Tata Communications Limited · NSE:TATACOMM
Tata Communications — Q3 FY2020 Earnings Presentation
28 slides from Tata Communications's earnings presentation, February 2020
Slide 1: Investor Presentation 3rd Quarter FY2020
INVESTOR PRESENTATION 3RD QUARTER - FY2020
Slide 2: Safe Harbour
SAFE HARBOUR Some of the statements herein constitute “forward-looking statements” that do not directly or exclusively relate to historical facts. These forward-looking statements reflect our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncer
Slide 3: Agenda
AGENDA Business overview Financial overview Growth Story Financial performance highlights Global Reach Portfolio Mix Our Customers Geography-wise distribution Market Overview Investment Thesis Products and Services Expanding Addressable Market Investing in the future Awards and Recognitions 3
Slide 4: Business Overview
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Slide 5: Delivering a New World of Communications
DELIVERING A NEW WORLD OF COMMUNICATIONS TM Powering the platform economy, the internet and globalisation 5
Slide 6: Growth Story
GROWTH GROWTH STORY STORY Transforming from an INDIAN PSU to a Digital enablement player Transformation Growth Innovation 2002 2008 2010 2012 2014 2015 2016-19 Tata Group Launch of Cloud Official connectivity Partnered with Joined forces with #1 International Wholesale VSNL, VSNL acquires stake Serv
Slide 7: Global Reach – Providing Connectivity Across the World
GLOBAL REACH – PROVIDING CONNECTIVITY ACROSS THE WORLD Over 40 Entities across the globe 25% of Leadership “Ring World’s in Global Global Around the internet SIP Backbone World” routes Trunking 7
Slide 8: Our Customers
OUR CUSTOMERS Manufacturing E-Commerce IT/ITES Services Technology Banking / Media / Healthcare/ Service Financial Entertainment Pharmaceutical Provider 69% of 60% of PWC S&P 500 ~2,000 100 ~5,000 Service ~ 7,000 Enterprise 41% of 66% of Provider Customers Fortune customers FTSE 500 Customers Global
Slide 9: Market Overview
MARKET OVERVIEW Technology is a game changer 70% of large and mid-sized enterprises are likely to rework their networking setups over the next three years Network Function 37% of IT budgets are spent on cloud and cloud-related services Virtualisation (NFV) 4.4 million IT jobs created globally to sup
Slide 10: Stages of Digital Maturity
STAGES OFOF STAGES DIGITAL MATURITY DIGITAL MATURITY TATA Communications offers solutions for each stage CONTEXTUAL —Highly customer DIGITAL centric —Real time faster —Digital trading trading experience OMNI-CHANNEL —Online co-exists —Machine —Mobile app Learning & ONLINE with physical —Social Media
Slide 11: A Truly Digital Business
A TRULY STAGESDIGITAL BUSINESS… OF DIGITAL MATURITY Enables collaboration Effectively deploys Is developing with an across employees, artificial intelligence intelligent network, partners, and the toal and analytics intuitive collaboration supply chain and borderless growth 11 11
Slide 12: Business Themes Enabling Digital Transformation
BUSINESS THEMES ENABLING DIGITAL TRANSFORMATION Borderless Productivity Customer experience Managing growth and efficiency and engagement business risk Cloud and Business Managed Network Mobility Voice Media data centre collaboration security Providing 24x7x365 Operates the largest Provides access t
Slide 13: Out of a $1.1 Tn Telecom Market, We Address ~$46 Bn
OUT OF A $1.1 TN TELECOM MARKET, WE ADDRESS ~$46 BN MARKET, WHICH HAS EXPANDED… MNaaS $8.1bn +80.7% Growth 2022 INTERNATIONAL VOICE $6.4bn -6.1% $1.4bn driven by $7.8bn MOBILITY Innovation $16.4bn +37.2% in new FROM CARRIER NETWORK $6.3bn services US$46 BN $9.9bn +1.4% IZOTM like IZOTM, IN 2019 $9.5
Slide 14: Innovating Together to Create Innovative Business Solutions
INNOVATING TOGETHER TO CREATE INNOVATIVE BUSINESS SOLUTIONS Helping consumers remain agile, adaptable, and responsive Internal Crowdsourcing ideas from 8,500 strong workforce and New business Innovation incubate internal start-ups for go to market units e.g. IoT in India Start-up scouting in partner
Slide 15: Investing for the Future
INVESTING FOR THE FUTURE MOVE is 3 Products built on Other Innovative Products the Tata Global Network in our Portfolio Digital Transformation SIM CONNECT Mobile customer engagement Revamping systems and processes • Mobile Messaging Exchange to enhance long term productivity Global Mobile Connectivi
Slide 16: Third Party Endorsements, Awards and Recognition
THIRD PARTY ENDORSEMENTS, AWARDS AND RECOGNITION Continuous improvement India's largest corporations: Frost & Sullivan India ICT Awards: Tata Communications at #68 • Enterprise Data Service Provider of the Year (10th Year in a row) Transparency International, a global civil society organisation, con
Slide 17: Positioned in the Leaders' Quadrant
POSITIONED IN THE LEADERS’ QUADRANT Tata Communications Positioned as a Leader in the 2019 Gartner Magic Quadrant for Network Services, Global - 6 years in a row Ability to Execute Gartner evaluates providers on the quality and efficacy of the processes, systems, methods or procedures that enable IT
Slide 18: Shareholder Value Creation
SHAREHOLDER VALUE CREATION Focus on maximising long term intrinsic value for shareholders • Recalibrate Investments Drive • Co-create with partners Capital • Strong discipline and governance around capital allocation and 1.6% Efficiency 5.5% expenditure 17.9% Improve • Improve operating efficiency a
Slide 19: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY Creating empowered and connected societies for sustainable development through next practices AFFIRMATIVE ACTION DISASTER RELIEF EMPLOYABILITY & SUSTAINABLE LIVELIHOODS EMPLOYEE VOLUNTEERING UN SDGs TATA group CSR MILLION PRIORITY framework EDUCATION LIVES AREAS Sched
Slide 20: Financial Performance
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Slide 21: Performance Highlights | Revenue, EBITDA and FCF | Quarterly
PERFORMANCE HIGHLIGHTS | REVENUE, EBITDA AND FCF | QUARTERLY REVENUE 4273 4229 Revenue YoY QoQ 4269 Growth % 944 874 809 o Data business continues to drive Data 2.8% 0.6% INR Cr. growth, despite Q3 being seasonally 3,326 3399 3420 weak quarter Voice (14.3%) (7.5%) o Consolidated revenue decl
Slide 22: Performance Highlights | Revenue, EBITDA and FCF | Annual
PERFORMANCE HIGHLIGHTS | REVENUE, EBITDA AND FCF | ANNUAL REVENUE 16772 Revenue FY17 FY18 FY19 17620 16525 Growth % 6758 5311 3870 o Consistent strong growth in Data Data 10.7% 5.5% 10.4% INR Cr. Business led by Growth & Innovation 10862 11460 12655 Services Voice (16.1%) (21.4%) (27.1%)
Slide 23: Performance Highlights | Portfolio Mix
PERFORMANCE HIGHLIGHTS | PORTFOLIO MIX Gross revenue mix EBITDA mix Operating free cash flow mix 18% 14% 12% 23% 21% 28% 29% 32% 39% 38% 45% 83% 86% 88% 77% 79% 72% 71% 68% 62% 61% 55% FY 16 FY 17 FY 18 FY 19 FY 16 FY 17 FY 18 FY 19 FY 17 FY 18 FY 19 Data Voice • There has been a significant shift i
Slide 24: Performance Highlights | Net Debt
PERFORMANCE HIGHLIGHTS | NET DEBT 1327 1438 1251 1287 1232 1248 1262 1257 1150 1151 USD Mn Mar-15 Mar-16 Mar-17 Mar-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Net Debt to EBITDA Cost of Debt % 3.80% 3.41% 3.87% 3.67% 3.76% 3.86% 3.93% 3.77% 3.55% 3.4 3.7 3.4 3.12% 3.3 3.2 3.2 3.1 2.9 2.8 2.9 Mar-1
Slide 25: Performance Highlights | Geo-wise Contribution
PERFORMANCE HIGHLIGHTS |GEO-WISE CONTRIBUTION Gross Revenue Share by Geography - FY15 FY19 APAC 8.7% 10.7% Europe 24.6% 14.6% India 30.6% 38.1% America 22.5% 25.6% MENA 8.6% 7.7% Global 5.0% 3.3% 25
Slide 26: Key Take Away
KEY TAKE AWAY Riding on global data growth Digital Transformation and Cloud adoption to drive the business growth Transformation driving demand for hosting, SD WAN and network virtualisation services Positioned for the first time by Gartner in its 2017 Magic Quadrant for Managed Hybrid Cloud Hosting
Slide 27: Investment Thesis
INVESTMENT THESIS Data led growth Valuation arbitrage as Geographically compared to global peers Diversified business TATA COMMUNICATIONS Value creation through huge Internal land assets transformation 27
Slide 28: Thank You
THANK YOU THANK YOU tatacommunications.com tatacommunications.com © 2019 Tata Communications. All Rights Reserved. TATA COMMUNICATIONS and TATA are trademarks of Tata Sons Limited in certain countries. ©2019 Tata Communications. All rights reserved. TATA COMMUNICATIONS and TATA are trademarks of Tat
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