Bharti Airtel Limited · NSE:BHARTIARTL
Bharti Airtel — Investor Presentation (November 2016)
50 slides from Bharti Airtel's investor presentation, November 2016
Slide 1: Bharti Airtel Management Presentation – November 2016
Bharti Airtel Management Presentation – November 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 75% 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 as of FY2016 66% 70% 73% 64% iRMS • Exits by many
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 9 11 14 18 24 33 46 62 80 102 35 35% 33 31 30% 30% 29 27% 25% 25% 27 22% 25 21% 20% 17% 34 14% 19% 23 13% 29 29 28 15% 28 21 27 11% 24 19 22 10% 17 20 17 15 5% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Smartphone shipments (Mn) Smartpho
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 • One App for all the Apps • Suite of apps including Hike, Juggernaut, Wynk Music, Video, MyAirtel Games, Ditto TV, Airtel Money under My Airtel App • Additional features – Dialer, OpenNetwork • Carrier agnostic music and video apps with a
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, 2015 Collaboration services and Enterprise Mobility India 1.34 are fast growing verticals and are estimated to register growth of
Slide 18: 2. Bulk Investments in Place
2. BULK INVESTMENTS IN PLACE Spectrum Bank • Successful re-farming of sub-GHz spectrum for 3G • 3G/4G coverage pan-India • Highest spectrum market share ex-MTNL/BSNL Largest network of towers and base stations • 95.1% voice population coverage • Mobile broadband towers up 57% over the last year Larg
Slide 19: India: Investments to Yield Results
Investments India: Investments to Yield Results Industry Nominal Wide Largest Prime leading value of spectrum optical fiber spectrum to revenue liberalized presence: network yield data yield/MHz at spectrum at ~20.6% amongst growth: Pan 2x avg with USD 15.5 spectrum private India 3G & same billion1
Slide 20: India: Superior Spectrum Position
Investments India: Superior Spectrum Position Spectrum Industry Industry Spectrum Bharti spectrum Band Spectrum Spectrum ex held by Bharti Market Share ex 3G sub-Ghz available in 10 circles covering ~54% (Mhz) BSNL/MTNL (MHz) BSNL/MTNL of own revenues and ~45% of industry revenue (MHz) Pan India
Slide 21: Pan India 3G and 4G footprint
Investments Pan India 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 Y Y Bihar — Y — Y Y Y Y Y Delhi Y Y Y Y Y Y Y Y Gujarat — Y — Y Y Y Y Y Haryana — Y — Y Y Y Y Y Himachal Pradesh Y Y Y Y Y
Slide 22: Africa: Invested for Growth
Investments Africa: Invested for Growth 2010 1H’17 Capex Investments till date: $ 5.2 bn Well funded out of EBITDA: $ 6.2 bn till date Thus OFCF = $ 1 bn Further focus on business re-contouring Tower Sales in 11 countries Divestment of 2 countries to Orange Total proceeds: $ 3.25 bn Al
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 • 363 mn1 wireless subscribers globally Airtel Business (Large enterprises and carriers) • Over 1.44 trillion minutes of calls (LTM) • Over 230,000 Rkms1 across 50 countries, 5 continents • Over 753Bn 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% YoY Revenue 32.3% $8,000 Growth 28.0% $7,000 EBITDA 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 Presence in 18 countries #3 Operator in the World 15,064 14,992 14,742 #1 in India & #1 or #2 in 12 countries in Africa 14,151 US$ 14.74 bn Revenue US$ 5.22 bn EBITDA 11,745 2.02 addressable population Only o
Slide 27: 4. Best in Class Execution
4. BEST IN CLASS EXECUTION Q2’17 highlights • India – Broad based revenue growth across mobile, DTH, Homes, Enterprise segments – Mobile revenue up 7.9% YoY via industry leading net subscriber additions, incremental RMS – Data volumes up 55%, Data ARPU up 4.2% YoY – Voice volumes grew 11.1% YoY, hig
Slide 28: Driving increased Profitability
Execution Driving increased Profitability • Incremental EBITDA margins at 79% YoY • Scale and Profitability across diversified segments • Among Top 3 in every non-mobile segment (TowerCo, DTH, Homes, B2B) • 34% of consolidated EBITDA comes from businesses other than India mobility • 23% 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 36,570 313,403 307,988 34,191 33,771 33,488 290,459 32,610 282,138 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Airtel carries over 1.41 trillion minutes Significant gap b/w realized & rack rates; Volume Growth Secular volume growth 10.4% Y-
Slide 33: Increasing market share in rural India
Execution INCREASING MARKET SHARE IN RURAL INDIA Airtel: Rural 25.7% 26.1% 26.5% 27.1% 27.3% subscriber share 125.0 50.0% 122.0 49.5% 120.0 117.5 49.0% 115.0 48.5% 112.4 110.3 47.9% 48.0% 110.0 47.6% 107.6 47.5% 47.1% 47.1% 105.0 46.9% 47.0% 100.0 46.5% Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 No. of rural sub
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 3G and 4G Pan India Q2'16 5.9% 21.5% 4G at 3G prices Q3'16 5.8% 23.1% Annualized data revenues c. $2.15 bn Q4'16 5.6% 23.3% Airtel recognized as the smartphone network
Slide 35: Data Growing Exponentially in Africa
Execution Data Growing Exponentially in Africa Africa data volumes (mn MBs) Africa data revenues (USD mn1) 145.3 146.6 34,269 137.4 27,655 22,787 123.8 19,254 117.4 15,805 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q2'FY16 Q3'FY16 Q4'FY16 Q1'FY17 Q2'17 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) 1H’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 Post-Paid (as % of total Customer Base) Mobile Broadband Customer Base 1 6.4% 6.3% 45,000 17.0% 6.3% 41,335 1 40,000 6.2% 36,572 15.9% 16.0% 35,460 6.1% 35,000 1 6.1% 30,881 15.0% 30,000 6.0% 25,484 14.3% 1 6.0% 14.0% 25,000 14.1% 5.9% 5.9% 20
Slide 38: Quality Subscriber Acquisitions
Execution Quality Subscriber Acquisitions India: Churn % Africa: Churn % 3.7% 6.8% 3.6% 3.5% 3.4% 6.0% 5.7% 3.3% 5.3% 4.9% Sept'15 Dec'15 Mar'16 June'16 Sept'16 Sept'15 Dec'15 Mar'16 June'16 Sept'16 • Airtel has industry wide lowest churn at 3.7% • In Africa, churn decreased from 6.8% in March 2016
Slide 39: Adding valuable customers across verticals
Execution Adding valuable customers across verticals Mobile broadband net adds1 (‘000) DTH net adds (‘000) 619 5397 530 4579 4763 424 3752 256 164 1112 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Airtel customer base (Q2’17) Home broadband net adds (‘000) 94 94 Data: 62.6 mn, growt
Slide 40: Strategic Pillars: Win with War on Waste
Execution Strategic Pillars: Win with War on Waste Opex to Total Revenues EBITDA % 1.2 44.0% 43.4% 38.4% 1 43.3% 43.0% 37.5% 0.8 41.7% 42.0% 42.0% 35.4% 0.6 41.0% 34.2% 40.0% 32.5% 0.4 40.0% 0.2 39.0% 0 38.0% Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 2014 2015 2016 1Q'17 2Q'17 Increasing Opex Productivity Smart
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 41
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 13 41.5% #1 5 #2 4 28.1% #2 7 #3 5 18.4% #3 3 1. RMS is as of June’2016. For Africa, only for GSMA telecoms are considered 42 Source: TRAI; Co
Slide 43: Enhancing India Subscriber Market Share
Execution Enhancing India Subscriber Market Share 25% 19% 17% 10% 6% 5% 19% Subs in mn 256 199 193 176 99 59 53 Airtel Vodafone Idea (Incl Spice) Reliance Tata Tele Uninor Others 0.4% Airtel 0.2% Industry wide 0.5% lowest churn 24.7% – 3.7% Entered into an Airtel 0.1% Project agreement to Incrementa
Slide 44: Enhancing India Revenue Market Share
Execution Enhancing India Revenue Market Share1 33% 23% 19% 5% 5% 6% 6% 3% 1% Airtel Vodafone Idea (Incl Spice) Reliance BSNL+MTNL Tata Tele Aircel Uninor Others 32.7% Airtel 31.6% 31.6% Incremental 31.3% 31.3% revenue 30.4% market share 53.7% YoY Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4'16 Q1'17 1. RMS is ca
Slide 45: …with gaining highest incremental share
Execution …with gaining highest incremental share 32.7% 30.8% 31.3% 0.5% 1.4% 23.3% 23.3% 23.3% 0.1% -0.1% 19.2% 18.7% 16.2% 2.5% 0.5% Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Airtel Vodafone Idea 45
Slide 46: Strong Corporate Profile
2 airtel STRONG CORPORATE PROFILE
Slide 47: 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 2.2x 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 48: 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 49: 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 50: Thank You
THANK YOU
Bharti Airtel — Investor Presentation (November 2016) on 6ix