Tata Communications Limited · NSE:TATACOMM
Tata Communications — Investor Presentation (May 2017)
39 slides from Tata Communications's investor presentation, May 2017
Slide 1: Investor Presentation May 2017
INVESTOR PRESENTATION MAY 2017
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 • Competitive Situation • Financial Performance • Major Corporate Developments www.tatacommunications.com I @tata_comm | http://tatacommunications-newworld.com | www.youtube.com/tatacomms © 2016 Tata Communications. All Rights Reserved. TATA COMMUNICATIONS and TATA are tra
Slide 4: Business Overview
TATA COMMUNICATIONS TATA BUSINESS OV
Slide 5: Growth Story
GROWTH STORY Global challenger • Managed services portfolio • Tata Communications brand launch Competitive private sector • MPLS, Ethernet, IDC expansion • Operations restructuring • Emerging Market (EM) expansion Monopoly public • Enterprise services domain • New verticals: media, banking sector In
Slide 6: We Are Part of the Tata Group
WE ARE PART OF THE TATA GROUP A global business group with products and services in over 100 countries More than 140 years experience Over 600,000 employees Group revenue of $108.78bn (32 percent India; 68 percent rest of the world) A global leader in several sectors (including IT, banking, healthca
Slide 7: Tata Communications network highlights
COMMUNICATIONS™ We've invested over $300m in data centre expansion Our customers can reach 99.7% of the global G! using our network and servi 4 < 1 Over 25% of the world’s internet 4 i routes use our network | We've invested $1 ae .~ the only wholly-owned subsea cable network that circles the globe
Slide 8: 710,000 kms of subsea & terrestrial fibre network
OUR 710,000KMS OF SUBSEA & TERRESTRIAL FIBRE NETWORK COULD CIRCUMVENT THE EQUATOR 17 TIMES
Slide 9: Products and Services
PRODUCTS AND SERVICES Provider of Enterprise & Wholesale Data Services and Wholesale Long Distance Voice Solutions Revenue Mix Virtual Private Network; International Private Line; Internet Leased Line; Traditional 46% Ethernet Internet Protocol –Transit; Inmarsat; National Private Line; Services Mob
Slide 10: c. 7,000 customers globally
C.7000 CUSTOMERS GLOBALLY c. 2,000 60% of S&P 500 SERVICE c. 5,000 PROVIDER ENTERPRISE 60% CUSTOMERS of the Fortune 500 CUSTOMERS GLOBALLY GLOBALLY 41% of FTSE 350 69% of PWC 100 MANUFACTURING E-COMMERCE IT/ITES SERVICES TECHNOLOGY HEALTHCARE/ BANKING/FINANCIAL MEDIA/ENTERTAINMENT SERVICE PROVIDER 1
Slide 11: Our Customers
TATA COMMUNICATIONS OUR CUSTOMERS ae a , OS es q ~ Unitovow Unni WITH YOU, RIGHT THROUGH Panasonic AIRFRANGE KL ; ya Unleash the Next is Microsoft ESSAR” TATA(Sj#KY TATA TECHNOLOGIES a » — oe
Slide 12: Our Strategy
OUR STRATEGY Cross-border mobility Make the Internet Partner for service Be a global leader in solutions for fit and secure creation and cloud enablement enterprises and IoT for business go-to-market World-class customer service Delivering new services Innovating Empowering people www.tatacommunicat
Slide 13: Access to both service providers and customers across diverse segments
ACCESS TO BOTH SERVICE PROVIDERS AND CUSTOMERS ACROSS DIVERSE SEGMENTS INDUSTRY SERVICE GLOBAL VERTICALS NEXTGEN PROVIDERS ENTERPRISE (MEDIA, BFSI, HEALTHCARE) • Enabling their • End users of the • Helping NextGens • Specialist platforms enterprise customers platforms reach end customers for specifi
Slide 14: Co-creation and joint go to market through strong partnerships
CREATION AND JOINT GO TO MARKET THROUGH STRONG PARTNERSHIPS IZO partners across 70+ Microsoft countries Cisco Google Private – Public Microsoft Salesforce Interconnects Zscaler Amazon NNIs CLOUD AND DATA CENTRE NETWORK CO-CREATION OF PARTNERSHIPS PLATFORMS SERVICES 14
Slide 15: Investment in start ups and telecom focused VCs
INVESTMENT IN START UPS AND TELECOM FOCUSED VC’S Northgate Telecom Cloud SDN Innovation Fund Cloud-managed Incident resolution SD-WAN (analytics) platform Cloud app security SDN/NFV Artificial Intelligence Mobile Virtual and security Network Enabler www.tatacommunications.com I @tata_comm | http://t
Slide 16: Commitment to R&D and Innovation
COMMITMENT TO R&D AND INNOVATION A LEADING GLOBAL COMMUNICATIONS SERVICES PROVIDER Innovating together • We collaborate with customers and partners to Corporate innovation programme: We power the digital economy build sustainable innovation and help our customers and partners accelerate their growth
Slide 17: Shareholder Value Creation
SHAREHOLDER VALUE CREATION FOCUS ON MAXIMIZING LONG TERM INTRINSIC VALUE FOR SHAREHOLDERS Shareholding pattern • Drive capital efficiency • Recalibrate Investments 5.6% • Co-create with partners 8.0% • Strong discipline and governance around capital allocation and expenditure 11.4% • Improve margin
Slide 18: Successes
SUCCESSES Tata Communications ranks #2 in the ‘Transparency in Corporate Report’ Transparency International, a global civil society organization, conducted research into the public reporting practices of 100 emerging market companies based in 16 countries in 2016 “Leader” in Gartner Magic Quadrant¹
Slide 19: Competitive Landscape
<p TATA COMMUNICATIONS TATA
Slide 20: Positioned in the Leaders' Quadrant in Gartner Magic Quadrant
POSITIONED IN THE LEADERS' QUADRANT IN GARTNER MAGIC QUADRANT FOR NETWORK SERVICES, GLOBAL Source: Gartner, Inc “Magic Quadrant for Network Services, Global” Neil Rickard, Bjarne Munch, 13 February 2017. This Magic Quadrant graphic was published by Gartner, Inc. as part of a larger research note and
Slide 21: We have further improved our position in Gartner MQ
WE HAVE FURTHER IMPROVED OUR POSITION IN GARTNER MQ Challengers Leaders • TCL and Verizon are the only “Leaders” showing significant improvement • TCL’s global SIP trunk offering, IZO internet WAN across 82 OBS AT&T Verizon countries and plans for SD-WAN have been identified as key strengths BT NTT
Slide 22: Telecom is consolidating/transforming under margin pressure
TELECOM IS CONSOLIDATING / TRANSFORMING UNDER MARGIN PRESSURE & SEEKING NEW GROWTH OPPORTUNITIES www.tatacommunications.com I @tata_comm | http://tatacommunications-newworld.com | www.youtube.com/tatacomms © 2016 Tata Communications. All Rights Reserved. TATA COMMUNICATIONS and TATA are trademarks o
Slide 23: We are growing faster than our peers but with lower margins
WE ARE GROWING FASTER THAN OUR PEERS BUT WITH LOWER MARGINS www.tatacommunications.com I @tata_comm | http://tatacommunications-newworld.com | www.youtube.com/tatacomms © 2016 Tata Communications. All Rights Reserved. TATA COMMUNICATIONS and TATA are trademarks of Tata Sons Limited in certain countr
Slide 24: We address a ~$46bn market out of $1.1tn telecom market
WE ADDRESS A ~$46BN MARKET OUT OF $1.1TN TELECOM MARKET www.tatacommunications.com I @tata_comm | http://tatacommunications-newworld.com | www.youtube.com/tatacomms © 2016 Tata Communications. All Rights Reserved. TATA COMMUNICATIONS and TATA are trademarks of Tata Sons Limited in certain countries.
Slide 25: Target addressable market expanding from $46bn to $69bn by 2020
OUR TARGET ADDRESSABLE MARKET IS EXPANDING FROM $46BN IN 2017 TO $69BN IN 2020 CAGR US $69Bn in 2020 11% Change in target addressable market for TCL from 2016 to 2020 (US $ B) MNaaS 9 9 US $46Bn 93% in 2017 2 4 5 4 2 3 32% 0 1 4 Mobility Healthcare 1 (4) 2 1 2 19% IZO 1 7 24% Media UCC 23 1 Growth d
Slide 26: Financial Performance
TATA COMMUNICATIONS FINANCIAL PERFORMANCE ee ap TATA
Slide 27: Core - Data and Voice Summary: FY14-FY17
CORE - DATA AND VOICE SUMMARY: FY14 – FY17* 2885 2907 2850 2689 9.2% 10.1% 4.2% GROWTH % 1538 53% 1436 1231 1001 37% USD MN Gross FY15 FY16 FY17 1688 63% -6.7% Revenue 1347 47% 1471 1619 -14.3% -18.6% FY14 FY15 FY16 FY17 Data Voice Data Voice 392 397 420 397 104 77 64 18.9% 19.9% 21.2% 19.7% EBITDA
Slide 28: Core - Full Year (excluding data center & normalised)
CORE – FULL YEAR (EXCLUDING DATA CENTER & NORMALISED FOR EXCEPTIONS) 2731 2626 • During FY17, the Madras High Court dismissed the 1231 1001 USD MN petition filed by the Company against Gross implementation of TRAI Regulation (2012) on Access 1624 Revenue 1500 Facilitation Charges (AFC). This has aff
Slide 29: Core - Quarterly (excluding data center & normalised)
CORE – QUARTERLY (EXCLUDING DATA CENTER & NORMALISED FOR EXCEPTIONS) 675 654 644 • During FY17, the Madras High Court dismissed the petition filed by the Company against USD MN 288 245 224 implementation of TRAI Regulation (2012) on Access Gross Facilitation Charges (AFC). This has affected both 420
Slide 30: Data Summary: FY14-FY17
DATA SUMMARY: FY14 – FY17* 1619 1688 1467 1343 186 208 134 157 202 239 154 USD Mn 131 Gross 1156 1231 1241 1078 Revenue FY14 FY15 FY16 FY17 Traditional Growth Subsidiaries USD Mn 343 333 EBITDA 293 21 17 258 1 2 2 305 352 351 254 -15 -30 -36 FY14 FY15 FY16 FY17 Traditional Growth Subsidiaries Tradit
Slide 31: Performance Highlights | Core Segmentation (Y-o-Y)
PERFORMANCE HIGHLIGHTS | CORE SEGMENTATION (Y-O-Y) DATA SERVICES SAW IMPROVEMENT ON THE BACK OF GROWTH IN ALL THREE SEGMENTS Y-o-Y Data Voice USD Mn Traditional Services Growth Services Subsidiaries Particulars Growth Growth Growth Growth FY16 FY17 % FY16 FY17 % FY16 FY17 % FY16 FY17 % GR 1230.7 124
Slide 32: Capital Expenditure Trend (Capitalised): FY14-FY17
CAPITAL EXPENDITURE TREND(CAPITALISED): FY14 – FY17 319 46 263 6 35 224 69 5 33 4 USD MN 87 Capital 63 Expenditure Trend 198 137 124 FY15 FY16 FY17 Data Sustenanace Data Growth Voice Other Note: USD-INR: FY14 60.48, FY15: 61.13, FY16: 65.44, FY17: 67.08 www.tatacommunications.com I @tata_comm | http
Slide 33: Net Debt: FY14-FY17
NET DEBT: FY14 – FY17 1380 1327 1438 1150 USD MN Net Debt FY14 FY15 FY16 FY17 3.5 3.4 3.3 Net Debt to EBITDA (x) Net Debt to 2.8 EBITDA FY14 FY15 FY16 FY17 4.28% Cost of Debt (%) 3.80% Cost Of Debt 3.14% 3.04% (%) FY14 FY15 FY16 FY17 Note: USD-INR: FY14 60.48, FY15: 61.13, FY16: 65.44, FY17: 67.08;
Slide 34: Data Services - Transformation Services
DATA SERVICES - TRANSFORMATION SERVICES 6.3% 5.6% INR MN GROWTH % Gross 2428 2462 2617 2764 1.4% Revenue -1.7% Q1FY17 Q2FY17 Q3FY17 Q4 FY17 Q1FY17 Q2FY17 Q3FY17 Q4 FY17 Revenue 13.9% 15.3% EBITDA MARGIN % 12.1% INR MN 7.8% 365 422 EBITDA 294 193 Q1FY17 Q2FY17 Q3FY17 Q4 FY17 Q1FY17 Q2FY17 Q3FY17 Q4 F
Slide 35: Data Services - Payment Solutions
DATA SERVICES - PAYMENT SOLUTIONS 2.9% 0.1% GROWTH % INR MN Q1FY17 Q2FY17 Q3FY17 Q4 FY17 Gross -16.1% Revenue 1523 1524 1215 1019 -20.3% Q1FY17 Q2FY17 Q3FY17 Q4 FY17 8.0% 6.2% EBITDA MARGIN % INR MN EBITDA 122 95 Q1FY17 Q2FY17 Q3FY17 Q4 FY17 -7.3% -7.4% -89 -75 Q1FY17 Q2FY17 Q3FY17 Q4 FY17 20526 209
Slide 36: Corporate Developments
CORPORATE DEVELOPMENTS 36
Slide 37: Tata Tele Services Limited (TTSL) Update
TATA TELE SERVICES LIMITED (TTSL) UPDATE • In 2008-09, when NTT Docomo of Japan had invested in TTSL to acquire a 20% stake, Tata Communications sold a part of its holding at INR 116.09/share making a profit of INR 346.65crs • At the same time Docomo reserved a right of sale option, entitling it to
Slide 38: Key Take Away
KEY TAKE AWAY Favourable sectoral trends – riding on global data growth; we continue to deliver industry leading growth. Investments in new services to increase Total Addressable market Launched Wi-Fi+, a new Wi-Fi® cloud communication solution, which enables mobile network operators’ customer
Slide 39: Thank You
THANK YOU tatacommunications.com www.tatacommunications.com @tata_comm http://tatacommunications-newworld.com www.youtube.com/tatacomms © 2016 Tata Communications. All Rights Reserved. TATA COMMUNICATIONS and TATA are trademarks of Tata Sons Limited in certain countries. www.tatacommunications.com I
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