Vodafone Idea Ltd · NSE:IDEA
Vodafone Idea — Investor Presentation (February 2019)
35 slides from Vodafone Idea's investor presentation, Feb 26, 2019
Slide 1: Stronger Together. For You.
STRONGER TOGETHER. FOR YOU. Vodafone Idea Limited India’s Leading Telecom company
Slide 2: Disclaimer
Disclaimer This presentation and accompanying slides (the “Presentation”) has been prepared by Vodafone India Limited (“Company”) and is strictly confidential and is not for release, distribution or publication, whether directly or indirectly, in whole or part, into or in any jurisdiction in which s
Slide 3: Introduction to Vodafone Idea
Introduction to Vodafone Idea
Slide 4: Vodafone Idea Limited: A leading telecom operator
Vodafone Idea Limited: A leading telecom operator 1,850 MHz > 198,000 >376,000 >340,000 Kms1 Spectrum holding Unique GSM Cell sites Broadband sites Fibre 1.4 million > 480,000 Retail touchpoints 387 million Enhanced coverage Subscriber base Across towns & villages 11,100 Branded stores 38% 32% Custo
Slide 5: Well positioned to compete: Two complementary brands
Well positioned to compete: Two complementary brands Trendy Stylish, Warm, friendly fashionable Helpful/reliable Small/mid town Fun loving Urban Honest, hard working Mass market Youthful International Humble & simple Value for money Traditional Achiever, Powerful 5
Slide 6: Well positioned to compete: Largest spectrum portfolio
Well positioned to compete: Largest spectrum portfolio Spectrum holdings - unpaired basis (MHz)1 1166 914 570 600 423 458 400 283 243 165 208 215 293 Sub-GHz Supra-GHz TDD Sub-GHz Supra-GHz TDD Sub-GHz Supra-GHz TDD (800/900) (1800/2100) (2300/2500) (800/900) (1800/2100) (2300/2500) (800/900) (1800/
Slide 7: Well Invested Network: Capex at par with peers historically
Well Invested Network: Capex at par with peers historically Capital expenditure (Rs. bn) Broadband Sites (‘000) (Dec-18) Vodafone Idea Bharti Vodafone Idea Bharti Broadband Coverage 614 69% 533 377 195 372 159 162 165 142 134 120 Vodafone1 81 83 72 703 Idea2 78 79 70 FY16 FY17 FY18 9M 19 Total Vodaf
Slide 8: Growth opportunities
Growth opportunities
Slide 9: Growth opportunity: Large population, fastest growing economy
Growth opportunity: Large population, fastest growing economy Growing population and high demographic Fastest growing major economy dividend Easing inflationary environment Real GDP growth (%)1 India’s population (mn)1 Consumer Price Index growth (%) 1 Avg 2014-17 Avg 2018-20 1,388 1,370 7.3 7.5 6.9
Slide 10: Growth opportunity: Significant ARPU recovery potential
Growth opportunity: Significant ARPU recovery potential Significant revenue decline Exponential data growth Significant ARPU compression Wireless Industry gross revenue (Rs. bn)1 Data usage per data subscriber Blended mobile ARPU (US$) – September 20181,2,3 per month (GB) - September 20181,2 8.3 505
Slide 11: Growth opportunity: India now has three main players
Growth opportunity: India now has three main players Input Active customer market share (%)1 Jun 2016 (%) Dec 2018 (%) 41% 40% 42% 41% 39% 39% 39% 38% 40% 40% 39% 38% Sistema, HFCL Aircel Reliance 1% Vodafone: 21% 6% 7% 37% 36% Comms 1% Idea: 20% 8% 34% 34% 33% 33% 35% 35% 34% 33% 33% 33% BSNL 7% 23
Slide 12: Growth opportunity: To upsell 2G subscriber base
Growth opportunity: To upsell 2G subscriber base Input Under-penetrated market Two main players 2G market Three main players mobile broadband market India subscribers (bn)1 2G subs (mn)1,2 Broadband subs (mn) Market share 46% Market share 56% 311 38% 0.15 1.2 280 259 Rural 1.0 0.5 0.5bn 59% tele- de
Slide 13: Growth opportunity: Substantial 4G potential
Growth opportunity: Substantial 4G potential Input 4G subscriber market share1 Expanding 4G population coverage (%) Vodafone Idea Bharti Jio 4G Q3 FY19 Subscribers Pre Merger (mn)(2) ~64% combined 68.8% 66.1% 65.1% 65.6% 64.8% 280 ~40% ~49% ~62% ~60% Vodafone Idea Vodafone Idea 17.0% 17.6% 17.1% 17.
Slide 14: Strategy
Strategy
Slide 15: Vision
Vision Create world class digital experiences to connect and inspire every Indian to build a better tomorrow 15
Slide 16: The strategy for Vodafone Idea
The strategy for Vodafone Idea 1 Radically accelerate 2 Prioritising investments 3 Drive ARPU via 4 Fast growing revenue 5 simplification, Strengthen integration to reduce in key profitable streams, partnerships balance sheet rationalisation & cost of production districts upselling to drive value •
Slide 17: Integration: Progressing ahead of plan, accelerating synergies
1 Integration: Progressing ahead of plan, accelerating synergies Target synergy completion date FY 2021 Previously FY 2023 € Day 0 Today Accelerating synergies • Executed smoothly • Network vendor selection, equipment • Prioritisation of low utilisation site ordering completed exits • Meticulous pla
Slide 18: Integration: Overview of network integration activities
1 Integration: Overview of network integration activities Integration activities Key levers supporting accelerated integration • Similar BAU activities already completed 146k sites rolled out Physical activities between Apr-17 to Sep-18; • Sufficient spectrum • Physical sites consolidation 62k sites
Slide 19: Integration: Network opex and capex synergies
1 Integration: Network opex and capex synergies Site exits rental • Day 0, tenancy exits of ~66k co-located sites resulted in an immediate monthly cost saving from Sept ‘18 savings and loading • Prioritisation of low utilization site exits from overlapping networks resulting in rental savings saving
Slide 20: Integration: Operations integration ahead of plan
1 Integration: Operations integration ahead of plan; structure & organisation completed Circle Operations Sales & Distribution Urban Branded Retail Stores 290 Aug’18 155 Circle and zonal office ~5,900 infrastructure 43K 28K consolidated Dec’18 Zones Distributors ~4,900 Achieved Achieved Aug-18 D
Slide 21: Integration: Other opex synergies
1 Integration: Other opex synergies • Change in acquisition mix with focus on higher value customers Acquisition • Distribution consolidation • Closure of high cost - low quality channels • Harmonisation of retail stores & service centre consolidation • Increase in acquisitions through digital chann
Slide 22: Prioritising Investments: Moving focus from circles to key districts
2 Prioritising Investments: Moving focus from circles to key districts Revenue per District per month for 650+ Districts1 (Q2 FY19) High Quad A Quad C Fortify and win Build selectively 303 Districts 54 Districts 86% Revenue 3% Revenue District Potential Quad A + B (338 Districts) (50% of total) Quad
Slide 23: Prioritising Investments: Capex guidance
2 Prioritising Investments: Capex guidance Capex (Rs. bn) 332 Reuse of 62 co-located • Sources of capex synergy equipment - existing co-located equipment to be redeployed - spectrum consolidation creates significant capacity - capex avoidance and efficiencies 162 • Investments focused on profitable
Slide 24: Prioritising Investments: Capex Efficiency
2 Prioritising Investments: Capex Efficiency Capex per site (Rs. mn) Deployment in last 21 months Vodafone Idea Bharti Capex Incr. BB sites Incr. OFC (Rs. bn) (No.s ‘000) (Km ‘000) Bharti 360 181 44 2.25 1.99 Vodafone Idea 212 157 25 1.82 1.30 1.43 1.34 Vodafone Idea 59% 87% as % of Airtel FY18 9M F
Slide 25: Simplification of prepaid plans: Driving ARPU improvement
3 Simplification of prepaid plans: Driving ARPU improvement Integrated products with Subscriber Base ARPU (INR) New: simplified portfolio: bundled Talk time, Data, Tariff Million non-unlimited recharges • Common price points 92 88 89 Only 5 plans - nationwide 2GB, Rs 245 across all 22 circles talk t
Slide 26: Simplification of prepaid plans: Driving ARPU improvement
3 Simplification of prepaid plans: Driving ARPU improvement Extending customer access to the stronger network Simplified Simplified Objectives postpaid postpaid Segmented discounts portfolio portfoliowith with • Minimum recharge of Rs. 35 to discontinued bundled bundled stay on the network content c
Slide 27: Driving value: Leadership positions in Business Services
4 Driving value: Leadership positions in Business Services Input Leader in mobility market share Number 1 in Internet of Things Non-Mobility: the growth engine1 Enterprise mobility market share (%) IoT RMS (%) Revenue growth (Apr to Dec 2018 YoY) 41.6 45 36.9 33 Cloud 83% IoT 18% 10.8 11 11 6.5 4.1
Slide 28: Driving value: Partnerships for Growth
4 Driving value: Partnerships for Growth Our Assets Our Arrangements with 387mn customers Global Content Providers 11k stores Regional Content Providers Carrier billing Financial Institutions and NBFCs Digital assets E-Commerce Distribution reach 1.4mn Leading Handset Manufacturers Customer intellig
Slide 29: Strengthen Balance Sheet
5 Strengthen Balance Sheet Net debt breakdown (Dec-18) Spectrum debt Net non-spectrum debt Current Position • 80% of current net debt to DoT for spectrum • Debt : equity ratio @1.78: post proposed equity issue ~1.0 20% Initiatives • Up to Rs. 250 bn (~US$3.5bn) equity raise with promoter shareholder
Slide 30: Strengthen Balance Sheet: Fibre monetisation opportunity
5 Strengthen Balance Sheet: Fibre monetisation opportunity Business Overview Km • Fibre assets used for backhaul capacity Intra – city 38 k • ~180k km of fibre under IRUs and which will Inter – city 120 k continue to remain in the mobile business1 Strategic Rationale Total 158 k Increasing value thr
Slide 31: Q3 FY19 Performance Review
Q3 FY19 Performance Review
Slide 32: Key Operating Trends
Key Operating Trends Rationalization in Subscriber Base ARPU (INR) Expanding Broadband Sites Million 92 88 89 340,709 365,575 376,816 435 422 387 Q1FY19 Q2FY19 Q3FY19 Q1FY19 Q2FY19 Q3FY19 Consistent Growth in Broadband Subscribers Rapid Data Volume Growth Million bn MB 100.2 107.9 2,426 2,705 95.3 2
Slide 33: Finance: Results and merger accounting
Finance: Results and merger accounting Rs. bn FY18 9MFY19 • Pro-forma Revenue and EBITDA for FY18 and 9M FY19 have been computed assuming merger is effective 1st April 2017 Revenue 603 367 EBITDA 118 37 Capex 143 70 Net debt 1,149 Net worth 645 Debt : Equity 1.78 33
Slide 34: Summary
Summary
Slide 35: Summary: We are creating the leading telco
Summary: We are creating the leading telco 1 The Indian market is a large under-penetrated growth opportunity Vodafone Idea has leading assets – the largest spectrum, network quality, 2 distribution reach, customer service and two strong brands Our strategic focus is on our strong positions in the m
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