Bharti Airtel Limited · NSE:BHARTIARTL
Bharti Airtel — Investor Presentation (March 2017)
49 slides from Bharti Airtel's investor presentation, March 2017
Slide 1: Bharti Airtel Management Presentation – March 2017
Bharti Airtel Management Presentation – March 2017
Slide 2: Disclaimer
Disclaimer The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwise shall be subject to the applicable laws and regulations as amended from time to time. There is no representation that all information relating to the context
Slide 3: Journey Through The Times
Journey Through The Times Start up (1995 - 2000) Land Grab (2001 - 2010) Multiple Plays (2011 onwards) 1998 2004 2008 2010 2011 2013 2014 2015 2016 2017 Pan India #3 data Only First Pan India Launch Acquired First operator operator First operator operator to footprint; direct to Zain; 3G operator in
Slide 4: What Guides Us
What Guides Us Customer Centricity • Win customers for life through differentiated experience, products and world class technology Performance Excellence • Growth despite challenges • Grow market share, strip out waste • Accelerate non-mobile businesses Transparency & Ethical Governance • Highest co
Slide 5: Investment Highlights
Investment Highlights 1 Large residual opportunity 2 Bulk investments already in place; good spectrum bank 3 Diversified operator with scale and dominance in marketplace 4 Demonstrated best in class execution 5
Slide 6: 1. Large Residual Opportunity
1. LARGE RESIDUAL OPPORTUNITY Voice Secularity • Under-penetrated geographies • Unique mobile users at c. 50% of total SIMs (large dual-SIM user base)1 • Declining age dependency2 • Industry consolidation, top 3 operators account for 78% RMS3 Data • India mobile broadband (3G/4G) penetration at 15%4
Slide 7: India, Africa have the lowest wireless penetration
Opportunity India, Africa have the lowest wireless penetration Overall 80% but Rural – ~ 51% Source: Ericsson Mobility Report 2016 7
Slide 8: India: 2nd largest mobile market in Asia, but long way from saturation
Opportunity India: 2nd largest mobile market in Asia, but long way from saturation 2020 734 2019 697 2020: ~54% of total mobile connected devices 2018 660 2017 619 7.7% CAGR 2016 562 2015: ~50% of total mobile connected devices 2015 506 India Unique Subscribers Source: TRAI; Ericsson Mobility Report
Slide 9: India: Industry Consolidation Underway via Revenue Shares
Opportunity India: Industry Consolidation Underway via Revenue Shares 10 Operators 14 Operators 12 Operators 10 Operators 27% • Industry consolidation via market share gains, 34% 30% 36% with top 3 now accounting for over 78% of the industry revenues as of Dec’16 including Telenor (merger subject to
Slide 10: India: Transitioning to a Smartphone Market
Opportunity India: Transitioning to a Smartphone Market 140 170% 180% 125 160% 120 108 104 140% 100 120% 80 80 100% 83% 83% 80% 60 44 60% 40 48% 40% 20 16 29% 11 20% 5% 15% - 0% 2011 2012 2013 2014 2015 2016E 2017E Smartphone shipments YoY 7 out of 10 smartphones shipped in Q2 FY2016 were 4G enabled
Slide 11: Driven by increasingly affordable handsets
Opportunity … driven by increasingly affordable handsets High end smartphones (~ USD 165+) Low end smartphones (~ USD 35) 30 Mn 75 Mn 360 Mn 240 Mn 2014 2020 2014 2020 Prices are expected to fall by 40–50% over the next 3 years for high-end smartphones Source: Ericsson Mobility Report; GSMA Intellig
Slide 12: …and growing appetite for data services
Opportunity …and growing appetite for data services Airtel owned apps Source: Ericsson Mobility Report 12
Slide 13: …will drive increase in consumption
… will drive increase in consumption Opportunity Mobile data traffic data per month in India Source: GSMA Intelligence 2016 13
Slide 14: We continue to innovate across areas that matter
Opportunity We continue to innovate across areas that matter • One App for all the Apps • Suite of apps including Hike, Juggernaut, Wynk Music, Video, MyAirtel Games, Ditto TV, Airtel Payments Bank under My Airtel App • Additional features – Dialer, OpenNetwork • Carrier agnostic music and video app
Slide 15: Significant opportunities exist in payments bank and DTH
Opportunity Significant opportunities exist in payments bank and DTH Digital payments will touch $500bn in India by 2020 No. of pay DTH subscribers projected to increase to 74mn by 2017 Payment Instrument Mix for Countries (2015) No. of DTH subscribers Card Digital Other Paper Cash 74 55 44 2015 201
Slide 16: Fixed broadband and enterprise services market has huge growth potential
Opportunity Fixed broadband and enterprise services market has huge growth potential Fixed broadband subscriptions per 100 Enterprise data services market growth capita, 2015 Collaboration services and Enterprise Mobility India 1.34 are fast growing verticals and are estimated to register growth of
Slide 17: Payments Bank – Untapped Opportunity
Opportunity Payments Bank –Untapped Opportunity There is a need to drive Financial Inclusion in India to digitize cash and bring the un- banked in the folds for organized banking sector Cash v/s non-cash transaction value Unbanked Population (Mn) PMJDY made large dent in unbanked 35% 230 557 415 65%
Slide 18: 2. Bulk Investments in Place
2. BULK INVESTMENTS IN PLACE Spectrum Bank • Successful re-farming of sub-GHz spectrum for 3G • 3G/4G coverage pan-India • Highest spectrum market share ex-MTNL/BSNL Largest network of towers and base stations • 95.3% voice population coverage • Mobile broadband towers up 28.3% over the last year La
Slide 19: India: Investments to Yield Results
Investments India: Investments to Yield Results Industry Nominal leading Wide Largest Prime value of revenue spectrum optical fiber spectrum to liberalized yield/MHz at presence: network yield data spectrum at 2x industry ~22%3 amongst growth: Pan USD 15.7 avg with spectrum private India 3G & billio
Slide 20: India: Superior Spectrum Position
Investments India: Superior Spectrum Position Spectrum holdings across bands; % of own revenues covered1 No. of circles present in 10 20 8 22 19 19 94 100 84 85 50 45 3G (900) 3G (2100) 3G (900 & 2100) 4G (1800) 4G (2300) 4G (1800 & 2300) xx % of own revenues covered 3G sub-Ghz available in 10 cir
Slide 21: Aggressive Network Build - Monetize Spectrum
Investments Aggressive Network Build - Monetize Spectrum Mobile broadband towers (‘000) - India Total 3G Network Sites (‘000) – Africa1 67% 70% 70.0% 13.0 140 70.8% 63% 65.0% 65% 11.0 60.0% 120 58.4% 113 60% 55.0% 100 9.0 50.0% 55% 88 13.6 45.0% 11.9 80 7.0 50% 50% 40.0% 9.2 31.2% 35.0% 5.0 60 45% 4
Slide 22: Pan India 3G and 4G footprint
Investments Pan India 3G and 4G footprint 3G 4G (Carrier (TDD+FD 3G (900) 3G (2100) Agg) 3G Total 4G (TDD) 4G (FDD) D) 4G Total Andhra Pradesh Y Y Y Y Y Y Y Y Assam Y Y Y Y Y Y Y Y Bihar — Y — Y Y Y Y Y Delhi Y Y Y Y Y Y Y Y Gujarat — Y — Y Y Y Y Y Haryana — Y — Y Y Y Y Y Himachal Pradesh Y Y Y Y Y
Slide 23: Africa: Invested for Growth
Investments Africa: Invested for Growth 2010 3Q’17 Capex Investments till date: $ 5.3 bn Well funded out of EBITDA: $ 6.4 bn till date Thus OFCF = $ 1.1 bn Further focus on business re-contouring Tower Sales in 11 countries Divestment of 2 countries to Orange Announced merger of Ghana op
Slide 24: 3. Airtel: Diversified Operator with Significant Scale
3. AIRTEL: DIVERSIFIED OPERATOR WITH SIGNIFICANT SCALE Profitability and scale across diversified segments • Dominant position to capitalize with bulk investments in place Allowing Airtel • Only operator with diversified portfolio the best • Scale leading to operating leverage chance to • Generating
Slide 25: Multiple plays, multiple opportunities
Scale Multiple plays, multiple opportunities Mobile Services across 17 countries • 365 mn1 wireless subscribers globally Airtel Business (Large enterprises and carriers) • Over 1.40 trillion minutes of calls (LTM) • Over 230,000 Rkms1 across 50 countries, 5 continents • Over 776Bn MBs of data over t
Slide 26: Profitability & Scale across Diversified Segments
Scale Profitability & Scale across Diversified Segments1 USD Rev $9,000 $8,565 33.0% 208% 71.1% YoY Revenue 32.3% $8,000 Growth 28.0% $7,000 EBITDA Growth 23.0% $6,000 17.8% $5,000 18.0% 13.0% $3,838 16.2% $4,000 11.8% 13.0% $3,000 9.9% 7.9% 8.0% 5.4% $2,000 4.4% 7.4% $1,192 3.5% 3.0% $1,000 3.0% $7
Slide 27: Scale brings Operating Leverage
Scale Scale brings Operating Leverage Overview Revenue Market Share - India Presence in 17 countries #3 Operator in the World 32.7% 32.9% 33.1% #1 in India & #1 or #2 in 11 countries in Africa 31.6% 31.6% US$ 14.74 bn Revenue1 US$ 5.22 bn EBITDA1 2.02 addressable population1 Q3FY16 Q4'16
Slide 28: Driving increased Profitability
Execution Driving increased Profitability • Reducing costs. Consolidated opex growth -5.1% YoY • Scale and Profitability across diversified segments • Among Top 3 in every non-mobile segment (TowerCo, DTH, Homes, B2B) • 39% of consolidated EBITDA comes from businesses other than India mobility • 24%
Slide 29: 4. Leader in India Revenue and Customer Market Share
Execution 4. Leader in India Revenue and Customer Market Share1 RMS 36% 23% 19% 4% 5% 6% 6% 1% Airtel + Telenor Vodafone Idea (Incl Spice) Reliance BSNL+MTNL Tata Tele Aircel Others VLR CMS 30% 20% 19% 7% 7% 6% 4% 6% <0% 296 194 192 VLR Customers (Mn) 74 67 60 58 43 5 Airtel + Telenor Vodafone IDEA
Slide 30: Increasingly gaining revenue market share
Execution Increasingly gaining revenue market share Airtel Vodafone Idea Airtel + Telenor 32.9% 33.1% combined 30.8% 31.3% entity RMS is 0.5% 1.8% 35.6% as of Dec’16 23.3% 23.3% 23.4% 23.5% 0.0% 0.2% Combined V+I 18.7% 18.7% 18.7% gained 0.2% 16.2% RMS 2.5% 0.0% Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2
Slide 31: Strategic Pillars for execution
Execution Strategic Pillars for execution Go to Win with a Win with War on Win with Market Brilliant Valuable Waste People Excellence Network Customers Experience VibrantVibrant Digital Airtel, Brand Brand 31
Slide 32: Strategic Pillars: Go to Market Excellence
Execution Strategic Pillars: Go to Market Excellence Game changing innovations Creating opportunities • Unlimited voice packs • Simplified Pricing. From 6500 Postpaid plans to • Myplan – Customized plans as per customer usage • Infinity – Options with unlimited benefits • Wynk – Music, games. Airtel
Slide 33: Driving increased brand awareness
Execution Driving increased brand awareness Airtel 4G ad – Top television in Dec 2016 Awareness Brand recall Ad reach (%) - 82 (%) - 95 index - 78 Source: Mint Ipsos TV AdIndx Survery 33
Slide 34: Airtel launches India's first payments bank
Execution Airtel launches India’s first payments bank Highlights • Committed to an investment of Rs 3,000 crore across its national operations • Completely digital and paperless bank. Account opened within minutes using Aadhaar based e-KYC • 250,000 airtel retail outlets will act as Banking Points,
Slide 35: Voice: Significant growth
Execution Voice: Significant growth 330,217 36,570 35,913 314,831 313,403 307,988 34,191 33,771 32,610 290,459 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 SIM consolidation in the industry due to Volume Airtel carries over 1.48 trillion minutes1 Growth unlimited voice offers Secular
Slide 36: Fast growing data business
Execution Fast growing data business Mobile broadband base stations (‘000) - India First brand to own and launch 4G in India 3G and 4G Pan India Annualized data revenues c. $2 bn (India) Airtel recognized as the smartphone 148 171 network 99 118 138 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Africa data
Slide 37: Increasing market share in rural India
Execution INCREASING MARKET SHARE IN RURAL INDIA Airtel: Rural 27.1% 28.4% 29.5% 30.2% 30.6% subscriber share 130.0 49.0% 48.8% 48.7% 48.8% 125.0 48.6% 48.6% 48.4% 120.0 48.3% 48.2% 126.7 48.0% 115.0 124.9 47.8% 122.0 47.8% 117.5 47.6% 110.0 112.4 47.4% 105.0 47.2% 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17
Slide 38: Strategic Pillars: Win with Brilliant Network Experience
Execution Strategic Pillars: Win with Brilliant Network Experience Eliminate frustration Invest in tools An open network Blocked calls Repeat calls Dropped calls Frustration index Capex Outflow FY’16 (mn) Guidance (bn) 9M’17 Largest capital expenditure of Rs. 60,000 crore over 3 years India & SA $
Slide 39: Strategic Pillars: Win with Valuable Customers
Execution Strategic Pillars: Win with Valuable Customers Post-Paid (as % of total Customer Base) Mobile Broadband Customer as a % of total data customers 1 6.4% 69% 6.3% 6.3% 66% 1 6.3% 6.2% 1 6.1% 6.1% 62% 61% 6.0% 1 6.0% 5.9% 5.9% 56% 0 5.8% 5.7% 0 5.6% 0 5.5% Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q3'16 Q
Slide 40: Quality Subscriber Acquisitions
Execution Quality Subscriber Acquisitions India: Churn % Africa: Churn % 4.1% 6.8% 6.0% 3.7% 3.6% 5.3% 3.4% 4.9% 4.9% 3.3% Dec'15 Mar'16 June'16 Sept'16 Dec'16 Dec'15 Mar'16 June'16 Sept'16 Dec'16 • Airtel has industry wide lowest churn at 4.1% • In Africa, churn decreased from 6.8% in March 2016 to
Slide 41: Strategic Pillars: Win with War on Waste
Execution Strategic Pillars: Win with War on Waste Opex Growth YoY EBITDA % 36.7% 3.9% 35.2% 1.4% Q3'15 Q3'16 Q3'17 33.7% -5.1% Q3'15 Q3'16 Q3'17 Increasing Opex Productivity Smart procurement Frugal cost structure Maximizing sharing Network re-design Divestment of towers Source: Company Filings Not
Slide 42: Strategic Pillars: Win with People
Execution Strategic Pillars: Win with People Build capabilities and help people grow Learning, mentoring, succession planning Build a high performance culture 42
Slide 43: Enhancing leadership Position across Geographies
Execution Enhancing leadership Position across Geographies No 1 Share No 2 Share No 3 Share RMS1 Rank # of circles Avg. RMS Market Position # of Countries #1 13 43.4% #1 5 #2 6 28.4% #2 7 #3 3 19.9% #3 3 1. For India RMS is as of Dec’2016. Includes Telenor (merger is subject to regulatory approvals)
Slide 44: Best in Class Execution: Q3'17 highlights
Execution BEST IN CLASS EXECUTION Q3’17 highlights • India – Broad based revenue growth across DTH, Homes, Enterprise segments. Mobile revenues hit in the quarter due to competition and demonetization – Continue healthy customer acquisitions in Mobile India; added 5.9mn customers in Q3’17 – Data vol
Slide 45: Strong Corporate Profile
2 airtel STRONG CORPORATE PROFILE
Slide 46: Financial flexibility & Balance Sheet Focus
Financial flexibility & Balance Sheet Focus Diversified debt profile; focus on deleveraging Over last 3 years: Leverage: Net Debt (ex-DOT) to EBITDA down from 2.51x as of Mar 2013 to 1.45. Net Debt to EBITDA down from 3x to 2.7x (with fully loaded all spectrum auctions) Average Maturity: Average ten
Slide 47: Highest Standards of Corporate Governance
Highest Standards of Corporate Governance Credit Rating and Information Services of India (“CRISIL”) has assigned its Governance and Value Creation rating “CRISIL GVC Level 1” to the corporate governance and value creation practices of Bharti Airtel Quarterly financials audited on Ind-AS basis IG ra
Slide 48: Summary
Summary India & Africa remain attractive markets, with large opportunities Bulk investments in place, asset restructuring in progress • Spectrum • Network • Deleveraging via asset monetization (Tower sales, sale to Orange, Bangladesh merger, Ghana merger) We are extremely well positioned • Large cus
Slide 49: Thank You
THANK YOU