Tata Communications Limited · NSE:TATACOMM

Tata Communications — Q4 FY2019 Earnings Presentation

35 slides from Tata Communications's earnings presentation, May 2019

  1. Slide 1: Investor Presentation 4th Quarter FY2019

    INVESTOR PRESENTATION 4TH QUARTER - FY2019

  2. 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

  3. Slide 3: Agenda

    AGENDA • BUSINESS OVERVIEW • FINANCIAL OVERVIEW 3

  4. Slide 4: Business Overview

    lp TATA COMMUNICATIONS TATA “a : —— BUSINESS OVERVIE

  5. Slide 5: Delivering a New World of Communications

    DELIVERING A NEW WORLD OF COMMUNICATIONS TM POWERING THE PLATFORM ECONOMY, THE INTERNET AND GLOBALISATION Over 25% of the world’s We have the only wholly-owned internet traffic uses our subsea cable network that circles network (Over 12,000 the globe petabits) We’re a leading player in managed hosti

  6. Slide 6: Growth Story

    GROWTH STORY TRANSFORMING FROM AN INDIAN PSU TO A DIGITAL ENABLEMENT PLAYER Transformation Growth Innovation World’s 1st LTE roaming peering with Telecom Italia Sparkle 100G connectivity to carriers & Partnered with Salesforce to VSNL, VSNL International, CIPRIS, Tata enterprises across the US & Eur

  7. Slide 7: Global Reach – Providing Connectivity Across the World

    GLOBAL REACH – PROVIDING CONNECTIVITY ACROSS THE WORLD Over 40 Entities across the globe Global Backbone “Ring Around the World” Leadership 25% of in Global World’s SIP internet Trunking routes 7

  8. Slide 8: Our Customers

    OUR CUSTOMERS ~ 7,000 CUSTOMERS GLOBALLY: ~2,000 SERVICE PROVIDER CUSTOMERS & ~5,000 ENTERPRISE CUSTOMERS 60% of S&P 500 66% of the Fortune 500 69% of PWC 100 41% of FTSE 350 Banking/ Media/ Healthcare/ Service Manufacturing E-Commerce IT/ITES Services Technology Financial Entertainment Pharmaceutic

  9. Slide 9: Market Overview

    MARKET OVERVIEW TECHNOLOGY IS A GAME CHANGER 70% of large and mid-sized enterprises are likely to rework their networking setups over the next three years Network Function Virtualisation 37% of IT budgets are spent on cloud and cloud-related services (NFV) Big Data and Explosion of 4.4 million IT jo

  10. Slide 10: Business Themes Supporting Digital Transformation

    BUSINESS THEMES SUPPORTING DIGITAL TRANSFORMATON DIGITAL TYPICALLY DELIVERS VALUE ACROSS 4 IMPACT AREAS FOR BUSINESSES Driving their digital transformation on a global scale, organisations need best-in-class global Borderless infrastructure and tools. They will power organisations’ expansion into ne

  11. Slide 11: Business Themes Enabling Digital Transformation

    BUSINESS THEMES ENABLING DIGITAL TRANSFORMATION CLOUD AND BUSINESS MANAGED VOICE MEDIA NETWORK MOBILITY DATA CENTRE COLLABORATION SECURITY

  12. Slide 12: Products and Services

    PRODUCTS AND SERVICES PROVIDER OF ENTERPRISE & WHOLESALE DATA SERVICES & WHOLESALE LONG DISTANCE VOICE SOLUTIONS Data Services Virtual Intl Private Internet Private Mobility Inmarsat Line Leased Line Traditional Network Services Ethernet National Private Line Internet Protocol - Transit Managed Mana

  13. Slide 13: We Address ~$49 Bn Out of a Telecom Market

    WE ADDRESS ~$49 BN OUT OF A $898 MN TELECOM MARKET SERVICEABLE ADDRESSABLE MARKET REPRESENTS PORTION OF THE TELECOM MARKET WHICH WE CAN CAPTURE Telecom: SAM: $898Bn $49Bn $42 Bn $128 Bn $79 Bn $9 Bn $9 Bn $159 Bn $49 Bn $4 Bn $0.4 Bn $8 Bn $86 Bn $2 Bn $211 Bn $2 Bn $3 Bn $0.1 Bn $8 Bn $146 Bn $2 Bn

  14. Slide 14: Our Target Addressable Market Is Expanding from $49Bn to $78Bn

    OUR TARGET ADDRESSABLE MARKET IS EXPANDING FROM $49BN IN FY19 TO $78 BN IN FY22 US $78 Bn CAGR in FY22 17% 13 15 91% US $49 Bn 5 MOVE in FY19 4 3 2 0 12 20% 0 1 0 1 (2) 1 2 MOVE 2 Growth driven by new 8 25% Mobility 7 40% services like IZO, 4 27% Netfoundry 4 1 IZO 2 Netfoundry, Mobility and 5 18% I

  15. Slide 15: Helping Consumers Remain Agile, Adaptable, and Responsive

    HELPING CONSUMERS REMAIN AGILE, ADAPTABLE, AND RESPONSIVE POWERING THE DIGITAL ECONOMY AND HELPING OUR CUSTOMERS AND PARTNERS ACCELERATE THEIR GROWTH BY DEVELOPING INNOVATIVE BUSINESS SOLUTIONS Innovating Together New business Crowdsourcing ideas from 8,500 strong workforce & units e.g. IoT Internal

  16. Slide 16: Investing for the Future

    INVESTING FOR THE FUTURE MOVE is 3 Products built on the Tata Global Network SIM CONNECT Global Mobile Connectivity for Humans – Providing Global Visibility, Security and Control to MNCs IOT CONNECT Global Connectivity for Machines and Things – Fully Programmable Global IoT connectivity and services

  17. Slide 17: Leveraging Our Positioning

    LEVERAGING OUR POSITIONING Cloud and Data Centre Solutions − Connecting businesses to 8 main cloud platforms in 20 locations across 3 continents − Our data centres meet and exceed TIA 942 standards and offer 99.982% uptime − 10,000+ installed racks, and more than 5,000 virtual instances Managed Mana

  18. Slide 18: Third Party Endorsements, Awards and Recognition

    THIRD PARTY ENDORSEMENTS, AWARDS AND RECOGNITION CONTINUOUS IMPROVEMENT India's largest corporations: Tata Communications at Frost & Sullivan India ICT Awards: #68 Transparency International, a global civil society organization, • Enterprise Data Service Provider of the Year (4th Year in a row) cond

  19. Slide 19: Positioned as a Leader in 2019 Gartner Magic Quadrant for Network Services

    TATA COMMUNICATIONS POSITIONED AS A LEADER IN THE 2019 GARTNER MAGIC QUADRANT FOR NETWORK SERVICES, GLOBAL - 6 YEARS IN A ROW Ability to Execute Gartner evaluates providers on the quality and efficacy of the processes, systems, methods or procedures that enable IT provider performance to be competit

  20. Slide 20: Shareholder Value Creation

    SHAREHOLDER VALUE CREATION FOCUS ON MAXIMIZING LONG TERM INTRINSIC VALUE FOR SHAREHOLDERS − Recalibrate Investments 2.2% Drive − Co-create with partners 4.2% Capital Efficiency − Strong discipline and governance around capital allocation and expenditure 18.6% Improve − Improve operating efficiency a

  21. Slide 21: Corporate Social Responsibility

    CORPORATE SOCIAL RESPONSIBILITY TECHNOLOGY DRIVING SOCIAL CHANGE “ “ By financially including women around the globe, we take an important step towards poverty alleviation, equality and economic prosperity. Walt Macnee, Vice Chairman, Mastercard • Tata Communications and MasterCard joined forces to

  22. Slide 22: Financial Performance

    TATA COMMUNICATIONS FINANCIAL PERFORMANCE ee ap TATA

  23. Slide 23: Performance Highlights | Core – Gross Revenue

    PERFORMANCE HIGHLIGHTS | CORE – GROSS REVENUE 2850 628 592 602 2627 2601 2364 173 130 128 1231 1008 824 554 USD Mn USD Mn 455 462 475 1619 1619 1778 1810 FY16 FY17 FY18 FY19 Q4 FY18 Q3 FY19 Q4 FY19 Y-o-Y Q-o-Q Growth % FY16 FY17 FY18 FY19 Growth % YoY QoQ Data  10.1%  0.0%  9.8%  1.8% Data  4.3

  24. Slide 24: Performance Highlights | Core – EBITDA

    PERFORMANCE HIGHLIGHTS | CORE – EBITDA 118 420 393 10 97 352 374 91 77 48 12 14 62 54 USD Mn USD Mn 107 343 290 320 345 80 84 FY16 FY17 FY18 FY19 Q4 FY18 Q3 FY19 Q4 FY19 Y-o-Y Q-o-Q Margin % FY16 FY17 FY18 FY19 Margin % Q4FY18 Q3FY19 Q4FY19 Data  21.2%  17.9%  18% 19.0% Data 17.5% 23.2%  17.6%

  25. Slide 25: Performance Highlights | Core – Operating FCF

    PERFORMANCE HIGHLIGHTS | CORE – OPERATING FCF 10 52 11 47 14 59 USD Mn USD Mn 40 46 137 117 34 92 FY17 FY18 FY19 Q4 FY18 Q3 FY19 Q4 FY19 Y-o-Y Q-o-Q EBITDA to FCF FY17 FY18 FY19 EBITDA to FCF Q4FY18 Q3FY19 Q4FY19 Data  31.9%  42.7%  34% Data 50.6% 43.3%  40.4% Voice  95.9%  97.5%  98.6% Voice

  26. Slide 26: Performance Highlights | Portfolio Mix

    PERFORMANCE HIGHLIGHTS | PORTFOLIO MIX Gross Revenue Mix EBITDA Mix Operating Free Cash Flow Mix 56.8% 61.6% 60.9% 68.3% 72.3% 71.2% 76.6% 81.7% 82.5% 86.0% 87.8% 43.2% 38.4% 31.7% 39.1% 27.7% 28.8% 23.4% 18.3% 17.5% 14.0% 12.2% FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 FY17 FY18 FY19 Data Voice • The

  27. Slide 27: Performance Highlights | Data – Gross Revenue

    PERFORMANCE HIGHLIGHTS | DATA – GROSS REVENUE 1,778 1,810 455 462 475 1,619 1,619 230 229 61 59 62 186 208 202 255 346 407 97 104 117 USD Mn USD Mn 1231 1156 1201 1174 297 299 296 FY16 FY17 FY18 FY19 Q4 FY18 Q3 FY19 Q4 FY19 Y-o-Y Q-o-Q Growth % FY16 FY17 FY18 FY19 Growth % YoY QoQ Traditional 6.1% 

  28. Slide 28: Performance Highlights | Data – EBITDA

    PERFORMANCE HIGHLIGHTS | DATA – EBITDA 107 343 320 345 80 290 9 84 33 29 USD Mn 21 USD Mn 17 11 6 352 362 386 119 328 92 93 (30) (55) (74) (70) (23) (21) (15) Q4 FY18 Q3 FY19 Q4 FY19 Y-o-Y FY16 FY17 FY18 FY19 Q-o-Q Margin % FY16 FY17 FY18 FY19 Margin % Q4FY18 Q3FY19 Q4FY19 Traditional 28.6%  28.3%

  29. Slide 29: Performance Highlights | Capital Expenditure

    PERFORMANCE HIGHLIGHTS | CAPITAL EXPENDITURE 69.3 8.4 60.0 0.1 51.7 USD Mn USD Mn 10.2 35 39 18.1 1 0.0 5 37 12.0 50 3 65 18.8 87 1 0.4 48 66 17.3 Y-o-Y 42.8 Q-o-Q 149 162 137 118 31.0 22.0 FY16 FY17 FY18 FY19 Q4 FY18 Q3 FY19 Q4 FY19 Data Sustenance Data Growth Voice Others Data Sustenance Data Grow

  30. Slide 30: Performance Highlights | Net Debt

    PERFORMANCE HIGHLIGHTS | NET DEBT 1380 1327 1438 1204 1209 1254 1268 1251 1287 1232 1150 1151 USD Mn Mar'14 Mar'15 Mar'16 Mar'17 Jun'17 Sep'17 Dec'17 Mar'18 Jun'18 Sep'18 Dec'18 Mar'19 Net Debt to EBITDA (x) Cost of Debt % 3.5 3.6 3.6 3.6 3.7 3.3 3.4 3.4 3.4 4.28% 3.80% 3.2 3.1 3.1 3.41% 3.12% 3.24%

  31. Slide 31: Performance Highlights | TCTSL - Standalone

    PERFORMANCE HIGHLIGHTS | TCTSL - STANDALONE Gross Revenue Gross Revenue 3375 3550 12545 2962 11276 INR Mn Q4 FY18 Q3 FY19 Q4 FY19 FY18 FY19 EBITDA 486 Growth % YoY QoQ 351 Margin % INR Mn Gross Revenue  19.9%  5.2% 16.4% 104 10.4% EBITDA  (78.6%)  (70.3%) 2.9% Q4 FY18 Q3 FY19 Q4 FY19 • Transform

  32. Slide 32: Performance Highlights | TCPSL - Standalone

    PERFORMANCE HIGHLIGHTS | TCPSL - STANDALONE 1001 Gross Revenue Gross Revenue 895 3829 3571 INR Mn 844 Q4 FY18 Q3 FY19 Q4 FY19 FY18 FY19 EBITDA Gross Revenue Q4 FY18 Q3 FY19 Q4 FY19 7.2% 8.0% Margin % INR Mn Growth % YoY QoQ 6.0% 64 Gross Revenue  (15.7%)  (5.6%) 2.5% 4.0% 1.3% 21 2.0% EBITDA  57.

  33. Slide 33: Investment Thesis

    INVESTMENT THESIS Data led Growth Valuation Arbitrage Lean Balance as compared to Sheet Global Peers Value Creation Global through huge Land Management Team Assets Regulatory Regular Dividend Environment Pay-out Favourable Internal Transformation 33

  34. Slide 34: Key Take Away

    KEY TAKE AWAY ❑ Riding on global data growth ❑ Digital Transformation and Cloud adoption to drive the business growth ❑ Transformation driving demand for SD WAN and network virtualisation services ❑ Positioned for the first time by Gartner in its 2017 Magic Quadrant for Managed Hybrid Cloud Hosting,

  35. Slide 35: Thank You

    THANK YOU tatacommunications.com © 2016 Tata Communications. All Rights Reserved. TATA COMMUNICATIONS and TATA are trademarks of Tata Sons Limited in certain countries. 35 35

Tata Communications — Q4 FY2019 Earnings Presentation on 6ix