Reliance Communications Limited · NSE:RCOM

Reliance Communications — Investor Presentation (June 2015)

42 slides from Reliance Communications's investor presentation, June 2015

  1. Slide 1: Investors' Presentation

    Investors‟ Presentation June, 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 Leading global data Only pan-India GSM & CDMA communications business operator with long weighted under GCX, with sub-se

  4. Slide 4: Contents

    Contents   Indian Telecom Scenario  RCOM - Strategy for Growth o Operations o Financial Update  Deleveraging and Asset Monetisation  Investment Highlights

  5. Slide 5: 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

  6. Slide 6: 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

  7. Slide 7: 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  Spectrum Sharing & Trading guidelines expected to be finalis

  8. Slide 8: Regulatory Impact - Tariff Hikes

    Regulatory Impact - Tariff Hikes Impact in case of Tariff Hardening GSM incumbents RCOM Incremental revenue to be utilized for regulatory payouts & servicing of Lesser regulatory additional debt payouts Minimal value accretive Incremental revenue to generate further FCF For RCOM : Tariff Hikes to be

  9. Slide 9: Contents

    Contents  Indian Telecom Scenario   RCOM - Strategy for Growth o Operations o Financial Update  Deleveraging and Asset Monetisation  Investment Highlights

  10. Slide 10: Journey So far

    Journey So far RCOM: A Multi-Technology Integrated Telecom Operator 1997 2009 2011 2014 2015-16 9 GSM 14 GSM 3G in 13 RevB LTE circles circles circles Services capabilities / launched launched launched launched Launch 2003 Pan India CDMA launch 30% >70% GSM + Data Growth 70% <30% 2009 2015 Revenue U

  11. Slide 11: 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

  12. Slide 12: 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

  13. Slide 13: RCOM's Renewal Circles – Auction Outcome

    RCOM‟s Renewal Circles – Auction Outcome Pre-auction Post-Auction 800 900 1800 2100 800 900 1800 2100 MHz MHz MHz MHz MHz MHz MHz MHz Business Continuity and Growth Plans Assam 2.5 6.2 - 5.0 5.0 - 5.0 ICR Arrangements, Shift of customers to 3G Bihar 5.0 6.2 - 5.0 5.0 - 5.0 ICR Arrangements, Shift of

  14. Slide 14: RCOM's Spectrum Holding Post-Auction

    RCOM‟s Spectrum Holding Post-Auction Cat Circle 800 MHz 900 MHz 1800 MHz 2100 MHz M Delhi 5.00 - 4.40 5.00  Acquisition of substantial spectrum M Kolkata 6.25 - 6.20 5.00 in 800/850 band - to augment Rev M Mumbai 5.00 - 5.00 5.00 B data strategy and future LTE A Andhra Pradesh 5.00 - 4.40 - plans w

  15. Slide 15: 850 MHz Band - A Powerful LTE Spectrum

    850 MHz Band - A Powerful LTE Spectrum Our Spectrum Holding in this band – Strategic Advantage in Data Leadership  850 MHz spectrum band is a powerful LTE spectrum. Global commercial services are already being provided by many reputed operators in various markets such as :  Australia  Philippines

  16. Slide 16: Wireless Business Strategy

    Wireless Business Strategy Contract / SIM / Connection Annuity like Business Business (Non-proprietary / Open Market Device Ecosystem) (Proprietary / Dedicated Devices) Unbundled Bundled 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 4 Circles 8 Circles Protect Participate Disrupt US$ 8bn Circles Del, Bh, Or, Asm, NE, TN, AP, KK, US$ US$ annual MP, WB Kol, Pb, Har, Ker

  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: Partnership between Facebook & RCOM

    Partnership between Facebook & RCOM  First of its kind partnership with FB by any operator in India  Taking Internet to the Masses  Targeted to 2 Customer Segments :  Own Customers : Non- / Intermittent Users  Competition Customers : Churn  Phase 1 :  6 Circles : Mum,Mah,Guj,AP,TN,Chn,Ker  P

  20. Slide 20: 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

  21. Slide 21: Dominant Footprint of Data Capabilities

    Dominant Footprint of Data Capabilities GSM – 3G CDMA – Rev B and Rev A Delhi  3G coverage in  7 metros on Rev Delhi 18 circles B (14.7 Mbps)  334 cities Kolkata  436 towns with Kolkata (13 own circles) Rev B coverage  5 ICR circles Pune Hyderabad Mumbai Mumbai Bengaluru Chennai Own Rev A/B ICR

  22. Slide 22: Extensive Distribution and Service Network

    Extensive Distribution and Service Network Extensive Distribution and Service Network Mass   One tier reach in urban towns (3,500 Distributors and 700k Retailers) Two tier format ( Distributor/sub-Distributor and Retailer) mainly for Distribution rural areas  956 exclusive full service franchisee

  23. Slide 23: Margin Optimisation Strategy

    Margin Optimisation Strategy Outsourcing of network management services and call centre operations Margin optimisation measures Cost Lever Planned Activities  Outsourced network  Process re-engineering in outsourcing management services to Network Cost  SEB/battery for diesel cost reduction Erics

  24. Slide 24: 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

  25. Slide 25: Enterprise Business: An Overview

    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 cust

  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  Top 5 Managed Network Service provider globally Global  Leading Ethernet services provider in the U.S. Enterprise  Data connectivit

  27. Slide 27: Strong Brand Recognition

    Strong Brand Recognition RCOM among top 10 most reputed Indian Companies & ranked 14th in most exciting brands RCOM- Among top 10 Most Reputed Indian Companies Reliance -14th Most Exciting Brand Slide 27

  28. Slide 28: Q4'FY15 Results Show Success of Strategy

    Q4‟FY15 Results Show Success of Strategy Marginal uptick in CDMA revenues ‘GSM +Data’ share up at ~76% of wireless revenues India telecom revenues up 2.7% Q4‟FY15 Q-o-Q and 8.7% Y-o-Y Data traffic up 14% Q-o-Q and 74% Y-o-Y ARPU up 3.5% Q-o-Q and 14.8% Y-o-Y Focused on-ground execution yielding resu

  29. Slide 29: Financial Snapshot

    Financial Snapshot RCOM Financial Performance Revenue (US$mn) and EBITDA margin Capex (US$mn) Revenue (US$mn) EBITDA margin % 959 3,623 3,659 3,570 643 35% 34% 548 3,341 33% 39% 257 FY12 FY13 FY14 FY15 FY12 FY13 FY14 FY15 Capex for FY15 aggregated from quarterly reports Fx: 1US$=INR61 Margin Improve

  30. Slide 30: Financial Snapshot – Key Metrics

    Financial Snapshot – Key Metrics Operating Metrics have Seen a Sharp Turnaround RPM (INR) Minutes of usage/ sub 0.44 0.44 0.43 330  Improved industry 290 296 0.40 227 dynamics with pricing power coming back to operators  Focus on high quality Mar' 12 Mar' 13 Mar '14 Mar '15 Mar' 12 Mar' 13 Mar' 14

  31. Slide 31: Financial Snapshot – Segment Reporting

    Financial Snapshot – Segment Reporting India Operations US$ mn Q4 FY14 Q3 FY15 Q4 FY15 Q-o-Q % Y-o-Y% Revenue 762 787 804 2.2% 5.5% Voice 554 576 589 2.2% 6.3% Non-voice 170 190 199 4.5% 16.5% EBITDA 272 280 281 0.5% 3.3% Margin % 35.7% 35.5% 34.9% Global Operations US$ mn Q4 FY14 Q3 FY15 Q4 FY15 Q-

  32. Slide 32: KPIs

    KPIs Voice Voice KPIs Q4 FY14 Q3 FY15 Q4 FY15 Q-o-Q % Y-o-Y % ARPU (INR) 128 142 147 3.5% 14.8% RPM (INR) 0.432 0.452 0.444 -1.8% 2.8% Total MoU (Bn. Min.) 102.3 103.4 108.1 4.5% 5.7% Voice Usage/ Cust/ Month (Min.) 296 315 330 4.8% 11.5% Total Customer Base (Mn.) 112.1 107.5 110.7 2.9% -1.3% Churn

  33. Slide 33: Data Leadership

    Data Leadership RCOM - Leading player in the Wireless Data Market Non-voice as % of Total Revenue No. of 3G Active Subscribers (mn) * 25.2% 24.5% 23.5% 23.7% 19.4 17.4 17.4% 16.5% 14.5 12.0 10.3 7.2 4QFY14 Rcom Airtel Idea 4QFY15 4QFY14 Rcom Airtel Idea 4QFY15 Total Data Traffic on Network (mn MBs)

  34. Slide 34: Contents

    Contents  Indian Telecom Scenario  RCOM - Strategy for Growth o Operations o Financial Update   Deleveraging and Asset Monetisation  Investment Highlights

  35. Slide 35: Key Deleveraging Step – QIP - Completed

    Key Deleveraging Step – QIP - Completed Largest Corporate Qualified Institutional Placement (QIP) in India - INR 48bn - Solid investor confidence in RCOM’s long-term business strategy Shareholding Pattern  Promoters invested INR13bn (US$213m) through In %, as on Mar 31, 2015 preferential allotment

  36. Slide 36: 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

  37. Slide 37: 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 various properties at Delhi, Navi Mumbai, DAKC etc.  GCX: Stake sale planned  DTH: Monetisation through divestment of business Unlock Substantial Value for the Benefit

  38. Slide 38: 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 Divestment of non-core assets (Real Estate, Global and DTH) * Based o

  39. Slide 39: Contents

    Contents  Indian Telecom Scenario  RCOM - Strategy for Growth o Operations o Financial Update  Deleveraging and Asset Monetisation   Investment Highlights

  40. Slide 40: 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

  41. Slide 41: Key Investment Highlights

    Key Investment Highlights Future ready spectrum portfolio Future expansion at least RCOM‟s Lower 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 Sectoral

  42. Slide 42: Thank You

    RELIANCE Thank You

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