Reliance Communications Limited · NSE:RCOM

Reliance Communications — CLSA Investor Forum September 2006

75 slides from Reliance Communications's conference presentation, September 2006

1. Slide 1: India's only Integrated Play on the Explosive Growth of Communications

   India’s only Integrated Play on the Explosive Growth of Communications CLSA Investor Forum September 2006

2. Slide 2: Forward looking statements – Important note

   Forward looking statements – Important note This presentation and the following discussion may contain “forward looking statements” by Reliance Communications Limited (“RCOM”) that are not historical in nature. These forward looking statements, which may include statements relating to future results

3. Slide 3: Agenda

   Agenda † Introduction to Reliance ADA Group † Communications opportunity in India † What is Reliance Communications? † Our strategic positioning and strengths † Financials and summary 3

4. Slide 4: Reliance Anil Dhirubhai Ambani Group

   Reliance Anil Dhirubhai Ambani Group † 1 year old group Reliance ADA Group † Over 33 million customers – by far the largest in India Communications † 8 million individual shareholders – Power among the largest in the world Natural Resources † Group assets of over US$ 7 billion and & Energy Group net

5. Slide 5: Group DNA

   Group DNA † Strategic long-term vision † Entrepreneurial and dynamic spirit † Positioned in high growth sectors † Capturing value across integrated chain † Customer facing, consumer centric businesses † World-class technology driven Committed to maximizing shareholder value 5

6. Slide 6: Group DNA

   Group DNA † Financially conservative † Young and committed global team † Transparency and global standards of corporate governance † Promoters’ interests completely aligned with 8 million shareholders We bet on people 6

7. Slide 7: Unprecedented unlocking of value for all shareholders on creation of the group

   Unprecedented unlocking of value for all shareholders on creation of the group Total M-cap- US$ 31 bn % De-merged 7 +4 entity – M-cap US$ 9 bn RIL – M-cap RIL – M-cap US$ 21 bn US$ 22 bn Market Cap of RIL on de-merger Market Cap of RIL + de-merged date entities on 6th March 2006 US$ 10 billion of va

8. Slide 8: Reliance Communications

   Reliance Communications † Largest integrated communications company in the private sector in India † Serving over 26 million individual and corporate customers on a global basis † Strategic presence in all high growth segments - wireless, global and broadband † One of the largest Next Generation Net

9. Slide 9: Reliance Energy

   Reliance Energy † India’s #1 integrated private sector power company † Engaged in entire value chain : † Generation (Coal, Gas, Hydro, Wind) † Transmission † Distribution † Trading † Distributing more than 5,000 MW – the largest in India † Serving more than 5 million industrial, commercial and resid

10. Slide 10: Reliance Natural Resources

    Reliance Natural Resources † Vertically-integrated, end-to-end business initiatives: † Exploration, mining, production and sourcing of a wide range of fuels: natural gas, coal, coal bed methane, LNG † Fuel management and transportation † Gas distribution in cities † Moving forward with strong financ

11. Slide 11: Reliance Capital

    Reliance Capital † Top 3 private sector financial services company - net worth US$ 1 billion † Business portfolio includes: - Mutual Funds - Life and General Insurance - Stock broking - Custody and wealth management - Private Equity † Top 3 Mutual Funds in India – AUM over US$ 6 billion † Over 3 mil

12. Slide 12: Adlabs Films and BIG Radio

    Adlabs Films and BIG Radio Adlabs Films † Significant presence in all segments of the movie value chain † Exhibition: 46 multiplex screens, rolling out 150 in next 2 years † Processing: 60% market share in Bollywood † Production: Significant slate of Bollywood movies in next 2 years † Leading player

13. Slide 13: Agenda

    Agenda † Introduction to Reliance ADA Group † Communications opportunity in India † What is Reliance Communications? † Our strategic positioning and strengths † Financials and summary 13

14. Slide 14: India telecom market growth forecasts

    India telecom market growth forecasts Telecom services revenue (US$ Bn) 29.1 n il lio b .7 13 $ US + 15.4 FY06 FY09F Wireless Fixed Long distance Data Source : Industry Report Telecom <2% of GDP in India, compared with >4% in China 14

15. Slide 15: Industry landscape

    Industry landscape Wireless Long Distance Data Fixed line Growth High High High Low RCOM Bharti BSNL Hutch MTNL VSNL+Tata RCOM uniquely positioned in all high growth segments 15

16. Slide 16: Supportive regulatory framework

    Supportive regulatory framework † Adequate spectrum available or being cleared to support growth in 2G/2.5G † 3G spectrum and policy in process of being cleared, with service expected to be launched in 2007 † WiMax being actively considered in 2.5 GHz band and 3.5 GHz band to provide affordable broa

17. Slide 17: Agenda

    Agenda † Introduction to Reliance ADA Group † Communications opportunity in India † What is Reliance Communications? † Our strategic positioning and strengths † Financials and summary 17

18. Slide 18: Dominant position across multiple segments

    Dominant position across multiple segments # Wireless traffic – 350 million mins/day Public Call Office (PCO) lines – 48% market share International Long Distance (ILD) voice – 45% market share US-India retail voice carrier – 40% market share Internet Data Center (IDC) services – 62% market share In

19. Slide 19: Who do we serve?

    Who do we serve? † Over 26 million consumers in India † Over 700,000 individual global consumers † Over 200 major global carriers † Over 250 MNCs † Over 700 out of Top 1,000 Indian large enterprises † Over 10,000 Indian SMEs Unparalleled customer franchise in India and globally 19

20. Slide 20: Strategic presence in all growth segments

    Strategic presence in all growth segments Net service revenue pre-eliminations (%)- 1Q FY07 Global National and international voice, virtual calling card, international capacity, Wireless 28% internet bandwidth, CDMA+GSM voice, managed data mobility, fixed services 65% wireless, internet 7% access,

21. Slide 21: Fully integrated IP-enabled infrastructure platform

    Fully integrated IP-enabled infrastructure platform Convergence Business / Infotainment Mobile Data Centre CONVERGED SERVICES PLATFORM Application Productivity Applications BPM Convergence Voice Data Internet Video Service • Bundled Services - Flexible in Design , Targeted for Specific Markets • Con

22. Slide 22: Building capabilities through Alliances…

    Building capabilities through Alliances… Network IT Interconnect Building the right strengths through Network, IT and Interconnect 22

23. Slide 23: Capabilities converted to sustainable competitive advantage…

    Capabilities converted to sustainable competitive advantage… Partner Area of Excellence Value Created Lucent Wireless Access Network, The largest, state-of-art end-to-end integrated network Alcatel Transmission (backbone) – domestic and international, built in recent times Nortel Ericsson Services f

24. Slide 24: Embedded opportunities for value creation

    Embedded opportunities for value creation Contact Centers † 6,000 seat multi-location, multi lingual † Largest single location facility in the country Retail Presence - Reliance World † 1,650 exclusive stores in 700 towns † Largest chain of digital entertainment centres in the country Network Operat

25. Slide 25: Embedded opportunities for value creation

    Embedded opportunities for value creation Passive Infrastructure † Nationwide single occupied radio towers and fiber ducts † Cell sites provide most extensive coverage of any private operator in India GSM Franchise in Eastern India † Most profitable GSM franchise in the whole of India † Over 10 year

26. Slide 26: Agenda

    Agenda † Introduction to Reliance ADA Group † Communications opportunity in India † What is Reliance Communications? † Our strategic positioning and strengths † Wireless † Financials and summary 26

27. Slide 27: Accelerating growth in wireless

    Accelerating growth in wireless Wireless subscriber base (Mn) 349 291 224 154 96 FY06 FY07E FY08E FY09E FY10E Source : Industry estimates Increasing affordability and population coverage 27

28. Slide 28: Monthly net adds surpass China

    Monthly net adds surpass China India (GSM+CDMA+FWT) China (GSM+CDMA+PHS) 8.0 6.0 4.0 2.0 0.0 Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06 India – 120 million wireless subscribers; China – 480 million subscribers 28

29. Slide 29: Huge opportunity to be addressed in rural India

    Huge opportunity to be addressed in rural India Tele-density estimates 26% 2% Urban Rural Source : TRAI report for 2005 Unprecedented opportunity in the rural market 29

30. Slide 30: Our wireless services

    Our wireless services Consumer Enterprise Mobile D D Fixed wireless phone D D Wireless internet access D D Wireless multimedia D D Wireless data-VPN D D PCO / payphone D D Broadest range of wireless services of any operator 30

31. Slide 31: Frontrunner in the leadership stakes

    Frontrunner in the leadership stakes Wireless subscriber base (in Mn) 23.1 22.5 19.6 20.2 17.0 16.3 14.9 14.1 2QFY06 3QFY06 4QFY06 1QFY07 Bharti RCOM RCOM consistently adding more than 1 mn customers per month 31

32. Slide 32: Continuous innovation

    Continuous innovation Innovative ‘Lifetime’ First to launch ‘One India plan structure plan’ across all networks Innovative bundled New interactive kiosk for offers with our partners promoting data service A new initiative to increase our On-net calls A pioneer in introducing new products 32

33. Slide 33: Network dimensioned ahead of exponential growth

    Network dimensioned ahead of exponential growth Coverage at a glance – June 06 Wireless network coverage - June 06 Urban population 97% Rural population 42% National highways 50% Railway lines 58% Census towns 3,881 Non-census towns/villages 245,728 Population covered 54% Highest coverage of any pri

34. Slide 34: Power of distribution - Handsets

    Power of distribution - Handsets Reliance Nokia Integrated Handset design, Business communications service manufacturing, sales provider Selling capability 25 mn p.a. 20 mn p.a Handset outlets 90,000 42,000 4,600 towns serviced by 250 5,000 towns, serviced by Presence distributors / micro 1,500 dist

35. Slide 35: Power of distribution – Retail presence

    Power of distribution – Retail presence Channel Dimensions † Largest chain of digital entertainment and † 1,650 Reliance World stores † Presence in 700 towns communication stores † Over 700,000 sq.ft. of net retail space † Provides high level of branding and visibility † Services include † Multi-cit

36. Slide 36: Wireless internet coverage everywhere

    Wireless internet coverage everywhere Reliance Others Availability Over 4,500 towns < 25 towns Speed 144 kbps 9.6 / 56 kbps † 350,000 wireless internet customers on Reliance network † No serious competition from GSM, GPRS, EDGE or Wi-Fi The entire nation is our Hotspot 36

37. Slide 37: Unrivalled wireless multimedia platform

    Unrivalled wireless multimedia platform Reliance Mobile Unparalleled user experience in India World † “Click, Browse and Select” † Audio-video content delivery across all tiers of phones Platform, phones and network superiority † Over 15 million multimedia enabled phones active † Platform supporting

38. Slide 38: “Bus Button Dabao”… (Just press a button)

    “Bus Button Dabao”… (Just press a button) “Bus Button Dabao” – a Tie-ups with top content campaign to popularize the providers for mobile TV, ease of accessing the music and ring-tones Reliance Mobile World Creating a market for mobile data 38

39. Slide 39: Quarterly financial results

    Quarterly financial results Revenue and EBITDA (US$ Mn) 36% 36% 32% 529 461 431 165 190 138 Q3FY06 Q4FY06 Q1FY07 Revenue EBITDA EBITDA Margin Note: US$1=Rs46 Consistent revenue growth and margin improvement 39

40. Slide 40: Key performance indicators

    Key performance indicators Revenue per minute (cents/min) Churn (%) 2.0 5.5% 1.7 1.5 2.6% Avg. GSM Avg. GSM 2.1% Q4 FY06 Q1 FY07 Q4 FY06 Q4 FY06 Q1 FY07 Q4 FY06 ARPU (US$/month/sub) Multimedia users (mn) 7.9 6.4 8.2 8.2 8.0 Avg. GSM Q4 FY06 Q1 FY07 Q4 FY06 Q4 FY06 Q1 FY07 Increased revenue per minut

41. Slide 41: Summary

    Summary † Strongly positioned for accelerating market growth † Technology neutral † Key competitive strengths † Brand † Network † Distribution † Customer acquisition machine firing on all cylinders † High revenue growth momentum and increasing operating leverage † Significant improvement in KPIs Ind

42. Slide 42: Agenda

    Agenda † Introduction to Reliance ADA Group † Communications opportunity in India † What is Reliance Communications? † Our strategic positioning and strengths † Global † Financials and summary 42

43. Slide 43: Surging volume growth in long distance voice

    Surging volume growth in long distance voice Long distance minutes (Mns) 76,190 47,900 31,390 14,455 9,993 6,912 FY05 FY06 FY07 NLD ILD Note: NLD refers to inter-circle traffic while ILD includes both incoming and outgoing traffic Generated by huge increase in penetration and affordable pricing 43

44. Slide 44: Massive increase in bandwidth demand in emerging markets

    Massive increase in bandwidth demand in emerging markets Cumulative bandwidth demand (GBs) India Middle East 438 315 296 212 224 160 169 119 123 86 68 46 05 06F 07F 08F 09F 10F 05 06F 07F 08F 09F 10F Source : Telegeography Generated by huge increase in internet and IT adoption 44

45. Slide 45: Global business product portfolio

    Global business product portfolio Voice Data † International † Bandwidth † Wholesale – Bilateral † IRU – Carrier of Carriers Carriers † Leased Circuits – † Retail – Reliance IndiaCall Corporate † Internet † National † Wholesale – Carrier of † Managed Data Services Carriers Among Top 5 global carrier

46. Slide 46: Portfolio delivered through global network

    Portfolio delivered through global network † FLAG 65,000 RKms undersea OFC network † PoPs in 28 countries across 5 continents † Leadership in Middle East, India, and East Asia Largest privately owned seamless global network 46

47. Slide 47: Global network further strengthened by FALCON

    Global network further strengthened by FALCON † Largest private cable build of past 5 years † US$ 400 mn project † Completed 20% under envisaged project cost and 4 months ahead of schedule † Very strong levels of pre-sales – de-risking investment † 11,500 cable route kms, 18 landing points in 12 cou

48. Slide 48: Anchored by largest fully owned NLD network

    Anchored by largest fully owned NLD network † 60,000+ RKms intercity backbone † 20,000+ Rms of intracity metro access rings † Ring and Mesh architecture † Largest MPLS enabled core network † India’s first and only Next Generation Network Seamless connectivity deep into every part of India 48

49. Slide 49: Strategic positioning – Long distance voice

    Strategic positioning – Long distance voice RCOM VSNL Bharti Inter-city route km 68,000+ ~34,000 ~35,016 NLD interconnects with BSNL 800+ ~220 ~210 Traffic termination at local exchange ~ 92% ~72% ~72% Cities – MPLS PoPs 170+ ~30 ~50 † >40% market share in international long distance voice † Cost of

50. Slide 50: #1 ILD retail voice carrier US – India, with 40% market share

    #1 ILD retail voice carrier US – India, with 40% market share † Retail inbound Virtual Calling Service † Brand leader within 2 years from US, Canada and UK † Over 700,000 individual customers † Entirely web based † Churn <6% over 18 months † Launched in May 2004 † ARPUs – US$30 per month Replicating

51. Slide 51: Quarterly financial results

    Quarterly financial results Revenue and EBITDA (US$ Mn) 23% 19% 15% 302 308 268 46 57 62 Q3FY06 Q4FY06 Q1FY07 Revenue EBITDA EBITDA Margin Note: US$1=Rs46 Strong margin improvement driven by data turnaround 51

52. Slide 52: Summary

    Summary † Surging volumes in long distance voice and international bandwidth † Market leading retail / wholesale long distance voice franchise in India and overseas † Leading provider of international bandwidth and data services in highest growth regions globally † Highly scalable assets with lowest

53. Slide 53: Agenda

    Agenda † Introduction to Reliance ADA Group † Communications opportunity in India † What is Reliance Communications? † Our strategic positioning and strengths † Broadband † Financials and summary 53

54. Slide 54: Significant data opportunity @work and @home

    Significant data opportunity @work and @home Corporate data services revenue (US$ Mn) Telecom and TV penetration (in Mns) 1,494 108 1,394 1,280 1,147 1,012 870 61 645 47 4 1.7 04 05 06F 07F 08F 09F 10F Broadband PC Fixed lines CATV TV lines households households households Source : IDC Source : TRAI

55. Slide 55: Achievements in 1st year of operations

    Achievements in 1st year of operations † Initial focus on enterprise segment † Launched in Premier Business districts in Top 30 Metros † Existing 20,000 Rkms of Metro fiber Î Unique SDH + Ethernet † Over 180,000 buildings on-net – increase of 125,000 in 6 months † Over 40% market share in buildings

56. Slide 56: Most complete product portfolio of any operator

    Most complete product portfolio of any operator Voice Data Large MPLS VPN Centrex (Smart Office) Leased Lines, IPLC Enterprises E1 DID Gigabit Ethernet RSN (migrating to 1- Office Internet 800) Video Conferencing Audio Conferencing IDC - Managed Hosting, Storage & DR Professional Support Services Sm

57. Slide 57: Strong in-roads into marquee accounts

    Strong in-roads into marquee accounts IT / ITES Segment BFSI Segment Media Segment FMCG Segment Services Segment 70% of Top 1,000 Indian enterprises are now our customers 57

58. Slide 58: Our competitive differentiation

    Our competitive differentiation Key Strengths Largest Centrex Implementations Service Single largest No of 1000+ lines provider implementation installation † Network architecture & capability † Superior product suite Reliance 8,500 lines 6 † Telecom + IT Infrastructure (IDC) Bharti 1,200 lines 2 † M

59. Slide 59: Development work on-going for IPTV

    Development work on-going for IPTV † Consumer broadband penetration in India still in its infancy but with huge future potential – TV Homes vs PC Homes (108 mn vs 4 mn) † IPTV technology is gradually getting stabilized for a mass market roll out † Keenly watching roll outs by AT&T, T-System, BT and

60. Slide 60: Quarterly financial results

    Quarterly financial results Revenue and EBITDA (US$ Mn) 39% 31% 20% 49 42 28 19 13 5 Q3FY06 Q4FY06 Q1FY07 Revenue EBITDA EBITDA Margin Note: US$1=Rs46 Franchise in rapid roll out phase, but still highly profitable 60

61. Slide 61: Summary

    Summary † Data services poised for exponential growth in both enterprise and consumer segments † Initial focus on high value-added enterprise data services as foundation for long term value creation † Leveraging existing 20,000 RKms of metro fiber to rapidly add buildings to our network at low cost

62. Slide 62: Agenda

    Agenda † Introduction to Reliance ADA Group † Communications opportunity in India † What is Reliance Communications? † Our strategic positioning and strengths † Financials and summary 62

63. Slide 63: Completion of corporate re-organization in record period of six months

    Completion of corporate re-organization in record period of six months † On de-merger, RCOM was a holding company with minority stakes in its principal operating companies † Rapid steps taken to put in place a simple, transparent and optimal ownership structure † RCOM has now become the primary oper

64. Slide 64: Top line growth momentum + operating leverage

    Top line growth momentum + operating leverage Consolidated Revenue, Opex, and EBITDA (US$ Mn) Revenue Opex EBITDA 706 444 262 % % % . 1 .4 .3 15 +9 +6 + 646 418 228 Q4FY06 Q1FY07 Q4FY06 Q1FY07 Q4FY06 Q1FY07 Note: US$1=Rs46 EBITDA margin increased to 37.1% from 35.3% Q-o-Q 64

65. Slide 65: Balance sheet

    Balance sheet Balance sheet as at 30th June, 2006 † RCOM strongly capitalized to meet its anticipated † Total Assets: US$ 5.9 billion investment requirements † Substantial capacity to † Net Worth: US$ 2.7 billion leverage balance sheet † US$ 500 million zero coupon † Net Debt: US$ 533 million / high

66. Slide 66: Leveraging assets to enhance returns

    Leveraging assets to enhance returns Annualized RoCE and RoE 16.8% RoE 13.7% RoCE 10.7% 8.6% Q4FY06 Q1FY07 RoE and RoCE targets of above 20% 66

67. Slide 67: Share summary

    Share summary Category Shareholding † Market cap of US$ 14 billion † US$ 5 billion free float Domestic institutions 6.3% /Banks/Mutual funds † Part of MSCI, Nifty and Sensex Indices Foreign investors – FIIs, 14.2% GDRs, NRIs and others † Traded in Futures & Options segment Indian public – over 2 12.

68. Slide 68: Performance and valuation

    Performance and valuation † RCOM share price EV/EBITDA outperforming Bharti and in- Share (LQA) line with Sensex since listing † Highly liquid shares with average daily turnover of RCOM 13.9X US$ 30 million † Market liquidity 10X Bharti Bharti (FII trades) 16.2X Note : LQA – Last quarter annualized

69. Slide 69: Summary

    Summary RELIANCE. 69 Communications

70. Slide 70: Unique value proposition

    Unique value proposition † An integrated platform, facilitating convergence † Growth engines covering the entire telecom spectrum † Largest market shares in highest growth segments † Sustainable capital cost advantage † High operating leverage; rapid margin expansion † Embedded capabilities that com

71. Slide 71: Thank you

    Thank you RELIANCE. 7] Communications

72. Slide 72: Background Material

    Background Material RELIANCE. 72 Communications

73. Slide 73: Key performance indicators - Wireless

    Key performance indicators - Wireless KPI 3Q FY06 4Q FY06 1Q FY07 Revenues (US$ mn) 431 461 529 EBITDA (US$ mn) 138 165 190 EBITDA margin 32% 36% 36% ARPU (US$) 9.0 8.2 8.2 Minutes of usage (bn minutes) 26.22 29.69 31.44 Wireless MOU (per sub/mth) 547 532 491 RPM (US cents) 1.63 1.54 1.67 Churn 2.2%

74. Slide 74: Key performance indicators - Global

    Key performance indicators - Global KPIs 3Q FY06 4Q FY06 1Q FY07 Revenues (US$ mn) 302 308 268 EBITDA (US$ mn) 46 57 62 EBITDA margin 15% 19% 23% Long distance minutes 3,617 3,943 4,299 Note: US$1=Rs46 Strong margin improvement driven by data turnaround 74

75. Slide 75: Key performance indicators - Broadband

    Key performance indicators - Broadband KPIs 3Q FY06 4Q FY06 1Q FY07 Revenues (US$ mn) 28 42 49 EBITDA (US$ mn) 5 13 19 EBITDA margin 20% 31% 39% No. of buildings on net 57,794 101,741 180,759 Note: US$1=Rs46 High profitable growth as franchise rolls out 75

Reliance Communications — CLSA Investor Forum September 2006 on 6ix