Bharti Airtel Limited · NSE:BHARTIARTL
Bharti Airtel — Investor Day (December 2017)
35 slides from Bharti Airtel's investor day presentation, Dec 7, 2017
Slide 1: Airtel Africa Day
AIRTEL Africa Day 7th December 2017 1
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: Index
Index Airtel journey in Africa, 2010 - 16 Africa learnings What has happened in Africa in last 6 quarters? What did we do? Financial performance Way ahead 3
Slide 4: Airtel journey in Africa, 2010 - 2016
Airtel journey SECTION in Africa, 2010 - 2016 HEADER GOES HERE 4
Slide 5: A lot has happened in Africa
A lot has happened in Africa Acq. Zain Africa Acq. Warid in 15 operations; Congo B & Uganda Acq. Yu telecom’s Acq. Rwandatel’s & Telecom customers in GSM license in Seychelles Kenya Rwanda 2010 2012 2013 2014 2015 2016 Airtel Warid Tower Sale – 10 OPCOs RMS % RMS % Eaton GH, UG, KE, BF Uganda 23.3%
Slide 6: We believed we could replicate the India success story
We believed we could replicate the India success story Aggressive network expansion 9000+ sites added in 6 yrs 3G roll out in all OPCOs Pricing drop to fuel elasticity, like in India Replicated India outsourcing model e.g., Call center, IT, Managed services In-country merger Uganda, Congo B, Kenya 6
Slide 7: Financial performance
Financial performance 4,000 3,364 3,448 3,500 3,116 3,106 3,000 2,819 30.0% 2,500 2,363 GR 25.0% 2,000 EBITDA % 24.9% 24.4% 20.0% 23.3% 23.9% 1,500 21.4% 15.0% 19.3% 1,000 10.0% 500 5.0% 0.0% - FY11 FY12 FY13 FY14 FY15 FY16 7 Note: GR in $ mn & constant currency (Mar’2016), EBITDA margin in %
Slide 8: Africa learnings
Africa learnings S ECTION HEADER GOES HERE 8
Slide 9: Learnings: Wide range of GDP per capita across countries
Learnings Population GDP GDP per capita Country (mn) ($bn) (PPP) Wide range of GDP per Capita, across Countries DRC 79 35 742 Niger 21 7.5 907 Malawi 18 5.4 1,084 Madagascar 25 10 1,396 Uganda 42 26 1,714 Rwanda 11 8 1774 Chad 14 10 1,846 Tanzania 50 47 2,583 Kenya 49 71 2925 Zambia 17 20 3,636 Ghan
Slide 10: Learnings: Vast geography with high urbanization
Learnings Population Population Area Urbanization Country density (mn) (sq km) % Wide range of GDP per Capita, across Countries (person/sq km) Seychelles 0.1 455 206 54% Gabon 2 267,667 8 87% Vast geography with high urbanization Congo B 5 342,000 15 65% Rwanda 11 26,338 483 29% Chad 14 1,284,000 11
Slide 11: Learnings: Market infrastructure
Learnings Wide range of GDP per Capita, across Countries Vast geography with high urbanization Market infrastructure Few large businesses control the market Low capital availability Common distributors/wholesalers Fast evolving into modern trade High cost of infrastructure 9.3 Source: tradingeconomi
Slide 12: Africa Telecom: Scale is small, with moderate competition intensity
Africa Telecom Market size Key Telecom Airtel RMS % Country (Mn $) operators (2016) Nigeria 7,116 6 ~20% Scale is small, with moderate competition intensity Kenya 2,071 3 <10% Ghana 1,151 5 10-20% DRC 1,125 6 20-30% Tanzania 1,090 5 20-30% Uganda 697 5 30-40% Congo B 438 3 >40% Zambia 415 3 >40% Gab
Slide 13: High on-net minutes and dual SIM usage
Africa Telecom Local IUC rate Dual SIM Country On-net % ($ cents) penetration % Rwanda 2.7 >80% 79% Scale is small, with moderate competition intensity Uganda 4.0 >80% 64% Chad 11.0 >80% 48% Zambia 1.3 >80% 56% Madagascar 4.3 >80% 40% High on-net minutes & dual SIM usage Malawi 4.0 >80% 43% DRC 3.4
Slide 14: High site OPEX, more spectrum
Africa Telecom Scale is small, with moderate competition intensity High on-net minutes & dual SIM usage High site OPEX, ranging from 30k - 75k USD p.a. per site More spectrum, high OPEX per site 10.3 In Mar’16 Constant Currency
Slide 15: Africa Airtel - 2016
Africa Airtel - 2016 Airtel money – great potential but inadequate distribution High data prices & low penetration High revenue per site, wide disparity in spread High cost structure but scope to optimize operational design 11
Slide 16: What has happened in Africa in last 6 Quarters?
What has happened in Africa in last 6 Quarters? 12
Slide 17: GPS
GPS Win through Win with Win with Win with more from Win with Distribution Network right cost Existing People Excellence Excellence model Customers Key Position Airtel as the Smartphone Network Build an enabling IT infrastructure and support Enablers Leverage legal and regulatory frameworks to suppo
Slide 18: Win with Distribution Excellence
Win with Distribution Excellence Build alternate channels for SIM sale/ Money Freelancers Exclusive mini shops, kiosks Increase KYC locations through simplified KYC app - BYOD Disciplined field working 14 18
Slide 19: Win through more from Existing customers
Win through more from Existing customers VRPM 1.49 1.47 1.49 Ease price war 1.46 1.39 Increase bundle sales Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 DRPM Separate voice & data bundles, for enhanced ARPU 0.45 0.36 0.35 0.33 0.28 Simplified access to USSD Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 KYC, SIM SWAP failure reduc
Slide 20: Win with Network Excellence
Win with Network Excellence OPCO U900 LTE Uganda Zambia U 900 Malawi Madagascar Gabon LTE Seychelles Kenya Congo B Planned Chad Planned Radio frequency planning & optimization Tanzania - Niger Planned Planned Rwanda Planned - Improved NW KPIs through operational rig
Slide 21: Win with right cost model
Win with right cost model Recharge margin correction in some OPCOs DRC Tanzania SIM/ RCV cost reduction MW Lusaka P & L focus for each retail store Zimbabwe Logistics, Warehousing revamped Bandwidth: Flow redesign & optimized planning Re-scope fuel distribution & managed services Rightsizing of site
Slide 22: Win with People
Win with People Delayered sales structure HQ functional ownership & collaboration HQ transition Governance SMEs Rigorous monthly planning meeting with each OPCO Organizational re-structuring in some OPCOs 18 22
Slide 23: Financial performance
Financial performance SECTION HEADER GOES HERE 19
Slide 24: Business performance
Business performance REC Base (mn) Mins (bn) 81.9 39.6 80.4 80.1 80.0 36.6 35.9 78.1 35.8 76.3 75.8 33.8 34.2 34.0 75.4 33.5 74.7 32.6 72.6 31.5 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Data ARPU 3.36 3.33 3.31 3.31 3.26
Slide 25: Financial performance
Financial performance GR EBITDA 400 32% 35% 782 26% 28% 775 350 30% 23% 24% 762 300 19% 21% 25% 17% 18% 18% 251 746 749 20% 744 250 206 738 736 186 192 15% 732 200 176 132 140 134 151 10% 717 150 123 5% 100 0% 50 -5% - -10% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q1 16 Q2 16 Q3 1
Slide 26: Portfolio health – EBITDA %
Portfolio health – EBITDA % Period <20% 20-30% 30-40% >40% FY’ 16 8 4 3 0 Q2’18 4 4 2 5 TZ, KE, GH, RW MG, DRC, TD, CG NG, SC ML, UG, ZM, NE, GA 22 26
Slide 27: Opcowise Status: #1 or #2 operator in 11 out of 14 operations
Opcowise Status: Key Our Market size Key Country Telecom Airtel RMS % EBITDA range Position (mn $) competitors operators Uganda 5 2 699 >40% MTN >40% Zambia 3 1 479 >40% MTN >40% Gabon 4 2 348 >40% Maroc >40% Niger 4 1 329 >40% Orange >40% Malawi 4 1 222 >40% TNM >40% Congo B 3 2 375 >40% MTN 30-40%
Slide 28: Airtel Africa today
Airtel Africa today 14 OPCO Operation Airtel Operation Sold to Orange JV with Millicom 24 28
Slide 29: Way ahead
Way ahead SECTION HEADER GOES HERE 25
Slide 30: Way ahead - Opportunities: Mobile penetration & population covered
Way ahead - Opportunities Unique mobile Population Covered Country penetration (mn) population Mobile penetration & population covered %** Nigeria 186 84% 45% DRC 79 64% 26% Tanzania 50 78% 42% Kenya 49 77% 59% Uganda 42 77% 41% Madagascar 25 34% 23% Niger 21 38% 26% Malawi 18 70% 26% Zambia 17 79%
Slide 31: Way ahead - Abundant spectrum for high throughput/site
Way ahead - Opportunities Frequency Band (MHz) OPCO Mobile penetration & population covered 800 900 1800 2100 2600 2300 Total Seychelles 10.0 12.0 20.0 20.0 - - 62.0 Gabon 10.0 8.0 14.0 15.0 20.0 - 67.0 Abundant spectrum for high throughput/site Congo B - 11.8 15.0 15.0 - - 41.8 Malawi - 11.6 19.8 1
Slide 32: Way ahead - Data: 3G handsets & revenue contribution
Way ahead - Opportunities 3G Handset Country Data rev % Penetration % Mobile penetration & population covered Zambia 31% >20% Uganda 31% >20% Seychelles 15% >20% Abundant spectrum for high throughput/site Rwanda 11% >20% Kenya 13% >20% DRC 24% <20% Data: 3G handsets & Revenue contribution Malawi 15%
Slide 33: Way ahead - Mobile money potential
Way ahead - Opportunities Banking Max. branches Unique SIM Country penetration % by largest bank* penetration %** Mobile penetration & population covered Niger 3% 16 26% Madagascar 5% 89 23% Chad 7% 14 30% Abundant spectrum for high throughput/site DRC 10% 90 26% Malawi 15% 30 26% Congo B 15% 16 58%
Slide 34: Way ahead - Potential for profitable growth
Way ahead - Opportunities Market Key Telecom Our Airtel EBITDA Country size operators Position RMS % range Mobile penetration & population covered (mn $) Uganda 5 2 699 >40% >40% Zambia 3 1 479 >40% >40% Abundant spectrum for high throughput/site Gabon 4 2 348 >40% >40% Niger 4 1 329 >40% >40% Malaw
Slide 35: Thank you
INK LIKE AN \ Favret O) 0. “WIN” DISRUPTIVELY ? airtel