Tata Communications Limited · NSE:TATACOMM
Tata Communications — Investor Presentation (January 2017)
41 slides from Tata Communications's investor presentation, January 2017
Slide 1: Investor Presentation January 2017
INVESTOR PRESENTATION JANUARY 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 BUSINESS OVERVIEW
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: World's Largest, Most Advanced Network
D’S LARGEST, COMMUNICATIONS™ We've invested over $300m in data centre expansion Our customers can reach 99.7% of the global using our network and servi 4 < 1 We Over 25% of the world’s internet ‘ ’ routes use our network _ We've invested $1 “oy - the only wholly-owned subsea cable network that circl
Slide 8: 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 9: 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 9
Slide 10: 710,000 kms of Subsea & Terrestrial Fibre Network
OUR 710,000KMS OF SUBSEA & TERRESTRIAL FIBRE NETWORK COULD CIRCUMVENT THE EQUATOR 17 TIMES
Slide 11: Products and Services
PRODUCTS AND SERVICES Provider of enterprise & wholesale data services and wholesale long distance voice solutions Traditional Voice Growth Neotel Subsidiaries services solutions services Revenue Mix: 42% Revenue Mix: 34% Revenue Mix: 9% Revenue Mix: 7% Revenue Mix: 8% • Virtual Private Network • In
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 12
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: 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: Operationally Fit
OPERATIONALLY FIT GROWTH WITH CUSTOMERS INFRASTRUCTURE EXPANSION 42% GROWTH IN VOLUME The scale & 600+ VPN & IP POPS diversity of our GLOBAL 3+ PRODUCTS DELIVERED PER CUSTOMER service delivery 350+ TRANSMISSION POPS continues to grow COUNTRIES VIA 86th PERCENTILE IN CUSTOMER SATISFACTION 130+ GVPN &
Slide 18: Shareholder Value Creation
SHAREHOLDER VALUE CREATION Focus on maximizing long term intrinsic value for shareholders Shareholding pattern • Drive capital efficiency 4.9% • Recalibrate Investments • Co-create with partners • Strong discipline and governance around capital 9.0% allocation and expenditure • Improve margin profil
Slide 19: 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 20: Competitive Landscape
<p TATA COMMUNICATIONS TATA
Slide 21: Positioned in the Leaders' Quadrant in Gartner Magic Quadrant for Network Services
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, 14 January 2016. This Magic Quadrant graphic was published by Gartner, Inc. as part of a larger research note and
Slide 22: Current Portfolio – Market Share vs Industry Growth
CURRENT PORTFOLIO – MARKET SHARE VS INDUSTRY GROWTH 45% Traditional Mobility Indicative Revenue View Tata Communications Market Share Dummy Ref ILL Traditional Services 35% Voice Services 25% Broadcast India Data Centre Subsidiaries 15% Ethernet Growth Services IPL NPL Voice Services SIP-T IP-T VPN
Slide 23: Target addressable market expanding from $46Bn to $69Bn in 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 2016 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 24: Financial Performance
. TATA COMMUNICATIONS ’ pec lola PERFORMANCE) | ae TATA 7
Slide 25: Performance Highlights | Consolidated
PERFORMANCE HIGHLIGHTS | CONSOLIDATED Treading on the path towards generating increased levels of cash profit Y-o-Y Revenue (INR Mn) Revenue (INR Mn) Q-o-Q 199090 205539 50995 50911 48720 196196 94941 97761 105023 25509 26638 25845 FY14 FY15 FY16 Q3FY16 Q2FY17 Q3FY17 Net Revenue Gross Revenue Net Re
Slide 26: Performance Highlights | Consolidated – Q3FY17 (Q-o-Q)
PERFORMANCE HIGHLIGHTS | CONSOLIDATED – Q3FY17 (Q-O-Q) Strong EBITDA story resulting from operational efficiencies Q-o-Q Gross Revenue (INR Mn) EBITDA (INR Mn) Q3FY17 27,664 16,524 4,532 48,720 Q3FY17 5,074 845 1,304 7,223 Q2FY17 29,157 17,734 4,020 50,911 Q2FY17 6,614 1,178 890 8,682 Q3FY16 26,961
Slide 27: Performance Highlights | Consolidated Portfolio Mix
PERFORMANCE HIGHLIGHTS | CONSOLIDATED PORTFOLIO MIX1 Data continues to be the pillar for growth Traditional Services Growth Services 73% VPN 15% UCC SIP T 17% 15% Voice 24% 14% Hosting IPL Solutions 25% 21% 5% 7% GHCC ILL 34% 12% 11% 11% 8% 48%48% Ethernet V Connect 10% 21% 5% 6% VS & IPT 14% 11% 20
Slide 28: Performance Highlights | Core Analysis (Q-o-Q)
PERFORMANCE HIGHLIGHTS | CORE ANALYSIS (Q-0-Q) Composition of core business is steadily transforming in favour of data Q-o-Q Revenue (INR Mn) Free Cash Flow [EBITDA – Capex] (USD Mn)1 46,787 46,891 46,346 70.4 71.9 44,187 16.8 12.3 19,826 17,734 16,524 16,524 44.2 35.0 12.3 26,961 29,157 27,663 29,8
Slide 29: 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 Q3 Q3 Growth Q3 Q3 Growth Q3 Q3 Growth Q3 Q3 Growth FY16 FY17 % FY16 FY17 % FY16 FY17 % F
Slide 30: Data Services | Profitability
DATA SERVICES | PROFITABILITY Traditional Services continue to perform well Q3FY16 (USD Mn) EBITDA Segmentation Q3FY17 (USD Mn) EBITDA Segmentation EBITDA Margin 30.4% 29.6% 31.4% 25.6% 23.3% 21.5% 22.7% 18.3% Q3FY16 Q2FY17 Q3FY17 Q3FY17(N) Traditional Services Data Services • Continued momentum in
Slide 31: Data Services | TCPSL
DATA SERVICES | TCPSL* Restructuring of ATM Portfolio Q-o-Q Net Revenue (INR Mn) ATM’s Q3FY17 1215 Q3FY17 8,456 7,448 4,144 20,048 Q2FY17 1524 Q2FY17 8,808 7,547 4,616 20,971 Q3FY16 6,827 7,874 4,847 19,548 Q3FY16 1427 WLA MoF Brown Label EBITDA Analysis (INR Mn) • Business was affected due to demon
Slide 32: Data Services | TCTSL
DATA SERVICES | TCTSL* Visibility of healthy pipeline Revenue (INR Mn) Q-o-Q Headcount1 Q3FY17 4524 Q3FY17 2617 Q2FY17 4479 Q2FY17 2462 Q3FY16 3400 Q3FY16 2038 EBITDA (INR Mn) 365 300 • Q3 revenue up by 28.4% Y-o-Y, primarily on account of 14.7% 14.0% new business wins. 193 • EBITDA up 89.1% Q-o-Q,
Slide 33: Voice Solutions | Highlights
VOICE SOLUTIONS | HIGHLIGHTS Structural headwinds Q-o-Q Gross vs Net Revenue (INR Mn) EBITDA Analysis (INR Mn) 6.6% 19,826 17,734 16,524 5.1% 4.2% 1,178 830 845 2,385 2,314 1,957 Q3FY16 Q2FY17 Q3FY17 Q3FY16 Q2FY17 Q3FY17 Net Revenue Gross Revenue EBITDA EBITDA Margin Traffic (Billion Minutes) 10.4 1
Slide 34: Core Business | Capex Intensity
CORE BUSINESS | CAPEX INTENSITY Capex closely aligned to market opportunity, strategic direction Q-o-Q FCF1 Analysis (USD Mn) Capex detailed breakdown (USD Mn) 11.9% 12.0% 6.9% 28.9% 57.6% 27.4% 36.8% 18.1% 67.0 27.8% 81.1% 27.9 32.3 60.7% 53.1% Q3FY16 Q2FY17 Q3FY17 FCF EBITDA to FCF Conversion rati
Slide 35: Core Business | Debt Profile
CORE BUSINESS | DEBT PROFILE Consistent reduction in average cost of borrowings Average Cost of Loans Net Debt (USD Mn) 7.36% 1573 5.34% 4.97% 4.28% 1476 3.80% 3.48% 1438 1439 3.02% 1261 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Sep-16 Dec-16 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 • Core business Net Debt stoo
Slide 36: Corporate Developments
CORPORATE DEVELOPMENTS 36
Slide 37: Neotel Update
NEOTEL UPDATE SOUTH AFRICA OPERATIONS UPDATE • On 28 June 2016, the Shareholders of Neotel entered into an agreement with a Special Purpose Vehicle (“SPV”) that will be owned 70% by Liquid Telecom and the remaining 30% by Royal Bafokeng Holdings. • The enterprise value of the transaction is ZAR 6.55
Slide 38: ST Telemedia & TCL Enter into a Strategic Partnership
ST TELEMEDIA & TCL ENTER INTO A STRATEGIC PARTNERSHIP • On 18 May 2016, ST Telemedia (STT) and Tata Communications (TCL) entered into definitive agreements where in STT will acquire a 74% majority stake in Tata Communications’ data centre business in India (TCDC) and Singapore (TCX) for an estimated
Slide 39: 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 40: Key Take Away
KEY TAKE AWAY Restructuring to de-leverage gains momentum Data business continues to deliver strong growth. Q3 Normalized Gross revenue growth; QoQ 2.3%, YoY 10.6% Q3 Normalized EBITDA growth; QoQ 4.8%, YoY 19.8% Growth services ramping up: YoY growth 19.1%, QoQ 6.8% RoCE Expansion conti
Slide 41: 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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