBITDA 240 224.6 64 34% 31.8% 195.4 56 60.0 50.9 32% 200 $ 1,006 Mn 48 155.0 30% 160 $ 1,095 Mn $ 3,762 Mn 40 27.9% 27.7% 37.9 $ 348 Mn 125.0 28% 120 101.5 32 28.4 26.1% 34.6 26% 24 24.5% 26.7% 80 20.8 24% 65.4 16 40 8 22% 0 0 20%
Slide 25: Key Financial Ratios
Key Financial Ratios (1) Investment Efficiency Steep fall in Capex (2) to Sales ratio Free Cash Flow (INR bn) (3) 47.0% 10 7.25 50% 4 2.05 40% (3.72) (2) 30% 24.8% (8) 22.5% 21.4% (4.18) 20% 16.6% (14) FY10 was impacted due to (20) 10% Amalgamation of Spice into Idea FY10 was impacted due to (26) Am
Slide 26: Idea Performance in India Telecom Sector
Idea Performance in India Telecom Sector Indian Telecom Sector – Huge Consumption Potential Active (VLR) Mobile subscriber penetration in India amongst lowest in the world @ 59%(1); voice growth stable for rural India, slated to sustain minutes growth Mobile Internet market showing early signs of ta
Slide 27: Idea Performance in India Telecom Sector
Idea Performance in India Telecom Sector Strong Idea Financials Improved rate realization & falling subscriber churn fuelling strong financial performance, 97.6% YoY PAT growth and increasing return ratios Idea has very comfortable ‘Net Debt to EBITDA’ at 1.39 (Q1 FY14) in Indian telecom industry in
Slide 28: Financial Trends– Latest Quarter
Financial Trends– Latest Quarter INR bn Growth in Revenue INR bn Growth in EBITDA 68 22 20.8 66 65.4 20 64 62 18 60 18.8% 44.6% 58 16 14.4 55.0 56 14 54 52 12 50 $ 922 Mn $ 1,095 Mn $ 240 Mn $ 348 Mn 10 48 Q1FY13 Q1FY14 Q1FY13 Q1FY14 Realized rate per minute Net Profits Paisa INR bn 44 43.7 6 4.6 43
Slide 29: Appendix
Appendix 29
Slide 30: Idea Q1FY14 Performance
Idea Q1FY14 Performance YoY Consolidated (INR mn) Q1 FY 13 Q1 FY 14 Growth (%) Gross Revenue 55,037 65,388 18.8% EBITDA 14,355 20,763 44.6% EBITDA Margin (%) 26.1% 31.8% Capex 8,202 13,572 65.5% EBITDA-Capex 6,153 7,192 16.9% Gross Block+CWIP 425,977 488,432 14.7% KPI Summary Subscribers ('000) 117,
Slide 31: Board Members
Board Members Mr. Kumar Mangalam Birla – Chairman (Non-Executive) Mr. Arun Thiagarajan – Independent Director Mr. Kumar Mangalam Birla is the Chairman of Idea and Aditya Birla Group. Mr. Arun Thiagarajan is currently a part-time Non-Executive Independent He chairs the Boards of the major Group C
Slide 32: Board Members
Board Members Mr. R.C. Bhargava – Independent Director Mr. Sanjeev Aga – Non -Executive Director Mr. R.C Bhargava served in Indian Administrative Services and has held Mr. Sanjeev Aga served as the Managing Director of Idea for the period the post of Joint Secretary in the Ministry of Energy and
Slide 33: Management Team
Management Team Chief Financial Officer, aged 50 years Deputy Managing Director, aged 57 years o CA and Licentiate CS with over 27 years of industry experience o B.Tech. from IIT Delhi and Post Graduation from Indian o Joined ABG in August 1986 at Grasim. Worked with ABG in Institute of Manageme
Slide 34: Shareholding
Shareholding As on 30 June’13 Indian Others, 7.5% Promoter Foreign Group, 45.9% Holding, 46.7% PROMOTERS’ HOLDING TOP 5 PUBLIC SHAREHOLDERS ADITYA BIRLA NUVO LIMITED 25.3% TMI TMIMAURITIUS MAURITIUS 14.0% 14.0% AXIATA AXIATAINVESTMENTS INVESTMENTS2 2(INDIA) (INDIA)LTD. LTD. 5.9% 5.9% BIRLA TMT HOLDI
Slide 35: Glossary
Glossary Definitions/ S. No. Description/Full Form Abbreviation Is Incremental Revenue Market Share (RMS), calculated as change in absolute revenue for Idea divided by change in 1 Incremental RMS absolute revenue for Industry during the relevant period Incremental VLR Is Incremental Visitor Location
Slide 36: Glossary
Glossary Definitions/ S. No. Description/Full Form Abbreviation Is calculated as total tax charged to Profit and Loss Account divided by Profit Before Tax (PBT) for the relevant 12 Effective Tax Rate period 13 EoP End of Period 36
Slide 37: Thank You
Thank You ADITYA BIRLA GROUP