Indus Towers Limited · NSE:INDUSTOWER
Indus Towers — Bharti Infratel — Investor Presentation (May 2018)
41 slides from Indus Towers's investor presentation, May 2018
Slide 1: Investor Presentation
Investor Presentation May 2018 Building and Sharing Vital Infrastructure
Slide 2: Disclaimer
Disclaimer By attending the meeting where this presentation is made, or by reading the presentation materials, you agree to be bound by the following limitations: The information in this presentation has been prepared by Bharti Infratel Limited (the “Company”) for use in presentations by the Company
Slide 3: Table of Contents
Table of Contents Company Overview Industry Overview Business Model Strengths Proposed Merger with Indus In Summary 3 of 41
Slide 4: Company Overview
Ss » 2 Bharti Infratel Limited Company Overview 40f 41
Slide 5: Bharti Infratel – Who We Are?
Bharti Infratel – Who We Are? A Leading Tower Infrastructure Operator Pan India Presence across all 22 Telecommunications Circles Indus Towers – JV between Bharti Infratel, Vodafone and Aditya Birla Telecom Top 3 Operators Anchor Customers & Relationships with all other Operators Marquee promoter an
Slide 6: Performance at a Glance
Performance at a Glance 91,451 towers and 205,596 co-locations(1) Market share in terms of installed tower base, FY15 39,523 towers of Bharti Infratel and 51,928 towers from 42% stake in Indus (1) Infratel + Indus: 40.8% Net decline in co-locations during Q4 FY18 and FY18 at 7,880 and 5,010 respecti
Slide 7: Pan India Footprint: Leading Positions Across India
Pan India Footprint : Leading Positions Across India Pan India presence ⁻ Opportunities for voice growth in rural areas given rural penetration of 57.09%(1) ⁻ Data services to drive data consumption ⁻ Given inadequate wire-line infrastructure, wireless services expected to cater to new demand Bharti
Slide 8: Industry Overview
Ss » 2 Bharti Infratel Limited Industry Overview 8 of 41
Slide 9: Operator Industry Dynamics
Operator Industry Dynamics Market Concentrated in Hands of Select Players Post consolidation the Indian market expected to be dominated by three operators Top 3 operators (post consolidation) have 88.3% Revenue Market Share (RMS) Right of First Refusal (RoFRs) Non-discriminatory nature All operators
Slide 10: Increasing Operator Focus on Networks
Increasing Operator Focus on Networks An operator agnostic business model, superior network footprint and service quality standards allow Bharti Infratel to capitalize on the growth in the data and voice market Operator Investment in Licenses1 Data Usage per customer (MB/month)2 3G/4G auctions hel
Slide 11: Data Revolution Unfolding
Data Revolution Unfolding • Favorable demographics –Median Age of India’s population ~26 years • Broadband penetration ~28%1 & Internet penetration ~34%2 • Technology Adoption and smartphone penetration leading to higher data uptake Technology shift for future growth3 Data growth driven by smartphon
Slide 12: India Mobile Data Trends
India Mobile Data Trends Findings from NSN MBIT Index • The Indian telecom market witnessed a paradigm shift in data consumption, with 4G traffic capturing 82% share of total data traffic in December 2017 • Increase in 4G device penetration, aggressive 4G network rollout, lower data prices, and deve
Slide 13: Network & Data Growth Forecasts and Recent Trends
Network & Data Growth Forecasts and Recent Trends Exponential Growth expected in Data over the next five years1 Current Data usage trends indicate significant incremental opportunity2 • 4G data consumption at ~11GB per user sustained the usage levels seen in 2016 (when 4G data was not fully monetize
Slide 14: Phases of Data led Tower Revenue Growth
Phases of Data led Tower Revenue Growth Airtel has 100 sites in Delhi Due to Propagation effect Total Towers available with Circle (900 + 1800 Mhz) for 2G Airtel will need 150 sites on Indus in Delhi - 135 coverage 2100 MHz for 3G Loading all the existing Loading Revenue for STAGE 1 100 sites with 3
Slide 15: Business Model Strengths
Business Model Strengths 15 of 41
Slide 16: Business Model Strengths
Business Model Strengths 1 A Leading Tower Infrastructure Operator 2 Visibility of Future Revenues Through Long Term Contracts 3 Demonstrated Operational and Financial Performance 4 Implementation of Green Initiatives 5 Experienced Management 16 of 41
Slide 17: A Leading Global Tower Infrastructure Operator
A Leading Global Tower Infrastructure Operator Indian Tower Companies(1) Global Listed Tower Companies(1) Sharing Factor 2.30(2) 1.00 2.2 1.74 1.83 2.2 2.2 1.73 1.69 1.7 Towers (‘000s) Bharti Infratel + 42% equity interest in Indus Others* CCI: Crown Castle International, SBA: SBA Communications, AT
Slide 18: Long Term Contracts with Visibility of Future Growth
Long Term Contracts with Visibility of Future Growth Key Features of Master Service Agreements (MSAs) Tenor Long term (10 to 15 years) with built in escalations (2.5% p.a) Termination Penalty Significant exit penalties A base rental rate is applicable, based on the following factors: Base Rent
Slide 19: Business Model Unique to India
Business Model Unique to India Key Features of Master Service Agreements unique to India unlike US Tower Cos Purpose Key Feature Result • It is not economically rewarding for the operators Most operators in India are not building Disarming The Operators to build new towers themselves towers on their
Slide 20: Demonstrated Operational and Financial Performance: Co-locations
Demonstrated Operational and Financial Performance Stable tower growth… CAGR: 2.5% Towers (1) (1) Towers …coupled with an increase in average sharing factor 1.85 1.90 1.96 2.06 2.16 2.26 2.29 Co-locations (1) Co-locations (1) FY refers to fiscal year ending March 31. (1) Consolidated figures for Bha
Slide 21: Revenues and EBITDA Performance
Demonstrated Operational and Financial Performance Strong revenue growth… Strong Operating Leverage Indexed to 100 CAGR CAGR: 7.8% 900 Revenues(1)(2) (US$m) 36.9% …faster EBITDA growth CAGR: 9.3% EBITDA Margin(3) EBITDA(1)(3) (US$m) 10.9% 7.9% 5.4% 2.2% Exchange Rate Used US$1 = 65.17 as on 31st Mar
Slide 22: Focus on Delivering Shareholder Value
Focus on Delivering Shareholder Value Bharti Infratel is focused on delivering return to its shareholders through multi-pronged strategy Pursuit of viable value accretive inorganic growth Leverage Diversified Customer Base to Capitalize on Data Growth Explore Opportunities to Return Cash to Sh
Slide 23: New opportunities for Telecom Infrastructure under Smart Cities Project
New opportunities for Telecom Infrastructure development under ‘Smart Cities’ Project Development of Smart Cities key for ‘Digital India’ Program Government has announced the creation of 100 Smart Cities Communication backbone is key to a Smart City Entails setting up of telecom infrastructure w
Slide 24: Quarterly Performance Impacted by Recent Exits
Quarterly Performance Impacted by Recent Exits Co-locations Revenue1 (US$m) Y-o-Y Growth: -2.4% Y-o-Y Growth: 4.0% EBITDA1 (US$m) AFFO1,4 (US$m) Y-o-Y Growth: 1.3% Y-o-Y Growth: 0.6% Note: Constant exchange rate of US$ 1 = INR 65.17 has been used, which is the closing exchange rate as on March 31, 2
Slide 25: Implementation of Green Initiatives
Implementation of Green Initiatives Bharti Infratel has institutionalized ‘GreenTowers P7’ programme, aimed at minimizing dependency on diesel consumption and thereby, reducing the carbon footprint The ‘GreenTowers P7’ programme is based on seven innovative ideas deploying cleaner energy technol
Slide 26: Experienced Management Team
Experienced Management Team Joined Bharti Infratel in March 2008 as Director Work experience of over 30 years Akhil Gupta Certified Chartered Accountant and fellow member of ICAI. Completed an advanced management program at Chairman Harvard Business School. Has received various awards includ
Slide 27: CSR, Awards and Recognition
CSR, Awards and Recognition Awards and Recognition ET NOW CSR Leadership Award 2018 • Bharti Infratel received the "ET NOW CSR Leadership Award 2018" for its efforts towards building an inclusive world, by supporting inclusion of differently abled people into the mainstream through the Bharti Infrat
Slide 28: Proposed Merger with Indus
Proposed Merger with Indus 28 of 41
Slide 29: Merger of Bharti Infratel and Indus Towers
Merger of Bharti Infratel and Indus Towers Creating a listed pan-India tower company which will be the largest tower company in the world outside China with over 163,000 towers Highly complementary footprints to continue to support the delivery of the Government of India’s vision of ‘Digital India’.
Slide 30: Key Highlights
Key Highlights Vodafone shall swap its 42% in Indus against shares in combined entity as per valuation construct Providence or PEP shall swap its 1.5% in Indus against shares in combined entity on Basic Construct same basis as Vodafone Idea for its 11.15% in Indus & PEP for their 3.35% in Indu
Slide 31: Illustrative Scenarios
Illustrative Scenarios Illustrative Scenarios for Issuance of Shares based on SEBI pricing guidelines: Illustratively, based on SEBI pricing guidelines for Bharti Infratel of INR 363 per share as at 23 April 2018 (date of agreement) and reported net debt as at 31 March 2018: The transaction values
Slide 32: Other Highlights
Other Highlights Joint Governance and Bharti Airtel and Vodafone will have equal rights in the combined company Management The Board of the combined company will comprise of 11 directors, of whom three will be Board of Directors and appointed by each of Bharti Airtel and Vodafone, one will be ap
Slide 33: Current Shareholding Structure
Current Shareholding Structure Public(1) Vodafone Providence Idea 46.49% 11.15% 42% 4.85% #2 #3 Wireless Wireless Operator Operator (3) (3) 100% Bharti Infratel Indus Towers Aditya 53.51%(5) 42% Bharti Airtel Birla 91,451 Towers(2) 123,639 Towers(2) Telecom #1 Wireless Operator #2 Tower Company(4) #
Slide 34: Indicative Post Merger Shareholding Structures
Indicative Post Merger Shareholding Structures Bharti Airtel Public Providence Vodafone #1 #2 Wireless Wireless 37.2% 32.3% 1.1% 29.4% Operator Operator Indus 163,162 Towers • Based on the assumption that Idea group sells it’s 11.15% shares for cash and Providence elects to receive cash for its 3.35
Slide 35: Indicative Post Merger Shareholding Structures
Indicative Post Merger Shareholding Structures Bharti Airtel Public Providence Idea Vodafone #1 #3 #2 Wireless Wireless Wireless Operator 33.8% 29.3% 3.1% Operator 7.1% 26.7% Operator Indus 163,162 Towers • Based on the assumption that Idea group and Providence elect to receive shares for their 11.1
Slide 36: In Summary
Ss » 2 Bharti Infratel Limited In Summary 36 of 41
Slide 37: Company Strategy
Company Strategy Promote Tower Sharing Capitalize on opportunities of Data Organic Growth and Acquisition growth, Digital India, Smart Cities Opportunities Initiatives of Government Achieving Cost Efficiencies Across Increasing Revenue and Capital Tower Portfolios Productivity 37 of 41
Slide 38: Investment Thesis
Investment Thesis Demonstrated Operational and Financial Performance Insulated from Major Concerns - Data-led revenue growth $-Re, Leverage, Import Dependence Operator Agnostic way to benefit from Experienced Management Team Data Growth Regulatory Environment High Standards of Corporate Favorable Go
Slide 39: Appendix
Ss » 2 Bharti Infratel Limited Appendix 39 of 41
Slide 40: Impact of Data Growth on Tower Industry
Impact of Data Growth on Tower Industry Expansion of 3G / 4G Networks by Operators will necessitate demand for towers Propagation on higher frequency band weaker Data usage to drive co-location growth 3G/4G only sites to drive tower demand Propagation effects in different bands Tower Multipl
Slide 41: Thank You
Thank You Building and Sharing Vital Infrastructure