Idea Cellular Limited - Vodafone Idea Limited | An Aditya ...€¦ · This presentation is not...

Idea Cellular Limited

Investor Presentation

DisclaimerDisclaimerDisclaimerDisclaimer

The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwise shall be subject to the applicable laws and regulations as amended from time to time. There is no representation that all information relating to the context has been taken care of in the presentation and neither we undertake any obligation as to the regular updating of the information as a result of new information, future events or otherwise. We will accept no liability whatsoever for any loss arising directly or indirectly from the use of, reliance of any information contained in this presentation or for any omission of the information. The information shall not be distributed or used by any person or entity in any jurisdiction or countries were such distribution or use would be contrary to the applicable laws or regulations. It is advised that prior to acting upon this presentation, independent consultation / advise may be obtained and necessary due diligence, investigation etc may be done. You may also contact us directly for any questions or clarifications.

This presentation contain certain statements of future expectations and other forward-looking statements, including those relating to our general business plans and strategy, our future financial condition and growth prospects, and future developments in our sector and our competitive and regulatory environment. In addition to statements which are forward looking by reason of context, the words ‘may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential or continue’ and similar expressions identify forward looking statements.

Actual results, performances or events may differ materially from these forward-looking statements including the plans, objectives, expectations, estimates and intentions expressed in forward looking statements due to a number of factors, including without limitation, future changes or developments in our business, our competitive environment, telecommunications technology and application, and political, economic, legal and social conditions in India. 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 be used 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 may not be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Any public offering of securities to be made in the United States will be made by means of a prospectus and will contain detailed information about the Company and its management, as well as financial statements. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted.”

198

213

234238

247

263

272264 264

160

180

200

220

240

260

280

Q2FY08 Q3FY08 Q4FY08 Q1FY09 Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10

Indian Wireless Sector Indian Wireless Sector Indian Wireless Sector Indian Wireless Sector –––– Revenue TrendRevenue TrendRevenue TrendRevenue Trend

# Source: Data released by the TRAI for Sep’09 quarter; revenue for UAS and Mobile licenses only

Others,

87.9%

Idea,

12.1%

Others

91.9%

Idea

8.1%

Q2 FY08

Q2 FY10*

Sector Gross Revenue# (INR bn)Idea - Increase in Revenue Market Share

*including Spice comm.

3

Idea Idea Idea Idea –––– An OverviewAn OverviewAn OverviewAn Overview

Operates in 20 service areas (incl. Spice)

51.5 mn subscribers as on Sep’09

Launched operations in J&K, West Bengal and Kolkata in Oct’ 09

Operating service areas cover ~98% of national subscriber base

With the planned launch of North East & Assam service areas by Dec’09, Idea will be a pan-India operator.

Current Operations

4

2.6%2.6%2.6%2.6%

5.0%5.0%5.0%5.0% 5.1%5.1%5.1%5.1% 5.1%5.1%5.1%5.1%5.8%5.8%5.8%5.8%

6.9%6.9%6.9%6.9%

8.9%8.9%8.9%8.9% 9.1%9.1%9.1%9.1%

10.7%10.7%10.7%10.7%

0%0%0%0%

2%2%2%2%

4%4%4%4%

6%6%6%6%

8%8%8%8%

10%10%10%10%

12%12%12%12%

Har . Har . Har . Har . Pun. Pun. Pun. Pun. UPW UPW UPW UPW M.P . M.P . M.P . M.P . Ker .Ker .Ker .Ker . Guj . Guj . Guj . Guj . Kar .Kar .Kar .Kar . Maha.Maha.Maha.Maha. A .P .A .P .A .P .A .P .

900 MHz spectrum band provides capex/opex advantage, compared to 1800 MHz

900 MHz spectrum also accompanied by early mover advantage

Idea holds 900 MHz spectrum in 9 service areas

~ 48% of gross revenue base (total)

~ 59% of gross revenue base (excluding metros)

Idea’s spectrum profile is very attractive across all private operators

Service areas share of gross revenue (excl. metros)

900 MHz Spectrum (incl. Spice Comm.)

1800 MHz Spectrum

59%59%59%59%

Competitiveness Lever 1 = SpectrumCompetitiveness Lever 1 = SpectrumCompetitiveness Lever 1 = SpectrumCompetitiveness Lever 1 = Spectrum

# Source: Data released by the TRAI for Sep’09 quarter; revenue for UAS and Mobile licenses only

5

Competitiveness Lever 2 = Scale Competitiveness Lever 2 = Scale Competitiveness Lever 2 = Scale Competitiveness Lever 2 = Scale

127.6%20.6%UP (W)

222220.3%20.3%20.3%20.3%17.9%17.9%17.9%17.9%TotalTotalTotalTotal

66.0%6.7%Karnataka

128.1%24.4%Kerala

17.7%

16.3%

17.7%

20.1%

29.4%

28.3%

Revenue Revenue Revenue Revenue

Mkt Share Mkt Share Mkt Share Mkt Share 2222

(RMS)(RMS)(RMS)(RMS)

223.7%M.P.

Service Area Service Area Service Area Service Area

(900 MHz)(900 MHz)(900 MHz)(900 MHz)

Subscriber Subscriber Subscriber Subscriber

Mkt Share Mkt Share Mkt Share Mkt Share 1111

(SMS)(SMS)(SMS)(SMS)

Rank Rank Rank Rank 3333

Maharashtra 22.8% 1

Haryana 15.9% 2

Punjab 16.6% 2

A.P 15.1% 2

Gujarat 16.2% 3

In 9 service areas, comprising ~ 48% of national revenue marketIn 9 service areas, comprising ~ 48% of national revenue marketIn 9 service areas, comprising ~ 48% of national revenue marketIn 9 service areas, comprising ~ 48% of national revenue market, Idea, Idea, Idea, Idea’’’’s competitiveness is intrinsically s competitiveness is intrinsically s competitiveness is intrinsically s competitiveness is intrinsically

strong based on a) quality of spectrum and b) scale of operationstrong based on a) quality of spectrum and b) scale of operationstrong based on a) quality of spectrum and b) scale of operationstrong based on a) quality of spectrum and b) scale of operationssss

1 Source: COAI and AUSPII (as on 30 Sep‘09 )

2 Based on gross revenues for Sep’09 quarter, as released by TRAI

3 Based on revenue market share

6

1800 MHz 1800 MHz 1800 MHz 1800 MHz NewNewNewNew LaunchesLaunchesLaunchesLaunchesFocus On Focus On Focus On Focus On OptimisationOptimisationOptimisationOptimisation, Not , Not , Not , Not MaximisationMaximisationMaximisationMaximisation

Idea to be a pan-India operator in

2009

Leverage synergies of pan India

operations i.e. roaming, NLD, ad

spend, common network elements,

etc.

Infra sharing to reduce capex, and

time to market

Focus on operational and financial

goals, not league tables

7

Idea Idea Idea Idea –––– Creating Long Term Shareholder ValueCreating Long Term Shareholder ValueCreating Long Term Shareholder ValueCreating Long Term Shareholder Value

Enhancing

Shareholder

Value

~48% of national revenue market

covered under 9 operating

service areas

900 MHz spectrum usually

accompanied by early mover

advantage

900 MHz spectrum provides

capex and opex advantage

No. 2 rank with Revenue market

share of 20.3% for Q2 FY10

900 MHz Service Areas( 9 Operating )

Leverage spectrum and scale advantages to enhance leadership

Pan India Footprint

Leverage synergies of scale and

wider presence

Strong presence in Delhi and

Mumbai

Calibrated Capex with infra

sharing etc

Focus on operational & financial

goals, not league tables

1800 MHz Service Areas( 11 Operating + 2 to be launched )

Sustainable and profitable growth

8

28.928.928.726.2

23.0

25.9%25.3%

26.7%26.0%26.3%

30.0%30.4%29.2%29.4%

28.1%

0

5

10

15

20

25

30

35

Q2 FY09 Q3 FY09 Q4 FY09 Q1 FY10 Q2 FY10

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

32.0%Revenue EBITDA% Idea Standalone EBITDA% 11 Service Areas

Strong Financial PerformanceStrong Financial PerformanceStrong Financial PerformanceStrong Financial Performance

# Figures for Idea including its 100% subsidiaries and excluding Spice and Indus.

INR bn %

Revenue Distribution Q2 FY10

6.3%

93.7%

Launched services in Mumbai, Bihar, Orissa and Tamil Nadu service areas

EBITDA % drop of 1% over last 4 quarters, after absorbing start-up losses of 4 new launches and Indus Impact

EBIDTA % of 11 service areas improved by 1.9%, over last 4 quarters

87%

13%

11 Service Areas

New Service Areas

9

Investment Distribution as on Sep'09

The Indus AdvantageThe Indus AdvantageThe Indus AdvantageThe Indus Advantage

Indus Service Areas

Indus Share Holding

Provides passive infrastructure services in 15 service areas

Largest independent tower company in the world - ~ 100,000 towers under its management

Indus benefits from assured tenancy from promoters, and from other operators

Idea benefits by reduced capex, speed to market, and embedded value of shareholding

Idea Cellular

Ltd* 16%Vodafone

Essar Ltd

42%

Bharti Infratel

Ltd 42%

Indus Share Holding

*through Aditya Birla Telecom Ltd.

10

Strong Balance Sheet to Drive Strategic IntentStrong Balance Sheet to Drive Strategic IntentStrong Balance Sheet to Drive Strategic IntentStrong Balance Sheet to Drive Strategic Intent

1 Figures for Idea including its 100% subsidiaries and excluding Spice and Indus.

2 Price to Earning/Cash Earning is based on annualised PAT/ Cash profit and closing price of respective quarter

Financial Ratios Financial Ratios Financial Ratios Financial Ratios 1111

Balance Sheet Balance Sheet Balance Sheet Balance Sheet 1111

INR bnINR bnQ3 Q3 Q3 Q3

FY08FY08FY08FY08

Q4 Q4 Q4 Q4

FY08FY08FY08FY08

Q1 Q1 Q1 Q1

FY09FY09FY09FY09

Q2 Q2 Q2 Q2

FY09FY09FY09FY09

Q3 Q3 Q3 Q3

FY09FY09FY09FY09

Q4 Q4 Q4 Q4

FY09FY09FY09FY09

Gross debtGross debtGross debtGross debt 52.8 65.2 97.4 97.3 99.2 77.6

Cash & Cash equivalentCash & Cash equivalentCash & Cash equivalentCash & Cash equivalent 13.8 10.5 9.2 66.9 79.6 49.6

Net DebtNet DebtNet DebtNet Debt 39.0 54.6 88.3 30.4 19.6 28.0

Net WorthNet WorthNet WorthNet Worth 32.6 35.4 38.1 107.0 130.6 133.4

Cash Profit Cash Profit Cash Profit Cash Profit 1111 4.9 5.5 5.7 4.6 6.2 6.9

Net Debt to Net WorthNet Debt to Net WorthNet Debt to Net WorthNet Debt to Net Worth 1.20 1.54 2.32 0.28 0.15 0.21

Net Debt to Annualised EBITDANet Debt to Annualised EBITDANet Debt to Annualised EBITDANet Debt to Annualised EBITDA 1.71 2.03 3.06 1.25 0.72 0.94

ROCEROCEROCEROCE 17.4% 17.9% 14.7% 9.4% 9.1% 8.8%

Q1 Q1 Q1 Q1

FY10FY10FY10FY10

60.9

26.6

34.3

136.5

7.3

0.25

1.11

9.3%

Q2 Q2 Q2 Q2

FY10FY10FY10FY10

59.2

23.1

36.1

139.0

7.1

0.26

1.23

7.7%

Price to Earning Price to Earning Price to Earning Price to Earning 2222 38.6 24.5 23.3 38.9 15.9 13.7 18.0 23.3

Price to Cash Earning Price to Cash Earning Price to Cash Earning Price to Cash Earning 2222 18.7 12.3 10.9 12.7 6.6 5.6 7.6 8.3

11

Idea Idea Idea Idea –––– A Power BrandA Power BrandA Power BrandA Power Brand

THE ECONOMIC TIMES AWARDS

FOR CORPORATE EXCELLENCE 2009

EMERGING COMPANY

12

Foreign

Holding

38.0%

AV Birla

Group 49.0%

Indian

Others

13.0%

Post Spice merger*

As on 30th Sep‘09

* assuming no change in other shareholding

TOP 5 shareholders

(excluding Promoters)

TOP 5 shareholders

(excluding Promoters)

TMI MAURITITUS 15.0%

P5 ASIA INVESMENT 10.6%

MONET LIMITED 2.9%

BAJAJ ALLIANZ LIFE INSURANCE 1.8%

LIC OF INDIA MONEY PLUS 1.4%

TMI MAURITITUS 20.0%

P5 ASIA INVESMENT 10.0%

MONET LIMITED 2.7%

BAJAJ ALLIANZ LIFE INSURANCE 1.7%

LIC OF INDIA MONEY PLUS 1.3%

ShareholdingShareholdingShareholdingShareholding

Foreign

Holding

41.6%

Indian

Others

12.3%

AV Birla

Group 46.1%

13

Appendix

14

Key Trends (Idea)Key Trends (Idea)Key Trends (Idea)Key Trends (Idea)

48,729 50,339

44,22440,254

36,315

0

8000

16000

24000

32000

40000

48000


VAS as a % of Revenue

Realized rate per minute

0.62

0.64

0.63

0.58

0.56

0.00 0.15 0.30 0.45 0.60 0.75

Q2 FY09

Q3 FY09

Q4 FY09

Q1 FY10

Q2 FY10

INR

Minutes of use on Network (QoQ)

Minutes

EoP Subscribers

42,76946,758

38,890

34,21130,380

0

8000

16000

24000

32000

40000

48000


9.8%

10.1%

10.6%

9.5%9.5%

9.0%

9.5%

10.0%

10.5%

11.0%


In ‘000

15

Financial Matrix (Idea)Financial Matrix (Idea)Financial Matrix (Idea)Financial Matrix (Idea)

99.7

43.9

67.4

29.922.7

57.8

0

20

40

60

80

100

120

FY05 FY06 FY07 FY08 FY09 H1FY10

14.4

23.4

11.7

19.8

7.6

5.2

0

5

10

15

20

25

30

FY05 FY06 FY07 FY08 FY09 H1 FY10

9.610.4

5.0

2.1

0.8

5.6

0

2

4

6

8

10

12


Robust Growth in Top Line

INR bn

14.9

10.9

8.4

22.7

27.5

15.0

0

5

10

15

20

25

30


Robust Growth in EBITDA

INR bn

Robust Growth in Net ProfitsINR bn

Robust Growth in Cash Profits

INR bn

16

Financial Matrix (Consolidated)Financial Matrix (Consolidated)Financial Matrix (Consolidated)Financial Matrix (Consolidated)

101.5

43.9

67.4

29.922.7 59.5

0

20

40

60

80

100

120


15.1

23.3

11.7

19.8

7.6

5.2

0

4

8

12

16

20

24

28

32


8.8

10.4

5.0

2.1

0.8

5.2

0

2

4

6

8

10

12


Robust Growth in Top Line

INR bn

14.9

10.98.4

22.7

28.4

16.7

0

4

8

12

16

20

24

28

32

36


Robust Growth in EBITDA

INR bn

Robust Growth in Net Profits

INR bn

Robust Growth in Cash Profits

INR bn

17

Thank You

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