Bharti Airtel Limited · NSE:BHARTIARTL
Bharti Airtel — Investor Presentation (August 2016)
49 slides from Bharti Airtel's investor presentation, August 2016
Slide 1: Bharti Airtel Management Presentation – August 2016
Bharti Airtel Management Presentation – August 2016
Slide 2: Disclaimer
Disclaimer 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
Slide 3: Journey Through The Times
Journey Through The Times Start up (1995 - 2000) Land Grab (2001 - 2010) Multiple Plays (2011 onwards) 1998 2004 2008 2010 2011 2012 2013 2014 2015 2016 Pan India #3 data Only Pan India Launch Acquired First operator operator First Launch of operator footprint; direct to Zain; 3G operator in the wit
Slide 4: What Guides Us
What Guides Us Customer Centricity • Win customers for life through differentiated experience, products and world class technology Performance Excellence • Growth despite challenges • Grow market share, strip out waste • Accelerate non-mobile businesses Transparency & Ethical Governance • Highest co
Slide 5: Investment Highlights
Investment Highlights 1 Large residual opportunity 2 Bulk investments already in place; good spectrum bank 3 Diversified operator with scale and dominance in marketplace 4 Demonstrated best in class execution 5
Slide 6: 1. Large Residual Opportunity
1. LARGE RESIDUAL OPPORTUNITY Voice Secularity • Under-penetrated geographies • Unique mobile users at c. 50% of total SIMs (large dual-SIM user base)1 • Declining age dependency2 • Industry consolidation, top 3 operators account for 73% RMS3 Data • India mobile broadband (3G/4G) penetration under 1
Slide 7: India, Africa have the lowest wireless penetration
Opportunity India, Africa have the lowest wireless penetration Overall 80% but Rural – ~ 51% Source: Ericsson Mobility Report 2016 7
Slide 8: India: 2nd largest mobile market in Asia, but long way from saturation
Opportunity India: 2nd largest mobile market in Asia, but long way from saturation 2020 734 2019 697 2020: ~54% of total mobile connected devices 2018 660 2017 619 7.7% CAGR 2016 562 2015: ~50% of total mobile connected devices 2015 506 India Unique Subscribers Source: TRAI; Ericsson Mobility Report
Slide 9: India: Industry Consolidation Underway via Revenue Shares
Opportunity India: Industry Consolidation Underway via Revenue Shares 10 Operators 14 Operators 12 Operators 10 Operators 27% • Industry consolidation via market share 34% 30% 36% gains, with top 3 now accounting for over 73% of the industry revenues 66% 70% 73% • Exits by many operators post Feb 20
Slide 10: India: Data only 22% of mobile revenues
Opportunity India: Data only 22% of mobile revenues 72% 71% 66% 46% 45% 42% 35% 35% 34% 29% 22% 12% Indonesia Malaysia Australia India Hong Kong China Thailand Taiwan Singapore Japan Philippines South Korea Data as a % of Revenue (2015) Source: Company Reports, BAML 10
Slide 11: India: Transitioning to a Smartphone Market
Opportunity India: Transitioning to a Smartphone Market Feature phones Smartphones 7% 17% 31% 45% 59% 76% 92% 93% 83% 69% 55% 41% 24% 8% 2012 2013 2014 2015E 2016E 2017E 2018E 148M smartphones expected in 2016 - 60% would be 4G capable Source: Ericsson Mobility Report; GSMA Intelligence, IDC, JP Mor
Slide 12: … driven by increasingly affordable handsets
Opportunity … driven by increasingly affordable handsets High end smartphones (~ USD 165+) Low end smartphones (~ USD 35) 30 Mn 75 Mn 360 Mn 240 Mn 2014 2020 2014 2020 Prices are expected to fall by 40–50% over the next 3 years for high-end smartphones Source: Ericsson Mobility Report; GSMA Intellig
Slide 13: …and growing appetite for data services
Opportunity …and growing appetite for data services Airtel owned apps Source: Ericsson Mobility Report 13
Slide 14: … will drive increase in consumption
… will drive increase in consumption Opportunity Source: Ericsson Mobility Report 14
Slide 15: We continue to innovate across areas that matter
Opportunity We continue to innovate across areas that matter • Offered in India and all 15 opcos in Africa • KPI: Africa (Q1’FY17) Airtel Money • 8.6 mn active customers, up 23% YoY, transacting c $5 bn / quarter • Carrier agnostic music and video apps with a curated library of Wynk Music, 1.8 milli
Slide 16: Significant opportunities exist in payments bank and DTH
Opportunity Significant opportunities exist in payments bank and DTH Digital payments will touch $500bn in India by 2020 No. of pay DTH subscribers projected to increase to 74mn by 2017 Payment Instrument Mix for Countries (2015) No. of DTH subscribers Card Digital Other Paper Cash 74 55 44 2015 201
Slide 17: Fixed broadband and enterprise services market has huge growth potential
Opportunity Fixed broadband and enterprise services market has huge growth potential Fixed broadband subscriptions per 100 Enterprise data services market growth capita, 2014 Collaboration services and Enterprise Mobility India 1.2 are fast growing verticals and are estimated to register growth of 1
Slide 18: 2. Bulk Investments in Place
2. BULK INVESTMENTS IN PLACE Spectrum Bank • Successful re-farming of sub-GHz spectrum for 3G • 3G gap circles covered • 4G coverage pan-India Largest network of towers and base stations • 95.1% voice population coverage • Mobile broadband towers up 89% over the last year Largest network of optic fi
Slide 19: India: Investments to Yield Results
Investments India: Investments to Yield Results Industry Prime Nominal Wide Largest leading spectrum to value of spectrum optical fiber revenue yield data liberalized presence: network yield/MHz at growth: spectrum at 21.0% amongst 2x avg with Virtually Pan USD 13.4 spectrum private same India 3G &
Slide 20: India: Superior Spectrum Position
Investments India: Superior Spectrum Position Spectrum Industry Industry Spectrum Spectrum held Bharti spectrum Band Spectrum ex BSNL/MTNL by Bharti Market Share ex Pan India 4G, 3G available in 21 circles (MHz) (MHz) (MHz) BSNL/MTNL 900 421.0 282.8 110.2 39.0% 3G sub-Ghz available in 10 circles
Slide 21: Pan India 3G and 4G footprint
Investments Pan India1 3G and 4G footprint 3G 4G (Carrier (TDD+FD 3G (900) 3G (2100) Agg) 3G Total 4G (TDD) 4G (FDD) D) 4G Total Andhra Pradesh Y Y Y Y Y Y Y Y Assam Y Y Y Y Y — — Y Bihar — Y — Y Y Y Y Y Delhi Y Y Y Y Y Y Y Y Gujarat — Y — Y — Y — Y Haryana — Y — Y Y Y Y Y Himachal Pradesh Y Y Y Y —
Slide 22: Africa: Invested for Growth
Investments Africa: Invested for Growth 2010 2016 Capex Investments till date: $ 5.1 bn Well funded out of EBITDA: $ 6.0 bn till date Thus OFCF = $ 0.9 bn Further focus on business re-contouring Tower Sales in 11 countries Divestment of 2 countries to Orange Total proceeds: $ 3.25 bn A
Slide 23: 3. Airtel: Diversified Operator with Significant Scale
3. AIRTEL: DIVERSIFIED OPERATOR WITH SIGNIFICANT SCALE Profitability and scale across diversified segments • Dominant position to capitalize with bulk investments in place • Only operator with diversified portfolio Allowing Airtel • Scale leading to operating leverage the best • Generating c. $1 bn
Slide 24: Multiple plays, multiple opportunities
Scale Multiple plays, multiple opportunities Mobile Services across 18 countries • 358 mn1 wireless subscribers globally Airtel Business (Large enterprises and carriers) • Over 1.41 trillion minutes of calls (TTM) • Over 230,000 Rkms1 across 50 countries, 5 continents • Over 671Bn MBs of data over t
Slide 25: Profitability & Scale across Diversified Segments
Scale Profitability & Scale across Diversified Segments1 USD Rev $9,000 $8,565 33.0% 208% 71.1% EBITDA Growth 32.3% $8,000 28.0% $7,000 YoY Revenue Growth 23.0% $6,000 17.8% $5,000 18.0% 13.0% $3,838 16.2% $4,000 11.8% 13.0% $3,000 9.9% 7.9% 8.0% 5.4% $2,000 4.4% 7.4% $1,192 3.5% 3.0% $1,000 3.0% $7
Slide 26: Scale brings Operating Leverage
Scale Scale brings Operating Leverage1 Overview Consolidated Revenues ($ Mn)2 15,000 14,742 Presence in 18 countries 14,500 14,056 #3 Operator in the World 14,000 13,500 #1 in India & #1 or #2 in 12 countries in Africa 13,095 13,000 US$ 14.74 bn Revenue 12,500 US$ 5.22 bn EBITDA 12,000 11,
Slide 27: 4. Best in Class Execution
4. BEST IN CLASS EXECUTION Q1’17 highlights • India – Broad based revenue growth across mobile, DTH, Homes, Enterprise segments – Mobile revenue up 9.1% YoY via industry leading net subscriber additions, incremental RMS – Data volumes up 55%, Data ARPU up 12% YoY – Voice volumes grew 8.3% YoY • Afri
Slide 28: Driving increased Profitability
Execution Driving increased Profitability • Incremental EBITDA margins at 72% YoY • Scale and Profitability across diversified segments • Among Top 3 in every non-mobile segment (TowerCo, DTH, Homes, B2B) • 33% of consolidated EBITDA comes from businesses other than India mobility • 21% from India n
Slide 29: Strategic Pillars for execution
Execution Strategic Pillars for execution Go to Win with a Win with War on Win with Market Brilliant Valuable Waste People Excellence Network Customers Experience VibrantVibrant Digital Airtel, Brand Brand 29
Slide 30: Strategic Pillars: Go to Market Excellence
Execution Strategic Pillars: Go to Market Excellence Game changing innovations Creating opportunities • Night cash back, night plans – Reduced rates during night usage • Myplan – Customized plans as per customer usage • Family – Tailor made plan and share benefits with family • Infinity – Options wi
Slide 31: Driving increased brand awareness
Execution Driving increased brand awareness Airtel 4G ad – Top television in April 2016 Awareness Brand recall Ad reach (%) - 84 (%) - 96 index - 81 Ad diagnostic score Ad Likeability Enjoyability Believability Claim (%) – diagnostic - (%) - 84 (%) - 84 (%) - 75 75 80 Source: Mint Ipsos TV AdIndx Su
Slide 32: Voice: Significant growth
Execution Voice: Significant growth 314,831 35,293 34,940 307,988 34,620 33,669 32,791 290,802 290,459 282,138 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Airtel carries over 1.41 trillion minutes Significant gap b/w realized & rack rates; Volume Growth Secular volume growth 8.2% Y-o
Slide 33: Increasing market share in rural India
Execution Increasing market share in rural India Airtel: Rural 25.4% 25.7% 26.1% 26.5% 27.1% subscriber share 120 48.0% 118 47.6% 47.5% 116 47.1% 47.1% 114 47.0% 46.9% 112 110 46.5% 117.5 108 46.0% 106 45.9% 112.4 110.3 104 107.6 45.5% 102 101.3 100 45.0% Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Airtel's Rural
Slide 34: Fastest Growing Data Business in India
Execution Fastest Growing Data Business in India Data as a % of Mobile revenues First brand to own and launch 4G in India 4G services Pan India post spectrum deals with Aircel Q1'16 6.10% 19.20% and Videocon Q2'16 5.90% 21.50% 4G at 3G prices Q3'16 5.80% 23.10% Annualized data revenues c. $2
Slide 35: Data Growing Exponentially in Africa
Execution Data Growing Exponentially in Africa Africa data volumes (mn MBs) Africa data revenues (USD mn1) 154.5 147.0 28,539 23,646 133.6 20,049 126.7 16,483 13,843 117.8 Q1'FY16 Q2'FY16 Q3'FY16 Q4'FY16 Q1'FY17 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Source: Company filings 1. In Constant Currency 35
Slide 36: Strategic Pillars: Win with Brilliant Network Experience
Execution Strategic Pillars: Win with Brilliant Network Experience Eliminate frustration Invest in tools An open network Blocked calls Repeat calls Dropped calls Frustration index Capex Outflow FY’16 (mn) Guidance (bn) Q1’17 Largest capital expenditure of Rs. 60,000 crore over 3 years India & SA $
Slide 37: Strategic Pillars: Win with Valuable Customers
Execution Strategic Pillars: Win with Valuable Customers 205 6.2% 6.1% 200 6.1% 195 5.9% 6.0% 6.0% 190 Airtel India: Postpaid 5.9% subscriber base inching up, 185 5.8% Data ARPU up 12% YoY 200 202 5.8% 180 196 193 5.7% 175 181 170 5.6% 5.6% 165 5.5% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Data ARPU Post Pai
Slide 38: Quality Subscriber Acquisitions
Execution Quality Subscriber Acquisitions India: Churn % Africa: Churn % 3.6% 6.7% 3.5% 3.4% 5.8% 5.9% 3.3% 3.3% 5.4% 5.0% Jun'15 Sept'15 Dec'15 Mar'16 June'16 Jun'15 Sept'15 Dec'15 Mar'16 June'16 • Airtel has industry wide lowest churn at 3.6% • In Africa, churn decreased from 6.7% in March 2016 to
Slide 39: Adding valuable customers across verticals
Execution Adding valuable customers across verticals Mobile broadband net adds1 (‘000) DTH net adds (‘000) 5397 619 4579 530 3752 424 339 2018 1112 164 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Airtel customer base (Q1’17) Home broadband net adds (‘000) 94 94 86 80 Data: 58.9 mn,
Slide 40: Strategic Pillars: Win with War on Waste
Execution Strategic Pillars: Win with War on Waste 1.2 44.0% • Increasing Opex 43.5% 1 43.4% Productivity 43.3% 43.3% 43.0% 0.8 42.5% • Smart procurement 0.6 42.0% 41.70% 42.0% • Frugal cost structure 0.4 41.5% 0.2 • Maximizing sharing 41.0% 0 40.5% • Network re-design Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
Slide 41: Strategic Pillars: Win with People
Execution Strategic Pillars: Win with People Build capabilities and help people grow Learning, mentoring, succession planning Build a high performance culture
Slide 42: Enhancing leadership Position across Geographies
Execution Enhancing leadership Position across Geographies No 1 Share No 2 Share No 3 Share RMS1 Rank # of circles Avg. RMS Market Position # of Countries #1 12 41.1% #1 5 #2 5 27.5% #2 7 #3 5 17.7% #3 3 1. RMS is as of Mar’2016. For Africa, only for GSMA telecoms are considered 42 Source: TRAI; Com
Slide 43: Enhancing India Subscriber Market Share
Execution Enhancing India Subscriber Market Share 24% 19% 17% 10% 6% 5% 19% Subs in mn 252 198 195 175 103 60 52 Airtel Vodafone Idea (Incl Spice) Reliance Tata Tele Uninor Others 0.2% 0.1% Airtel Industry wide 0.5% lowest churn – 3.6% Entered into an 24.4% Airtel Project 0.3% Leap, Wynk agreement t
Slide 44: Enhancing India Revenue Market Share
Execution Enhancing India Revenue Market Share1 32% 23% 19% 5% 5% 7% 6% 2% 1% Airtel Vodafone Idea (Incl Spice) Reliance BSNL+MTNL Tata Tele Aircel Uninor Others 31.6% 32% 31.3% 31.3% Airtel Incremental 30.4% revenue market share 53.4% YoY Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4'16 1. RMS is calculated on th
Slide 45: Strong Corporate Profile
2 airtel STRONG CORPORATE PROFILE
Slide 46: Financial flexibility & Balance Sheet Focus
Financial flexibility & Balance Sheet Focus Diversified debt profile; focus on deleveraging Over last 3 years: Leverage: Net Debt to EBITDA down from 3x to 2.4x Average Maturity: Average tenors pushed out from 2 years to 6 years Diversified debt mix: 100% bank to a mix of bonds, bank, ECA and DoT de
Slide 47: Highest Standards of Corporate Governance
Highest Standards of Corporate Governance Credit Rating and Information Services of India (“CRISIL”) has assigned its Governance and Value Creation rating “CRISIL GVC Level 1” to the corporate governance and value creation practices of Bharti Airtel Quarterly financials audited on Ind-AS basis IG ra
Slide 48: Summary
Summary India & Africa remain attractive markets, with large opportunities Bulk investments in place, asset restructuring in progress • Spectrum • Network • Deleveraging via asset monetization (Tower sales, sale to Orange, Bangladesh merger) We are extremely well positioned • Large customer base • O
Slide 49: Thank You
THANK YOU