Reliance Communications Limited · NSE:RCOM
Reliance Communications — Investor Presentation (May 2009)
55 slides from Reliance Communications's investor presentation, May 2009
Slide 1: Reliance Communications Investor Presentation
Reliance Communications Investor Presentation May 2009
Slide 2: Forward looking statements – Important Note
Forward looking statements – Important Note This presentation and the discussion that follows may contain “forward looking statements” by Reliance Communications Ltd (“RCOM”) that are not historical in nature. These forward looking statements, which may include statements relating to future results
Slide 3: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 3 of 55
Slide 4: India's leading fully integrated & converged service provider
Reliance Communications India’s leading fully integrated & Converged service provider… Wireless Enterprise • Mobile (CDMA & GSM) • Internet Data Center • VAS (Mobile World) • Broadband • Wireless Data • Leased Line • Fixed Wireless • Office Centrex • Public Access Business • MPLS & VPN • WiMax Tower
Slide 5: Complete range of telecom services
Reliance Communications Complete range of telecom services 6th largest wireless operator in the world (customer base in a single country) Only Indian company to offer nationwide both CDMA & GSM services Wireless Largest network covering a billion people in India Services offered includes Mob
Slide 6: Strategy
Reliance Communications Strategy Objectives Action Plans Customer Latest congestion free Next Generation network for highest quality Growth Attractive plans & offers More revenue streams from new product launches Revenue Growth Increased revenue from new service streams like GSM (share of VA
Slide 7: Building leadership position across all screens
Reliance Communications Building leadership position across all screens 4 screen strategy Wireless | Infratel | Globalcom | Enterprise | Home 7 of 55
Slide 8: Recent performance
Reliance Communications Recent performance Financial Performance Balance Sheet Strength* 4Q FY09 Q-o-Q Y-o-Y (As on Dec 31, 2008) (Rs. Mn) Assets 880,000 Revenue (Rs. Mn) 61,237 4.7% 15.3% EBITDA (Rs. Mn) 23,832 1.3% 2.9% Networth 290,000 Net Profit (Rs. Mn) 14,544 3.1% -3.2% Gross Debt 267,000 EBIT
Slide 9: Financial Highlights
Reliance Communications Financial Highlights Key Financial Parameters (Rs. Mn) Revenue EBITDA Net Profit 7% 59,078 9% 5% 229,411 92,875 2 5 3 54,005 + 190,678 + 81,989 +1 144,683 57,208 31,637 107,664 24,762 4,438 FY06 FY07 FY08 FY09 FY06 FY07 FY08 FY09 FY06 FY07 FY08 FY09 Consistent & Substantial i
Slide 10: Cost management (% of revenue) with stable margins
Reliance Communications Cost management (% of revenue) with stable margins… Margins 42.3% 40.8% 40.2% 38.9% Network expenses 100% - Increase in network cost due to expansion of coverage & GSM 90% 15.3% launch 18.2% 19.9% 80% 22.2% - Opex of other new businesses like DTH, Vanco, etc % of Total Reve
Slide 11: Profitability
Reliance Communications Profitability EBITDA Margin Net Profit Margin 50% 30% RCOM Bharti 25% 40% RCOM Bharti 20% 30% Idea 15% 20% 10% Idea 10% 5% 4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09 4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09 Source: Company reports Among the highest margins in the industry in sp
Slide 12: Capex intensity coming down significantly
Reliance Communications Capex intensity coming down significantly… 30,000 20,000 Rs. Crore Bharti 10,000 RCOM 0 FY06 FY07 FY08 FY09 FY10 Note: FY2010 capex amount is the company’s guidance in the earnings call Source: Company reports …moving towards FCF positive Wireless | Infratel | Globalcom | Ent
Slide 13: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 13 of 55
Slide 14: Targets the largest untapped population in the world
Wireless Business Targets the largest untapped population in the world Low wireless penetration… …Leading to strong revenue growth 140% 40% 126% 120% 30% 100% 89% 92% 26% 86% 80% 80% 20% 18% 60% 48% 14% 40% 30% 10% 6% 20% 3% 2% 0% 0% 0% India China Brazil Japan US France UK Japan France UK US China
Slide 15: Mobile subscribers in India to cross 600 mn in 2 years
Wireless Business Mobile subscribers in India to cross 600 mn in 2 years… 700 60% 400 Mobile Subscribers (mn) 15.2 386 Penetration 50% Subscriber additions (mn) 600 50% 13.7 42% 15.4 500 4 4% 596 40% 350 10.7 400 AGR 33% 496 10.3 C 10.4 30% 22% 386 10.0 300 9.1 20% 300 200 14% 256 9% 10% 100 161 96
Slide 16: One of the fastest growing wireless companies globally
Wireless Business RCOM: One of the fastest growing wireless companies globally Among India’s top 2 operators with over 73 mn wireless subscribers - Prepaid subscriber additions drive growth - 93% of total subscribers Key Performance Indicators - EBITDA margins among the highest in the industry -
Slide 17: Net adds market
Wireless Business Net adds market Net adds (mn) Net adds market share (%) 12.0 35.0% RCOM 10.0 Bharti RCOM Net adds (in mn) 8.0 25.0% Vodafone 6.0 Bharti Idea Vodafone 4.0 15.0% Idea 2.0 0.0 5.0% 4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09 4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09 Source: COAI, AUSPI Hi
Slide 18: Shall replicate success with nationwide GSM service
Wireless Business Mobility Over 73 million Happy customers Wireless Data Fixed Wireless Market leadership in all segments * PCO *CDMA … shall replicate success with nationwide GSM service Wireless | Infratel | Globalcom | Enterprise | Home 18 of 55
Slide 19: Seamless coverage wherever you go
Wireless Business 24,000 Towns 600,000 Villages 1 Billion Indians CDMA GSM Seamless coverage wherever you go Wireless | Infratel | Globalcom | Enterprise | Home 19 of 55
Slide 20: India's billion people can now expect an unbeatable choice and value proposition
Wireless Business India’s billion people can now expect an unbeatable choice and value proposition across…. 1. Coverage 2. Quality 3. Customer Choice 4. Handset Range 5. Service Breadth 6. Int’l Roaming 7. Value Added Services Reliance GSM – Set to redefine mobility landscape in India Wireless | Inf
Slide 21: GSM network exploits huge capex and opex synergies
Wireless Business GSM network exploits huge capex and opex synergies Radio bn < 15% investment Electronics $ 10 Retail Network ~ US Sales & Leveraged for Distribution Multiple businesses t: incl. CDMA +GSM BPO + Call Center ntran 3G Ready IT Systems Infrastructure ew e Billing + CRM + SAP 85% of cap
Slide 22: Dual network offers additional market share levers
Wireless Business Dual network offers additional market share levers Existing growth Industry monthly net adds of 8 - 10 mn GSM subscribers momentum Impetus from network expansion in semi-urban/ rural areas Broad Market Segmentation Corporate Requirement Retail/Family Cross technology Similar CU
Slide 23: Drivers for additional revenue market share
Wireless Business Drivers for additional revenue market share Participation in rapidly growing ~US$ 1 bn International international in-roaming market in-roaming revenue Currently enjoyed by few GSM incumbents Extremely profitable segment GSM non-voice revenue contribution ~10% with SMS cont
Slide 24: Most comprehensive wireless portfolio
Wireless Business Most comprehensive wireless portfolio Technology Advantages CDMA GSM Unlimited usage plans Spectrum efficiency PCO & FWP Mobile internet dominance Wireless Data capacity ATM & PoS Multimedia/Video capability Near 3G experience GSM ecosystem - 75% of Handset range at all price point
Slide 25: Best positioned to serve all customer segments
Wireless Business Best positioned to serve all customer segments Segment Need Technology Supporting factors Light pockets -Low handset prices GSM/EDGE -Presence of 2nd hand handsets -Primarily incoming & -SIM Distribution reach low outgoing Business and -E-mail GSM/EDGE -Mid and High end handset ran
Slide 26: Netconnect Broadband Plus
Wireless Business Netconnect Broadband Plus Competitive differentiation Fastest internet broadband service of up to 3.1 Mbps in India’s top 35 cities Seamless handover & connectivity through CDMA 1X in over 23K towns and 6 lakh villages covering 90% of the Indian population Wide reach compared
Slide 27: Service Innovations: First to reach the market
Wireless Business Service Innovations: First to reach the market Mobile TV Yahoo on Reliance Unlimited local & STD calls Micro-billing MBanking MPay Internet on the move MBlog Wireless | Infratel | Globalcom | Enterprise | Home 27 of 55
Slide 28: Multi-channel customer delivery system
Wireless Business Multi-channel customer delivery system World-class design , fit out & ambience at 2,000 exclusive retail showrooms on High streets/Malls High Quality Reach & National footprint through 5,000 distributors & 1 million retailers 5,000+ Direct & indirect outbound sales force to c
Slide 29: Wireless Financial Performance
Wireless Business Financial Performance Revenue (Rs. Mn) EBITDA (Rs. Mn) 46,000 45,015 17,000 16,763 16,859 44,119 16,623 16,616 16,629 43,356 44,000 41,608 42,000 41,187 16,000 40,000 38,000 15,000 36,000 34,000 14,000 4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09 4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09
Slide 30: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 30 of 55
Slide 31: Infrastructure Tenancy Slots – Market
Reliance Infratel Infrastructure Tenancy Slots – Market RITL Ground based tower 2G, 3G & BWA 700,000 400,000 200,000 RITL Roof top tower 2008A 2009A 2010E Source: Industry Estimates Wireless | Infratel | Globalcom | Enterprise | Home 31 of 55
Slide 32: Infrastructure sharing – All drivers are in place
Reliance Infratel Infrastructure sharing Pressure on site sharing Growth drivers GSM and 3G roll outs Operator imperatives Active sharing Access large rural allowed population Growth Regulation USO scheme for Spectrum scarcity vs. sharing coverage infrastructure Speed of deployment Key
Slide 33: Infrastructure overview
Reliance Infratel Infrastructure overview Operational in all 22 circles ~48,000 multi-tenancy towers as on March 31, 2009. Anchor customer (Reliance Communications) driven strategy Current captive tenancy of 1.6x post our GSM launch; will further increase by 3rd party (external) tenants Fi
Slide 34: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 34 of 55
Slide 35: Business structure
Globalcom Business Business structure Completed restructuring of our services under four core business segments of Data, Voice, WiMax and NLD Data Voice WiMAX NLD Accelerate growth into $290 Billion communications market by providing comprehensive voice, video & data network services Wireless | In
Slide 36: Market potential
Globalcom Business Market potential Past scope of services Business Unit 2008F Global Market Demand ($bn) Typical margins $2.2 bn 35%–55% WiMAX $1.5 bn $185 bn 15%-25% NLD 20%–40% Data $100 bn 15%–35% Voice Sources: Telegeography, Ovum, Gartner Research Addressable market revenue is ~US$ 290 bn with
Slide 37: Voice Business
Globalcom Business Voice Business Global Reach Innovative Product Leadership Position Suite Retail services in U.S., Reliance Global Call Market share of 30% for Canada, U.K., Australia, - International Calling Service ILD wholesale inbound New Zealand, Hong Kong traffic - Web based service de
Slide 38: Business Performance & Product Development
Globalcom Business Business Performance & Product Development RGC continues to be #1 Retail Service for India calling from US – user base of over 2 mn Special promotional offers were given for Pongal, Holi, Valentine’s day, etc Launched South Asia based calling card portal as part of RGC expan
Slide 39: Voice Business - Plan to drive profitable growth
Globalcom Business Voice Business - Plan to drive profitable growth Value adds to drive retention and usage - Loyalty and reward program Continued - Money transfer services Product Entertainment and content features Innovation - Launch new products like: - Web based Audio and Video Conferencing
Slide 40: Data Business
Globalcom Business Data Business Unmatched Blue Chip Customers Leadership Position Capabilities Global presence in over 60 Diverse base of over 200 Ranked amongst top 5 in countries. World’s largest carriers, ISPs and content Global Network Service IP optical network providers. Providers by Ga
Slide 41: Data Business - Plan to drive profitable growth
Globalcom Business Data Business - Plan to drive profitable growth Enhance revenue contribution from higher margin value added services Vertical “Sell to, sell through, sell with” channel partners to Expansion extend the customer franchise Expand Geographical Coverage: - Reach of cable network
Slide 42: WiMAX Business
Globalcom Business WiMAX Business Building a Spectrum Bank Way Forward Focused on acquiring licenses and spectrum in Operationalise WiMAX emerging markets; market size of WiMAX business in select estimated to be US$ 10 bn by 2010 geographies Leverage the low cost and scalable delivery center i
Slide 43: Globalcom Financial Performance
Globalcom Business Financial Performance Revenue (Rs. Mn) EBITDA (Rs. Mn) 20,000 18,803 6,000 16,915 16,783 5,025 15,257 15,260 5,000 4,315 15,000 4,089 4,000 3,608 3,222 10,000 3,000 2,000 5,000 1,000 0 0 4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09 4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09 EBITDA Margin
Slide 44: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 44 of 55
Slide 45: Underserved market: Provides strong growth opportunity
Enterprise Business Underserved market: Provides strong growth opportunity Broadband market segment revenue (US$ bn) US$ 13 bn bn 8 $ US + US$ 5.5 bn FY2008 FY2012 Household SMB + SME Enterprise Source : Industry Report Indian Market to grow to US$ 13 bn in the next 3 years Wireless | Infratel | Glo
Slide 46: RCOM: Best positioned to drive growth
Enterprise Business RCOM: Best positioned to drive growth >50% market share in highest growth data Atlantic products like IDC, Centrex solutions, VPN, etc Fiber Ring Meshed Core 1 Million buildings connected across top 44 cities to our fiber network, to cross 1.5 mn by Pacific next year end Ha
Slide 47: IDC: Largest in India with >60% market share
Enterprise Business - IDC IDC: Largest in India with >60% market share Six data centres with level 3+ accreditation – more than 300,000 sq ft of facilities space Hosting >20,000 systems and >1400 terabyte of information Geographic redundancy Wide & complex application hosted - Core Banking,
Slide 48: Enterprise Financial Performance
Enterprise Business Financial Performance Revenue (Rs. Mn) EBITDA (Rs. Mn) 8,000 7,075 4,000 6,542 3,160 6,023 2,941 5,603 2,714 2,760 6,000 5,100 3,000 2,492 4,000 2,000 2,000 1,000 0 0 4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09 4Q FY08 1Q FY09 2Q FY09 3Q FY09 4Q FY09 EBITDA Margin 80% 60% 48.9% 48.4%
Slide 49: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 49 of 55
Slide 50: Indian Market (as of March'09)
Home Indian Market (as of March’09) 400 India’s TV Viewership 350 300 TV HH (in mn) 2nd largest in the world 250 200 120 Mn TV Homes 150 100 90 Mn C&S Homes 50 12 Mn Pay TV DTH Homes 0 China India US Japan Analog cable HH TV Technology Evolution 90% Analog Cable – Digital Cable – DTH DTH
Slide 51: Big TV (DTH) - Commercially launched
Home Business Big TV (DTH) - Commercially launched Key service differentiators - More channel choice - Pure Digital viewing - 32 Cinema channels - Easy program guide - Quick channel select - Interactive applications (iNews, iGames, iCricket, etc) - Superior Mpeg 4 technology Pioneering HD Experi
Slide 52: BIG TV Services: Complete suite of services
Home Business BIG TV Services: Complete suite of services BroadcastTV and Radio EPG / Mini EPG Mosaic Portal Information News Stock Entertainment Game VoD / MoD / PVR Karaoke / Photo Album Services Advertisments Interactive Promotion Dedicated Advertiser Location Messaging SMS / MMS Mail Polling / V
Slide 53: Contents
Contents Reliance Communications – an integrated telco Wireless Enterprise Infratel Home Globalcom Key takeaways Wireless | Infratel | Globalcom | Enterprise | Home 53 of 55
Slide 54: Key Takeaways
Looking ahead Key Takeaways Drivers for growth Impact RCOM launched nationwide GSM service with presence in 20,000 towns in March Increases the Revenue 2009 generating ability RCOM GSM expanding coverage to 24K towns to cover 1 billion people by mid High EBITDA margin CY2009 Businesses improves
Slide 55: Thank you
RELIANCE Anil Dhirubhai Ambani Group Thank you
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