Maxis Bhd. · MYX:MAXIS
Maxis Bhd — Maxis Communications Berhad — Merger or Acquisition (December 2005)
32 slides from Maxis Bhd's merger presentation, Dec 30, 2005
Slide 1: Briefing on Investment in Aircel
Maxis Communications Berhad Briefing on Investment in Aircel 30th December 2005
Slide 2: Agenda
Agenda ~ Overview ~ Strategic Rationale ~ Transaction Structure ~ Financials ~ Summary 2 Corporate Office
Slide 3: Key Highlights of the Aircel Investment (1)
Key Highlights of the Aircel Investment (1) ~ Maxis and Indian Partner have agreed to invest in the Aircel Group via two separate Transactions } The pre-money equity value for the Aircel Group is US$800mn (existing shares) } Maxis will also inject US$280mn for new shares in Aircel ~ Unique opportuni
Slide 4: Key Highlights of the Aircel Investment (2)
Key Highlights of the Aircel Investment (2) ~ Aircel operations in Tamil Nadu and Chennai have } Combined revenue of US$122mn (FY March ’05) } Combined subscriber base of 2.2mn and a market share of 32% (Oct 05) } PAT positive and EBITDA of US$56mn (FY March 2005) ~ Providing significant growth oppo
Slide 5: Transaction Overview
Transaction Overview ~ Transaction 1: } Maxis to invest in 26% in the enlarged share capital of the Aircel Group for US$280mn for immediate participation } 2 directors, affirmative rights, right to nominate CFO } Approvals Required: – Lenders of Aircel Group; Bank Negara, as necessary } Expected clo
Slide 6: Strategic Rationale
Strategic Rationale SS MaxXIs.
Slide 7: Strategic Rationale
Strategic Rationale ~ Entry into the fast growing Indian market; now at an inflection point 1 } 40% of households will be able to afford mobile telephony by 2007 } Liberalising telecoms sector with low mobile penetration (~6%) Strong Indian } One of the fastest growing economies in the world for the
Slide 8: Increasing Number of India's Population Able to Afford Mobile Telephony
1. Strong Indian Market Potential: Increasing Number of India’s Population will be able to Afford Mobile Telephony Av. Annual HH % Household By 2007 Income, US$ Population in Addressable 2007 Market 19,500 2.6% 457 mn 4,500 37.9% 40% of Indian household 2,300 41.0% ≥ 20x Malaysian addressable 980 10
Slide 9: In Midst of Inflection Point With 60 mn Potential New Adds
1. Strong Indian Market Potential: In Midst of Inflection Point With 60 mn Potential New Adds Within Just 3 Years Growing Subscriber Base Numbers in million 140 GSM CDMA Penetration Forecasted 14% CAGR 124 120 34% 12% Steep growth 60mn = More due to change in 104 than 3x existing 100 10% regulation
Slide 10: Tamil Nadu State Has Good Fundamentals
1. Strong Indian Market Potential: Tamil Nadu State Has Good Fundamentals ~ 65 million population (Chennai – 6.8 mn) ~ Average growth rate has been around 8-9% p.a., consistently above the all-India average ~ Tamil Nadu is now the second most industrialised state in India with a network of over 110
Slide 11: Tamil Nadu (incl Chennai) Comparable to Other Countries
1. Strong Indian Market Potential: Tamil Nadu (incl Chennai) Comparable to Other Countries… Population (mn) GDP/Capita - PPP (US$) 250 9000 8000 200 7000 6000 150 5000 100 4000 3000 50 2000 1000 0 0 Tamil Nadu Cambodia Pakistan Thailand Indonesia Vietnam Thailand Philippines Vietnam Philippines Bang
Slide 12: 10 Circles Has Strong Potential
1. Strong Indian Market Potential: 10 Circles Has Strong Potential ~ 562 million population ~ Agriculture, mining, manufacturing and tourism are among key industries } An estimated 7 % of world’s total coal reserves are located in Bihar, Madhaya Pradesh and West Bengal } Tata Steel building a USD 3
Slide 13: TN Combined With 10 New Circles Will Cover 58% of India's Population
1. Strong Indian Market Potential: TN (incl Chennai) Combined With 10 New Circles Will Cover 58% of India’s Total Population Jammu & Kashmir Uttar Pradesh Bihar 7 North East Himachal Pradesh 8 Punjab 14 13 Haryana 10 4 Assam Rajasthan 3 11 9 West Bengal Gujarat 12 6 Madya Pradesh Kolkata Maharashtra
Slide 14: Positive Industry Characteristics
1. Strong Indian Market Potential: Positive Industry Characteristics ~ Continuing growth expected (CAGR projected 34% p.a) - 15% penetration expected by 2010 ~ Decline in ARPU’s has slowed down significantly with some stickiness being exhibited at current levels ~ Capital costs have declined signifi
Slide 15: Aircel Today: Existing and New Circles
2. Aircel Clear No.1: Aircel Today: Existing and New Circles Tamil Nadu (incl 10 new circles Chennai) Footprint Chennai Tamil Nadu ~ Obtained Category A ISP license in ~ Leading wireless operator in Tamil 1999 Description Nadu and Chennai telecom circle ~ Businesses include: ~ Tamil Nadu operations
Slide 16: Aircel is One of The Major Players in India
2. Sustainable Fundamentals: Aircel is One of The Major Players in India Number of Subscribers Wireless Players Market Share In ‘000s (Oct ’05) As of October 05 (%) TTSL MTNL Operator GSM CDMA Total Aircel Others Bharti 14,740 14,740 3.7% 2.0% 3.2% 2.4% Reliance 1,608 11,781 13,389 BPL Reliance BSNL
Slide 17: Aircel Continues to be the Market Leader in Chennai & Tamil Nadu
2. Aircel Clear No.1: Aircel Continues to be the Market Leader in Both Chennai & Tamil Nadu Chennai: GSM Subscribers by Operator ('000) 637K 700 TN & Chennai Market Share in Oct'05 Overtook 600 Airtel in 2Q TTSL Aircel took 2% Hutch/ BPL 500 Reliance over RPG CDMA 11% 400 16% 300 200 100 - Jan-03 Ap
Slide 18: Consumer Preference for Aircel
2. Sustainable Fundamentals: Consumer Preference for Aircel Performance of service providers as rated by subscribers across 17 circles 100 95 82 80 80 83 80 76 76 75 70 Industry average 65 60 40 20 0 e Re L h L EA ice el el ta L nc TN N tc BP rc rc Ta BS Sp ID lia Hu Ai Ai M National players (more t
Slide 19: Aircel has a Strong Distribution Model
2. Sustainable Fundamentals: Aircel has a Strong Distribution Model Performance of service providers as rated by Channel Partners across 17 circles 120 112 106 97 95 100 76 79 80 73 Industry average 64 60 51 47 40 20 0 e L h L EA ice el el ta L nc TN N tc BP rc rc Ta BS Sp ID lia Hu Ai Ai M Re Natio
Slide 20: Enables Maxis to Participate in Market of At Least 64 Million
3. Immediate and Long Term Growth Story: Enables Maxis to Participate in Market of At Least 64 Million Estim a te d m obile subscribe rs re a che d by Ma x is 200 188 mn Malaysia + India Z Subs(Mn) 70 Z 64 mn Malaysia + 60 TN/Chennai + 10 Circles 50 40 34mn Malaysia + Tamil 30 Nadu + Chennai 20 23mn
Slide 21: Upside From Participating in Future Consolidation
4. Acquisition Meets Our Investment Criteria: Upside From Participating in Future Consolidation Reliance Hutch IDEA (GSM) Spice MTNL Metro circle Aircel circles 21 Corporate Office
Slide 22: Maxis has Identified Potential Improvement Opportunities
Maxis has Identified A Number of Potential Improvement Opportunities ~ Improving certain network operating elements, especially in Chennai ~ Strengthening the organisation with greater strategic focus on areas like technology, human resource and product development ~ Investing in brand equity ~ Impr
Slide 23: An Entry Into Indian Market Carries Risk
An Entry Into Indian Market Carries Risk Key Risks Description ~ Local state issues, including insurgencies in North East and Political Jammu & Kashmir, can be a factor impacting roll-out and operations Sales tax ~ Industry in litigation at present with state governments on the right to levy sales t
Slide 24: Transaction Structure
Transaction Structure SS MaxXIs.
Slide 25: Structure: Transaction 1 (SSA)
Structure: Transaction 1 (SSA) Maxis Maxis ATVL ATVL 26% 74% Infusion of US$280 mn new capital AL AL ~Maxis invests in 26% of the enlarged share capital of AL by infusing US$280 mn new capital, after AL, ACL and DWL restructuring is completed ~Maxis would have proportionate share of Board seats (wit
Slide 26: Structure: After Transaction 2 (SPA) and IP
Structure: After Transaction 2 (SPA) and IP IP IP Maxis Maxis 74% 26% SPV SPV 35% 65% Aircel Aircel Limited Limited (AL) (AL) ~ Maxis acquires an additional 39% of Aircel directly from ATVL for US$422mn ~ SPV acquires 35% of Aircel from ATVL for US$378mn, funded by a combination of debt, and/or non
Slide 27: About Indian Partner
About Indian Partner ~ Indian Partner is an SPV owned by the Chennai based Reddy family ~ Amongst the businesses owned by the Reddy family are } Apollo Hospital Group (the largest private hospital group in Asia) and } PPN Power Generating Company (330 Mw IPP in India) ~ The family also has interests
Slide 28: Financials
Financials SS MaxXIs.
Slide 29: Financial Summary - Historical
Financial Summary - Historical Based on exchange rate USD1:INR45 INR 45 For usd 1 INCOME STATEMENTS COMPONENTS Year ended March 31 (USD mn) 2002 2003 2004 2005 REVENUE Mobile Operations 80.4 89.1 90.1 123.0 Others 22.2 23.1 62.8 40.4 Total 102.6 112.2 152.9 163.4 PROFIT BEFORE TAXATION Mobile Operat
Slide 30: Proforma Balance Sheet
Proforma Balance Sheet Gearing within acceptable levels; Commitment to Dividends Proforma 2: Maxis as Proforma 1: After Proposed All financials in RMmn at 31 Dec After Proposed Subscription 2004 Subscription and Proposed Acquisition RM'mil RM'mil RM'mil Fixed Assets 4,250 4,250 4,955 Intangible asse
Slide 31: Summary
Summary 1 Strong Indian ~ India market fast growing and at inflection point Market Potential 2 Aircel: Clear no. 1 operator with ~ Good base for becoming national player sustainable fundamentals 3 Aircel provides an immediate & long ~ Immediate and long term growth story term growth story for Maxis
Slide 32: Thank You
Thank You SS MaxXIs.
Maxis Communications Berhad — Merger or Acquisition (December 2005) on 6ix