Reliance Communications Limited · NSE:RCOM

Reliance Communications — Investor Presentation (February 2015)

41 slides from Reliance Communications's investor presentation, February 2015

  1. Slide 1: Investors' Presentation

    Investors‟ Presentation February, 2015

  2. Slide 2: Disclaimer

    Disclaimer This presentation has been prepared by Reliance Communications Limited (the “Company”) solely for information purposes without any regard to any specific objectives, financial situations or informational needs of any particular person. This presentation may not be copied, distributed or d

  3. Slide 3: Reliance Communications: An Overview

    Reliance Communications : An Overview Leading integrated telecommunications operator in India with presence across wireless, enterprise, broadband, passive infrastructure, and DTH Only pan-India GSM & CDMA Leading global data communications operator with long weighted business under GCX, with sub se

  4. Slide 4: A Major Domestic and Global Player

    A Major Domestic and Global Player Wireless and Wireless broadband services in 1,624 cities and towns, with net connectivity in over 19,000 Wireline towns across India Data Pan-India data operator with high speed data services through 3G and Rev B/A network Leadership Tower Only pan-India integrated

  5. Slide 5: Contents

    Contents  Indian Telecom Scenario  RCOM & Operational Strategies for Growth  Financial Update  Deleveraging and Asset Monetisation  Investment Highlights

  6. Slide 6: Consolidation in the Industry

    Consolidation in the Industry Recent Consolidation has already Reduced Competition Pre-2012 competitive landscape Competitive Landscape Now Pan-India players Pan-India private players 11 5 Operators Operators  Over capacity led to low tariffs, making business unviable  Top 5 operators account for

  7. Slide 7: Data is the Next Big Opportunity

    Data is the Next Big Opportunity Data: The key growth driver Indian Telecom - Moving from Voice to Data Communication Information The Past Present Future  SMS  Social Networking  Mobile Broadband  Radio  Mobile Apps  Convergence: M2M  CRBT  Mobile Gaming  M-commerce  Voice Calling  Mobile

  8. Slide 8: Regulatory Update

    Regulatory Update Enhanced Regulatory Clarity  All spectrum required for the Unified Access Services License has been delinked from Spectrum the license and spectrum is now being allotted through a transparent auction process Allocation  TRAI has submitted Guidelines for Spectrum Sharing & Spectru

  9. Slide 9: Regulatory Impact

    Regulatory Impact Tariff Likely to Harden GSM incumbents RCOM Incremental revenue to be utilized for regulatory payouts & additional debt Lesser regulatory required payouts Minimal value accretive Incremental revenue to generate further FCF For RCOM : Tariff Hike to be EBIDTA & Value Accretive Slide

  10. Slide 10: Contents

    Contents  Indian Telecom Scenario  RCOM & Operational Strategies for Growth  Financial Update  Deleveraging and Asset Monetisation  Investment Highlights

  11. Slide 11: Journey So Far

    Journey So far RCOM: A Multi-Technology Integrated Telecom Operator 1997 2009 2011 Now 9 GSM 14 GSM 3G in 13 RevB circles circles circles Services launched launched launched launched 2003 Pan India 2009 – 2015 CDMA 30% launch 70% 70% GSM + Data Growth 30% Earlier Now Revenue Uptrend CDMA GSM CDMA no

  12. Slide 12: Strong Spectrum Assets & Robust Backhaul Network

    Strong Spectrum Assets & Robust Backhaul Network Supporting and Enhancing Our Domestic Data Leadership Position Service Areas Spectrum Holding (MHz*) Leading network of backhaul optical fiber 2G CDMA GSM 3G LTE CDMA 2G 3G BWA Optical Fiber Layout for Operators (Kms) GSM Network Provider Length of Fi

  13. Slide 13: High Quality Telecom Infra Assets

    High Quality Telecom Infra Assets Tower Assets: Overview  43,379 towers, located in 22 circles in India and supported by an OFC network of over 190,000 Kms  Young tower portfolio, with towers spread across all 22 circles  High quality portfolio capable of housing 4 tenants; can be enhanced to 7 t

  14. Slide 14: Comparatively Lesser Exposure to Auction

    Comparatively Lesser Exposure to Auction RCOM’s Spectrum Holding Spectrum Available for Auction 800 900 1800 800 1800 2100 2100 MHz 900 MHz MHz MHz MHz MHz MHz MHz Assam 2.5 6.2 - 5.0 11.25 6.2 - 5.0 Bihar 5.0 6.2 - 5.0 5.0 6.2 2.0 - Himachal 2.5 6.2 - 5.0 8.75 12.4 10.2 - MP 5.0 6.2 - 5.0 6.25 12.4

  15. Slide 15: RCOM has Minimal Regulatory Cash Outflow

    RCOM has Minimal Regulatory Cash Outflow RCOM remaining circles spectrum expiry Spectrum Renewal Payments Expiry in Circles 1,800 800  * Mumbai: 0.6 Mhz in MHz MHz 1800 MHz Band is Circle 900 MHz 1,800 MHz Assam - 2.50 2015 liberalized spectrum Assam 6.20 - North East - 2.50 Bihar 6.20 - 2017 Gujar

  16. Slide 16: RCOM's Strategic Focus Areas

    RCOM‟s Strategic Focus Areas iRMS Focus Areas Margin & Smart Capex People Optimisation Slide 16

  17. Slide 17: GSM Voice Strategy: Market Portfolio Approach

    GSM Voice Strategy: Market Portfolio Approach National Circles Hot Micro Markets 3 Clusters of Circles Participate & Grow 10 Circles Protect & Grow Disrupt & Grow Protect Participate Disrupt 4 Circles 8 Circles US$ Circles Del, Bh, Or, Asm, NE, TN, AP, KK, 8bn MP, WB Kol, Pb, Har, Ker, Guj, US$ US$

  18. Slide 18: GSM Data Strategy: Disruptive Value Story for Customers

    GSM Data Strategy: Disruptive Value Story for Customers  Play across both Small Screen and Large Screen In 3G Circles In non-3G Circles 1 2 3 4 Smartphone / Reliance 3G = Aggressive 2G Free Social Devices Competition 2G Positioning Networking Alliances  Free Social Networking  Apple „Zero Plan‟ 

  19. Slide 19: Bundled Sales (CDMA): The Key Pillars

    Bundled Sales (CDMA): The Key Pillars Data Bundled Smart Device Dominance Sales Segmentation Ecosystem 1 2 3 4 Smart Smart Internet Large & Fastest Smart Bundled Segmentation & Device Ecosystem Data Network Products Products Bundled Offers & Tariff Universal Mode Internet Target Segmented Devices Pr

  20. Slide 20: Bundled Sales (CDMA): Chipset Evolution Merging GSM / CDMA

    Bundled Sales (CDMA): Chipset Evolution Merging GSM / CDMA 850+700 850+1800  Mutli-technology Mutli-band chipset supports 2G, 3G, 46 Smart Phones 54 Smart Phones 4G technologies in the same handset.  Low Cost Chipset (QC8909) supports Rev B and enables LTE / CDMA / GSM Smartphone 850+900 850+2100

  21. Slide 21: Margin Optimisation Strategy

    Margin Optimisation Strategy Outsourcing of network management services and call centre operations Margin optimisation measures Cost Lever Target Reduction Planned Activities  Process re-engineering in  Outsourced network outsourcing management services to Network Cost 10% – 12%  SEB/battery for

  22. Slide 22: Future Expansion at Least Cost

    Future Expansion at Least Cost Minimal Capex Due to ICR & Jio Reciprocity 1) Intra-Circle Roaming arrangements: “Test the waters”  Agreement to share infrastructure in select areas  Typical tenure 12 – 18 months  Access to 10,000+ sites De-risk No capex  “Pay as you use” model growth 2) Reciproc

  23. Slide 23: Smart People, Smart Organization: Circle as a Country Approach

    Smart People Smart Organization: Circle as a “Country” Approach  “Go To Market” basis  Micro segmentation  Clusters Clusters (107)  Circle demographics  Circle as P&L unit Circles (20)  Empowered Ownership at field level Regions (4)  Dedicated GSM & CDMA teams HQ Slide 23

  24. Slide 24: Extensive Leadership Bandwidth at RCOM

    Extensive Leadership Bandwidth at RCOM  Experience: 31 years  Experience: 13 years with RCOM Mr. Vinod Sawhny  Select Experience: Member of Bharti Mr. Punit Garg  Select Experience: Managing Director, CEO Airtel Management Board; Joint President and CEO Lockheed Martin Global Telecom, Reliance P

  25. Slide 25: India Enterprise Business: An Overview

    India Enterprise Business : An Overview  Operations in 180 cities in India, 1.1 m+ buildings connected directly to network, serves nearly 1.2 m access lines  Integrated ICT player with a comprehensive product range of 38+ enterprise voice, data, video, internet and IT infrastructure services  Our

  26. Slide 26: Global Business: An Overview

    Global Business: An Overview  World‟s largest private submarine cable system Carrier owner with 68,000+ km of sub-sea fiber  Serving top 290 carriers of the world  Leading Managed Network Service provider globally Global  Leading Ethernet services provider in the U.S. Enterprise  Data connectiv

  27. Slide 27: Contents

    Contents  Indian Telecom Scenario  RCOM & Operational Strategies for Growth  Financial Update  Deleveraging and Asset Monetisation  Investment Highlights

  28. Slide 28: Financial Snapshot

    Financial Snapshot Key Financial Parameters Revenue (US$mn) and EBITDA margin Capex (US$mn) Revenue (US$mn) EBITDA margin % 3,788 1,633 3,659 39% 3,570 35% 959 3,341 33% 643 548 32% FY11 FY12 FY13 FY14 FY11 FY12 FY13 FY14 Fx: 1US$=INR61 Margin Improvement Coupled with Lower Capex Intensity Slide 28

  29. Slide 29: Financial Snapshot – Key Metrics

    Financial Snapshot – Key Metrics Operating Metrics have Seen a Sharp Turnaround RPM (INR) Minutes of usage/ sub 0.45 0.45 0.43 315  Improved industry 288 0.41 270 224 dynamics with pricing power coming back to operators  Focus on high quality Dec' 11 Dec' 12 Dec '13 Dec '14 Dec' 11 Dec' 12 Dec' 13

  30. Slide 30: Financial Snapshot – Segment Reporting

    Financial Snapshot – Segment Reporting India Operations US$ mn Q3 FY14 Q2 FY15 Q3 FY15 Q-o-Q % Y-o-Y% Revenue 760 767 787 2.5% 3.5% -Voice 560 563 576 2.4% 2.9% -Non-voice 167 181 190 5.2% 13.8% EBITDA 263 273 280 2.6% 6.1% Margin % 34.6% 35.5% 35.5% Global Operations US$ mn Q3 FY14 Q2 FY15 Q3 FY15

  31. Slide 31: KPIs

    KPIs Voice Voice KPIs Q3 FY14 Q2 FY15 Q3 FY15 Q-o-Q % Y-o-Y % ARPU (INR) 125 137 142 3.6% 13.6% RPM (INR) 0.435 0.444 0.452 1.8% 3.9% Total MoU (Bn. Min.) 101.9 102.1 103.4 1.3% 1.5% Voice Usage/ Cust/ Month (Min.) 288 307 315 2.6% 9.4% Total Customer Base (Mn.) 118.5 111.3 107.5 -3.4% -9.3% Churn (

  32. Slide 32: Data Leadership

    Data Leadership RCOM - Leading player in the Wireless Data Market Non-voice as % of Total Revenue No. of 3G Active Subscribers (mn) * 24.8% 16.7 16.9 23.1% 16.1 23.0% 22.6% 17.0% 16.1% 11.1 8.8 8.7 3QFY14 Rcom Airtel Idea 3QFY15 3QFY14 Rcom Airtel Idea 3QFY15 Total Data Traffic on Network (mn MBs) D

  33. Slide 33: Contents

    Contents  Indian Telecom Scenario  RCOM & Operational Strategies for Growth  Financial Update  Deleveraging and Asset Monetisation  Investment Highlights

  34. Slide 34: Key Deleveraging Step – QIP – Completed

    Key Deleveraging Step – QIP - Completed Largest Corporate Qualified Institutional Placement (QIP) in India - INR 48bn - Solid investors’ confidence in RCOM’s long-term business strategy Shareholding Pattern  Promoters invested INR13bn (US$213m) through In %, as on Jan 20, 2015 preferential allotmen

  35. Slide 35: De-leveraging and Asset Monetisation

    De-leveraging and Asset Monetisation Comprehensive Business Co-operation Framework Between RCOM & Jio Tower sharing agreement Inter-city fiber sharing agreement  Nation-wide tower infrastructure sharing  RCOM‟s 120,000 Kms. of Inter-city fiber agreement with Jio optic network to be utilised by Jio

  36. Slide 36: De-leveraging and Asset Monetisation (contd.)

    De-leveraging and Asset Monetisation (contd.) Unlocking Value through De-merger of non-core assets  Real Estate: Monetisation of properties at DAKC, Delhi and other cities  GCX: Stake sale planned  DTH: Monetisation through divestment Unlock Substantial Value for the Benefit of Shareholders Slide

  37. Slide 37: De-leveraging improving Shareholders' Returns

    De-leveraging improving Shareholders‟ Returns Target leverage – 3X <5x * ~0.5x ~1.5x 1 <3x 2 Current Net Debt/ EBITDA Internal accruals Asset monetisation Target Net Debt/ EBITDA  1 Organic growth and free cash flow generation  2 Securitization of Jio receivables and divestment of non-core assets

  38. Slide 38: Contents

    Contents  Indian Telecom Scenario  RCOM & Operational Strategies for Growth  Financial Update  Deleveraging and Asset Monetisation  Investment Highlights

  39. Slide 39: Higher Upsides & Lower Future Risks

    Higher Upsides & Lower Future Risks Potential Future Upsides Status Potential Future Risks Impact on RCOM Data Leadership Capability Ready Regulatory Spectrum Payouts Low Intercity and Intracity Fiber Deal Done Capex Intensity Low with Jio Tower Tenancy Deal with Jio Done Business Operation Downside

  40. Slide 40: Key Investment Highlights

    Key Investment Highlights Future ready spectrum portfolio Future expansion at least RCOM‟s Minimal regulatory cash cost Value outflow Proposition Arrangement / co-operation and Focused plans for Deleveraging reciprocity with Jio to assist and Asset monetization revenue & margin growth Immense Sector

  41. Slide 41: Thank You

    RELIANCE Thank You

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