Reliance Communications Limited · NSE:RCOM
Reliance Communications — Investor Presentation (May 2008)
77 slides from Reliance Communications's investor presentation, May 2008
Slide 1: Reliance Communications Investor Presentation May 2008
Reliance Communications Investor Presentation May 2008
Slide 2: Forward looking statements – Important Note
Forward looking statements – Important Note This presentation and the discussion that follows may contain “forward looking statements” by Reliance Communications Ltd (“RCOM”) that are not historical in nature. These forward looking statements, which may include statements relating to future results
Slide 3: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Retail Financials Looking Ahead 3 of 77 confidential
Slide 4: Our strategy
Reliance Communications Our strategy Pillars of our strategy Big ambition Continuously strengthen wireless base High growth scale markets Exploit capabilities Long-term investment view for scale growth in related sectors Strong execution Leadership in high Pro-consumer regulatory policy growth marke
Slide 5: Strategy ensures high returns to investors
Reliance Communications Strategy ensures high returns to investors Continuously #1 network in India strengthen Dual network strategy; quality network is 3G ready wireless base Widest retail coverage; focus on customer care Exploit network assets Æ largest tenancy capacity and Exploit capabil
Slide 6: Reliance Communications
Reliance Communications Wireless Enterprise - Mobile (CDMA & GSM) - Internet Data Center Enterprise - VAS (Mobile World) Wireless - Broadband - Wireless Data - Leased Line - Fixed Wireless - Office Centrex Globalcom - MPLS & VPN Tower Infra RCOM - WiMax Tower (Infratel) Globalcom - Multi tenancy tow
Slide 7: Unprecedented fast diversification and growth journey
Reliance Communications Unprecedented fast diversification and growth journey Wireless ¾Nationwide GSM + CDMA Enterprise Wireless ¾IDC –Top 3 global player ¾World’s largest n/w ¾Launch of WiMax rollout cover 1 billion ¾Launched “Classic” – Globalcom became #2 handset ¾NGN expansion brand ¾Presence i
Slide 8: Strong growth – multiple times since listing
Reliance Communications Strong growth – multiple times since listing FY 2009* 90% FY 2008 CDMA +GSM 90% FY 2006 CDMA 200k+ (60k) 40% 120k+ Coverage CDMA (36k) Tenancy capacity 40K (10k) 48 mn 70 mn (towers) Customers 20 mn 207k RKms Fibre 165k RKms 300k RKms (Domestic + Int’l) * Analyst estimates 8
Slide 9: Strong intellectual capital
Reliance Communications Strong intellectual capital 35 % professionals and 65 % other qualifications Average age 29 years Over 50,000 employees Added over 11,000 employees during the previous year Announced widest employee stock option plan in the industry We bet on people 9 of 77 confiden
Slide 10: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Retail Financials Looking Ahead 10 of 77 confidential
Slide 11: Targets the largest untapped population in the world
Wireless Business Targets the largest untapped population in the world Low wireless penetration… …Leading to strong revenue growth 140% 50% 122% 120% 40% 40% 100% 89% 82% 84% 30% 80% 65% 60% 19% 19% 20% 41% 40% 9% 20% 10% 7% 20% 3% 0% 0% 0% India China Brazil Japan US France UK Japan France UK US Ch
Slide 12: Mobile subscribers in India to cross 500 mn in 3 years
Wireless Business Mobile subscribers in India to cross 500 mn in 3 years… 260 600 50% 9.9 256 Mobile Subscribers (mn) 44% Subscriber additions (mn) Penetration 500 250 8.4 38% 40% 400 5 % 530 240 8.6 3 30% GR 444 30% C A 8.0 300 22% 230 348 20% 8.2 200 14% 220 256 8.0 9% 161 10% 100 210 96 205 0 0%
Slide 13: One of the fastest growing wireless companies globally
Wireless Business One of the fastest growing wireless companies globally Among top 2 operators with 46 mn wireless subscribers - Prepaid subscriber additions drive growth - 90% of total subscribers Key Performance Indicators - EBITDA margins among the highest in the industry - >40%... - … despit
Slide 14: Currently national CDMA + Regional GSM player
Wireless Business Currently national CDMA + Regional GSM player RCOM will replicate its dual service success nationwide CDMA + GSM services RCOM Nationwide (1/3 of India) Dual circle Market share Market share 18%+ 30%+ Dual circles #1 position in dual technology (CDMA & GSM) service areas 14 of 77 c
Slide 15: World's largest network roll-out being executed
Wireless Business World’s largest network roll-out being executed 90% population 24,000 towns 500,000 villages coverage Seamless Voice, multimedia, video and Internet connectivity to one billion Indians All towns in India with >5,000 population are covered on RCOM network Almost 100% populatio
Slide 16: GSM network exploits huge capex and opex synergies
Wireless Business GSM network exploits huge capex and opex synergies Radio < 15% investment bn Electronics $ 10 Retail Network ~ US Sales & Leveraged for Distribution Multiple businesses t: incl. CDMA +GSM BPO + Call Center ntran 3G Ready IT Systems Infrastructure ew e Billing + CRM + SAP 85% of cap
Slide 17: Balanced portfolio – CDMA & GSM
Wireless Business Balanced portfolio – CDMA & GSM Technology Advantages CDMA GSM Unlimited usage plans Spectrum efficiency PCO & FWP Mobile internet dominance Wireless Data capacity ATM & PoS Multimedia/Video capability Near 3G experience GSM ecosystem - 75% of Handset range at all price points Indi
Slide 18: Dual network offers additional market share levers
Wireless Business Dual network offers additional market share levers Monthly net adds of 8 mn subscribers Existing growth Impetus from network expansion in momentum semi-urban/ rural areas Broad Market Segmentation Corporate Requirement Retail/Family Cross technology Similar CUG family plans Sen
Slide 19: India's No. 1 Wireless Data Operator
Wireless Business India’s No. 1 Wireless Data Operator Customer Experience - High speed internet across the entire network covering 15000 towns and 4 lakh villages - “Internet on the move” – major convenience for laptop users - Multiple times faster than dialup internet – major benefit in small to
Slide 20: Cost-effective communication solutions for all segments
Wireless Business Cost-effective communication solutions for all segments POS terminals Cost-effective ATM connectivity to leading banks Largest private PCO operator Largest provider of wireless data with >2 mn installations & cards with coverage in 23K towns >50% market share Supporting nationwide
Slide 21: Multi-channel customer delivery system
Wireless Business Multi-channel customer delivery system World-class design , fit out & ambience at 2,000 exclusive retail showrooms on High streets/Malls High Quality Reach & National footprint through 3,000 distributors & 500,000 retailers 5,000+ Direct & indirect outbound sales force to cat
Slide 22: Key takeaways
Wireless Business Key takeaways Among top 2 players in the largest wireless opportunity globally Largest coverage in the world: covering 1 billion Widest distribution through >2,000 exclusive stores & 500,000 retailers Nationwide GSM launch to fully leverage existing infrastructure Full su
Slide 23: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Retail Financials Looking Ahead 23 of 77 confidential
Slide 24: Infrastructure Tenancy Slots – Market
Reliance Infratel Infrastructure Tenancy Slots – Market RITL Ground based tower 2G, 3G & BWA 700,000 400,000 RITL Roof top tower 200,000 2008E 2009E 2010E Source: Industry Estimates 24 of 77 confidential
Slide 25: Infrastructure sharing has taken off
Reliance Infratel Infrastructure sharing has taken off Pressure on site sharing Growth drivers GSM and 3G roll outs Operator imperatives Active sharing Access large rural allowed population Growth Regulation USO scheme for Spectrum scarcity vs. sharing coverage infrastructure Speed of
Slide 26: Challenges for new entrants
Reliance Infratel Challenges for new entrants Addressing diverse population with different ethnic Demographics backgrounds, geography, cultures, languages & religions Various permissions are required at various stages from starting a company, getting license/spectrum, creating Government network, ri
Slide 27: New entrants cannot afford a delay
Reliance Infratel New entrants cannot afford a delay Cumulative cash flows for national roll-out (GSM) Reliance Infratel 25,000 will help reduce 20,000 cost and reduce Cummulative cash flows (Rs. Crore) time to market 15,000 10,000 Cash break-even 5,000 for new entrants 0 advanced by about -5,00
Slide 28: RITL: largest integrated telecom infrastructure provider
Reliance Infratel RITL: the largest integrated telecom infrastructure provider with 280,000 slots capacity by Mar’10 Pan India network with a presence in all 23 telecom circles In “000s Largest slot portfolio of 120 K slots Significant expansion – build-out of 23K new towers in FY08 and 280 24
Slide 29: Fast track project management & execution
Reliance Infratel Fast track project management & execution Over 100,000 dedicated personnel deployed 7,000 engineers deployed for project management and execution 20 Chinese factories working round the clock ~3,500 vendor teams committed for erection 40 state-of-the-art warehouses establi
Slide 30: Ingredients for high returns to investors
Reliance Infratel Ingredients for high returns to investors Market developments post 5% private placement - Increased visibility on new players entering the market (License has been issued to new entrants) - Recently, start-up spectrum has been allocated to some of the existing operators for their
Slide 31: Key takeaways
Reliance Infratel Key takeaways Highest tenancy capacity in the industry 280K slots by 2010 One stop shop for both passive & active infrastructure - 4X multi-tenancy towers - Fiber optic connectivity and full back-end support - Full suite of services for tenants Anchor customer driven strategy
Slide 32: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Retail Financials Looking Ahead 32 of 77 confidential
Slide 33: Axes of Growth for Global Business
Globalcom Axes of Growth for Global Business Profitable Growth n Customer Delight io t va no In Data Center e ic Managed Storage rv Se Multi Pronged Growth for Reliance Globalcom 33 of 77 confidential
Slide 34: Suite of leading brands and services
Globalcom Suite of leading brands and services Managed Wholesale Enterprise Consumer Wireless Services Capacity Managed Ethernet Virtual Calling Card Managed Contact Infrastructure (Metro, WAN, VPLS) Global Roaming Center Managed Managed Premium Managed Storage Bandwidth Internet
Slide 35: Profitability already ahead of many other industry leaders
Globalcom Profitability already ahead of many other industry leaders All figures in US$ Mn 36% 26% 28% 28% 18% 16% 15% 2007/ FY08 EBITDA % 4% consolidated Source: Analyst reports, Company Analysis Amongst Front runners in Profitability 35 of 77 confidential
Slide 36: We have only scratched the surface of the market potential
Globalcom We have only scratched the surface of the market potential for Reliance Globalcom Services Provided 2007F Global Market Demand ($bn) Typical margins Managed Services $95 bn $85 bn 45%–65% Consumer $95 bn $95 bn 15%–30% Enterprise $90 bn $90 bn $90 bn 30%–55% Wholesale $5 bn $5 bn $5 bn $5
Slide 37: Reliance's acquisition of FLAG initiated a transformation
Globalcom Reliance’s acquisition of FLAG initiated a transformation Large Network 9 9 Global Connectivity 8 9 Emerging Market 8 Strength 9 9 Infrastructure & Capacity Services 9 8 Channel Partner Strategy 9 8 Managed Connectivity & Consumer Svcs. 9 9 Experienced Operations Team 9 8 Scalable Low Cost
Slide 38: Transformed into Global Service Delivery Platform
Globalcom Transformed into “Global Service Delivery Platform” Managed Contact Center Virtual Calling Card Audio Conferencing In fra i t y str a c uc a p tu C re Data Center et IP Transit Managed Services Mgd Ethern g IP in N VP LS Ap LC am pli Ro MP Ho cati ste ons d Managed Storage From infrastruct
Slide 39: World's largest IP enabled optic fiber cable
Globalcom World’s largest IP enabled optic fiber cable U.S. Metro India Metro 99 87,000 87,000RKms RKms 99 GDP: GDP:US$ US$3535Trillion Trillion (~85% (~85%ofoftotal) total) Existing FLAG Global Network NGN Expansion under progress Current Post-NGN FY 2003 (incl. FALCON + Yipes) (under execution) In
Slide 40: Extensive Metro Coverage in the U.S.
Globalcom Extensive Metro Coverage in the U.S. 99 22,000 22,000Metro MetroRKms RKms Seattle 99 GDP: GDP:US$ US$4.6 4.6Trillion Trillion Chicago (~40% (~40%ofoftotal) total) San Francisco Boston Denver San Jose New York Philadelphia Washington DC Los Angeles San Diego Dallas Houston Miami We connects
Slide 41: Our Data Centers
Globalcom Our Data Centers U.S.A, U.K., France, Hong Kong, Taiwan and India. London Hosting Center Skewjack Northport Plerin Island Park Paris 325 Hudson Hong Kong Mumbai Taipei Bangalore Chennai 12 Hosting facilities in 6 countries with over 1 million sq. ft. colo space 41 of 77 confidential
Slide 42: Products: Carriers - NLD
Globalcom Products : Carriers - NLD 1 Duct Multiple Intercity PVC Conduits to carry OFC 2 Dark Fiber State-of-the-art high capacity DWDM transport Pan-India Carrier grade co-location equipped 3 Co-location with AC, DC power 4 Bandwidth 2 Mbps to 2.5 Gbps capacity with mesh topology Capacity deployme
Slide 43: Products: Carriers - ILD Voice
Globalcom Products : Carriers - ILD Voice Global voice infrastructure and capabilities More than 200 carrier relationships; 50+ countries direct routes Market leader for India Inbound business 1st Indian ILDO to deploy NGN Voice infrastructure globally Netherland Spain Austria France Russia
Slide 44: Products: Retail - Reliance Global Call
Globalcom Products : Retail - Reliance Global Call Virtual calling services - from USA, Canada, UK, Australia, New Zealand, Hong Kong, Malaysia & Singapore to over 200 countries Travel Communication services - Calling Card - Global SIM - Call Transfer service Addressing the Communications needs
Slide 45: Unmatched product, customer, and delivery capabilities
Globalcom Unmatched our product, customer, and delivery capabilities Capacity & Coverage Ethernet leadership Managed Svcs Consumer Voice Emerging mkts Scalable Delivery Center We are comparable with AT&T, BT, Verizon on most Growth Drivers 45 of 77 confidential
Slide 46: Unique play on growth of digital application and content distribution
Globalcom Unique play on the exponential growth of digital application and content distribution spanning developed and emerging markets Leverage the Assets in ground to introduce new services in Vertical Stack with marginal investment Spectrum Bank in Emerging Markets Close to Customer and und
Slide 47: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Retail Financials Looking Ahead 47 of 77 confidential
Slide 48: Underserved market: Provides strong growth opportunity
Enterprise Business Underserved market: Provides strong growth opportunity Broadband market segment revenue (US$ bn) US$ 13 bn bn 8 $ US + US$ 5.5 bn FY2006 FY2010 Household SMB + SME Enterprise Source : Industry Report Indian Market to grow by US$ 8 bn in the next 3 years 48 of 77 confidential
Slide 49: RCOM: Best positioned to drive growth
Enterprise Business RCOM: Best positioned to drive growth > 850,000 buildings in top 44 cities to our Atlantic fiber network in 365 Biz Districts Fiber Largest capability in an all IP MPLS enabled Ring Meshed Core Core network to serve > 7.5 mn Voice & Data customers Pacific Most comprehensive
Slide 50: Access to state of the art Network Infrastructure
Enterprise Business Access to state of the art Network Infrastructure Pan India, Convergence ready broadband network Largest & Integrated with RCOM’s nationwide/global network infrastructure Largest MPLS enabled core data network with multi-modal traffic capability Resilient network deliveri
Slide 51: 850 of Top 1,000 Indian enterprises are our customers
Enterprise Business 850 of Top 1,000 Indian enterprises are our customers FMCG Segment Services Segment Telecom Operators FMCG Segment Services Segment Telecom Operators Winning >50% of new business generated in the segment 51 of 77 confidential
Slide 52: Established leadership among competitors
Enterprise Business Established leadership among competitors Key Strengths Largest Centrex Implementations # Network architecture & capability Service provider Single largest implementation No of 1000+ lines installation Superior product suite Reliance 19,500 lines 13 Telecom + IT Infrastructu
Slide 53: WiMax is our access technology
Enterprise Business - SMEs WiMax is our access technology: Fastest subscriber take-up Received spectrum for top 10 cities in India - >20K customers acquired in these Mumbai, Bangalore and Pune - Will launch services in Delhi, Kolkata, Chennai, Hyderabad, Ahmedabad, Baroda & Surat by May 2008 Ser
Slide 54: Reliance Internet Data Centers (IDC)
Enterprise Business - IDC Reliance Internet Data Centers (IDC) Reliance Data Centers are specialized facilities that host complex array of IT hardware running Mission-critical software applications of its Customers - Extremely robust physical structure - Very High Power & Cooling requirement - Car
Slide 55: IDC: > 60% market share in India
Enterprise Business - IDC IDC: > 60% market share in India Six data centres with level 3 + accreditation – more than 2,60,000 sq ft of facilities space Hosting > 20,000 systems and > 1400 terabyte of information Geographic redundancy Wide & complex application hosted - Core Banking, ATM/ Int
Slide 56: Full service Telco
Enterprise Business Full service Telco Cover all customer segments - Consumer - SMB - Enterprise Service Providers covering full spectrum of services - Wireless – Mobility, Data connectivity, Internet - Wireline - MPLS, Leased line, Internet - Hosting - Data centres, DR backup - Global connectiv
Slide 57: Key takeaways
Enterprise Business Key takeaways India’s leading provider of Enterprise services - >50% Market share Built competitive advantages on State of the art infrastructure - 3-4 times over next competitor Largest IDC capacity in India - will be among the top 3 in the world by March 2009 Fastest Wi
Slide 58: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Retail Financials Looking Ahead 58 of 77 confidential
Slide 59: Target one of the largest + fastest growing pay TV markets
Home Business Target one of the largest + fastest growing pay TV market globally 400 >30% total HHs are served on C&S in India, mostly Analog 350 300 DTH HHs Digital cable 4% HHs 250 TV HHs (mn) 1% 200 150 100 50 0 Analog Cable HHs a Au es Th ia a Pa m a S lia n nd n 95% re di U in Ph ista pa s na n
Slide 60: Big TV (DTH) - to be launched shortly
Home Business Big TV (DTH) - to be launched shortly Key service differentiators - More channel choice - Pure Digital viewing - 32 Cinema channels - Easy program guide - Quick channel select - Interactive applications (iNews, iGames, iCricket, etc) - Superior Mpeg 4 technology Pioneering HD Exper
Slide 61: BIG TV Interface: A league apart
Home Business BIG TV Interface: A league apart BIG TV SELECT (Mosaic) Zapper Guide Guide (EPG) Cinema (PPV) Intuitive and intelligent viewer interface makes it easier and faster 61 of 77 confidential
Slide 62: Product miles ahead of any competing platform
Home Business Product miles ahead of any competing platform BIG TV Dish TV Tata Sky DD Direct No. of video channels 240+ 140+ 120+ 40+ Technology MPEG 4 MPEG 2 MPEG 2 MPEG 2 Exclusive movie channels Up to 32 Up to 6 Up to 6 NA Flexibility to select package Completely Partly NA NA Big TV Advantages
Slide 63: Leveraging Existing Infrastructure to maximise value
Home Business Leveraging Existing Infrastructure to maximise value Infrastructure Billing System - Co-location of Broadcast centre, Up-link infrastructure, Call centre Operation support systems Billing & Collection, Business Processes Sales and Distribution - Reliance Web World, Web World Expr
Slide 64: IPTV services – to be launched initially in metros
Home Business IPTV services – to be launched initially in metros IPTV to provide interactive TV & Video services using our existing Metro Ethernet network To leverage last mile connectivity of over 1Mn buildings Exclusive alliance with Microsoft for Indian market First and only HDTV in India
Slide 65: Key takeaways
Home Business Key takeaways At the forefront of the world’s largest opportunity in the home entertainment sector Similar to mobility inflection in 2003, Home Entertainment is on the verge now - 225 mn H/H, 120 mn TV H/H, almost 75 mn C&S H/H - but with a minimal 5 mn DTH penetration presents a h
Slide 66: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Retail Financials Looking Ahead 66 of 77 confidential
Slide 67: The Largest integrated multi-format branded retail entity
Retail Business The Largest integrated multi-format branded retail entity Æ Telecom: CDMA & GSM handsets + airtime + accessories Æ Digital Broadband Services, making convergence a reality Current After Expansion No. of Stores 2,000 5,000 No. of cities 600 1,100 covered Sq. ft area 1.1 mn 2.5 mn 67 o
Slide 68: Adding a New Dimension in Retailing – Services Retail
Retail Business Adding a New Dimension in Retailing – Services Retail Sales & Services for Handsets, Airtime & Accessories Mobile Store Handsets of All major vendors + private label devices High speed internet, Video conferencing, Broadband Gaming, Digital services Services e-Education, e-Re
Slide 69: Who do we serve?
Retail Business Who do we serve? 25 mn customer interactions @ retail - 15 mn of Reliance Mobile customers for sales & services - 10 mn for other businesses & services Over 1,500 large enterprises & MNC’s - for 20,000 hrs of video conferencing / month Over 1,000 SME’s Over 1.5 mn registered
Slide 70: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Retail Financials Looking Ahead 70 of 77 confidential
Slide 71: Consistent Performance
RCOM Financials Consistent Performance Quarterly Net Profits (Rs. cr) Yearly Net Profits (Rs. cr) 1,800 6000 5,401 1,503 1,500 % 5000 9 % 93 24 1,200 AGR 4000 AGR C 1,024 C 3,164 900 3000 600 2000 403 300 1000 444 0 0 4Q FY06 4Q FY07 4Q FY08 FY 2006 FY 2007 FY 2008 Net Profit - 12 times in just 2 ye
Slide 72: Key Performance Indicators
RCOM Financials Key Performance Indicators EBITDA Margin Net Profit Margin 45% 30% RCOM RCOM Bharti 25% 40% Bharti 20% 35% Idea 15% Idea 30% 10% 1Q FY08 2Q FY08 3Q FY08 4Q FY08 1Q FY08 2Q FY08 3Q FY08 4Q FY08 RPM (Rs) ARPU (Rs) 0.85 440 380 Bharti 0.75 RCOM RCOM Bharti 320 Idea Idea 0.65 260 1Q FY08
Slide 73: Among highest EBITDA margins globally
RCOM Financials Among highest EBITDA margins globally… EBITDA Margins 60% 54.2% 50% 47.8% 43.6% 41.4% 41.6% 38.6% 40% 35.3% 33.2% 29.5% 29.7% 28.1% 30% 20% 10% l ne i m te on N &T tr a rt nc e m ile co ng riz KP AT fo ls a il a co ob le Si Ve d a T e Bh le M Te Vo Re Te a h a in tis in Ch Br i Ch …d
Slide 74: Strong Financial Platform
RCOM Financials Strong Financial Platform Total Assets Rs. 73,811 cr Net worth Rs. 25,643 cr Return on Net worth 33.7% EBITDA Margin 43.6% …Net debt to equity at 0.39 – potential to borrow US$ 13 bn for growth 74 of 77 confidential
Slide 75: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Retail Financials Looking Ahead 75 of 77 confidential
Slide 76: RCOM: Looking Ahead
Looking ahead RCOM: Looking Ahead RCOM will have world’s largest network covering one billion people in more than 23,000 towns and 500,000 villages including national & state highways Continue expansion to high growth – DTH, Retail, BPO, IT services – exploiting internal capabilities Continue
Slide 77: Thank you
RELIANCE Anil Dhirubhai Ambani Group
Reliance Communications — Investor Presentation (May 2008) on 6ix