Slide 1: Investor Presentation Cover Letter to Stock Exchanges
ADITYA BIRLA September 3, 2016 National Stock Exchange of India Limited BSE Limited “Exchange Plaza’, Phiroze Jeejeebhoy Towers, Bandra - Kurla Complex, Dalal Street, Bandra (E), Mumbai — 400 001 Mumbai — 400 051 Dear Sirs, Sub: Investor Presentation Ref: “Idea Cellular Limited” (IDEA / 532822) Purs
Slide 2: Idea Cellular Limited
Idea Cellular Limited Confidential 1
Slide 3: Presentation Segments
Presentation Segments Indian Mobile Telecom • Industry & Idea Performance Snapshot The Emerging Mobile Data Opportunity • Spectrum Auctions 2016 Industry Projections Idea Digital Services Indian Tower Industry & Opportunities Confidential 2
Slide 4: Presentation Segments: Indian Mobile Telecom
Presentation Segments Indian Mobile Telecom • Industry & Idea Performance Snapshot The Emerging Mobile Data Opportunity • Spectrum Auctions 2016 Industry Projections Idea Digital Services Indian Tower Industry & Opportunities Confidential 3
Slide 5: India Subscriber Penetration
Confidential India Subscriber Penetration Large headroom for new subscribers addition in India India Mobility Active Subs - VLR (Mn) India Subscriber Penetration - VLR % 1000 936 90% 900 791 863 85% • India subscribers on VLR penetration remains 800 683 723 80% low @ 73.7% v/s Global average @ 92.1%
Slide 6: Idea gaining highest incremental subscriber net adds share over 4 years
Confidential Idea gaining amongst the highest incremental subscriber Net Adds share over last 4 years Industry & Idea EoP Subscriber trend Industry & Idea Net Annual Subs Addition trend (in Mn.) (in Mn.) Idea E oP Subscriber Industry E oP Subscriber Idea E oP Subs Market Share Idea Annual S ubs Indu
Slide 7: Idea – The fastest growing Indian Telco for 8 years
Confidential Idea – The fastest growing Indian Telco for straight 8 years Consistently growing at 2X the pace of industry Industry & Idea Revenue trend Industry & Idea Annual Incr. Revenue trend (in Rs Cr) (in Rs Cr) Idea Revenue Industry Revenue Idea RMS (%) Idea Annual Incr. Revenue Industry Annua
Slide 8: A Clear #2 in Incremental Revenue Market Share
Confidential Idea – The fastest growing Indian Telco for straight 8 years A Clear #2 in Incremental Revenue Market Share RMS IRMS (Q1) Q1 FY13-17 FY13-17 FY16-17 32.6% 32.4% 31.1% 31.3% Airtel 30.8% 39.4% 53.4% 30.1% [ +2.4% ] 29.8% Rest of Ind. 28.7% 26.6% 4.5% -2.7% 25.0% [ -7.4% ] 23.3% 23.2% 23.
Slide 9: Idea Mobile Voice & Data Segment Performance
Confidential Idea Mobile Voice & Data Segment Performance Gaining both Revenue and Traffic share Voice* Revenue (Rs Cr) Minutes of Usage (Bn Minutes) Ind. Voice* Revenue Idea Voice* Revenue Idea Voice* RMS (%) Ind. Minutes Volume Idea Minutes Volume Idea Minutes Volume Share (%) YoY rev. grow th FY1
Slide 10: Idea delivering consistent Revenue & EBITDA growth
Confidential Idea delivering consistent Revenue & EBITDA growth CAGR of 16.3% Revenue, 27.8% EBITDA & 10.4% margin improvement over past 4 years Revenue EBITDA EBITDA Margin % (Rs Cr) (Rs Cr) 33.1% 31.0% +2.2% EBITDA +3.2% Margin 27.7% 23.7% +4.0% 22.7% +1.0% +14.0% 35,967 +19.1% +4,412 31,555 +17.3
Slide 11: Margin improvement; Closing gap with No. 2
Confidential Idea – Revenue growth & scale benefit translating into Margin improvement; Closing gap with No. 2 EBITDA (Rs. Cr) EBITDA Margin % Incr. EBITDA Incr. EBITDA - Operators FY12 FY15 FY16 FY12 FY15 FY16 (4 Years) EBITDA Idea1 4,466 9,768 11,910 22.7% 31.0% 33.1% 45.7% 12.6% Bharti2 13,669 19
Slide 12: Idea Financial Trending
Confidential Idea Financial Trending Growth in Cash Profits & Net Profits Expanding Cell sites & Capex spends Rs Cr Cash Profit Net Profit 2G Sites EoP 3G Sites EoP 4G Sites EoP ~232-234k • GSM pop. Coverage: 1 Bn, 400k towns & villages 191,536 • Wireless Broadband coverage: 500 Mn, 75k 10,120 towns
Slide 13: Consolidation in Mobile Voice, emerging competition in Wireless Broadband
Confidential Consolidation in process in Mobile Voice, while emerging competition in high growth Wireless Broadband Indian Mobility Sector Existing Scenario (Year 2008 – 2016) • Mobile Voice Segment characterized by intense competition - 8 to 9 operators in each service area • Mobile Broadband Data
Slide 14: Presentation Segments: The Emerging Mobile Data Opportunity
Confidential Presentation Segments Indian Mobile Telecom • Industry & Idea Performance Snapshot The Emerging Mobile Data Opportunity • Spectrum Auctions 2016 Industry Projections Idea Digital Services Indian Tower Industry & Opportunities 13
Slide 15: Large Potential for Data Penetration in India
Confidential Large Potential for Data Penetration in India Smartphone Penetration - as a % of Connections* (3G+4G) Market Penetration (Connections)* • India: ~85 Mn Smartphones added in last FY* 79.1% 77.8% • Idea smartphone pen% – 34.5% (60.4 Mn) – 143.2% 69.6% 136.7% 65.6% March ‘16 69.0% 128.5% 1
Slide 16: Building a World Class Indian Mobile Broadband Infra
Confidential Building a World Class Indian Mobile Broadband Infra Pride of country and envy of world Since January 2016, top Indian Private Mobile Operators are now working at breakneck speeds to create a world class Digital Highway Coverage expansion* 3G & 4G Network Rollout 1.1 Billion Indians to
Slide 17: Mobile data adoption likely to follow mobile voice trajectory
Confidential Mobile data adoption likely to have similar trajectory as that of historic mobile voice penetration in India History to repeat itself Industry Reported EoP Subs (Mn.) Industry VLR Subs Phase 1 Phase 2 Phase 3 Phase 4 Introduction of Coverage Exponential Consumer adoption 1,034 mobile te
Slide 18: Steps taken by Idea to participate in Wireless Broadband Business
Confidential Steps taken by Idea to participate in Emerging Wireless Broadband Business Gearing to become 3G/4G Pan India provider but procure data capacity carrier as & when needed Planning own range of Digital Services Spectrum: • 3G/4G Coverage: 133.4 MHz (900/1800/2100) 17 circles o 1800 MHz: 60
Slide 19: Spectrum Auction – October 2016 & beyond
Confidential Spectrum Auction – October 2016 & beyond • Historically, India has been a spectrum starved country. Overall allocation by Govt. of India over last 2 decades for 22 circles is Quantum in MHz 700 MHz 800 MHz 900 MHz 1800 MHz 2100 MHz 2300 MHz 2500 MHz Total* Current Allocation 343 428 990
Slide 20: Presentation Segments: Industry Projections
Presentation Segments Indian Mobile Telecom • Industry & Idea Performance Snapshot The Emerging Mobile Data Opportunity • Spectrum Auctions 2016 Industry Projections Idea Digital Services Indian Tower Industry & Opportunities Confidential 19
Slide 21: Financial Projections for Industry by Analysts
Financials Projections for Industry by Analysts In Rs Cr FY17 FY18 FY19 FY20 FY21 Gross Revenue Market Consensus 2,10,506 2,28,035 2,48,469 2,70,570 2,92,341 Growth 9.1% 8.3% 9.0% 8.9% 8.0% Data Revenue Average 48,079 62,990 82,117 1,01,523 1,23,441 Growth 42.5% 31.0% 30.4% 23.6% 21.6% Based on Proj
Slide 22: Presentation Segments: Idea Digital Services
Presentation Segments Indian Mobile Telecom • Industry & Idea Performance Snapshot The Emerging Mobile Data Opportunity • Spectrum Auctions 2016 Industry Projections Idea Digital Services Indian Tower Industry & Opportunities Confidential 21
Slide 23: Rising Digital Opportunity
Rising Digital Opportunity Potential for Growth Growing World of Apps & Content • 800 Mn Indian Non-Users yet to go online • Mobile Internet Rural penetration to increase at a faster pace • Gen Z and Millennial to lead this growth Services of the future# Current Penetration among Users Surveyed Expe
Slide 24: Idea Strongly Placed
Idea Strongly Placed To Capitalize Opportunity in Entertainment & Payments Space As per the BCG report on “The Rising Connected Consumer in Rural India” • 75% of the new Internet User growth is poised to come from Rural • Connected Rural customers will increase from 120 Mn in 2015 to 315 Mn in 2020
Slide 25: Proposed Idea Services & Competition
Proposed Idea Services & Competition Digital VoIP & Instant Music Online Service Gaming Messaging Streaming Videos/Movies Online music listeners Online video users: 200 Mobile gamers: 40 – 50 Users 273 Mn (2020) from 27 million (2014) from 54 Mn growing at ~50% Mn (2015) million (Mar 2013) Rs. 10.7
Slide 26: Presentation Segments: Indian Tower Industry & Opportunities
Presentation Segments Indian Mobile Telecom • Industry & Idea Performance Snapshot The Emerging Mobile Data Opportunity • Spectrum Auctions 2016 Industry Projections Idea Digital Services Indian Tower Industry & Opportunities Confidential 25
Slide 27: Idea Tower Infrastructure Business
Confidential Idea Tower Infrastructure Business Tower Industry & Idea Market Share Idea Total Towers & Tenancies incl. 11.15% share in Indus (as of Mar’16) (as of Mar’16) Count Tenancy 11.15% Combined Particulars Particulars ICISL Towers Tenancies Ratio Indus share Tower Entity Total Industry 4,15,0
Slide 28: Thank you
Thank you Confidential 27
Slide 29: Annexures
Annexures Confidential 28
Slide 30: Idea gaining highest incremental subscriber net adds share
Idea gaining amongst the highest incremental subscriber Net Adds share over last 4 years In Million FY12 FY13 FY14 FY15 FY16 Industry EoP Subscriber 682.9 723.0 790.9 862.6 936.5 Industry Annual Subs 112.0 40.0 67.9 71.8 73.8 Idea EoP Subscriber 105.3 120.2 137.9 161.4 183.9 Idea Annual Subs 22.0 14
Slide 31: Idea – The fastest growing Indian Telco for 8 years (Q1)
Idea – The fastest growing Indian Telco for straight 8 years Consistently outpacing industry growth Industry & Idea Revenue trend Industry & Idea Annual Incr. Revenue trend (in Rs Cr) (in Rs Cr) Idea Revenue Industry Revenue Idea RMS (%) Idea Annual Incr. Revenue Industry Annual Incr. Revenue Idea A
Slide 32: Idea delivering consistent Revenue & EBITDA growth (Q1)
Confidential Idea delivering consistent Revenue & EBITDA growth CAGR of 14.4% Revenue, 24.9% EBITDA & 9.6% margin improvement over past 4 years Revenue EBITDA EBITDA Margin % (Rs Cr) (Rs Cr) 33.7% 33.9% +3.8% -1.5% 32.4% +2.0% 29.9% EBITDA 27.9% Margin +5.0% 22.8% +7.9% +16.4% 9,487 +15.6% 8,796 8,7
Slide 33: Indian Mobile Telecom undergoing major transformation
Confidential Indian Mobile Telecom undergoing major transformation In midst of building massive Mobile broadband Infra Broadband March 2014 June 2016 Estimated Data Current Usage (3G & 4G - All Capacity* % utilisation TB/day* bands) # of Circles # of Sites # of Circles # of Sites (Q1FY17) - TB/day A
Slide 34: Spectrum Auctions 2016 – Availability
Confidential Spectrum Auctions 2016 – Availability More than 2,300 MHz of spectrum available but unreasonably priced Total Spectrum Availability (MHz) Circle 700 MHz 800 MHz 900 MHz 1800 MHz 2100 MHz 2300 MHz 2500 MHz Total Andhra Pradesh 35.0 7.50 - 4.4 20.0 20.0 40.0 127 Assam 35.0 - - 18.0 15.0 2
Slide 35: Idea building a Competitive Spectrum Profile
Confidential Idea building a Competitive Spectrum Profile Current Spectrum Profile (in MHz) Capability to Offer Circles 1800 900 1800 LTE 2100 Total GSM 3G LTE GSM Maharashtra 9 4 5.0* 5 23 Kerala 6 10 5 21 • Competitive portfolio of 3G M.P. 7.4 2 5 5 19.4 and 4G capable spectru